The role of campaign finance

Presidential candidates receive funding from both private donors and the federal government, while congressional candidates rely solely on private sources. The federal government matches contributions from individual donors who give $250 or less, dollar for dollar. To qualify for these funds, candidates must raise $5,000 from small contributors in 20 different states. In the past, each political party received a one-time grant to help cover the costs of their nominating conventions, but this program ended in 2014 when President Obama signed new legislation. During the general election, the government covers all costs, up to a certain limit, for major-party candidates and partially subsidizes expenses for minor-party candidates who receive between 5 and 25 percent of the vote.

This public funding system for presidential elections was introduced after the Watergate scandal in the 1976 election. However, in recent years, an increasing number of candidates have chosen not to participate in this program. By opting out, candidates can spend unlimited amounts of money, while those who accept public funds must follow spending caps. In 2000, George W. Bush was the first to opt out of public funding during the primaries, although he participated in the general election funding. Barack Obama was the first to forgo public funding entirely during the general election in 2008, and in 2012, both major party candidates opted out of public funding. In 2016, only Martin O’Malley, a former governor of Maryland running for the Democratic nomination, accepted public financing; all other candidates, including Clinton and Trump, rejected it. The future of this funding system is uncertain.

Congressional candidates do not receive any government funding and must raise all their money from individuals, interest groups, or political parties. Contrary to popular belief, the majority of campaign funds come from individual donors, not wealthy individuals. Due to strict limits on how much one person can donate directly to candidates, most contributions are small, typically ranging from $100 to $200, from average citizens rather than a few affluent donors.

Bipartisan Campaign Reform Act 2002

Following the 2000 election, Congress initiated a significant movement aimed at reforming the campaign laws established in the 1970s. This effort resulted in the Bipartisan Campaign Reform Act of 2002, which gained swift approval from both the House and Senate and was signed into law by President Bush. The Supreme Court case Buckley v. Valeo (1976) had previously upheld federal limits on campaign contributions while also recognizing that spending money to influence elections is a protected right under free speech. This meant candidates could contribute unlimited amounts to their own campaigns. While that ruling remained largely intact, the new law introduced three key changes.

First, it prohibited soft-money contributions from corporations and unions to national political parties. After the 2002 federal elections, national parties and their committees could no longer accept soft money. Instead, they could only receive "hard money," which comes from individual donations or PAC contributions subject to federal limits. Many worried that this would significantly weaken political parties, which had become reliant on soft-money donations. However, as previously discussed, parties adapted their strategies and began to raise more funds than before.

Second, the maximum individual contribution limit increased from $1,000 per candidate per election to $2,000, with adjustments for inflation; for the 2017-2018 election cycle, this limit was set at $2,700.

Third, the law imposed strict restrictions on independent expenditures by corporations, labor unions, trade associations, and, under certain conditions, nonprofit organizations. These entities are now barred from using their own funds to refer to a clearly identified federal candidate in advertisements during the 60 days leading up to a general election or the 30 days before a primary. PACs may still mention candidates in their ads, but they are also limited to hard money contributions as defined by federal law.

Soon after the law was enacted, critics launched a federal lawsuit claiming it was unconstitutional. This lawsuit united various groups, including the American Civil Liberties Union and the National Right to Life Committee, which typically do not collaborate. They argued that the restrictions on independent spending referencing identified candidates within the 60 days before an election infringe on free speech rights. According to the law, an organization can be penalized simply for mentioning a politician, even without endorsing or opposing them. For example, they cannot state their position on a bill introduced by Congresswoman Pelosi during this timeframe.

Print and broadcast media are exempt from this law, allowing them to express whatever views they wish about candidates. This shift in regulations redirects influence from businesses and unions toward the media.

In the case of McConnell v. Federal Election Commission (2002), the Supreme Court upheld nearly all aspects of the new law. The Court dismissed arguments claiming that financial resources equate to free speech and ruled that restricting corporations and unions from mentioning federal candidates in the 60 days leading to an election did not violate the First Amendment. However, in 2007, the Court shifted its stance. A right-to-life group's advertisement urged the public to contact Senator Russell Feingold regarding specific judicial nominees without indicating how to vote.

The Court ruled that the activity in question was considered "issue advocacy," which is protected by the First Amendment, and therefore could not be prohibited by the McCain-Feingold law, as established in Federal Election Commission v. Wisconsin Right to Life. In two subsequent rulings, campaign finance regulations were further loosened. In the 2010 Citizens United case, the Court narrowly decided, with a five-to-four vote, to overturn the prohibition on campaign advertisements funded by corporations and unions. While it maintained limits on contributions to candidates, this decision allowed corporations, unions, and other organizations to spend unlimited amounts of money to promote or oppose specific candidates, contributing to the rise of super PACs. In 2014, the ruling in McCutcheon v. Federal Election Commission removed the total biennial limits on individual contributions to national parties and candidates. Previously, individuals could only donate a maximum of $48,600 overall to candidates and $2,600 to any single candidate, allowing contributions to only 18 candidates at the federal limit. Although McCutcheon upheld individual contribution limits per candidate, it eliminated the overall contribution cap. Now, an individual can contribute the federal maximum of $2,700 (for the 2017-2018 cycle) to as many candidates as they wish, mirroring similar decisions for political parties. Historically, changes like these, along with the current complex legal landscape, are unlikely to hinder individuals, PACs, party leaders, and others from financially supporting their preferred candidates. Additionally, it is expected that various groups will continue to direct their contributions in ways that align with their interests.

Political Action Committees (PACs) that focus on a specific party, policy, or cause usually maintain consistent giving patterns regardless of which party is in power. For example, pro-choice PACs support Democrats, while pro-life PACs back Republicans. In contrast, trade and corporate PACs often adjust their contributions based on who is in charge. When Democrats lead Congress, trade organizations typically contribute to them. However, when Republicans take control, these PACs redirect their funds to Republicans. During the 2009–2010 cycle, the National Association of Realtors allocated 55 percent of its donations to Democrats. Once Republicans regained the House in 2010, their contributions shifted to 55 percent for Republicans in 2011–2012. Likewise, the National Beer Wholesalers Association donated 53 percent to Democrats in 2009–2010 and then increased their support to 59 percent for Republicans in 2011–2012. This pattern is evident with many other trade and corporate PACs as well. As will be explored in the next chapter, the primary aim of many PACs is to establish connections with politicians and build relationships, rather than to champion a specific ideology. As a result, they tend to favor the party that holds power.

·    banned soft-money donations to national parties (all money raised or spent was now subject to federal limits)

·    said that soft-money donations to local parties could not be used to support federal candidates, but only for genuine party-building activities

·    said that issue adverts could not be funded directly by unions or corporations

·    said that issue adverts mentioning a candidate's name could not be shown within 60 days of an election, or 30 days of a primary, unless approved by one of the candidates, with money spent being covered by spending regulations.

Difficulty in achieving effective reform

Campaign finance laws have had limited effectiveness for a variety of reasons. In addition, it has proven difficult to overcome these limitations:

·    the ability of groups to find loopholes (soft money)   the 1st amendment and the ideological balance of the Supreme Court in striking down key provisions

·    the lack of legislation on the issue, which occurs both because it is difficult to pass legislation

through Congress and perhaps due to unwillingness for politicians to regulate themselves

·    the difficulty in amending the Constitution to regulate elections, such as Sanders's failed `Democracy for all' amendment.

Super PACs PACs and Super PACs 

Since the 2010 mid-term congressional elections, campaigns have been dominated by these organisations. Opensecrets.org reported that by 2016 there were 2,398 Super PACS, raising over $1.5 billion during that year's elections.

There remains considerable debate over the extent to which US elections hold politicians to account. This has led to the passage of a number of reforms which have attempted to restrict funding or make the system fairer. The system of generating campaign finance, which tends to benefit incumbents or wealthy individuals, as well as the increasing cost of electoral campaigns, has led to calls for greater restrictions on campaign finance. The problem has been in securing reform which strikes a balance between creating a fair playing field and not impinging on democratic rights to freedom of expression.

Despite these reforms, the cost of elections continues to escalate, with the Centre for Responsive Politics estimating that over $2.6 billion was spent on the 2012 elections.