Campaign Finance

The cost of political campaigns in the United States has risen sharply since the 1950s, fueling intense controversies about the ways candidates for office at all levels of government raise and spend money. Congress, state legislatures, and local lawmaking bodies have responded by adopting laws requiring disclosure of campaign contributions and expenditures and limiting contributions by individuals and organizations.

The disclosure laws have succeeded in bringing campaign finance practices into the open. But efforts to control the costs of campaigns have been thwarted by a Supreme Court decision that barred mandatory spending limits for candidates or independent groups. In addition, contribution limits, aimed at reducing the influence of wealthy individuals or organizations, have proved easy to circumvent.

The earliest campaign finance laws and provisions date from the late 1800s and early 1900s. Another wave of reform efforts began in the 1960s and gained strength in the 1970s. The sharp rise in presidential campaign spending led Congress to enact a system of public financing of presidential candidates who qualify and choose to participate. Then the Watergate scandal during President Richard Nixon's administration resulted in enactment of a law that places limits on contributions to federal candidates. That law also established the Federal Election Commission (FEC) as an independent regulatory agency to enforce its provisions.

The 1974 law produced an increase in campaign giving by political action committees (PACs). These organizations are formed by corporations, labor unions, and interest groups to raise money from their employees or members and make contributions to candidates. The rapid growth in the number of PACs and in their overall contributions raised new fears about the influence of special interests on congressional candidates.

That controversy, however, paled in comparison with the one that erupted in the 1990s over the use of so-called soft money —campaign funds raised by national political parties ostensibly to help finance organizational efforts and voting drives at the state and local level. Because the money was raised in amounts and from sources forbidden under federal campaign finance law, it was not to be used directly for federal candidates.

But as soft money inundated the electoral system, the distinction between how regulated money, known as hard money, and the unregulated soft money would be used became increasingly blurred. Supporters of soft money saw it as a means of invigorating the political party system by having the money centralized under party control instead of flowing from multiple private interests outside the reach of federal regulation. Critics believed that the growth in soft money spending by the parties was undercutting the efforts to reduce the influence of big contributors and flouted the long-standing ban on the use of corporate and labor union money in federal elections. The campaign finance scan [Page p43]dal that grew out of soft-money fund raising in the 1996 election further fueled their arguments. Particularly controversial was the use of soft money for a type of political advertising called issue advocacy—ads that supposedly promoted party issues but that critics claimed were thinly veiled ads for or against federal candidates. Ads that expressly called for the election or defeat of a candidate had to be paid for with hard money.

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