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A legal war has been waged since the campaign finance reforms that followed the Watergate scandals, when Congress passed the bedrock for our modern money-in-politics regulatory regime. And while reformers have notched significant victories, deep-pocketed deregulators have slowly chipped away at major provisions by challenging them all the way to the Supreme Court. Here’s a look at how we got here, to a system where unlimited and often undisclosed cash is used to directly influence modern elections.
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The Federal Election Campaign Act of 1971 (FECA) regulated the financing of federal election campaigns, including the money raised and spent by the candidates pursuing those offices and by the political parties. Extensive amendments to the act in the wake of the Watergate scandal led to several First Amendment challenges. In this photo, former special prosecutor Archibald Cox, left, his wife, and Senators Scott and Kennedy enter the Supreme Court in 1975 to hear arguments on FECA. (AP Photo, used with permission from the Associated Press)
The Federal Election Campaign Act of 1971 (FECA) regulated the financing of federal election campaigns (president, Senate, and House), including the money raised and spent by the candidates pursuing those offices and by the political parties.
Congress had already tried to regulate various aspects of campaign finance before FECA
FECA was preceded by laws regulating various aspects of federal election campaign finance:
- The Tillman Act of 1907 banned corporate contributions in federal elections.
- The Publicity Act of 1910, as amended in 1911, required disclosure by campaign committees and limited campaign spending, but the limits were struck down in Newberry v. United States (1921).
- The Federal Corrupt Practices Act of 1925 imposed additional disclosure requirements.
- Amendments passed in 1940 to the Hatch Act of 1939 limited contributions to candidates and to national party committees and imposed spending limits on party committees.
- And in 1947 the Taft-Hartley Act outlawed labor union contributions and purported to restrict corporate and labor spending on federal elections as well. The spending limits were largely ineffective, however, because they applied only to party committee spending and could easily be evaded. The disclosure requirements were often ignored in the absence of any meaningful enforcement mechanism.
FECA was extensively amended after Watergate scandal
In 1971 Congress passed FECA, which limited the amount candidates could contribute to their own campaigns, limited the amount that a federal campaign could spend on paid advertising, and expanded disclosure requirements. The new law went into effect in the 1972 presidential election, but it was overshadowed by the Watergate scandal, which led to the first and only resignation of a U.S. president, Richard M. Nixon, in 1974. The various investigations brought to light numerous campaign-finance abuses, including illegal contributions from corporations, cash contributions, hidden funds controlled by the Nixon reelection committee, and favors extended to donors in exchange for large contributions.
In the wake of the scandal, in 1974 Congress enacted extensive amendments to FECA. These amendments limited to $1,000 per election the amount an individual could contribute to any federal campaign and introduced limits on the amount an individual could contribute to a political party or political committee and on the amount a political committee could contribute to a candidate ($5,000 per election).
The 1974 amendments also imposed a limit of $1,000 per election on independent spending by an individual or group “relative to a clearly identified candidate.” In addition, they limited the amount candidates for federal office could spend on their own campaigns and the amount parties could spend in support of candidates and on their national nominating conventions. The amendments established the Federal Election Commission (FEC) as an independent federal agency to enforce the regulatory regime, authorizing it to make rules and to investigate and impose civil penalties for violations of the law.
FECA allowed candidates receive grants to finance election campaigns
The 1974 law also established a system of voluntary public financing for presidential campaigns under which candidates seeking the nomination of the major parties could receive from the federal government funds matching the first $250 of each contribution from an individual, if the candidates agreed to limit their overall spending in seeking the nomination.
In the general election, major-party nominees could receive a substantial grant to finance their entire general election campaigns, if they agreed not to raise or spend any private contributions but to spend only the amount of the grant. In addition, the law strengthened public disclosure of campaign spending by requiring all political committees—not just campaigns or party organizations—to register and file regular reports with the FEC itemizing contributions to and expenditures by each committee.
FECA faced First Amendment court challenges
The constitutionality of the 1974 amendments was immediately challenged.
In Buckley v. Valeo (1976), the Supreme Court upheld the limits on contributions, the reporting and disclosure rules, and the system of voluntary public financing for presidential campaigns, but it struck down the limits on independent expenditures, the caps on campaign spending, and the limits on what candidates could contribute to their own campaigns.
As effectively rewritten by this decision, FECA served as the framework for regulating the financing of federal elections without major modification until passage of the Bipartisan Campaign Reform Act in 2002.
This article was originally published in 2009. Joe Sandler is a member of the firm Sandler Reiff Lamb Rosenstein & Birkenstock, P.C., in Washington, D.C.
Send Feedback on this articleUnited States campaign-finance laws, in the United States, laws that regulate the amounts of money political candidates or parties may receive from individuals or organizations and the cumulative amounts that individuals or organizations can donate. Such laws also define who is eligible to make political contributions and what sorts of activities constitute in-kind contributions.
This article discusses campaign-finance laws in the United States. For treatment of the rationale of campaign-finance regulation and discussion of laws enacted in other countries, see campaign finance.
There have been four major periods of U.S. campaign-finance regulation in the past century: the era before the Federal Election Campaign Act (FECA) of 1971 and its subsequent amendments; the era from 1974 to 2002, when FECA regulated campaigns; the era following the enactment of the Bipartisan Campaign Reform Act (BCRA) of 2002; and the era following Citizens United v. Federal Election Commission (2010), the U.S. Supreme Court ruling that struck down crucial provisions of the BCRA.
Before FECA, campaign-finance laws were mainly addressed to particular types of contributors. By 1947, federal employees, corporations, and labour unions were barred from making contributions to candidates. Unions and corporations responded by forming political action committees (PACs), which aggregated voluntary contributions by individual members or employees.
FECA established limits on candidate spending; on the contributions of individuals and PACs to candidates, parties, or political committees; and on the amount of money candidates could spend on their own campaigns. As amended in 1974, FECA also created the Federal Election Commission (FEC) to enforce and clarify campaign-finance laws.
In Buckley v. Valeo (1976), the Supreme Court ruled that restrictions on candidate spending and candidate self-financing violated the First Amendment’s guarantee of freedom of speech. The court allowed the limits on spending in presidential campaigns to stand, because such limits were contingent on receipt of public funds. And the court upheld the limits on contributions from individuals or PACs; thus, from the passage of FECA in 1971 until 2002, individuals and groups were limited to contributing no more than $1,000 to a candidate, up to a total of $25,000, and PACs were limited to contributing no more than $5,000 to a candidate.
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Many election observers contended that FECA abetted the development of PACs and increased the reliance of congressional candidates on PACs. FECA was also said, however, to have reduced the reliance of candidates on individual donors or organizations. At the presidential level, FECA also restrained spending: all major party nominees abided by FECA’s spending limits in their primary campaigns from 1976 through 1996, and public funding of general election campaigns ensured that candidates could not outspend each other.
During the 1990s, two major developments took place that tended to undermine FECA’s restrictions. First, although corporations and labour unions could not make direct contributions to candidates, FECA did not prohibit them from contributing to political parties as long as such money was used for “party-building” activities. During the 1990s, political parties began to solicit such “soft money” donations from corporations, labour unions, and wealthy individuals. Because those funds were not distributed by the parties to candidates or used to advocate the election or defeat of a candidate, they were not subject to contribution limits. Second, in the 1990s several ostensibly independent advocacy organizations evaded FECA’s limits on spending money in a coordinated fashion with a campaign by funding television advertising on behalf of particular candidates that simply omitted certain “magic words”—such as “support” and “oppose.”
The BCRA of 2002 was a response to both developments. The two major components of the law were a ban on soft-money contributions to the national parties and severe restrictions on so-called “electioneering communications” (political advertising) by advocacy groups. The latter provisions prohibited organizations that received corporate or labour funding from broadcasting advertisements that referred to a particular candidate within 30 days of the relevant primary election or within 60 days of the general election. The BCRA also doubled individual contribution limits and indexed them to inflation. All major provisions of the law were upheld by the Supreme Court in McConnell v. Federal Election Commission (2003).
In Citizens United, however, the court partly overturned McConnell by invalidating the BCRA’s restrictions on political advertising as an unconstitutional infringement of the free-speech rights of corporations and unions. Four years later, in McCutcheon v. Federal Election Commission (2014), the court partly overturned Buckley by striking down FECA’s aggregate limits on monetary contributions by individuals to multiple federal candidates, party committees, and noncandidate PACs.