Throughout the history of American politics, campaign contributions, both individual and group, have played a major role in shaping our democracy. This influence exists because the contributions needed to fund a campaign directly affect the amount of public exposure the candidate receives. To put it simply, the more money a campaign receives in donations, the more they are able to convey their ideology to the American public. As a result, candidates often try to appease their most generous contributors by making policy decisions that will benefit those individuals or groups, making campaign finance a highly debated topic in terms of ethics. On the one side, there are those who believe that the limitations that exist on individual and group campaign contributions are necessary to prevent corruption and giving undue political influence to the wealthy. On the other, there are those who believe limitations on campaign contributions are a violation of the right to free speech guaranteed by the Constitution. There have been many reforms proposed over the years that tried to find a middle ground that satisfied both perspectives. One reform strategy, described in a joint report by the Campaign Finance Institute, the American Enterprise Institute, and the Brookings Institute entitled Reform in an Age of Networked Campaigns: How to Foster Citizen Participation Through Small Donors and Volunteers, effectively addresses both major concerns of preventing corruption and protecting free speech.
Before examining the positive and negative consequences of the aforementioned reform, it is important to first understand the history of campaign finance reform as well as the regulations that are currently in place. The first major reform effort was made in 1971 when Congress enacted the Federal Election Campaign Act, informally known as FECA. This new act sought to limit the disproportionate political influence of the wealthy and discourage abuse of the new reforms by requiring public disclosure of campaign finances (The FEC and the Federal Campaign Finance Law 2004). Because there was no established government institution in charge of enforcing the regulations, however, FECA failed to have any significant impact on campaign politics. Following accounts of serious campaign finance violations during the 1972 presidential election, Congress amended the act in 1974. The goal of these amendments was to set limits on contributions made by individuals and groups and to create an independent government agency, the Federal Election Commission, to implement the campaign finance regulations and administer the public funding of federal elections (The FEC and the Federal Campaign Finance Law 2004). Despite a number of minor changes, these amendments proved to be relatively effective and have laid the basic groundwork for the regulations in place today.
The next set of significant reforms came in 2002 with the implementation of the Bipartisan Campaign Reform Act, which banned national political parties from using nonfederal funds, restricted campaigns to issue-based advertisements, increased contribution limits and set future limits adjusted to inflation (The FEC and the Federal Campaign Finance Law 2004). Since this bill was enacted, it has been subject to a variety of minor adjustments and court objections. The most noteworthy being the Supreme Court case Citizens United vs. Federal Election Commission, which ruled the prohibition of corporate and labor union campaign spending to be unconstitutional (Federal Law 2010). Therefore, the basic tools used by government for campaign finance regulation, contribution limits and disclosure requirements, have not been fundamentally challenged since the passage of FECA and the creation of the FEC.
In addition to the usual issue of free speech that go along with contribution and spending limits, criticism for the current system of campaign finance regulation stems from it’s perceived ineffectiveness in achieving it’s stated goals. The initial goals of the FECA were to reduce the costs of campaigns, increase campaign finance transparency, encourage political participation at all levels of society, and facilitate competitive elections (The Association of the Bar of the City of New York 2000, 83). It’s ultimate consequence, however, would produce different results because it was relatively easy for campaigns to get around the contribution limitations that were put in place. This skirting of contribution limitations takes many forms, but one of the most significant is due to the idea of “soft money” (Kernell 2009, 538). Soft money is the result of a 1979 amendment to the FECA bill that allowed for donations to political committees to be exempt from FEC limitations provided that the funds are not accounted for in the campaign budget of a particular candidate and are used for party-building activities such as get-out-the-vote campaigns and polling (Urofsky 2005, 63). By the 1980’s, soft money could be used by any political group to finance particular activities and it became increasingly easier for individuals and groups to avoid regulations in making campaign contributions. The Bipartisan Campaign Reform Act of 2002 attempted to put an end to the limit skirting by prohibiting parties from raising or spending soft money for federal candidates (Kernell 2009, 539). Unfortunately for reformers, this would not put a stop to the use of soft money because of a clause in the revenue code that allows organizations regulated by section 527 to raise an unlimited amount of money to spend on almost any campaign activity that does not explicitly support or denounce a federal candidate (Kernell 2009, 539). This means that soft money contributors can simply give their contributions to Political Action Committees and issue advocacy groups that will then donate the money to specific campaigns that support their preferences and ideology. This is evidenced by the increase in financial participation of 527 committees from $151 million in 2002 to $405 million in 2004 (Kernell 2009, 539). The existence of soft money and limitations has created a system that has failed to satisfy one or more of its primary goals. Because the government has failed to effectively limit the amount of money an individual or groups can contribute to a campaign, they have not succeeded in reducing the gap in political influence with relation to wealth. Also, because they could not reduce the costs required to run a campaign, the FEC failed to level the playing field and make it possible for people other than the wealthy elite to get involved in federal politics. As a result, in many races the incumbent has a distinct advantage because it is so difficult for a challenger to finance and effective campaign (The Association of the Bar of the City of New York 2000, 2). The final issue with the current campaign finance system has to do with the disclosure requirements. The disclosure regulations that exist today require campaigns to make their contributors as well as their contributions known to the public. This means that that contributors must provide a considerable amount of personal information to the campaign that could jeopardize their right to privacy should that information be used in an improper way (Carpenter 2007, 1). If there is this inherent risk that goes along with contributing to a campaign, then the question of necessity must be raised when thinking about disclosure requirements. Do the benefits of the disclosure requirements outweigh the costs of personal privacy? The goal of these regulations is to increase transparency in campaigns and promote the sharing of information to ensure fair election practices and help voters make a rational decision in the ballot box (Carpenter 2007, 4). The reality is, however, that most individuals make decisions based on information that is presented to them rather than information they need to search for (Carpenter 2007, 4). In other words, they are more likely to use media outlets and the Internet for information gathering instead of performing a comprehensive search for campaign contribution numbers on their own. The result is a great deal of personal information being given out by the voter without much benefit given in return. The government is simply collecting a database of personal information that can be used by anyone for anything and there are not many American citizens who like the idea of that. Therefore, the current system of campaign finance regulation is flawed because contribution limits do not effectively create equal political influence and the potential cost of disclosure requirements often times outweighs the potential benefit of transparency.
Although there have been no major reforms enacted into law since 2002, the Fair Elections Now Act of 2009 that is currently being considered by Congress could generate key reforms. The proposed bill would allow candidates for federal office to receive taxpayer money to fund their campaigns, thus removing the disparity in political influence based on wealth, encouraging political participation at all socioeconomic levels of society, and increasing the accountability of candidates to their constituents (Fairly Flawed 2009, 3). This shift from contribution limits and disclosure requirements to a taxpayer funded campaign system represents a drastic change in regulatory strategy and has given rise to public debate over which strategies are most effective.
The set of reforms that most completely addresses the goals of campaign finance regulation is a system that uses partial public funding for elections to encourage political equality and networked communication technology to generate more widespread grassroots political participation. According to the authors of the report Reform in an Age of Networked Campaigns: How to Foster Citizen Participation Through Small Donors and Volunteers, any new reform should focus more on facilitating participation from the masses as opposed to limiting participation by the wealthy (Corrado 2010, 2). The recommendations for reform that are laid out in the report call for government regulation to promote open communications, lower contribution limits, improved transparency and a redefined system of public funding for elections First, with respect to encouraging political communication among the general public, the authors believe that the government should enact policy aimed towards decreasing the cost of information sharing such as increasing broadband internet capacity and affordability throughout the country (Corrado 2010, 3). If the average American citizen has easier access to information on the Internet, there would be a more engaged citizenry that is more likely to follow political events and be involved in public life (Corrado 2010, 1). The result is increased political influence for the general public to counter the influence of the wealthy. Second, the authors propose that the government replace spending limits with lower contribution limits that apply to all funds, including soft money (Corrado 2010, 4.) This would address the issue of free speech with respect to spending limits as well as the limit evasion that so regularly occurs in the current system because candidates would be free to spend their funds as they please as long as all of the money that was raised could be accounted for and regulated by the FEC.
To improve the system of public funding for elections, the government should institute a system that provides candidates with incentives that encourage them to seek out the small donor or contributor. To do this, the authors propose that the government create more generous matching funds for small contributions and eliminate spending limits as a condition for public funds eligibility in favor of lower contribution limits (Corrado 2010, 37). By instituting larger matching funds for small contributors, candidates are more likely than before to seek out those donations because they stand to gain more. Also, using lower contribution limits as a condition of eligibility for receiving public funds would prevent campaigns from targeting larger donations, thus reducing the disproportionate influence of the wealthy.
The one issue that is not addressed by this reform is that of personal privacy with relation to disclosure agreements. Because transparency of campaign finance is necessary for effective regulation, the reform calls for improved and more efficient access to contribution records (Corrado 2010, 32). To achieve this goal, the reformers propose that disclosure records are made available to the public in real time through a single disclosure website and that all advertisement logs collected by the Federal Communications Commission be organized into a single database and published to the Internet for public consumption (Corrado 2010, 32.) In doing so, it would be easier for voters to use the information in their decision-making process and for the FEC to regulate the campaign’s finances. However, putting all of this information on the Internet may cause conflict with those who are concerned about personal privacy, and rightfully so. There are simply to many ways for that information to be used in a negative way to justify that provision of the reform. Nevertheless, the plan as a whole fixes many of the shortcomings of the current system and, with a few adjustments; it could be a great option for reform.
The foundation of campaign finance regulation put in place by FECA in 1974 was a necessity and did a decent job of preventing a political free-for-all. As time passes, however, new methods of corruption and inequality emerge and the regulations must be updated to match the times. Overall, this reform proposal focuses on utilizing a more engaged citizenry to promote increased political participation and equality. In doing so, it represents an effective means of combating the corruption and limitations on free speech that plague our current system. Even if the reform plan is not adopted as a whole, it seems inevitable that, based on the current trends of the country, at least some of the changes will be adopted into law.
Campaign Cash: Who’s Spending Where in 2010 [Interactive Campaign Contribution Map]. (n.d.). Retrieved November 15, 2012, from The Washington Post website: http://www.washingtonpost.com/wp-srv/politics/campaign/2010/spending/index.html
Carpenter, D., II. (n.d.). Disclosure Costs: Unintended Consequences of Campaign Finance Reform. Retrieved from Institute for Justice website: http://www.ij.org/index.php?option=com_content&task=view&id=1530&Itemid=194
Corrado, A., Malbin, M., Mann, T., & Ornstein, N. (n.d.). Reform in an Age of Networked Campaigns: How to Foster Citizen Participation Through Small Donors and Volunteers. Retrieved from Brookings Institute website: http://www.brookings.edu/reports/2010/0114_campaign_finance_reform.aspx
Fairly Flawed: Analysis of the 2009 Fair Elections Now Act. (n.d.). Retrieved from Center for Competitive Politics website: http://www.campaignfreedom.org/research/
The FEC and the Federal Campaign Finance Law. (2010, January). Retrieved November 15, 2010, from Federal Election Commission website: http://www.fec.gov/pages/brochures/fecfeca.shtml
Federal Law. (n.d.). Retrieved November 15, 2012, from Campaign Finance Institute website: http://www.cfinst.org/law/federal.aspx
Kernell, S., Jacobson, G., & Krousser, T. (2009). The Logic of American Politics, 4th Edition. Washington D.C.: CQ Press.
The Association of the Bar of the City of New York, Commission on Campaign Finance Reform. (2000). Dollars and Democracy: A Blueprint for Campaign Finance Reform. New York, New York: Fordham University Press.
Urofsky, M. (2005). Money and Free Speech, Campaign Finance Reform and the Courts. Lawrence, Kansas: University Press of Kansas.