Campaign finance reform has been a black hole for legislative remedies for almost two decades. This public policy problem is unique in that 535 experts each have their own ideas of what is wrong with the system and remedies for preventing money's corrupting influence. Not surprisingly, this jumbled discourse has produced little or no change from the status quo. If anything, in the time reformers have attempted to find remedies, more ways have been devised to circumvent and short-circuit the current campaign finance system.
The Passage of the 1971 Federal Election Campaign Act (FECA), which was subsequently amended in 1974, 1976, and 1979, as well as The Revenue Act of 1971 and its subsequent amendment passed in 1974, which provided public funding of presidential general elections and funding of primaries and nominating conventions, changed the landscape for how congressional and presidential campaigns were to be financed. The Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976) upheld the Act's limitations on contributions as appropriate legislative tools to guard against the reality or appearance of improper influence stemming from candidates' dependence on large campaign contributions. In turn, however, the Court invalidated the Act's limitations on independent expenditures, on candidate expenditures from personal funds, and on overall campaign expenditures. Through its ruling, the Court set into motion two conflicting principles - one that allows limits on contributions and one that finds mandatory limits on expenditures an unconstitutional limitation of free speech. These two principles led to legislation that attempted to control the corrupting influence of money in congressional elections through limitations on contributions by individuals, political actions committees (PACs), and parties. Further, campaign finance legislation was carefully constructed not to mandate congressional spending limits, although a few bills have proposed getting around this by offering public funding or other incentives in exchange for voluntary spending limits.
Beginning in the 1980s and through much of the 1990s, two issues came to the forefront for those who studied the campaign finance issue: (1) the rising costs of campaigns; and (2) the substantial reliance on PACs as a source of major funding. Political scientists who provided much background and research during this time often pointed out additional issues of incumbency advantage and the lack of electoral competitiveness stemming from inadequate challenger financial resources. Further, the minority party, then the Republicans, was quick to point out that the growing cost of campaigns was a key explanation for what many believed would be their perpetual minority status.
The growth of outside or special interests in the electoral process caused grave concern for advocates of representative democracy. Many reform proposals focused on strengthening the parties to help counterbalance the effects of these special interests. However, with the advent of candidate-centered campaigns these proposals often became standard mantra but provided very little relief. Further, Federal Election Commission regulations promulgated to assist parties with activities to revitalize themselves, namely get-out-the-vote drives and the like, were quickly becoming avenues for the proliferation of unregulated sums of money (i.e., soft money).
There was also a growing concern about the role of other outside interests in federal elections. For instance, corporations and unions were thought by many to have an undue say in determining election outcomes. Further, candidates were beginning to notice that their own messages were being drowned out by the advertising and policy positions of groups advocating their election or defeat under the guise of providing the public with information (i.e., issue advocacy communications).
After more than a decade of reform efforts that attempted to limit campaign spending, restrict contributions, and provide for public financing of congressional elections, the focus of reform shifted to various perceived "loopholes" in the campaign finance system. While many of these loopholes in the current law were a point of contention toward the end of the 1980s, concern escalated as the loopholes began to engulf the whole system. According to a key reformer in the House, Representative Christopher Shays (R-Conn.), the system began to "collapse on itself." These loopholes included:
(1) Bundling: The collection of checks for (and made payable to) a specific candidate by an intermediate agent. This allows PACs and parties to raise money in excess of what it can legally contribute and receive recognition for its endeavors by the candidate.
(2) Soft money: Money that may "indirectly influence federal elections but is raised and spent outside the purview of federal laws and would be illegal if spent directly on a federal election."1
(3) Independent expenditures: Money spent by individuals or groups on communications with voters to support or oppose clearly identified candidates. Such expenditures are considered independent expenditures and held constitutionally unregulated by Buckley v. Valeo, as long as there is no coordination or consultation with any candidate. Independent expenditures rose from $11.1 million in 1992 to an estimated $22.4 million in 1996.
(4) Issue advocacy: Groups may promote their views and issue positions in reference to particular elected officials, as long as the communication does not expressly advocate the election or defeat of a candidate by using the so-called "magic words," such as "vote for" or "vote against."
The terms of the campaign finance reform debate began to shift with the growing acknowledgement that the loopholes posed the more severe threat to the campaign system. PACs, which were once perceived as a source of corruption that threatened to
undo the system, were now seen as one of the more legitimate forums for campaign money - after all, at least they are regulated and their activities disclosed. While concerns over fundamental issues like competition and incumbency bias are still in the background, the Republicans helped knock the wind out of these arguments by their decisive victory in 1994.
Practices that emerged most starkly in the 1996 campaign have sounded alarms to many reformers that the campaign finance system is in complete meltdown. The explosion of soft money has threatened to take "democracy" out of our democratic elections. Further, corporations and labor unions had long been prohibited from contributing directly to candidates or parties, yet the 1996 elections made clear that unregulated soft money was pouring in from corporations and labor unions as well as from interest groups.
As the chart above indicates, the congressional campaign committees of the national parties raised nearly five times as much soft money during the 1997-98 election cycle than they raised in 1993-94, $92.1 million compared to $18.8 million. Further, the national political party committees raised $193.2 million in soft money for the 1997-98 election cycle - more than twice the amount they raised during 1993-94. Much of this soft money came directly from corporations and labor unions.
This explosion of soft money also raised questions about the growth in the amount that outside groups were spending on issue advocacy. While avoiding the legal trip of express advocacy, these groups were coming severely close to capturing away from the candidates their own campaigns. In conjunction, soft money and express advocacy seemed to be the most egregious campaign finance practices in the 1996 elections. Much focus was placed upon the "twin evils" in the many investigative hearings that took place in the House and Senate in the months following the 1996 elections. Emphasis also was placed on foreign money invading our campaign process as well as the outrageous sums pouring in from unions and corporations in the guise of soft money.
These hearings led many among the Republican ranks to seek some sort of "pay check protection" plan where unions must disclose (and in some bill versions gain provision prior to spending) the members' dues. There was some effort in the House, specifically by Representatives Steve Horn (R-Calif.) and Bill Thomas (R-Calif.), also to cover corporations in what was considered a more palatable version of paycheck protection. However, few Democrats or pro-labor Republicans were persuaded.
Further, some Republicans were concerned with the all-out ban on soft money at both the state and federal levels. The House's base bill, The Freshman Bill,2 included only a ban on soft money at the federal level for fear that a state-level ban would violate the Tenth Amendment. However, opponents of this bill were quick to point out that many states permitted direct union and corporate contributions and individual donations in excess of $25,000 in state campaigns and that this money would find a way through transfers to the national party to influence federal elections.
The supporters of the McCain-Feingold bill in the Senate and Shays-Meehan bill in the House, the measures that eventually emerged as the leading reform bills, understood the changing terms of debate. In September 1997, the McCain-Feingold bill was pared down to focus primarily on soft money and express advocacy. While this effort was unsuccessful in the Senate, further action was sought in the House.
The Shays-Meehan bill also was altered from its original form to focus on soft money and express advocacy.3 By attacking these "twin evils" the supporters of Shays-Meehan were able to take advantage of the media attention placed on these loopholes during the 1996 election, and further were able to bring together a larger coalition for passage. While many argued that the original bill, which included free television in exchange for voluntary spending limits and provisions to deal with bundling, was preferred, advocates pointed out the updated version still had enough teeth. The updated version, in addition to addressing soft money and issue advocacy, also dealt with foreign money, independent coordinated expenditures and, to some extent, the wealthy candidate and the issue of incumbency advantage. According to Marty Meehan (D-Mass.), "The Shays-Meehan campaign finance reform bill is a scaled back version of our original legislation. It represents a compromise struck between what Chris [Shays] and I wanted to pass and what we believed could pass in the current political climate. It's not the perfect bill. But perfection is too often the enemy of the good."
A movement already is afoot to re-pass the version of the Shays-Meehan bill that passed in the House in early August 1998 at the end of the 105th Congress. On Tuesday, January 19, 1999, Representatives Shays and Meehan along with Senators John McCain (R-Ariz.) and Russell Feingold (D-Wis.) introduced companion bipartisan campaign finance reform bills in the House and Senate for the 106th Congress.
The Shays-Meehan/McCain-Feingold legislation bans soft money - the unregulated contributions to political parties from corporations, labor unions, and wealthy individuals. In addition, the bills require special interest groups to pay for phony "issue ads" with money raised in accordance with federal campaign finance laws.
According to the president of Common Cause, one of the leading public interest groups that has been extremely vital in the fight for campaign finance reform,
Last year, the House Republican leaders did everything they could to delay House passage of reform, so that when the issue shifted to the Senate there were only weeks left in the 105th Congress. . . . Early House action on the Shays-Meehan bill is a key test for Speaker Hastert and the new Congress. This decision will indicate if the Speaker will make good on his promise in January to 'work together across the political fence' and 'get down to business . . . on legislation that addresses the problems that the American people want solved.' Delay only serves to ensure that the current corrupt campaign finance system will continue into the future.4
The battle in the 106th Congress looks no easier than in the 105th.
Already, early indications from House Republican leadership are that consideration
of campaign finance reform is a low priority. While many believe momentum
for passage is there, the scenario in the Senate has promise for a different
dynamic. Sixteen Senators who voted against campaign finance reform in
the 105th Congress are up for reelection in 2000,5 a fact that
will not go unnoticed by supporters of reform. Further, there has already
been discussion of the vast sums that are beginning to be raised for the
presidential campaign of 2000, thus promising that the figures in 1996
and 1998 will be substantially dwarfed. The question that lies before the
governed and the governing is what are campaigns to be about: the open,
informed choice of the best qualified individual or, as others argue, a
process that is so noisy and consumed with what money can buy that democracy
itself is drowned out in the process.
Victoria A. Farrar-Myers served as an American Political Science Association Fellow for Congressman Christopher Shays (R-Conn.) in 1997-1998. She is currently an assistant professor of political science at University of Texas, Arlington.
Diana Dwyre served as an American Political Science Association Fellow for Congressman Sander Levin (D-Mich.) in 1997-1998. She is currently an assistant professor of political science at California State University, Chico.
Professors Farrar-Myers and Dwyre are currently working on a manuscript
about the legislative process through the lens of campaign finance reform
in the 105th Congress.
1. See Joseph Cantor, CRS Issue Brief - Campaign Financing, updated 16 October 1998.
2. H.R. 2183.
3. H.R. 3526, The Bipartisan Campaign Reform Act.
4. Quoted from a 1 Feburary 1999 Common Cause press release entitled "Editorial Memorandum Bipartisan Campaign Finance Reform Reintroduced; Reformers Ready to Capitalize on Majority Support and Push for Early Action."
5. Jon Kyle (R-Ariz.), William Roth (R-Del.), Connie Mack (R-Fla.),
Richard Lugar (R-Ind.), Spencer Abraham (R-Mich.), Rod Grams (R-Minn.),
John Ashcroft (R-Mo.), Trent Lott (R-Miss.), Conrad Burns (R-Mont.), Mike
DeWine (R-Ohio), Rich Santorum (R-Pa.), Bill Frist (R-Tenn.), Kay Bailey
Hutchinson (R-Tex.), Orrin Hatch (R-Utah), Slade Gorton (R-Wash.), Craig
The authors wish to thank the American Political Science Congressional Fellowship program for providing us with an excellent learning opportunity. In addition, we wish to thank the offices of Congressman Shays and Congressman Levin for allowing us to serve our fellowships as a part of their respective staffs. Finally, we would like to thank Jason Myers and Joseph Picard for their ongoing support and encouragement.