May 29: Campaign Finance: A History, Related Laws, And Impact On Running For Congress – Guest Essayist: The Honorable Frank M. Reilly

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Over the last 111 years, Congress has sought to regulate how its own elections are financed.  Like most regulations, campaign finance laws have become increasingly more intensive and complex, though the U.S. Supreme Court has occasionally stepped in when Congress has overstepped either the powers granted to it in Article I of the Constitution, or the First Amendment rights of candidates, citizens, or associations of citizens.

As with most legislation, campaign finance laws result from a perceived abuse of power or of the process.  And as the law changes, its subjects, like a stream of water that finds its way around an obstacle to continue its downstream flow, find new ways around the law.

While the bulk of federal campaign finance law has been enacted after the Watergate era of the early 1970s, the issue in the United States predates our Constitution.  In 1758, George Washington’s purchase of 144 gallons of hard cider, wine, and punch to encourage voters to support his election to Virginia’s House of Burgesses was a catalyst for that very body to later ban the gifting of “money, meat, drink, entertainment or provision or …any present, gift, reward or entertainment etc. in order to be elected.”[1]

The U.S. Congress first began regulating campaign finance in 1907 with the passage of the Tillman Act, 34 Stat. 864 (January 26, 1907), which banned corporate contributions to candidates for federal office.[2]  Congress enacted the Tillman Act to respond to increased contributions by corporations in the 1904 election, and President Theodore Roosevelt, a key beneficiary of those contributions sought to remove corporations from the realm of political activity.

The 1910 Federal Corrupt Practices Act and its 1911 and 1925 amendments created the first campaign finance disclosures and imposed spending limits,[3] but the Supreme Court held the spending limits for primary elections to be unconstitutional.[4]

After World War II, the labor movement increased with greater unionization of employees, and many labor unions began efforts to force all employees to join the unions.  During the war, the unions did not strike against the employers in a common effort to keep the nation’s war response engaged.  However, after the war, unions began striking against employers with greater frequency, and they became politically active.

In turn, Congress began restricting labor union political activities with the passage of the Smith-Connally and Taft-Harley Acts,[5] and also began prohibiting independent expenditures of not only labor unions but also corporations.  To get around the restrictions, labor unions, and later corporations, created political action committees (“PACs”), in which individuals contributed their own funds to a PAC but the labor union leadership often controlled the donations to candidates.

In 1971, Congress passed the Federal Election Campaign Act[6] (“FECA”) which instituted some campaign finance regulations on federal elections, primarily requiring disclosure of contributions and expenditures.  The Federal Election Campaign Act Amendments of 1974[7] passed in the midst of Congressional hearings concerning the Watergate scandal, imposed an overall scheme of campaign finance regulations.  These regulations essentially replaced the entirety of the 1971 Act and instituted comprehensive restrictions on federal campaign contributions and expenditures, enacted new registration and public disclosure requirements, created voluntary public financing of presidential campaigns, and created the Federal Election Commission to administer and enforce the new laws.

Former U.S. Senator James L. Buckley and others challenged the 1974 enactment, and the U.S. Supreme Court upheld contribution limits, public disclosure requirements, and the voluntary public funding of presidential campaigns, but struck down limits placed on spending by candidates for the U.S. Congress.[8]  The Supreme Court recognized that “[a] restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached.”[9]

Similar to the reaction to the law enacted in the 1940’s in which labor unions created PACs to get around the law, the individuals and groups regulated by the 1974 FECA amendments instituted new campaign practices to cope with the law.

National political parties began using “non-federal” or “soft money” accounts that were not subject to the individual campaign contribution limits for their party building activities.  Other organizations, including PACs, labor unions, trade organizations, and corporations began running issue advertisements that did not fall within the restrictions FECA placed on “express advocacy” communications that advocated for the election or defeat of a particular candidate.

An example of an issue ad that might appear on television or on the radio would go like this:  “Senator Jones opposes laws that would protect the environmentally sensitive Chesapeake Bay, endangering the survival of fish and birds that rely on clean water. Call Senator Jones at 202-224-3121 to tell him to support S. 2053 to protect Chesapeake Bay.”  These issue ads were unregulated, and no registration at or disclosure to the FEC was required.

Congress began regulating issue ads and party building with soft money by enacting the Bipartisan Campaign Reform Act of 2002[10] (“BCRA”), more commonly known as the McCain-Feingold Act.  The courts have upheld most of BCRA’s provisions, but the Supreme Court struck down the law’s attempts to prohibit independent expenditures by labor unions and corporations.[11]  Independent political expenditures are those which are made without any coordination with or prior knowledge to a federal candidate or the candidate’s political committee. A later Supreme Court ruling also struck down BCRA’s overall limits that individuals may give to all federal candidates and committees in the aggregate during a 2-year period.[12]   The Supreme Court weighed First Amendment rights of persons and associations of persons (including corporations and unions) against the desire by Congress to prevent corruption resulting from large campaign contributions and reasoned that if expenditures are independent from a candidate, the expenditures are far less likely to have any sort of corrupting power.

After the Supreme Court decisions that pushed back on BCRA, corporations, labor unions, and even wealthy individuals were allowed to make essentially unlimited independent expenditures to support or oppose federal candidates.  These associations created what are known as Super PACs.  A Super PAC does not make direct contributions to candidates, but instead allows individuals, or associations of individuals such as corporations or labor unions, to create an entity that makes independent expenditures in support or opposition to a federal candidate, so long as those expenditures are not in any way controlled by, made in coordination with, or in any way in consultation with a federal candidate or the candidate’s committee.

As each law was enacted, or modified by the courts, congressional candidates have adjusted their campaign fundraising.  In the early days, prior to 1910, candidates faced no restrictions and could raise and spend whatever funds they needed in order to run their campaigns.  With the advent of disclosure laws in 1910 and 1911, candidates would obviously be more discerning about the persons they solicited to avoid contributions from persons, or even the size of contributions that might negatively affect their campaign.  With the creation of PACs, greater funds could be channeled to candidates, and with the Super PACs, virtually unlimited amounts could be raised; however the Super PAC funds have to be fully independent from a candidate or a candidate’s committee.

The laws have affected campaigns in other ways.  Most campaigns now engage lawyers and accountants who specialize in campaign finance law, an expense unknown to congressional candidates for the first 200 years of the republic.

With larger numbers of people to reach as our nation’s population grows, and newer forms of communication, some of which remain expensive, the cost of political campaigns has grown significantly from the time that campaign finances began to be regulated.  According to the website OpenSecrets.org, the average winning candidate for U.S. Senate spent about $10.4 million through the last month of the campaign, and the average winning candidate of the U.S. House spent $1.3 million.[13]  Super PACs and other independent political groups spent nearly the same amount on Congressional candidates.[14]  This is a long way from the $195 (in today’s dollars) that George Washington reportedly spent on liquor to earn a seat in the Virginia Colony’s House of Burgesses in 1758,[15] but he had far fewer voters to reach, about 2,000[16] as opposed to the approximate 710,000 persons per congressional district as set forth after the 2010 census.[17]

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Frank M. Reilly teaches constitutional law, election law, and other political science courses at Texas Tech University. He is also a lawyer in private practice in Horseshoe Bay, Texas, and serves as a municipal judge for two Texas cities.  Follow him on Twitter @FrankReilly or on Facebook at JudgeFrankReilly.

[1] Jim Moyer, “Washington Wins First Election 1758 House of Burgesses,” <http://frenchandindianwarfoundation.org/event/washington-wins-first-election-1758-house-of-burgesses/>.

[2] J. Michael Bitzer, “Tillman Act of 1907,” The First Amendment Encyclopedia, <https://mtsu.edu/first-amendment/article/1051/tillman-act-of-1907>.

[3] CQ Researcher, “Revision of Federal Corrupt Practices Act,” Congressional Quarterly, <http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1931070100>.

[4] Newberry v. U.S., 256 U.S. 232 (1921).

[5] Pub.L. 78-89, 57 Stat. 163 (June 25, 1943) and Pub. L. 80-101, 61 Stat. 136 (June 23, 1947), respectively

[6] Pub.L. 92–225, 86 Stat. 3 (February 7, 1972).

[7] Pub.L 93-443, 88 Stat. 1263 (October 15, 1974).

[8] Buckley v. Valeo, 424 U.S. 1 (1976).

[9] Id., 424 U.S. at 19.

[10] Pub.L. 107–155, 116 Stat. 81 (March 27, 2002).

[11] Citizens United v. Federal Election Comm’n, 558 U.S. 310 (2010).

[12] McCutcheon v. Federal Election Comm’n, 572 U.S. ___, 134 S.Ct. 1434 (2014).

[13] Soo Rin Kim, “The Price Winning Just Got Higher, Especially in the Senate,” <https://www.opensecrets.org/news/2016/11/the-price-of-winning-just-got-higher-especially-in-the-senate/>

[14] Id.

[15] Jaime Fuller, “From George Washington to Shaun McCutcheon:a Brief-ish History of Campaign Finance Reform,”” Washington Post (April 3, 2014), <https://www.washingtonpost.com/news/the-fix/wp/2014/04/03/a-history-of-campaign-finance-reform-from-george-washington-to-shaun-mccutcheon/?utm_term=.1c14f5651186>

[16] Each county in the Virginia Colony would send 2 members to the House of Burgesses, and in 1858 there were approximately 100 counties in Virginia, which then had a population of about 250,000. “Estimated Population of American Colonies,1610-1780” <https://web.viu.ca/davies/h320/population.colonies.htm>.

[17] U.S, House of Representatives, “Proportional Representation,” <http://history.house.gov/Institution/Origins-Development/Proportional-Representation/>

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