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Study Notes

Campaign Finance

AQA, Edexcel, OCR, IB

Last updated 22 Mar 2021

Campaign Finance is the process by which political campaigns are financed. There are a huge amount of rules and regulations surrounding campaign finance - governing who can and cannot donate, and how much they are able to donate.

In the past, campaign finance was poorly regulated. The very first piece of successful legislation came in the 1970s with the Federal Election Campaign Act and the subsequent amendments.

This success was followed by the Bipartisan Campaign Reform Act of 2002 which passed some more rules on what is and is not allowed.

However, despite the success of the legislation, Supreme Court cases have meant that the rules have been changed again and, in some cases, parts of the legislation repealed.

Federal Election Campaign Act 1971

The Federal Election Campaign Act 1971 was the first successful attempt to reform campaign finance. It required all campaigns to disclose who had donated money and how much they had donated.

The act was amended in 1974, establishing the Federal Election Commission. In addition to the establishment of the FEC new regulations were introduced which included caps on:

  • Individual contributions
  • Contributions to candidates by Political Action Committees
  • Total campaign expenditures
  • Spending by Independent groups that were clearly identified to a candidate

Buckley v Valeo 1976

This Supreme Court case took on the act and its amendments.

The court ruled that caps on individual donations are fine as is the disclosure of them. However, caps on total expenditure and independent expenditure were unconstitutional.

Finally, the court ruled that the act can only apply to campaigns that explicitly advocate the election of a candidate.

Bipartisan Campaign Reform Act 2002

The Bipartisan Campaign Reform Act 2002 was designed to address soft money.

The act banned issue advocacy ads that named a candidate within 30 days of a primary, or 60 days of a general election. It also revised the campaign limits.

It also introduced the "Stand by your Ad" provision, which meant candidates had to declare that they approved of the messages that were being published.

The act has been known as the McCain-Feingold Act after its congressional sponsors, but the final act didn’t represent the original bill that was presented.

Challenges to BCRA

There have been 4 Supreme Court cases which have challenged the act:

  • McConnell v FEC: upheld most of the legislation
  • FEC v Wisconsin Right to Life Inc: the ban on mentioning a candidate was unconstitutional
  • Davis v FEC: overturned the provisions that stated candidates that were outspent by private wealth should have increased limits
  • Citizens United v FEC: Money = Free Speech: corporations were free under the first amendment to donate money without restrictions. This lead to the creation of Super PACs.

Read our study notes on soft money and hard money

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