Science Fair Project Encyclopedia
Federal Election Campaign Act
As early as 1905, President Theodore Roosevelt recognized the need for campaign finance reform and called for legislation to ban corporate contributions for political purposes. In response, the United States Congress enacted several statutes between 1907 and 1966 which, taken together, sought to:
- Limit the disproportionate influence of wealthy individuals and special interest groups on the outcome of federal elections;
- Regulate spending in campaigns for federal office; and
- Deter abuses by mandating public disclosure of campaign finances.
In 1971, Congress consolidated its earlier reform efforts in the Federal Election Campaign Act (FECA), instituting more stringent disclosure requirements for federal candidates, political parties and political action committees (PACs). Still, without a central administrative authority, the campaign finance laws were difficult to enforce.
Following reports of serious financial abuses in the 1972 Presidential campaign, Congress amended the FECA in 1974 to set limits on contributions by individuals, political parties and PACs. The 1974 amendments also established an independent agency, the Federal Election Commission (FEC) to enforce the law, facilitate disclosure and administer the public funding program.
The Supreme Court struck down two provisions of the 1974 amendments to the Act, namely limits on spending by campaigns and on the amount of money a candidate could donate to his or her own campaign.
Congress made further amendments to the FECA in 1976 following those decisions; major amendments were also made in 1979 to streamline the disclosure process and expand the role of political parties.
The 1979 amendments gave rise to a host of unintended consequences, however, allowing political donors to circumvent contribution limits by donating to a political committee rather than a single candidate. In addition, political committees did not have to disclose from whom they received contributions, as did political parties and candidates. These types of fund-raising and contributions made to committees rather than candidates or parties came to be known as "soft money."
Public perception of the corruption of the political process because of soft money lead to the next set of major amendments, the Bipartisan Campaign Reform Act of 2002 (BCRA). Among other things, the BCRA banned national parties from raising or spending soft money, restricted so-called issue ads, increased the contribution limits and indexed certain limits for inflation.
Public funding of federal elections originally proposed by President Roosevelt in 1907 began to take shape in 1971 when Congress set up the income tax checkoff to provide for the financing of Presidential general election campaigns and national party conventions. Amendments to the Internal Revenue Code in 1974 established the matching fund program for Presidential primary campaigns.
The FEC opened its doors in 1975 and administered the first publicly funded Presidential election in 1976.
The FEC has six voting members who serve staggered six-year terms. The Commissioners are appointed by the President with the advice and consent of the U.S. Senate. No more than three Commissioners may belong to the same political party. The Commissioners elect two members each year to act as Chairman and Vice Chairman.
The Commission normally holds a public meeting each week. At this meeting, the Commissioners adopt new regulations, issue advisory opinions, approve audit reports concerning Presidential campaign committees, and take other actions to administer the campaign finance law.
In addition, the Commissioners meet regularly in closed sessions to discuss pending enforcement actions, litigation and personnel matters.
The Campaign Finance Law
The Federal Election Campaign Act
The basic provisions of the FECA are described below.
The FECA requires candidate committees, party committees and PACs to file periodic reports disclosing the money they raise and spend. Candidates must identify, for example, all PACs and party committees that give them contributions, and they must identify individuals who give them more than $200 in an election cycle. Additionally, they must disclose expenditures exceeding $200 per election cycle to any individual or vendor.
The FECA places limits on contributions by individuals and groups to candidates, party committees and PACs. The chart below shows how the limits apply to the various participants in federal elections.
|To each candidate or candidate committee per election cycle||To national party committee per calendar year||To state/district/local party committee per calendar year||To any other PAC per calendar year||Special limits|
|Individual may give||$2,000||$25,000||$10,000 (combined)||$5,000||$95,000 overall biennial limit
|National Party Committee may give||$5,000||No limit||No limit||$5,000||$35,000 to Senate candidate per campaign|
|State/district/local committee may give||$5,000 (combined)||No limit||No limit||$5,000 (combined)||No limit|
|Multicandidate PAC may give||$5,000||$15,000||$5,000 (combined)||$5,000 (combined)||No limit|
|Non-multicandidate PAC may give||$2,000||$25,000||$10,000 (combined)||$5,000||No limit|
Prohibited Contributions and Expenditures
The FECA places prohibitions on contributions and expenditures by certain individuals and organizations. The following are prohibited from making contributions or expenditures to influence federal elections:
- Labor organizations;
- Federal government contractors; and
- Foreign nationals.
Furthermore, with respect to federal elections:
- No one may make a contribution in another person's name.
- No one may make a contribution in cash of more than $100.
In addition to the above prohibitions on contributions and expenditures in federal election campaigns, the FECA also prohibits foreign nationals, national banks and other federally chartered corporations from making contributions or expenditures in connection with state and local elections.
Under federal election law, an individual or group (such as a PAC) may make unlimited "independent expenditures" in connection with federal elections.
An independent expenditure is an expenditure for a communication which expressly advocates the election or defeat of a clearly identified candidate and which is made independently from the candidate's campaign. To be considered independent, the communication may not be made with the cooperation, consultation or concert with, or at the request or suggestion of, any candidate or his/her authorized committees or a political party, or any of their agents. While there is no limit on how much anyone may spend on an independent expenditure, the law does require persons making independent expenditures to report them and to disclose the sources of the funds they used. The public can review these reports at the FEC's Public Records Office or online at the FEC's web site.
Corporate and Union Activity
Although corporations and labor organizations may not make contributions or expenditures in connection with federal elections, they may establish PACs. Corporate and labor PACs raise voluntary contributions from a restricted class of individuals and use those funds to support federal candidates and political committees. Click here to download the Campaign Guide for Corporations and Labor Organizations.
Apart from supporting PACs, corporations and labor organizations may conduct other activities related to federal elections, within certain guidelines.
Political Party Activity
Political parties are active in federal elections at the local, state and national levels. Most party committees organized at the state and national levels as well as some committees organized at the local level are required to register with the FEC and file reports disclosing their federal campaign activities.
Party committees may contribute funds directly to federal candidates, subject to the contribution limits. National and state party committees may make additional "coordinated expenditures," subject to limits, to help their nominees in general elections. Party committees may also make unlimited "independent expenditures" to support or oppose federal candidates, as described in the section above. National party committees, however, may not solicit, receive, direct, transfer, or spend nonfederal funds. Finally, while state and local party committees may spend unlimited amounts on certain grassroots activities specified in the law without affecting their other contribution and expenditure limits (for example, voter drives by volunteers in support of the party's Presidential nominees and the production of campaign materials for volunteer distribution), they must use only federal funds or “Levin funds” when they finance certain “Federal election activity.”
Party committees must register and file disclosure reports with the FEC once their federal election activities exceed certain dollar thresholds specified in the law.
The Presidential Election Campaign Fund Act
Under the Internal Revenue Code, qualified Presidential candidates receive money from the Presidential Election Campaign Fund , which is an account on the books of the U.S. Treasury.
The Fund is financed exclusively by a voluntary tax checkoff. By checking a box on their income tax returns, individual taxpayers may direct $3 of their tax to the Fund (up to $6 for joint filers). Checking the box does not increase the amount a taxpayer owes or reduce his or her refund; it merely directs that three (or six) dollars from the U.S. Treasury be used in Presidential elections. Checkoff funds may not be spent for other federal programs.
The funds are distributed under three programs:
Primary Matching Payments
Eligible candidates in the Presidential primaries may receive public funds to match the private contributions they raise. While a candidate may raise money from many different sources, only contributions from individuals are matchable; contributions from PACs and party committees are not. Furthermore, while an individual may give up to $2,000 to a primary candidate, only the first $250 of that contribution is matchable.
To participate in the matching fund program, a candidate must demonstrate broad-based support by raising more than $5,000 in matchable contributions in each of 20 different states. Candidates must agree to use public funds only for campaign expenses, and they must comply with spending limits. Beginning with a $10 million base figure, the overall primary spending limit is adjusted each Presidential election year to reflect inflation. In 2000, the limit was $33.78 million.
General Election Grants
The Republican and Democratic candidates who win their parties' nominations for President are each eligible to receive a grant to cover all the expenses of their general election campaigns. The basic $20 million grant is adjusted for inflation each Presidential election year. In 2000, the grant was $67.56 million.
Nominees who accept the funds must agree not to raise private contributions (from individuals, PACs or party committees) and to limit their campaign expenditures to the amount of public funds they receive. They may use the funds only for campaign expenses.
A third party Presidential candidate may qualify for some public funds after the general election if he or she receives at least five percent of the popular vote.
Party Convention Grants
Each major political party may receive public funds to pay for its national Presidential nominating convention. The statute sets the base amount of the grant at $4 million for each party, and that amount is adjusted for inflation each Presidential election year. In 2000, the major parties each received $13.51 million.
Other parties may also be eligible for partial public financing of their nominating conventions, provided that their nominees received at least five percent of the vote in the previous Presidential election.
- Campaign finance
- Bipartisan Campaign Reform Act
- Federal Election Commission
- Buckley v. Valeo
- McConnell v. Federal Election Commission
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