Comparative Issues in Party and Election Finance - F. Leslie Seidle

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campaigns took full advantage of the 1979 amendments to exceed the official spending ceiling imposed by law.

      Reform Takes a Pause

      By the beginning of the 1980s, the United States had in place a system of election regulation that had taken most of the previous decade to enact and fine-tune. Federal elections were subject to strict rules for disclosure of spending and receipts, and the role of the wealthy donor was greatly diminished by the availability of public funding in presidential races and the presence of contribution limits in both presidential and congressional contests. Unlike the negative reforms of prior decades, which attempted to prevent abuses by a series of restrictions, limitations and prohibitions, public financing represented a step forward in that it provided an alternative - public funding in presidential campaigns - to less desirable forms of private money.

      In 1980, Ronald Reagan’s landslide victory returned the Senate to Republican control for the first time in a quarter of a century. The House remained in Democratic hands, but reform elements there saw little opportunity for change during Reagan’s first term, and campaign finance proposals languished.

      It was not until late 1986, when the Democrats recaptured control of the Senate, that campaign finance reform was to move once again to the top of the legislative agenda. By that time, the Republicans, too, had begun to see that certain types of reform might be in their interest. While far apart on solutions, leading legislators in both major U.S. political parties had become increasingly concerned as problems with the federal campaign finance system became more and more apparent.

      The failure of Congress to act on campaign finance reform throughout the 1980s can be attributed to the convergence of several political realities. The decade produced no scandal that sparked great public outrage. Numerous legislators in both major political parties did not see reform as being in their electoral self-interest, and the lack of public attention made it easy for them to ignore the issue. Finally, as pressure for change began to grow toward the end of the 1980s, sharp partisan differences between Democrats and Republicans emerged, making compromise elusive.

      As Mitch McConnell of Kentucky, the Senate Republicans’ point man on the issue, candidly observed: “Campaign finance is the rules of the game in our democracy, and either side would love to write the rules in a way that benefits them to the detriment of the other side” (Peck 1990, 3).

      The following section focuses on the issues that arose in the presidential and congressional systems of political finance during the 1980s, as well as the problems experienced by the Federal Election Commission. It also outlines some proposed legislative solutions.

      Presidential Campaigns

      Whatever its shortcomings, the U.S. system of public funding of presidential campaigns can claim some degree of success since first being implemented in 1976. During the pre-nomination period (the primary and caucus election process) it has enhanced access to voters by supplementing the treasuries of those candidates with limited name recognition and inadequate financial resources. For example, in 1976, a long-shot aspirant named Jimmy Carter captured both the Democratic presidential nomination and the election. In 1980, Republican George Bush, then relatively unknown to rank-and-file voters despite having held several appointed government positions, mounted an unexpectedly strong challenge to Ronald Reagan. It landed Bush the vice-presidential nomination and put him on the road to the White House.

      In addition, the combination of contribution limits and extensive disclosure and compliance requirements has prevented a recurrence of the free-wheeling atmosphere that pervaded the 1972 Nixon campaign. This suggests that the laws of the early 1970s have succeeded in altering the behaviour of candidates, committees and contributors so as to achieve some of the goals of campaign reform.

      However, if one views the reforms of the 1970s as an effort to regulate the flow of money into presidential campaigns, it is a regulatory structure in some jeopardy. While the structure worked well when first put into place in 1976, it began to spring leaks during the campaigns of 1980 and 1984; in 1988, major cracks appeared. The problems are attributable less to deficiencies in the law itself than to the inventiveness of political actors in circumventing the statutes and the difficulty of strictly regulating political money in a pluralistic society.

      At the outset, it is important to note that the laws governing presidential campaigns have changed little since the adoption of the FECA Amendments of 1974. In the pre-nomination period, a presidential aspirant is limited in how much he or she may receive from any individual contributor ($1 000) or a political action committee ($5 000). PAC donations are not “matchable.” But a candidate may receive public matching funds for each contribution from an individual up to $250. First, the candidate must demonstrate the viability of his or her campaign by collecting $5 000 (in up to $250 amounts) in each of 20 states, for a nationwide total of $100 000. There is a cap on the total amount of public funds available to a candidate during the pre-nomination period; it increases every four years based on the consumer price index (see table 1.2).

      (in millions of dollars)

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      Source: Citizens’ Research Foundation based on FEC data.

      Note: Totals may not be exact due to rounding.

      aBased on $10 million plus cost-of-living allowance (COLA) increases using 1974 as the base year. Eligible candidates may receive no more than one-half the national spending limit in public matching funds. To become eligible candidates must raise $5 000 in private contributions of $250 or less in each of 20 states. The federal government matches each contribution to qualified candidates up to $250. Publicly funded candidates also must observe spending limits in the individual states equal to the greater of $200 000 + COLA (base year 1974), or $0.16 x the voting-age population (VAP) of the state + COLA.

      bCandidates may spend up to 20 percent of the national spending limit for fund-raising.

      cLegal and accounting expenses to insure compliance with the law are exempt from the spending limit.

      dBased on $20 million + COLA (base year 1974).

      eBased on $0.02 x VAP of the United States + COLA.

      fCompliance costs are exempt from the spending limit.

      gBased on $2 million + COLA (base year 1974). Under the 1979 FECA amendments, the basic grant was raised to $3 million. In 1984, Congress raised the basic grant to $4 million.

      During the general election, the presidential nominee of each major political party receives full public financing. Each candidate receives a flat grant, which may be supplemented by a limited amount of funds spent on his or her behalf by each national political party. With that exception, the two presidential nominees are theoretically barred from raising private funds for their campaigns during the general election. As will be discussed later, these restrictions bear little resemblance to current reality.

      Some $500 million was spent on the 1988 presidential campaign, including the pre-nomination period, national conventions and the general election (Alexander and Bauer 1991, 11)7 More than a third of this represents funds provided by U.S. taxpayers (ibid., table 2.6). In return for this public subsidy, presidential candidates agreed to abide by expenditure limitations in the pre-nomination and general election periods and to limit use of their personal assets (as noted in Buckley v. Valeo in the last section). The expenditure ceilings also are indexed to inflation; consequently, the spending limits, as noted in table 1.1, more than doubled between 1976 and 1988.

      This, however, has not discouraged candidates and their operatives from devising increasingly imaginative means to get around these ceilings - so much so that they have become largely meaningless. There is no better example than the 1988 presidential campaigns, when Democrat Michael Dukakis and Republican George Bush each helped to raise half again as much money as the general election limit defined by law (Alexander and

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