Hard Money

Enactment of laws in the 1970s to regulate the flow of cash to and from political campaign chests led to an unofficial differentiation between “hard” and “soft” money. The term hard money refers to money raised and spent for federal elections under the limits and prohibitions of those campaign finance laws. Such money is hard because it is stringently controlled—and hard to raise. soft money refers to the opposite kind of money—largely unregulated funds given to political party committees and other organizations, ostensibly for worthy purposes such as voter registration and turnout drives and not for direct use in federal campaigns. These funds are easy to raise and have no limits.

Of the two, soft money proved to be the more troublesome. Both major parties took full advantage of it as a way to circumvent the tight campaign finance restrictions imposed by the Federal Election Campaign Act of 1971 (FECA) and later amendments. Soft money abuses led in 2002 to a law barring the national parties and federal candidates from raising or using such money.

Hard money, by comparison, has produced relatively few headlines since the Federal Election Commission (FEC) began administering and enforcing FECA in 1975. The commission relies mostly on voluntary compliance with the act's contribution and spending limits, although it has the authority to investigate suspected violations and, if necessary, to impose fines and order repayment of public funds. Possible criminal violations may be referred to the Justice Department.

The act requires disclosure of receipts and expenditures by candidates for federal office. Individuals and political committees are limited in how much they can give annually to candidates, parties, or political action committees (PACs). (See table, Contribution Limits.)

Presidential candidates who accept public financing must abide by overall spending limits in their campaigns, although they may also spend up to $50,000 of their own money in the general election campaign. Because there is no public funding of House or Senate campaigns, congressional candidates are subject to the contribution limits but not spending limits.

Besides giving soft money, interest groups and wealthy individuals have used other means to get around the hard money contribution limits. One is bundling—the collection of a number of checks, each within the legal gift limit, that are sent as a single package to a candidate under the auspices of an individual, PAC, or party committee. That person or group gets the credit, and presumably access, and because the bundle is made up of individual legal-sized donations, it is within the law and does not count against the bundler's contribution limits.

Another technique is the so-called independent expenditure—money individuals and groups may spend to advocate the election or defeat of a candidate so long as they do not coordinate or consult with any candidate's campaign. The Supreme Court ruled in Buckley v. Valeo (1976) that such spending is a form of free speech protected by the First Amendment to the Constitution. If it is truly independent, the Court said, it may not be restricted. In 1996 the Court ruled that even political parties could make independent expenditures. However, the 2002 law barred the parties from making these expenditures if they were also making coordinated expenditures on behalf of a candidate.

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