What you need to know about campaign finance FEC – Federal Election Commission BCRA – Bipartisan Campaign Reform Act Hard money = Federal money Political donations raised from federally permissible sources within the limits established by BCRA Soft money = Nonfederal money Political donations made in such a way as to avoid federal regulations.

Overview History of Campaign Finance Regulation Beginning of time—Civil War: No regulation Civil War—1910 Gilded Age Exceptionally scandalous politicians nationally Boss Tweed 1868: 75% of money used in congressional elections through party assessments 1867: Naval Appropriations Bill First federal effort to regulate campaign finance Aimed at stopping the political shakedown naval yard workers for political contributions Prohibits officers and employees of the fed. gov’t from soliciting contributions 1883: Civil Service Reform Act (Pendleton Act) prohibits the same solicitation of all federal workers www.mit.edu/~17.251/finance.ppt

Overview History of Campaign Finance Regulation Corrupt Practices Acts of 1911 and 1925 Set disclosure requirements for House and Senate Elections Spending limits ($25k for Senate; $5k for House) Ridiculously weak and regularly violated 1971 Federal Election Campaign Act (FECA) 1976: Buckley v. Valeo (1976) www.mit.edu/~17.251/finance.ppt

Campaign Finance Reform and Buckley I Original Provision Effect of Buckley v. Valeo Expenditure limits Overall spending limits (Congress and president) Struck down partially (freedom of speech) Limits on the use of candidates’ own resources Struck down entirely (freedom of speech) Limits on media expenditures Independent expenditure limits www.mit.edu/~17.251/finance.ppt

Campaign Finance Reform and Buckley II Original Provision Effect of Buckley v. Valeo Contribution limits Individual limits: $1k/candidate/election Affirmed PAC limits: $5k/candidate/election Party committee limits: $5k/candidate/election Cap on total contributions individual can make to all candidates ($25k) Struck down (freedom of speech) Cap on spending “on behalf of candidates” by parties www.mit.edu/~17.251/finance.ppt

Federal Election Commission Purpose In 1975, Congress created the Federal Election Commission (FEC) to administer and enforce the Federal Election Campaign Act (FECA) the statute that governs the financing of federal elections. The duties of the FEC, which is an independent regulatory agency, are to disclose campaign finance information enforce the provisions of the law such as the limits and prohibitions on contributions, oversee the public funding of Presidential elections.

FEC Rules & Regulations The Players Government FEC – Federal Election Commission Campaign Committees Candidates National Party Committees State & Local Party Committees Separate Segregated Funds PACs connected to corporations, unions, etc. Nonconnected Committees All other PACs 527s Individuals

Various Election Law Federal Election Campaign Act (FECA) 1975 Bipartisan Campaign Reform Act (BCRA) 2003 Major changes under BCRA

What does Federal Election Law Regulate? In General The financing of federal elections Specifically Disclosure of financial activity Contributions Receiving and Giving Expenditures Candidate support activities Federal election activities

Disclosure What is required? Reporting complexity Honor Problem/loophole?

Types of Money Federal Funds Levin Funds Nonfederal Funds Collected from permissible sources Subject to contribution limits Levin Funds For state and local party committees only Collected from any entity except fed cand. Only used for certain types of FEA Nonfederal Funds Subject to state law only May be used to pay for expenses related to not federal elections

Fundraising & Making Contributions Who can contribute? How much can they contribute? Special methods Joint fundraising Earmarking

Special Rules for Candidates Only federal funds Same restrictions on fundraising Restrictions on spending Millionaire’s Amendment

Other Ways to Support Candidates In-kind contributions Anyone Independent expenditures Coordinated Expenditures Issues SC overruled provision in BCRA prohibiting IEs after CE in same month Violation of 1st Amendment

Federal Election Activities GOTV Voter ID Generic Campaign Activity Voter Registration Public Communication

Content of Communications Express Advocacy Direct Candidate Support Contribution, IE or CE Public Communication Language Promote, oppose, support, attack Not direct candidate support Must be paid for with federal funds What is the difference?

Effects of BCRA on National Parties RNC Almost $40,000,000 DNC Slightly over $10,000,000 Hilary Clinton Over $20,000,000 Where did all the money go? Surge in dem affiliated 527s post BCRA

Upcoming Federal Campaign Finance Issues Should they be regulated by the FEC? Internet Currently not considered political advocacy Not regulated by FEC

Who raises What? Federal candidate comm State candidate comm Only federal money State candidate comm Only state money National Parties State/Local parties Federal Levin State PACs 527s Neither fed nor state money

Hierarchy of MONEY State Parties Federal “Hard Money” Levin Quasi-Fed $ State “Soft Money” Federal Money Most limitations Federal, state and local elections Levin Money Fewer limitations Some Federal election activities, state and local State Money Typically, fewest limitations State and local elections only

Example State Party Regulations Virginia State Contribution Regulations Rule 1 – Unlimited contributions from any type of entity (except foreign nationals) are permitted Rule 2 – If in doubt, see Rule 1 TN State Party Contribution Regulations Unlimited contributions from individuals Contributions from foreign nationals, corporations and some LLCs are prohibited

Where does my money go? It depends! Candidate Candidate specific activities Contributions to other candidates, parties or causes DNC/RNC Federal candidates Allocated nationally State Party Committees Federal, state & local candidates Allocated statewide PACs Support candidates, parties that agree on specific issues 527s Separate campaign

Loopholes/Issues of BCRA Purpose: To outlaw the use of soft money in federal elections Continuous re-writing of FEC regulations Unlimited State to State transfers Honor system vs. realistic expectations Constitutional Violations Internet

Campaign Structure

“Working Together” Federal Candidate Committee (FEC) –Nicolosi for President Campaign Committee National Party (FEC) – Democratic National Committee State Parties (FEC & State Election Comm) – Democratic Party of Virginia Local Parties (FEC & State Election Comm) PACs Leadership PACs – Forward Together Union PACs Corporate PACs Individual contributors

Working ‘Together’ ACT/Swift Boat Veterans for Truth Section 527 File reports with IRS Not subject to FEC contribution/expenditure restrictions Not permitted to coordinate with candidates and campaigns for candidates Separate GOTV plan Separate message – but no “expressed advocacy” Nicolosi rocks because he loves puppy dogs NOT Vote for Nicolosi FEC REGULATIONS APPLICABLE if: Mention federal candidate AND Aired within 60 days of federal election

Citizens United Case: Changing the game? Or Not? Case: Conservative advocacy group – -Accepted corporate money to make a movie about Hillary Clinton - Was it an attack ad funded by an outside group? Prohibited by FEC/ BCRA - Court looks at Speech during an election year Decision 5-4 – Corporations have First Amendment Rights too! SUPER PACs – must disclose donors, 527s GENERALLY do not. Still can’t coordinate with the campaign. Must be independent, but does it leave you, the candidate, in less control of your campaign and its message? Effects? Huge amounts of Money Spent – see next slide. Does it matter.