It seems a truism to say that one of the main roles in the presidential election campaign is played by money. The fact of the matter is that without adequate funding, causal and effective action in American politics, including at the campaign stage, is incredibly limited, if not out of the question. Funds allow you to obtain space on various platforms for contact with recipients, communicate your demands and present yourself to potential voters.
At the same time, it should be borne in mind that the issue of collecting and disposing of money by politicians and their staffs – especially US presidential candidates – during the ongoing election campaign, due to its sensitivity, multifaceted and critical nature in the context of the entire democratic system, remains subject to legal regulation. In the case of the specifics of campaign financing in the United States, these regulations cover not only the federal and state levels, but also apply to financial resources from public funds as well as those collected from private entities.
This text is an attempt to provide a synthetic presentation of this issue, including a discussion of sources and methods of financing and the possibilities of their issuance.
History of regulation
The process of introducing legal regulations for the financing of political campaigns proceeded gradually, starting in the middle of the 19th century. The first issue that was sought to be resolved on the federal level was the issue of “remuneration” of donors by, inter alia, successive presidents after winning elections, consisting in political patronage of party members who contributed funds to the candidate and guaranteeing them positions in the federal administration. The Pendleton Civil Service Act of 1883, which made it compulsory for a candidate for the above position to be selected by competition, proved to be the answer to this kind of practice.
Another problem was the dependence of candidates in federal elections on representatives of big business and corporations, which, in exchange for large sums of money donated to the candidates' election campaigns, often gained enormous influence over the decisions made by politicians, including the President of the United States. In the 20th century, some progressive circles – including journalists and satirists – undertook various information initiatives aimed at persuading the public and, consequently, putting pressure on politicians, to introduce regulations that would reduce this type of lobbying practices and increase control over the flow of money to presidential candidates. An attempt to counteract the above-mentioned practices of corporations and interstate banks was made in the Tillman Act of 1907, preventing such entities from transferring money directly to candidates. However, the above solutions have proved ineffective due to their low enforcement efficiency.
Another solution that was proposed was the question of introducing limits when it came to the transfer of funds – an issue of this kind first became the subject of legislation in 1910. However, 11 years later, these solutions were declared unconstitutional by the Supreme Court. However, the federal authorities did not abandon the idea of regulating this issue, and in 1925 the Federal Corrupt Practices Act came into force, requiring election committees (still relatively easy to circumvent) to file quarterly financial statements.
A major change in campaign finance rules came with the introduction of the Federal Election Campaign Act in 1971 and its amendment three years later. The aforementioned law introduced and strengthened the reporting obligations of candidates, party committees and the so-called Political Action Committees (PAC), organisations formed since 1943 and comprising, among other things, members of trade unions (which were prohibited from donating individual money to candidates running for federal office), which also raised funds that were then transferred to federal election campaigns. The indicated entities were required to disclose the data of the units making donations above one hundred dollars (this amount was raised to $200 in 1979).
In addition to this, the aforementioned legislation created the Federal Election Commission, an institution that remains tasked with overseeing the public financing of presidential elections; conducting information policy on campaign financing; and enforcing the relevant laws. The legal regulations also provided for the introduction of the possibility of limiting certain categories of contributions to the election campaign and the possibility of financing the presidential campaign from public funds.
It should be noted that these limits were abolished by the Supreme Court's decision in Buckley v. Valeo in 1976, which found similar arrangements to be a violation of freedom of speech. However, it remains important to point out that maintaining the limits for obtaining campaign funds was possible in a situation where a candidate in the presidential election decided to use public funds to finance their campaign.
The next major change in campaign financing came in 2002 under the Bipartisan Campaign Reform Act. The effect of this law was to restrict the use of soft money, i.e. money accepted by party committees from individuals, trade unions and corporations for which there is no obligation to indicate in reports and/or which are not subject to certain prohibitions or limits.
Ways of financing
Each candidate is required to register with the FEC and to submit regular, detailed financial statements with information on the received funds and how they are spent (the period of submission of such reports in an election year depends on the forecasts for the raised amount).
As indicated above, candidates in the presidential election of the United States have the opportunity to take advantage of public financing of the electoral campaign. Funds for this purpose come from the Presidential Election Campaign Fund.
However, obtaining funds from the aforementioned Fund is associated with specific obligations – candidates are obliged to comply with certain limits, keep appropriate documentation and spend these funds exclusively on issues related to the campaign.
Fulfilment of these obligations is verified in the form of a Commission audit carried out after the elections, and failure to comply or exceed the above obligations results in the obligation to return the aforementioned funds to the State Treasury.
The possibility of obtaining funds from the Fund also remains conditional on meeting certain requirements, including demonstrating that an applicant has successfully raised a sum of at least five thousand dollars in at least 20 states (with a limit of $250 per person).
The amount of public subsidies for candidates in elections is variable, as it takes into account the “increase in the cost of living” (in 2012 it exceeded the sum of 90 million dollars).
It should be underlined that the candidate is not obliged to use this type of public fund – due to the the relatively high number of restrictions and constraints on the disposal of non-public funds and the possibility of raising significantly higher funds from other sources, candidates of the Republican and Democratic Parties regularly decline to apply for funds from the Presidential Election Campaign Fund.
During the election campaign, a presidential candidate can use private funds and money collected from donors (voters) through the activities of the relevant party committees. An individual can donate a maximum of $3,300 to a candidate, and this is not the donor's only option - further sums of money can be donated to the National Party Committee and the PAC, or political action committee (subject to the applicable limits). Interestingly, the Federal Election Commission prohibits national banks, corporations and union organisations from making campaign contributions, but this prohibition does not extend to individuals who remain employed by such entities.
PACs are extremely important when it comes to raising and disposing of funds for presidential election campaigns – they donate the collected funds to campaigns and fund various initiatives related to voting. The management and leadership of such committees is not within the competence of a political party or a specific candidate, but remains the responsibility of various organisations, trade unions, corporations and associations.
PACs are bound by certain limits on their support for candidates (including five thousand dollars for a candidate or committee at each successive election) but are free to make unlimited expenditures regardless of the candidate or political party.
It should be pointed out that in addition to PACs, the so-called super-PACs can also raise funds to run election campaigns. The activities of the aforementioned entities were permitted as a result of the 2010 Supreme Court decisions in Citizens United v. FEC and Speechnow vs. FEC. concerning selected regulations of the aforementioned 2002 Act. These committees can collect unlimited amounts of money from a variety of entities (including trade unions and corporations) and fund advertising material with a clear message about the candidates (for or against). At the same time, their activities may not include the coordination of campaigns, direct participation in them and the transfer of funds directly to a candidate or political party.
Expenditure
The funds raised by candidates and committees are spent on information and political activities, directly and indirectly related to the promotion of a particular candidate, their figure, worldview and political agenda, encouraging participation in elections and/or discouraging the election of an opposing candidate. The funds are used, among other things, to buy space and airtime in traditional mass media (television, press, radio) and online promotion (in social media and purchase of advertisements on various Internet portals).
It should be noted that due to the nature and complexity of a presidential election campaign, the amount of funds raised by a candidate does not equate to an advantage in the polls and a victory in the presidential election. For example, in 2016, the funds raised by Donald Trump and the PACs supporting him were significantly lower than those of his opponent Hilary Clinton, yet he still managed to win the election.
Text: Dr Jakub Stępień
Department of Constitutional Law, University of Lodz / Centre for Anglo-American Legal Tradition UŁ
ORCID: 0000-0003-0106-680
The article is a part of the ConLaw24 series, in which the Centre for Anglo-American Legal Tradition takes a closer look at the intricacies of the American legal and political system. We will publish new texts every Tuesday until election day.
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