Campaign Finance Laws

The phrase campaign finance and regulation refers to laws structuring the use of money in political campaigns at the federal and state level in the United States. Over time, the courts have struggled with adjudicating between concerns that money corrupts the political process and needs to be regulated versus the First Amendment right of groups and individuals to use money to express protected speech.

Campaigns and elections need money. It costs money to run for office or communicate a message, necessitating that candidates, political parties, and other groups both raise and spend money to achieve their political objectives. While money is a campaign resource, it also potentially corrupts the political system because it may give rise to bribery and extortion. As far back as the days when George Washington was a candidate for the Virginia Assembly, there were allegations that he spent too much money on rum that he gave to voters.

The rise of the modern mass-mobilization party, beginning in the late 1820s, ushered in the spoils system, in which donors made campaign contributions in the hopes of receiving favors and jobs if their candidates were elected. Federal and state government jobs were freely traded for contributions and support, and often these offices served as a basis of funding as salaries were “assessed” to help pay for campaigns.

Efforts to eliminate the spoils system and limit the role of money in politics began in the 1880s with the passage of the first civil service act and continued into the Progressive Era of the early twentieth century. In 1907, Congress, at the urging of President Theodore Roosevelt, passed the Tillman Act, which banned corporations from expending money for the purpose of trying to influence a federal election. In 1925, Congress passed the Federal Corrupt Practices Act, which outlawed political assessments. This act was upheld in United States v. Wurzbach, 280 U.S. 396 ( 1930 ). Then, in the 1947 Taft-Hartley Act, labor unions were banned from expending money for the purposes of trying to affect a federal election. Many states passed similar laws regulating their election campaigns.

The Watergate break-in and revelations of President Richard Nixon's 1972 fund-raising scandals led to the adoption in 1974 of amendments to the Federal Election Campaign Act (FECA). These amendments provided for a major overhaul of federal elections, including expenditure and contribution limits, disclosure rules, public financing for presidential elections, and the creation of the Federal Election Commission (FEC) to regulate campaign activity.

These amendments raised significant constitutional questions that persist to this day. The essential issue was whether campaign contributions were a form of speech protected by the First Amendment, or whether the government could impose expenditure or contribution limits in order to equalize the political playing field and make elections more competitive. These questions have dominated much of the debate on campaign finance issues from the 1970s through today.

Buckley v. Valeo, 424 U.S. 1 ( 1976 ), is arguably the most important case related to campaign finance reform. In Buckley, the US Supreme Court did not rule that money is speech, but it did decide that money contributed or expended for political purposes raises important free speech concerns. The Court here distinguished contributions from expenditures, finding that limits on the former were permissible in order to prevent corruption or its appearance. The form of corruption involved in this instance is the classic quid pro quo (“this for that” ), stemming from the possibility that money could be exchanged for political favors. While abating corruption or its appearance was found to be a compelling governmental interest that could justify limits on contributions, the absence of such a possibility for corruption precluded expenditure limits. The Court thus gave more constitutional protection to the latter than to contributions.

An advisory opinion issued by the FEC in 1975 opened up a new hole in the FECA regulations. The FEC ruled that a corporation could expend money to solicit contributions from employees and stockholders. The decision permitted unions and corporations to give money to political parties for the purposes of voter registration, get-out-the-vote efforts, and party building. These exceptions allowed for a dramatic increase in the amounts of money these groups could spend. This opinion, along with Buckley and other court cases, created a new distinction in the law between hard and soft money. Hard money constituted regulated and disclosed contributions to candidates; soft money, given to political parties, was unregulated in terms of limits on dollar amounts. The use of soft money would grow until the passage of BCRA.

One of the issues growing out of Buckley concerned the type of evidence needed to show corruption or its appearance to sustain contribution limits. In addition, how low could contribution limits be set? These questions were addressed in Nixon v. Shrink Missouri Government PAC, 528 U.S. 377 ( 2000 ). Some such as Richard Hasen contend that the Court seemed to lower the evidentiary burden necessary to sustain a contribution limit and that it established new and lesser burdens to regulate money in politics, creating the presumption that contribution limits were valid unless shown to be invalid. The Court also upheld quite low contribution limits, and it appeared to define an outer boundary to these limits, although subsequent decisions, such as Randall v. Sorrell, 548 U.S. 230 ( 2006 ) (discussed below), questioned that.

In addition to contribution limits, Buckley upheld disclosure requirements for both money contributed to or expended by candidates, political parties, and political action committees, including the name of the contributor, the contributor's employer, and the amount of the contribution if it were more than $200 per year. Disclosure requirements were upheld to promote the detection of fraud, among other purposes, but questions remained. For example, did Buckley mean that disclosure could always be mandated or required? Could individuals engage in anonymous political speech or not? Another case, McIntyre v. Ohio, 514 U.S. 334 ( 1995 ), upheld the proposition that individuals have a constitutional right to engage in anonymous political speech. But how far does that ruling extend? Does it protect anonymous speech for groups? The Court has never clarified the scope of its ruling here, although in cases such as Doe v. Reed, 561 U.S. ___ ( 2010 ), the Court has endorsed disclosure of political spending against claims that it violates the First Amendment.

To stem the dramatic increase of money being spent for political purposes in the 1980s and 1990s, and to address many of the loopholes and problems in the law caused by Buckley and subsequent Supreme Court decisions, Senators Russ Feingold and John McCain worked for nearly a decade to achieve passage of BCRA. The legislation sought to close the soft-money loophole, redefine the line between express and issue advocacy, improve disclosure, and place some limits on the ability of wealthy candidates to use their money to affect elections.

BCRA was a controversial piece of legislation challenged by numerous groups who argued that it violated their First Amendment rights. The Supreme Court under Chief Justice William Rehnquist upheld almost all of the major provisions in McConnell v. FEC, 540 U.S. 93 ( 2003 ). The net result of the decision was to uphold the soft-money ban and to endorse the closing of the distinction between express advocacy and issue advocacy that Buckley had created in footnote 52.

McConnell and BCRA have encouraged groups and individuals to find ways around regulations. These include using nonprofits and other organizations to collect contributions and make expenditures. The FEC has sought to regulate this practice but has been unsuccessful. Also, after McConnell, critics of Buckley thought that the Court might be prepared to overturn that decision and uphold expenditure limits and even lower contribution limits than were permitted in the Shrink case. However, the Court under Rehnquist's successor as chief justice, John Roberts, has generally not supported campaign finance regulations, striking them down as a violation of the First Amendment.

A 2006 case, Randall v. Sorrell, 548 U.S. 230, concerned a Vermont law that imposed both expenditure and contribution limits. Randall was seen as a test of the viability of Buckley and of the new Chief Justice Roberts and Associate Justice Samuel Alito. As it turned out, the Roberts Court was less sympathetic to campaign finance regulations than the Rehnquist Court had been.

In Randall v. Sorrell, the Court reaffirmed Buckley and its framework, again striking down expenditure limits and here rejecting the contribution limits as being too low. In doing so, the Court drew upon both the Shrink 2007 ), that, as applied, the restriction on express political ads or communication for one month prior to an election violated the First Amendment. This decision effectively reinstated the express and issue advocacy distinction found in Buckley. Then, in Davis v. Federal Election Commission, 554 U.S. 724 ( 2008 ), the Court struck down the provision of BCRA known as the “millionaire's amendment,” which sought to offset expenditures made by wealthy candidates.

In Citizens United v. Federal Election Commission, 558 U.S. ___ ( 2010 ), the Supreme Court ruled that the First Amendment protected the right of corporations and unions to make political expenditures in federal races. The decision also affected state regulations. The decision was controversial in that some argued that it gave corporations rights similar to those of persons. Others feared that it would unleash significant amounts of money into politics.

Finally, in McCutcheon v. Federal Election Commission, 572 U.S. ___ ( 2014 ), the Court struck down the overall aggregate contribution limits imposed under the 1974 FECA amendments. The Court declared that, unlike individual contribution limits, overall limits did not prevent the risk of quid pro quo corruption.

Questions remain after Citizens United and McCutcheon regarding whether any limits on the use of money in politics are constitutional. While some contribution limits under Tillman, Taft-Hartley, FECA, and BCRA are still on the books, many expect the Roberts Court to review or reject them in the future. Additionally, while the Court has consistently supported disclosure, there are First Amendment challenges to them. Overall, these cases point to the complexities of balancing free speech with the impact of money on politics.

SEE ALSO Buckley v. Valeo ; Campaign Finance Practices ; Citizens United v. Federal Election Commission ; Freedom of Speech ; Freedom of Speech: Advocacy in Times of Crisis ; Regulation of Federal Elections ; Regulation of State Elections .