Campaign Finance (CF), Campaign Spending & CF Reform MU MVZ 449 Spring 2010 Dave McCuan Masaryk University Final Exam Dates MVZ 449 Spring 2010 Your Choice: Wednesday, 26 May, 1600-1730 OR Friday, 04 June, 1500-1630 BOTH SESSIONS TO BE HELD IN CLASSROOM U43 FSS 1 Margarita Party! Details • Saturday, 15 May 2010 • 42 Gorkeho Street, near Café Steiner • Top Floor, Unit 12 (there is an elevator) • Mailbox to ring bell is marked, "Matheson" • We'll start around 20:00 with drinks and food. • You all are welcome and can a bring a guest if you like. Area of Focus: Campaign Processes, Campaign Money, & Political Participation What is the Relationship Among: Political Contributions, Campaign Financing, and Politics? 2 Campaign Process Elements • Finance: Raise Money • Gain Publicity (Earned, Free) • Expand Unpaid/Free Coverage through Paid Media: - Campaign events - Press conferences - Debates REFORM: The Recurring Theme of "Reform" • Limit the disproportionate influence of wealthy individuals and special interest groups on the outcome of federal elections; • Regulate spending in campaigns for federal office; and • Deter abuses by mandating public disclosure of campaign finances ("transparency"). 3 Terms / Concepts "Soft money:" ('R & not R') contributions to national parties & lEs; not subject to contribution limits. "Hard money:" ('R & R') "PACs:" Political Action Committee ("multi-candidate committee) "Independent expenditures:" made without coordination with candidate / campaign "Issue ads:" political advertising not directly affiliated with specific candidate, but oriented toward specific issue or cause. Quick Overview of thel 974 FECA • 1. Created Federal Elections Commission (FEC). • 2. Allowed for federal funding for presidential candidates (matching funds with voluntary limits). • 3. Required public disclosure of contributions & spending. • 4. Placed limits on campaign spending if a candidate accepted federal matching funds. • 5. Set contribution limits: - $1,000 limit any individual can give to federal candidate in the primary, & $1,000 in per candidate in general election. $5,000 limit per individual per campaign by a "multi-candidate organization" (Political Action Committee.) • Limited amounts of their own money candidates could spend on their own campaigns. (Struck down in Buckley v Valeo) • Limited amounts of other people's money candidates could spend (i.e. tried to establish expenditure ceilings in US congressional races.) (Struck down in Buckley v Valeo) b 4 Modern campaign finance laws • 1907 - Ban on direct contributions by corporations • 1947 - Ban on direct contributions by labor unions • 1971 / 1974 - Federal Election and Campaign Act, FECAs (established limits & FEC) • 1976: Supreme Court decision in Buckley v. Valeo • 2002: Bipartisan Campaign Reform Act (BCRA or "McCain Feingold") Campaign Finance Law Basics To any candidate or candidate committee (per election*) To any national party committee (per year) To any PAC, state/local party, or other political committee (per year) Aggregate total Individual can give**: Old law: $1,000 $20,000 $5,000 $25,000 per year New law: $2,000, subject to the aggregate limit*** $25,000 per party committee, subject to the aggregate limit °$10,000 to each state or local party committee °$5,000 to each PAC or other political committee, subject to the aggregate limit $95,000 per two-year election cycle as follows: °$37,500 per cycle to candidates; and °$57,500 per cycle to all national party committees and PACs ($20,000 to $57,500 per cycle to all national party committees, and a maximum $37,500 per cycle to PACs) Multi-candidate committee (PAC) can give $5,000 $15,000 $5,000 No limit Same Same Same Same Other political committee can give: $1,000 $20,000 $5,000 No limit Same Same Same Same 5 CAMPAIGN FUND-RAISING, 1992-2000* 2000 1996 1992 Democrats Hard Money $275.2 $210.0 $155.5 Soft Money $245.2 $122.3 $36.3 Republicans Hard Money $465.8 $407.5 $266.3 Soft Money $249.9 $141.2 $49.8 Grand Total $1236.1 $881.0 $507.9 • Source: Federal Election Commission / Center for Responsive Politics. Totals are in millions. Some web sites • www.fec.gov • www.opensecrets.org • For the State of CA: http://ss.ca.gov/prd 6 Problems Thinking about Campaign Finance Anti-incumbency/politician hysteria Problem of strategic behavior - Why the "no effects" finding of $$ What we want to know: - Why do politicians need campaign $$ and how much is "enough" - Does private money "buy access" or... • Why do people contribute to campaigns? • What do MCs do in return for $$? - How do principals respond to changes in circumstances Overview History of Campaign Finance Regulation Mists of time—Civil War: no regulation Civil War—1910 "Gilded Age" Muckraking journalism unearthed many scandals 1868: 75% of money used in congressional elections through party assessments 1867: Naval Appropriations Bill prohibits officers and employees of the fed. gov't from soliciting contributions 1883: Civil Service Reform Act (Pendleton Act) prohibits the same solicitation of all federal workers 7 Overview History of Campaign Finance Regulation • Corrupt Practices Acts of 1911 and 1925 - Set disclosure requirements for House and Senate Elections - Spending limits ($25k for Senate; $5k for House) - Ridiculously weak and regularly violated • 1971 Federal Election Campaign Act (FECA) • 1971 Revenue Act • 1974 FECA Amendments (FECAA) • 1976: Buckley v. Valeo (1976) Campaign Finance Reform: Buckley I Original Provision Effect of Buckley v. Valeo Expenditure limits Overall spending limits (Congress and president) Struck down, except as condition to receiving public funding (freedom of speech) Limits on the use of candidates' own resources Struck down entirely (freedom of speech) Limits on media expenditures Struck down entirely (freedom of speech) Independent expenditure limits Struck down entirely (freedom of speech) 8 Campaign Finance Reform: Buckley II Original Provision Effect of Buckley v. Valeo Contribution limits Individual limits: $1k/candidate/election Affirmed PAC limits: $5k/candidate/election Affirmed Party committee limits: $5k/candidate/election Affirmed Cap on total contributions individual can make to all candidates ($25k) Struck down (freedom of speech) Cap on spending "on behalf of candidates" by parties Affirmed Campaign Finance Reform: Buckley III Original Provision Effect of Buckley v. Valeo Federal Election Commission Receive reports; implement FECA Upheld Appointed by Congress Struck down (separation of powers) Public funding (presidential elections) Check-off system to fund system Upheld Partial funding during primaries; total funding during general election Upheld Spending limits as price of participating Upheld Disclosure All expenditures Upheld Contributions over $100 (raised later to $200) Upheld 9 More History • 1979 FECA Amendments: "party building" activities allowed, leading to "soft money" • 1996: Colorado Republican Federal Campaign Committee v. FEC (196) - Parties can spend what they want so long as they don't coordinate • 2000: Section 527 reform • 2002: Bipartisan Campaign Reform Act (McCain-Feingold) Section 527 Highlights Applies to non-profits incorporated under section 527 of the Internal Revenue Code Examples: GOPAC, Sierra Club Previous restriction: they may run issue adds, but not advocate the election of a fed. cand. Gist: contributions must be reported Effects: Some have complied Some have re-filed incorporation papers Some have filed lawsuits 10 McCain-Feingold Highlights (A.) Long political history 104th Congress (1995—96) Eliminate soft money; ban on PAC contributions; incentives for complying with spending limits Senate: filibuster; House: leadership supports failed bill Shays-Meehan in the House 105th Congress (1997—98) Outright alliance with Shays-Meehan Ban soft money; lower PAC contribution limits; provide incentives to comply with spending limits House passes S-M, following "discharge petition" Senate filibuster McCain-Feingold Highlights (B.) • Long political history - 106th Congress (1999—2000) • S-M passes again • Senate filibuster again • McCain bill to limit Section 527's passes - 107th Congress (2001—02) • M-F forced through in 2001, after compromises • S-M delayed over scheduling (Republicans + Black Caucus coalition) • March 20: passes and goes to president 11 McCain-Feingold Main Features • Hard money - Limit increased to $2k/election/candidate, $25k to national parties; indexed to inflation - Likely outcome: Reps. gain • Soft money - National parties totally prohibited - State & local parties: $10k/year for registration & gotv; regulated by states - Likely outcome: National parties loose in favor of states • Organizations - No limits, if $$ not used for fed. election activity - Likely outcomes: • More $$ for these groups • Law suits McCain-Feingold Main Features, Part II • Election Advertising - Limits • Broadcast "issue adds" that refer to specific candidate paid for by soft money • No limit if the ad refers to the issue and not a cand. - Likely effects • Money diverted to other ads and other strategies • More law suits • Effective date: after 2002 federal election 12 McCain-Feingold Controversies • Lawsuit - McConnell v. FEC • Upheld broadcast & soft money restrictions • FEC regulations - Lax regulation of 527's • Narrow definition of "solicit" • Internet excluded from regulation - Overturned by trial court • Congress now on war path New McCain-Feingold-Shays-Meehan • Require 527s to raise and spend only "hard money" • Restrict 527 TV advertising before election 13 Top 527s from Opensecrets.org: 2004-2006 Period • Joint Victory Campaign 2004 * $41,685,706 • Media Fund $28,127,488 • America Coming Together $26,905,450 • Service Employees International Union $16,652,296 • American Fedn of St/Cnty/Munic Employees $13,658,207 • MoveOn.org $9,086,102 • New Democrat Network $7,172,693 • Club for Growth $6,301,03 • EMILY'sList $5,673,173 • Sierra Club $4,491,180 • AFL-CIO $4,109,799 • Voices for Working Families $3,668,280 • College Republican National Cmte $3,647,093 Campaign Facts • Total spending and receipts • Growth in congressional money • Incumbent vs. challenger vs. open seats • Growth of PACs 14 Total spending (1999-2000 cycle, in thousands $) Fed. matching Indiv. PACs Cand. loans & contribs. Other loans Transf. & prev. camp. Other receipt s Total Pres. nom. 57,744 233,584 2,893 43,160 237 3,491 1,855 342,964 Pres. gen'l elect. 135,120 135,120 Sen. elect. 249,980 51,940 106,990 510 409,420 House elect. 312,790 192,770 66,140 1,450 573,150 Dem. pty comm. (hard) 194,832 30,695 225,527 Rep. pty comm. (hard) 394,787 28,916 423,704 Dem. Pty. Comm. (soft) 245,203 Rep. Pty. Comm. (soft) 249,862 Totals 192,864 1,385,974 307,214 216,290 2,197 3,491 1,855 2,604,949 Growth in Congressional Money J2 o •*-> «/» o 1988 1990 1992 1994 1996 1998 2000 2002 House tot. Senate tot. - House avg. Senate avg. 15 Incumbents, Challengers, & Open Seats i-1- -i --\ 0.8 - n p. O.D 0.4 s n o 0.2 0 = =:* : - - - -)K O 1 1990 199 > 1994 199D 19 98 2000 2002 1 \j\j\j 1 \j\J4 _ 1 \j\ \j\j\j 1 ij — r~)pm Inp Ppn inp ~~ ripm nnpn L-fC III. 11 IO . 1 11 lis. ' UCIM. UUCI 1 — - Rep. open ■ ■ Dem. cha • Rep. cha Current numbers (10/13/04) Source: FEC House Number Receipts Senate Number Receipts 1992 195D 207.2D 1992 237 $1D1.19 1994 1D93 223.58 1994 230 $1D3.01 199D 1590 271.77 199D 208 $157.99 1998 123D 278.77 1998 1D1 $191.38 2000 13D3 $381.77 2000 193 $258.42 2002 1394 $400.48 2002 142 $180.78 2004 1410 $459.89 2004 237 $337.DD 16 PACs: Numbers 2,500 2,000 1,500 1,000 500 0 1985- 1987- 1989- 1991- 1993- 1995- 1997- 1999- 2001- 200386 88 90 92 94 96 98 2000 2002 2004 Election cycle —♦— Corp. —■— Labor --Non-connected x Trade/membership —as—Coop —•—Corp. w/out stock PACs: Money 1-'- 250 - 200 - ....................♦ — ............♦— O =150 - .........,V ^.............. - "^=="^ ♦ .....__ ^__ 100 - .--- 50 - 0 - 1 985- 1987- 1989- 1991- 1993- 1995- 1997- 1999- 2001- 86 88 90 92 94 96 98 2000 2002 —♦—Corp. —i ■— Labor a Non-connected Trade/m smber —s k— Coop. -•— Corp. w/out stock 17 PAC Giving, 2002 Source: opensecrets.org Grand Total Democrats Republicans Dem % Repub % Business $1,008,406,673 $429,074,306 $577,020,735 43% 57% Labor $96,584,777 $89,937,275 $6,465,902 93% 7% Ideological $90,259,388 $49,010,162 $41,157,993 54% 46% Other $108,024,969 $48,130,631 $59,271,482 45% 55% Unknown $77,355,798 $21,589,286 $55,563,830 28% 72% Where does it go? What good does it do? • Where does it go? - Safe incumbents: consumption - Unsafe incumbents: campaign (media, etc.) - Everyone else: Campaign activities • To what effect? - The paradox of the spendthrift incumbent 18 Does Private Money "Buy" Access? • Why do people contribute to campaigns? - Participation (Ansolabehere and Snyder) - Investors vs. consumers - Access and compositional effects • What do contributors get? - Talk to contributors: it's protection money - Empirical studies of legislating: mixed results Thinking About Reform • Never underestimate the power of unintended consequences - Shift to PACs - Shift to millionaires - Shift to 527s 19 Problems With Particular Reforms • Spending limits: - Generally favors incumbents - Generally unconstitutional • Limit activities of non-candidates - Encourages shifting to other behaviors - Generally unconstitutional • Subsidies (free TV, etc.) - Is this enough? - Do we want more TV? • Public Financing - Citizens don't like paying for politics - People can still opt out The Problem of "Concentrated" $$$ Metro Cash Nearly 60 percent of the individual contributions to the presidential candidates have come from these Percentage Percentage 10 metropolitan areas, which together represent of total U. S. of voting-age about a quarter of the voting-age population. contributions population New York-Northern New Jersey-Long Island $21,694,119 187% 6.8% Los Angeles-Long Beach-Santa Ana 10,231,041 8.8 4.4 Washington-Arlington-Alexandria 8,960,093 77 2.0 Chicago-Naperville-Joliet 5,686,074 4,9 3.3 San Francisco-Oakland-Fremont 4.915,701 4.2 1.5 Boston-Cambridge-Quincy 4,873,133 4.2 1.5 Miami-Fort Lauderdale-Miami Beach 4.524,502 3 9 2.1 Dallas-Fort Worth-Arlington 2,890,785 2.5 2.4 Bridgeport-Stamford-Norwalk 2,576,888 2.2 0.3 Houston-Sugar Land-Baytown 2,406,709 2-1 2.0 Top 10 totals $68,759,046 59.3% 26.3% Source- Federal Section Commission Source: NYT, 22 April 2007 20