A Brief History on Campaign Finance Laws: The Progressives to McCutcheon

While McKinley’s powerful funding gave him an overwhelming Electoral College victory in 1896 (60% of the vote), the popular vote and state count were much closer contests (51-46.7 and 23-22, respectively). Where the impressive campaign financing paid off was in the electorate-rich industrial states of the East and Midwest.

 

Part 1: Campaign Finance, 1787 to Today

 

McKinley would win a second term, largely by outspending his opponents with corporate money, but also with his very popular running mate, Theodore Roosevelt. His margin of victory increased in every measurable category, but this was not the most interesting feature in this election.

The Prohibition Party, with the platform of the prohibition of alcohol, made their first and only serious run for presidential office
in 1900. While their bid for presidency was completely crushed, this would be the first time that religious organizations would donate large sums of money to political campaign funds.

While the Prohibition Party would never win the presidency, they picked up considerable support in Congress and state legislatures — often funded by religious organizations and temperance leagues.

In the span of two election cycles, corporations, public advocacy groups, and religious organizations became serious players in campaign finance. The desire these types of organizations have to continue to be major players has been a central theme even into our present debates and court rulings.

 

Theodore Roosevelt won his own term in 1904 after completing McKinley’s second term. He not only won in 1904, he surpassed anything that McKinley ever accomplished: 71 percent of the Electoral Vote, 56 percent of the popular vote, and winning 32 out of 45 states.

After three election cycles being largely funded by corporate money, progressive Democrats and Republicans had enough. Roosevelt would embrace this shift in public opinion and denounce corporate funding of campaigns in his annual address before Congress in 1905:

All contributions by corporations to any political committee or for any political purpose should be forbidden by law; directors should not be permitted to use stockholders’ money for such purposes; and, moreover, a prohibition of this kind would be, as far as it went, an effective method of stopping the evils aimed at in corrupt practices acts.

He would repeat his request for legislation barring corporations from funding elections in his 1906 State of the Union address:

I again recommend a law prohibiting all corporations from contributing to the campaign expenses of any party. Such a bill has already past one House of Congress. Let individuals contribute as they desire; but let us prohibit in effective fashion all corporations from making contributions for any political purpose, directly or indirectly.

 

Because so many acts were passed, and subsequently replaced and/or ignored, it is easier to present the following table:

 

Act

Purpose

Outcome

Tillman Act of 1910 Prohibited corporations and national banks from contributing money to federal campaigns Largely ignored or skirted
Federal Corrupt Practices Act 1910 Campaign disclosure information for the House of Representatives
Federal Corrupt Practices Act of 1911 Campaign disclosure information for the Senate; set spending limits for all Congressional candidates Replaced by 1925 Act increasing limits
Hatch Acts of 1939 & 1940 Gave right to Congress to regulate primary elections and discretion to oversee expenditure limits. Eliminated, unbiased oversight
Taft-Hartley Act 1947 Barred Labor Unions and Corporations from making expenditures and contributions in all Federal elections Did not have enough power to enforce

*All information retrieved from www.fec.gov.

 

The problem with all of these laws was that they all lacked the power of enforcement. Ignorance was an acceptable excuse, corporations could pay employees to make donations, or the law could be totally ignored with little to no consequence.

In 1968, just 3 years prior to the modern Federal Election Campaign Act (FECA) of 1971 being passed, House and Senate candidates reported spending $8.5 million. Once the more stringent oversight took place in 1971, reporting jumped to over $88.9 million — a clear signal that few in Congress were actually reporting campaign financing correctly.

 

The FECA of 1971 (and subsequent amendments) was the first broad-based, enforceable act pertaining to federal campaign financing. Many of the laws had direct bearing on the Watergate Scandal (1972), where campaign finance money had been used to both commit and cover up criminal activities by members of the Republican Party.

In particular, Americans were not satisfied with anything but the most transparent of accounting for campaign financing — something that would be addressed in the numerous amendments to FECA.

 

Act or Court Case

Purpose

Outcome

FECA of 1971 Required full reporting of campaign contributions and expenditures, limited media spending.Allowed for the creation of PACs—allowing contributions from corporations and banks Media spending limits repealed, no oversight body to enforce
Revenue Act of 1971 Created the modern system of public campaign finance—funded $3 at a time through contributions on federal tax returns.
1974 Amendments to FECA 7000 cases of election finance abuse were referred to the Justice department during the 1972 elections, it became clear that there needed to be a single oversight body.Matching funds were created for Presidential elections. FEC developed, members chosen (2 each) by the President, Speaker of the House, and President pro tempore of the Senate.
Buckly v Valeo, 1976 Court upheld contribution limits because they safeguarded the integrity of the elections.Overturned expenditure limits on non-publicly funded candidates, stating they limited First Amendment expression. Gave Presidential candidates the option not to accept federal matching money—thereby lifting limits.
1976 Amendments to FECA President nominates all six Commissioners who are approved by Senate.Put significant limits on PAC solicitations and contributions. Maintained executive power
Minor Amendments in 1977, 1979, 1982, 1983, and 1984 Primarily improved efficiency and integrity of reporting practices.
Bipartisan Campaign Reform Act (BCRA) of 2002 Prohibited corporations and unions from using their general treasury to fund broadcast advertisements mentioning a candidate within 30 days before a primary and 60 days before a general election.

*All information retrieved from www.fec.gov.

 

There was a significant lull during the 1990s and 2000s when it came to major challenges to the FEC oversight of federal elections. BCRA of 2002 set up the legal challenge with Citizens United, with Citizens United claiming an unfair application of the law.

Using the 1976 decision in Buckley v. Veleo, SCOTUS argued that corporations have the right to freedom of speech, and thus could not be limited. Furthermore, 501(c)(4) groups, including the National Rifle Association, Sierra Club, or even Citizens United, had the same protections.

While the outcome can be debated, the numbers cannot be disputed. Eighty percent of total individual contributions to super PACs in 2011 were donated by only 196 individuals.

 

If Citizens United opened the door to unlimited corporate, super PAC, and public interest group contributions, McCutcheon opened the floodgates to unlimited individual contributions.

Essentially, the majority opinion of the high court stated that any and all limits to campaign finance were unconstitutional. It will be up to lower courts to eventually determine where those boundaries actually lie.

The outcome of McCutcheon can be debated, but we must remember that in 2012, billionaire Sheldon Adelson donated $92 million to losing Republican candidates — the single largest donor during that election cycle could not get a single candidate elected on his slate. Money can’t buy everything.

At this point, the Federal Election Commission seems to be a paper-tiger, ready to be dismantled as a thing of the past. When every single one of its original purposes has been overturned by the courts, it seems to be a waste of taxpayer money in its current form.

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