Campaign Finance: Yesterday, Today, and Tomorrow

By Sam Torre

As the 2016 Presidential election nears, the anticipated and often feared influence of corporate wealth on politics through super PAC contributions continues to raise concern throughout the United States. As The New York Times Editorial Board predicted, “This election year will be the moment when individual candidate super PACs—a form of legalized bribery—become a truly toxic force in American politics.”

These apprehensions breed discussion about campaign finance reforms. Proponents of reform fear that contributions by large corporations will allow the donors to exert control over policy and push their own political agendas on the candidates to whom they contribute. They look to stop organizations from using their large sums of money as incentive for politicians to pass legislation in accordance with their special interests. Opponents of these reforms argue that the legislation violates the Constitution, specifically the right to freedom of speech, since monetary contributions enable candidates to communicate their platforms to voters. How have these regulatory policies changed in the last several decades, and how do they impact Presidential candidates’ campaigns today? Additionally, is the panic caused by fear of super PACS warranted or simply blown out of proportion?

After decades of mostly unsuccessful attempts at campaign finance reform dating back to the 1800s, policymakers enacted stricter regulations in 1971 with the creation of the Federal Election Campaign Act (FECA). Goals of replacing previous, evaded legislation, including the Federal Corrupt Practices Act of 1925 and the Hatch Act of 1939, with more enforceable legislation remained at the forefront of the discussion. FECA, signed by Richard Nixon in 1972, required candidates in federal elections to disclose campaign contribution details. Although FECA achieved some progress in terms of regulating campaign finance, it required amending following the infamous Watergate Scandal later that year. After the discovery of a link between the money used by Nixon’s reelection campaign and the Watergate break-in, the American public’s emergent distrust of government led to the FECA reforms of 1974.

The creation of the Federal Election Commission (FEC) arguably remains the most influential aspect of those 1974 FECA amendments. The FEC defines their duties as “to disclose campaign finance information, to enforce the provisions of the law such as the limits and prohibitions on contributions, and to oversee the public funding of Presidential elections.” This establishment provides enforcement practices which failed to exist in previous legislation. Additionally, the amendments included individual donation limits of $1,000 to a single candidate and no more than $25,000 delegated between federal election candidates. The reforms also validated Political Action Committees (PACs), or outside entities established to campaign for a candidate’s election, by limiting their contributions to $5,000 per candidate.

However, several provisions of the reforms, including candidate spending limits of $10 million in primaries and $20 million in general elections, were not readily accepted nationwide.

The Supreme Court case Buckley v. Valeo (1976) took a step away from regulation and determined unanimously that limiting campaign expenditures violated freedom of speech rights, except in the cases of candidates who received public funding. Buckley v. Valeo remains a landmark case due to its denial of financial equality as a standard for federal elections while also demonstrating the continued struggle between upholding individual rights and establishing an accepted sense of fairness in elections.

2002 marked the enactment of the Bipartisan Campaign Reform Act, more commonly known as the McCain-Feingold law in recognition of the act’s main sponsors, U.S. Senator John McCain (R-AZ) and former Wisconsin State Senator Russ Feingold. A major provision of the act included ending the use of soft money in federal elections, or what the FEC describes as nonfederal “money raised outside the limits and prohibitions of federal campaign finance law.” The act also coined the term ‘electioneering communications’ to describe paid television and radio ads which “discuss[ed] candidates in the context of certain issues without specifically advocating a candidate’s election or defeat,” and disallowed their funding by corporations or labor unions. Additionally, individual contribution limits became $2,000 to a single candidate and $95,000 every two years for overall contributions. While these alterations were, in part, adjusted for inflation, they also demonstrated a growing tendency toward deregulating campaign finance.

The Supreme Court case Citizens United vs. FEC (2010) struck down on parts of the McCain-Feingold law. The Court ruled that free speech rights also extend to corporations and unions, giving rise to super PACs. Individuals and corporations may contribute unlimited amounts of money to super PACs, permitting these super PACs to spend limitlessly on campaigns, as well. As a result, the use of super PACs in the 2008, 2012, and 2016 Presidential elections grew exponentially. While candidate money is capped and goes directly to the candidate, super PAC contributions have no limits and do not go directly to the candidates, but rather to outside campaigns. According to the New York Times, in 2008, before Citizens United vs. FEC created super PACs, roughly 99.9% of total campaign contributions went directly to the candidate. In 2012, the first Presidential election to follow the Citizens United case, approximately 8% of total funds were contributions to super PACs and 92% were contributions to the candidate. Surprisingly, in 2016, 49% of total funds were contributed to super PACs and 51% went directly to the candidate, nearly an even split. The ability to donate limitless amounts of money to super PACs tends to attract wealthy donors and corporations. Additionally, super PACs may target their campaigns to specific aspects of a candidate’s platform and often use smear tactics to create negative and typically distorted (or simply untrue) campaigns about a candidate’s opponents. Although considered unscrupulous by many, this ability to donate to smear campaigns through contributions to super PACs incentivizes others. Together, these features explain a proliferating trend toward super PAC use, only exacerbating concerns of a government swayed by wealthy contributors.  

The struggle between seeking equality in federal elections and avoiding infringement on individual liberties manifests in the 2016 election season. Senator Bernie Sanders repudiates the use of super PACs and claims that, “I am very proud to be the only candidate up here who does not have a super PAC, who’s not raising huge sums of money from Wall Street and special interests.” According to a report by the New York Times, as of February 20, 2016, Sanders received a negligible 0.1% of his total funds from super PACs/PACs, while Drumpf received 7%, Kasich received 25%, Clinton received 31%, and Cruz received 48%. Interestingly enough, these numbers hardly compare to the monstrous super PAC funds amassed by several former candidates in the election. Scott Walker received 61% of his total funds from super PACs/PACs, Chris Christie received 69%, and Jeb Bush received 79%, yet all still removed themselves from candidacy due to the meager prospects of their election. This raises the question of whether these corporate contributions are as formidable as they may seem or if hysteria may be partly to blame for the concern. Accordingly, fears regarding super PACs may be justified but misplaced; while raising the largest amount of money may not always win elections, as demonstrated by Jeb Bush, issues may still arise if a candidate heavily funded by super PACs does win and allows special interests to influence legislation.

Where does this leave us as a nation on the brink of electing a new national leader? We have been irresolute for many decades, wavering between more and less regulation of campaign finance; with the recent controversy surrounding super PACs, we can assume this indecisiveness will continue.  Because limitless contributions to super PACs are a fairly new phenomenon, we are still gauging their power and efficacy. Party nominations and the election in November may convey the initial impacts of these super PAC contributions; however, only time will reveal their true effects, as we wait in hope of an honest and upstanding President who will distinguish special interests from those of the nation as a whole.

Election Year: Rhetoric vs. Reality

By Isaac Greenwood

2016 has ushered in a national election cycle like none other. In the aftermath of the Great Recession of 2007-2009, and despite the rhetoric espoused by many of the leading candidates on both sides of the aisle, the still-recovering American economy would be best served by centrist economic policies given the fragility of international developments and tepid growth.

The Great Recession cost the American economy billions in productivity and had long-lasting effects on the domestic and international economic orders. Even after the height of the Recession, U.S. unemployment peaked at 10% as workers were laid off in increasing numbers. Thousands of Americans were impacted by the sudden burst of the housing bubble, which significantly devalued their homes while also setting of a global financial crisis from the prevalence of mortgage-backed securities. While China and Russia weathered the crisis relatively well, most countries heavily engaged with the U.S. economy, notably in Europe, felt the shockwaves of distress as the turmoil increased.

The Federal Reserve, under the guidance of former Chairman Ben Bernanke, engaged in bailing out or aiding firms deemed “too big to fail” like AIG and a variety of large banks which had become increasingly interdependent with a number of industries. The Fed embarked on a policy of quantitative easing and slashing interest rates to historic lows to maintain a high money supply and embolden the teetering economy. In addition to the fiscal policies such as the Troubled Asset Relief Program (TARP) and Emergency Economic Stabilization Act of 2008, Washington was successful in preventing a catastrophic meltdown of the U.S. economy.

However, the American economy is not out of danger yet. A myriad of factors remain that threaten not only domestic prosperity but also the international economic system given the rapid globalization of the past twenty years. The American Dream may still be attainable, but only with the careful monetary and fiscal policies that will not strain the moderate economic recovery of the past five years.

While unemployment has reached the Fed’s target of 5%, the labor force participation rate remains at 63%, down from its historic 66% average. To maintain full employment and continued consistent job growth, candidates with job creation programs would aid in the recovery as opposed to those who seek to cut unemployment assistance and government spending.

Another key measure of economic health is inflation. Often measured by the Personal Consumption Expenditures Price Index (PCE), inflation is currently below the Fed’s target of 2%. While in the United States this number is near 1.7%, European inflation is almost 0 and has forced the European Central Bank to enact quantitative easing through 2017 as a means to prevent another crisis. Rather than meddle in the workings of the Fed and politicize the institution, the incoming President must remain aware of Chair Janet Yellen’s guidance in bolstering the American economy and work to promote job security.

Beyond macroeconomic growth and stability, issues of wealth inequality and social security have become forefront topics for the average American. With a stagnant lower class and growing upper class, the American middle class has been shrinking over the past 45 years. The share of aggregate income held by middle-class Americans has fallen 19% from a previous high of 62% in 1970, and the Recession saw middle class wealth shrink by 28%. Once a representation of the American Dream and success, the middle class ought to be supported through tax cuts and incentives by future candidates to ensure domestic economic stability, and the increasingly wealthy upper classes should bear a larger burden of taxation to account for the wide discrepancies under the current system.

With increasing life expectancies, Social Security reserves, which are expected to run out of money by 2034, must be increased to provide for the nation’s poor and infirm. Politicians who suggest cutting Social Security benefits or taxes will fail to address the magnitude of the program by failing to provide for the 65 million who require it. As Mahatma Ghandi said, “A nation’s greatness is measured by how it treats its weakest members” and that certainly holds true with regards to the aged, infirm, and poor of the United States, although current policies seem to do little to ensure their future stability.

Given the precarious global economic situation, in addition to forecasts for another recession within the coming two years, drastic tax or spending cuts could exacerbate future economic issues and threaten to undo the slow but steady recovery of the past administration.