Campaign Finance Reform and The Demise of Public Financing

Campaign Finance Reform and The Demise of Public Financing

Christopher J. Schaefer, MA

10 June 2018

The Federal Elections Campaign Act of 1971, the 1974 amendments to the Federal Elections Campaign Act, and the landmark 1976 Supreme Court case Buckley v. Valeo profoundly impacted the conduct of American public policy and political campaigns. This paper seeks to analyze key provisions of the aforementioned initiatives: individual contribution limits, unlimited spending by individual candidates, unrestricted spending by political action committees on express advocacy, and the creation of public financing for presidential campaigns; and their impact on public policy and political campaigns. Furthermore, this paper examines the implications that the decisions made by George W. Bush and Barack Obama to reject public financing during the 2000 primary and 2008 general election will have on future presidential campaigns. The passage of comprehensive campaign finance reform legislation, coupled with the decisions by the George W. Bush (2000) and Barack Obama (2008; 2012) campaigns to reject public financing revolutionized American politics and contributed to the demise of public financing.

Individual Spending Limits

No campaign finance provision had a more profound impact on the conduct of American political campaigns and public policy than individual contribution limits. The 1971 Federal Elections Campaign Act, in an attempt to subvert widespread corruption, limited the amount of money individuals could contribute to political candidates, to $1,000 per candidate, per election (Fleishman, 1975; Corrado, 1997; Alexander, 1992). The Supreme Court in Buckley v. Valeo (1976) upheld the constitutionality of the individual contribution limit. Francia, Joe, and Wilcox (2008) found that the individual contribution limit of $1,000 per candidate, per election (later adjusted to $2,300 by the Bipartisan Campaign Reform Act of 2002), limited the influence of individuals in American politics. Magleby, Monson, and Patterson (2007) maintained that individual contribution limits profoundly impact the conduct of American political campaigns. Special interest groups and political parties took the place of individuals on the scale of importance in presidential campaigns, as a result of individual contribution limits (Magleby et al., 2007; Smith, 2003; Francia, 2005). Francia (2005) concluded that individual contribution limits have made candidates more beholden to special interest groups than voters. As a result of individual contribution limits, special interest groups became the driving forces behind American public policy (Birkland, 2006; Itkonen, 2009; Grossman & Helpman, 2002). No campaign finance provision has done more to reduce citizen involvement in the political process than individual contribution limits.

Unlimited Spending by Candidates

Perhaps the most controversial ruling by the Supreme Court in Buckley v. Valeo (1976) was that money equals free speech. As a result, the Court argued that limits on the amount of money candidates could spend on their own campaigns were unconstitutional (Buckley v. Valeo, 1976; McKenna & Feingold, 2009; O’Brien, 2005). The Supreme Court, in Buckley v. Valeo (1976), ruled that “restricting the amount of money candidates can spend on their own campaigns is a violation of the First Amendment” (p. 26). According to Potter (1999), the unrestricted limit on candidate spending has profoundly impacted the conduct of American political campaigns. As a result of this ruling, the amount of money required to run for office has increased tenfold (Boatright, 2008; Potter, 1999). Trent and Friedenberg (2007) concluded that candidates running for the House of Representatives should strive to raise a minimum of $1 million if they intend to prevail. As the aforementioned indicates, money is the driving force behind American political campaigns (Francia, Joe, & Wilcox, 2008; Semiatin, 2004). Toner and Trainer (2016) are correct in asserting that while money is the lifeblood of political campaigns—particularly at the national level—outspending the opposition does not guarantee victory. In 2016, Donald J. Trump became the first candidate in more than two decades to win a presidential election despite being significantly outspent. Clinton outspent Trump two-one ($768 million to $398 million), particularly on television advertising and get-out-the-vote efforts in traditional Democratic bastions; a colossal blunder, as it precipitated unexpected losses for the former secretary of state in Michigan, Wisconsin, Ohio, and Pennsylvania. Donald, Trump’s campaign, on the contrary, spent copious amounts of money, especially late in the campaign, on television spots targeted towards undecided voters and disgruntled Democrats residing in battleground states. This strategy proved a resounding success, as the billionaire reality television star bested the scion to one of the nation’s foremost political dynasty, in three Midwestern battleground states that had not voted Republican since the 1980s (Gingrich, 2017; Pollak & Schweikart, 2017).

Johnson (2007) insisted that candidates with immense personal wealth have a greater chance of getting elected than those who are dependent upon individual contributions. Johnson (2007) found that in 2005, Michael Bloomberg spent $70 million on his reelection for mayor of New York City. As a result of unrestricted spending limits by individual candidates, the cost of running for office has increased exponentially and allowed wealthy candidates to play a greater role in shaping public policy decisions (Steen, 2006). Research by Steen (2006) found that wealthy candidates, upon getting elected, are more willing to support legislation that benefits the affluent than middle-class Americans. As the reader can discern, unlimited spending by individual candidates has made running for political office more expensive, contributed to the demise of issues as a driving force in campaigns, and had a profound impact on American public policy.

Unrestricted Spending on Express Advocacy

The 1974 amendments to the Federal Elections Campaign Act placed limits on the amount of hard money political action committees could contribute to political parties ($5,000 per election); and other political action committees ($5,000)—in a calendar year (Johnson, 2007; Magleby, 2010). Two years later, the Supreme Court, in Buckley v. Valeo (1976), ruled that restrictions on the amount of money that political action committees, labor unions, and corporations could spend to advocate the victory or defeat of a candidate for federal office were unconstitutional (Johnson, 2007; Mutch, 1988). According to Johnson (2007), the Supreme Court’s ruling that political action committees could spend unlimited amounts of money on express advocacy contributed to the cynicism and vitriol that are ubiquitous in American politics.

Magleby (2010) posited that as a result of the Court’s ruling in Buckley v. Valeo (1976), special interest groups began spending a copious amount of money on negative advertisements. In 1988, for example, interest groups spent a colossal $8.5 million on the infamous “Willie Horton” advertisement, which sought to portray Michael Dukakis as soft on crime (Greer, 2006; Jamieson, 1996; Johnson, 2007). Francia et al. (2008) posited that unlimited spending by interest groups on negative advertisements contributed to the public’s cynicism towards political campaigns. Furthermore, Shea and Burton (2010) found that increased spending by special interest groups on negative advertisements led to a reduction in voter turnout during presidential elections. As a result of Buckley v. Valeo (1976), interest groups played an instrumental role in the election and defeat of candidates for federal office; shaping public policy (this was done through copious spending on issue advocacy); and the reduction of citizen involvement in the political process (Ackerman & Ayers, 2002; Francia et al., 2008; Kasniunas, Rozell, & Keckler, 2016; Shea & Burton, 2015;).

The Bipartisan Campaign Finance Reform Act of 2002 (BCRA), sought to curtail the excessive spending by interest groups, corporations, and labor unions on express advocacy in American political campaigns (Francia et al., 2008). Johnson (2007) found that BCRA placed limits on express advocacy and “electioneering communication” by interest groups, labor unions, and corporations. Under the new law, labor unions and corporations were required to refrain from “electioneering communications” sixty days prior to the general election and thirty days prior to a primary. The limits placed on “electioneering communication” and express advocacy, by BCRA did little to prevent excessive spending by special interest groups in presidential elections (Weissman & Hassan, 2006). Kolodny and Dwyre (2006) concluded that the restrictions on express advocacy led to excessive spending by interest groups, corporations, and labor unions on issue advocacy. The limits placed on express advocacy by BCRA forced special interest groups to spend copious amounts of money on issue advocacy (Francia et al., 2008). As a result, labor unions, corporations, and interest groups played an instrumental role in shaping public policy (Boatright, 2011; Corrado, 1997).

Public Financing of Presidential Campaigns

The public financing of American presidential campaigns was inaugurated by the 1974 amendments to the Federal Election Campaign Act. Corrado (1997) insisted that “the most innovative aspect of the 1974 law was the creation of an optional program of public financing for presidential general election campaigns and public matching subsidies for presidential primary campaigns” (p. 32). Public financing provided candidates with one-for-one matching funds for the first $250 the candidate raises from each individual contributor, and it establishes spending limits for both primary and general election campaigns (Malbin, 2009; M. Green, 2002; Samples, 2006). Malbin (2009) suggested that “in the general election the two major party nominees may receive a flat grant that came to $84.1 million in 2008” (p. 1).

According to Malbin (2009), the purpose of federal financing is threefold: allowing underdog candidates to remain competitive; generating more competition in presidential primaries, and encouraging candidates to broaden their fundraising bases. The public financing system is funded by a $3 tax check-off on individual tax returns (Fleishman, 1975; Malbin, 2009). The number of citizens donating to the presidential election fund has steadily decreased since the 1980s (Malbin, 2009). In 2008 less than six percent of American taxpayers contributed to the voluntary presidential election campaign fund (Malbin, 2009). The remainder of this paper examines the impact that the decisions made by George W. Bush in the 2000 primary and Barack Obama in the 2008 general election to reject public financing, will have on future presidential campaigns.

Bush, Obama, and the Demise of Public Financing

In 2000, George W. Bush became the first presidential candidate to reject public financing for a presidential primary campaign. J. Green and Corrado (2003) argued that George W. Bush’s decision to reject public financing for his 2000 Republican primary campaign revolutionized American politics. Bush (2010) insisted that accepting public financing would have limited the amount of money he could spend on his primary campaign, and prevented him from winning the Republican nomination. Public financing forced candidates to abide by spending caps and limited the amount of money they could spend on their campaigns (J. Green & Corrado, 2003; Malbin, 2009; Abramson, Aldrich, & Rhode, 2003). Rejecting public financing allowed candidates to raise unlimited amounts of money and increase their chances of capturing the nomination (J. Green & Corrado, 2003).

George W. Bush’s decision to reject public financing for the 2000 Republican primary transformed American politics. Parti (2011) found that four years later, George W. Bush, Howard Dean, and John Kerry all rejected public financing for their primary campaigns. What is more, in 2008, Hillary Clinton, Rudy Giuliani, John McCain, Mitt Romney, and Ron Paul all rejected public financing during the primaries (Parti, 2011; J. Green & Kingsbury, 2011). If candidates intend to compete in presidential primaries or the general election, it will be imperative that they reject public financing (Ceaser, Busch, & Pitney, Jr., 2009; Parti, 2011). By 2016, the public financing system was all but dead, as every major party candidate rejected federal matching funds, recognizing that doing so would pose an existential threat to their candidacy. John McCain, the last candidate to accept matching funds for a general election campaign, was outspent by his opponent, seven-to-one on television advertisements in Indiana, a Republican bastion, for example, and prohibited from raising more than $84 million. Obama, on the contrary, raised more than $700 million (Schaefer, 2016). Nothing has done more to transform political campaigns than the decisions by George W. Bush and Barack Obama to reject public financing during the primaries.

History was made in 2008 when Senator Barack Obama became the first presidential candidate to reject public financing for the general election campaign. Barack Obama’s decision to forgo public financing allowed him to raise more money than any other presidential candidate in history: $742.6 million (Ceaser et al., 2009; Heileman & Halperin, 2010; Schaefer, 2016). Had Senator Obama accepted public financing, the amount of money he would have been allowed to spend on his campaign would have been capped at $84.1 million (Ceaser et al., 2009). Ceaser et al. (2009) found that in the final week of the campaign, Obama outspent John McCain, who accepted public financing—by a colossal $100 million. Being that Senator McCain was constrained by public financing, the amount of money he could spend on get-out-the-vote efforts and television advertisements in key swings states was severely limited (Corrado, 2011; Ceaser et al., 2009). What is more, by accepting public financing, John McCain was outspent by Barack Obama in four key swing states (Indiana, 7-1; Ohio, 2-1; North Carolina, 3-2; and Virginia, 4-1)—all of which were won by Obama (Ceaser et al., 2009; Rove, 2008). As the reader can discern from the myriad statistics provided, the 2008 presidential election contributed to the demise of public financing.

Barack Obama’s ability to raise nearly $750 million during the 2008 presidential election indicated that public financing is no longer viable (Malbin, 2009; Haynes & Pitts, 2009). In addition to the demise of public financing, the 2008 presidential election was symbolic in another regard: it proved that candidates must raise hundreds of millions of dollars or, in the case of Barack Obama in 2012, $1 billion, if they intend to win the presidency (Boatright, 2013; Ceaser et al., 2009; Kenski, Hardy, & Jamieson, 2010; Edwards & Wayne, 2010; McCain, 2018). The profound emphasis placed on fundraising runs counter to the intentions of the Federal Elections Campaign Act of 1971: to limit the influence of money in politics (Magleby, 2010; Boatright, 2009). It is evident from Barack Obama’s historic victory in the 2008 presidential election that fundraising will be paramount in future presidential elections.

Conclusion

The myriad campaign finance reform initiatives enacted by Congress during the 1970s, coupled with the landmark Supreme Court case Buckley v. Valeo (1976), revolutionized the conduct of political campaigns and American public policy. Furthermore, the decisions made by George W. Bush and Barack Obama to reject public financing contributed to the demise of public financing. It is evident from this paper that money is the driving force behind political campaigns and American public policy. The findings of this paper, it is hoped, have contributed valuable new insights into the intricacies of campaign finance reform, and the influence of money in American politics.

Christopher Schaefer, a presidential historian and political consultant, resides in Madison, Wisconsin, and is the author of four books: The Great President: The Policies that Shaped the Bush Legacy; 41 vs. 43: The Reluctant Realism of George H.W. Bush, the Primacy of George W. Bush, and the War in Iraq; The Presidential Simulation: A Student’s Guide to Understanding the American Presidency; and Project Mastodon: Building a Twenty-First Century Republican Party (2 vols.). Schaefer received his BA in Politics and Government from Ripon College and MA in Political Management from the George Washington University.

 

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