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some extent, the problem of compliance with expenditure ceilings in U.S. presidential elections mirrors the 1988 Canadian campaign, when the expenditure limits on political parties were undermined by the so-called political interest groups - which spent freely in connection with the debate over the U.S.-Canada Free Trade Agreement. In the United States, the first major holes in the spending limit dike appeared during the 1980 presidential election, the second such contest featuring public financing and expenditure ceilings.

      The 1980 Campaign

      Yet another major element of the Buckley decision involved “independent expenditures.” The decision made clear that such activity by individuals or groups was a constitutionally protected form of free speech as long as the spending was truly independent. Consequently, independent expenditures could not be coordinated with candidates or their organizations or consented to by candidates or their agents, but they could be spent on behalf of or against a non-cooperating candidate.

      The result was the creation of several independent expenditure groups in the late 1970s, the most prominent of which were strongly conservative and pro-Republican. In 1980, most of their efforts were devoted to electing Ronald Reagan. To illustrate the degree to which this device undercut spending limits, Reagan was limited to a total of $51.7 million during the pre-nomination and general election that year. However, according to Federal Election Commission data, independent expenditure campaigns spent another $12.5 million promoting Republican presidential candidates that year, most of it on Reagan’s behalf.⁸ One aspect of independent spending totals requires explanation. Not all such spending is for direct campaigning by means of communicating with voters; totals also include fund-raising and administrative costs of the political committee undertaking the independent expenditures.

      Meanwhile, Reagan’s own advisers came up with another way around the expenditure limits: the “presidential PAC.” After losing his bid for the Republican presidential nomination to Gerald Ford in 1976, Reagan started a PAC ostensibly to contribute money to conservative candidates at the state and local levels. However, its true purpose was to promote Reagan himself as he prepared for another run for the presidency in 1980. As Anthony Corrado has said, “most of the PAC’s funds were used to hire staff and consultants, develop fund-raising programs, recruit volunteers, subsidize Reagan’s travel and host receptions on his behalf” (Corrado 1990).

      The object of the PAC was to get around provisions of the Federal Election Campaign Act dictating that once a person declares his or her intention to run for president and registers a principal campaign committee with the FEC, the meter begins running on the pre-nomination expenditure ceiling. There is another advantage to the presidential PAC, since used by many other candidates: an individual donor is permitted to contribute five times as much money to a PAC ($5 000 maximum) as to a presidential or congressional candidate’s campaign committee ($1 000 limit).

      The 1984 Campaign

      Just as Reagan found ways around the spending limits during the 1980 pre-nomination process, so did former Vice-President Walter Mondale in winning the Democratic Party nomination four years later.

      Besides agreeing to overall expenditure ceilings in the pre-nomination process, candidates receiving public funding must abide by a complex series of state-by-state limits, based on population size. These have proved to be highly constraining in an era in which several state primary elections are often held on the same day, and candidates for a party’s nomination must depend on high-cost television rather than personal campaigning in many states. The limits also have proved troublesome for candidates in small states that hold high-stakes contests early in the pre-nomination process.

      The result has been a continuing series of subterfuges to evade a particular state’s spending limit. For example, candidates have felt compelled to throw tremendous resources into New Hampshire, which traditionally has been the site of the first presidential primary election. Given the state’s relatively small population and its correspondingly low spending limit, candidates have used such strategies as buying time on Boston TV stations - which reach more than three-quarters of New Hampshire’s population - and charging the cost partially to the Massachusetts limit rather than wholly to the New Hampshire limit. Candidates campaigning in western New Hampshire have been known to spend the night in Vermont, allowing them to charge lodging costs for themselves and their staffs against the Vermont limit.

      In 1984, the Mondale campaign sought to escalate this creative accounting through a device known as the “delegate committee.” A study of existing law by Mondale’s legal staff uncovered a 1980 FEC decision permitting those seeking to become national convention delegates to raise and spend money on their own behalf for such grassroots activities as brochures, buttons and bumper stickers (Germond and Witcover 1985, 226). These delegate committees had to operate independently of a national presidential campaign effort.

      At the time, the Mondale campaign was fast approaching the prenomination spending ceiling. Compounding the problem was the fact that many of Mondale’s most reliable supporters had “maxed out” by giving the campaign the $1 000 limit on individual contributions. High-ranking Mondale campaign officials saw the delegate committees as a way around both the contribution and spending limits.

      There was a second major factor behind creation of the delegate committees. Mondale, in an effort to free himself from criticism that he was too close to many of the Democratic Party’s “special interest” groups, had declared that he would not accept PAC donations. However, a top Mondale campaign official quietly informed the delegate committees by memo that because they were theoretically independent of the Mondale campaign, they could accept PAC money (Germond and Witcover 1985, 229). Organized labour, which had endorsed Mondale, proceeded to contribute substantial amounts of PAC dollars to the delegate committees.

      When stories about these committees surfaced in the media, they unsurprisingly prompted criticism that Mondale was flouting the spending limits. The controversy became so intense that Mondale ordered the delegate committees shut down in late April 1984. By then, however, he was well on his way to becoming the Democratic Party nominee.

      In May 1984, the FEC found “reason to believe” that the Mondale campaign was in violation of the law because the delegate committees were not functioning in a truly independent fashion (Germond and Witcover 1985, 273). The Commission’s decision was not disclosed until 27 November, after the general election. At that time, it also was announced that negotiations between the FEC and the Mondale campaign had produced an agreement in which the latter paid the federal government almost $400 000 to resolve the matter.⁹

      The 1988 Campaign

      The fourth presidential campaign held since the passage of the 1974 amendments witnessed an escalation of the efforts to skirt the spending limits. Because 1988 was the first election since the reforms in which an incumbent president was not running, there were hotly contested battles for the nominations of both major political parties, and this was reflected in the increase in spending. Although the rate of inflation between 1984 and 1988 was only 13.5 percent, total presidential campaign costs rose by 54 percent during that period (Alexander and Bauer 1991, 11).

      Use of the presidential PAC reached new highs. In fact, presidential PAC spending for 1988 was more than twice the combined amounts expended in advance of the 1980 and 1984 elections (Alexander and Bauer 1991, 15). Another well-worn way around the presidential limits - independent expenditures - declined somewhat between 1984 and 1988. Nonetheless, they still played a crucial role in the general election campaign. Michael Dukakis’ campaign was hurt by explosive ads highlighting a felon named Willie Horton, who, while on a prison furlough program in Massachusetts, had escaped and brutally raped a Maryland woman. These commercials, designed to question Dukakis’ record on crime, were produced and aired not by the Bush campaign, but by two independent expenditure groups, and were widely shown on television news programs (ibid., 86-87).

      But the most controversial element in the financing of the 1988 presidential campaign was a device that has come to be known in the American political vocabulary as “soft money.” In contrast to “hard money” regulated by the FECA, soft money was subject to neither the limits nor the disclosure requirements of federal law. In the context of major political parties, soft money refers to funds

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