The first Federal campaign finance legislation was an 1867 law that prohibited Federal officers from requesting contributions from Navy Yard workers. Over the next hundred years, Congress enacted a series of laws which sought broader regulation of Federal campaign financing. These legislative initiatives, taken together, sought to:
This effort to bring about more comprehensive campaign finance reform began in 1907 when Congress passed the Tillman Act, which prohibited corporations and national banks from contributing money to Federal campaigns. The first Federal campaign disclosure legislation was a 1910 law affecting House elections only. In 1911, the law was amended to cover Senate elections as well, and to set spending limits for all Congressional candidates.
The Federal Corrupt Practices Act of 1925, which affected general election activity only, strengthened disclosure requirements and increased expenditure limits. The Hatch Act of 1939 and its 1940 amendments asserted the right of Congress to regulate primary elections and included provisions limiting contributions and expenditures in Congressional elections. The Taft-Hartley Act of 1947 barred both labor unions and corporations from making expenditures and contributions in Federal elections.
The campaign finance provisions of all of these laws were largely ignored, however, because none provided an institutional framework to administer their provisions effectively. The laws had other flaws as well. For example, spending limits applied only to committees active in two or more States. Further, candidates could avoid the spending limit and disclosure requirements altogether because a candidate who claimed to have no knowledge of spending on his behalf was not liable under the 1925 Act.
The evasion of disclosure provisions became evident when Congress passed the more stringent disclosure provisions of the 1971 Federal Election Campaign Act (FECA). In 1968, still under the old law, House and Senate candidates reported spending $8.5 million, while in 1972, after the passage of the FECA, spending reported by Congressional candidates jumped to $88.9 million.1
The Federal Election Campaign Act of 1971 (P.L. 92-225), together with the 1971 Revenue Act (P.L. 92-178), initiated fundamental changes in Federal campaign finance laws. The FECA, effective April 7, 1972, not only required full reporting of campaign contributions and expenditures, but also limited spending on media advertisements.2 (These limits were later repealed.)
The FECA also provided the basic legislative framework for separate segregated funds,3 popularly referred to as PACs (political action committees), established by corporations and unions. Although the Tillman Act and the Taft-Hartley Act of 1947 banned direct contributions by corporations and labor unions to influence Federal elections, the FECA provided an exception whereby corporations and unions could use treasury funds to establish, operate and solicit voluntary contributions for the organization's separate segregated fund (i.e., PAC). These voluntary donations could then be used to contribute to Federal races.
Under the Revenue Act-the first of a series of laws implementing Federal financing of Presidential elections-citizens could check a box on their tax forms authorizing the Federal government to use one of their tax dollars to finance Presidential campaigns in the general election.4 Congress implemented the program in 1973 and, by 1976, enough tax money had accumulated to fund the 1976 election-the first publicly funded Federal election in U.S. history.
The Federal Election Campaign Act of 1971 did not provide for a single, independent body to monitor and enforce the law. Instead, the Clerk of the House, the Secretary of the Senate and the Comptroller General of the United States General Accounting Office (GAO) monitored compliance with the FECA, and the Justice Department was responsible for prosecuting violations of the law referred by the overseeing officials. Following the 1972 elections, although Congressional officials referred about 7,000 cases to the Justice Department, and the Comptroller General referred about 100 cases to Justice,5 few were litigated.
Not until 1974, following the documentation of campaign abuses in the 1972 Presidential elections, did a consensus emerge to create an independent body to ensure compliance with the campaign finance laws. Comprehensive amendments to the FECA (P.L. No. 93-443) established the Federal Election Commission, an independent agency to assume the administrative functions previously divided between Congressional officers and GAO. The Commission was given jurisdiction in civil enforcement matters, authority to write regulations and responsibility for monitoring compliance with the FECA. Additionally, the amendments transferred from GAO to the Commission the function of serving as a national clearinghouse for information on the administration of elections.
Under the 1974 amendments, the President, the Speaker of the House and the President pro tempore of the Senate each appointed two of the six voting Commissioners. The Secretary of the Senate and the Clerk of the House were designated nonvoting, exofficio Commissioners. The first Commissioners were sworn in on April 14, 1975.
The 1974 amendments also completed the system currently used for the public financing of Presidential elections. The amendments provided for partial Federal funding, in the form of matching funds, for Presidential primary candidates and also extended public funding to political parties to finance their Presidential nominating conventions.
Complementing these provisions, Congress also enacted strict limits on both contributions and expenditures. These limits applied to all candidates for Federal office and to political committees influencing Federal elections.6
Another amendment relaxed a 1939 prohibition on contributions from Federal government contractors. The FECA, as amended, now permitted corporations and unions with Federal contracts to establish and operate PACs.
Key provisions of the 1974 amendments were immediately challenged as unconstitutional in a lawsuit filed by Senator James L. Buckley (Republican Senator from New York) and Eugene McCarthy (former Democratic Senator from Minnesota) against the Secretary of the Senate, Francis R. Valeo. The Supreme Court handed down its ruling on January 30, 1976. Buckley v. Valeo, 424 U.S. 1 (1976).
The Court upheld contribution limits because they served the government's interest in safeguarding the integrity of elections. However, the Court overturned the expenditure limits, stating: "It is clear that a primary effect of these expenditure limitations is to restrict the quantity of campaign speech by individuals, groups and candidates. The restrictions. . . limit political expression at the core of our electoral process and of First Amendment freedoms." Acknowledging that both contribution and spending limits had First Amendment implications, the Court stated that the new law's "expenditure ceiling impose significantly more severe restrictions on protected freedom of political expression and association than do its limitations on financial contributions." The Court implied, however, that the expenditure limits placed on publicly funded candidates were constitutional because Presidential candidates were free to disregard the limits if they chose to reject public financing; later, the Court affirmed this ruling in Republican National Committee v. FEC. 445 U.S. 955 (1980).
The Court also sustained other provisions of the public funding law and upheld disclosure and recordkeeping requirements. However, the Court found that the method of appointing FEC Commissioners violated the constitutional principle of separation of powers, since Congress, not the President, appointed four of the Commissioners, who exercised executive powers. As a result, beginning on March 22, 1976, the Commission could no longer exercise its executive powers.7 The agency resumed full activity in May, when, under the 1976 amendments to the FECA, the Commission was reconstituted and the President appointed six Commission members, who were confirmed by the Senate.
In response to the Supreme Court's decision, Congress revised campaign finance legislation yet again. The new amendments, enacted on May 11, 1976, repealed expenditure limits (except for candidates who accepted public funding) and revised the provision governing the appointment of Commissioners.
The 1976 amendments contained other changes, including provisions that limited the scope of PAC fundraising by corporations and labor organizations. Preceding this curtailment of PAC solicitations, the FEC had issued an advisory opinion, AO 197523 (the SunPAC opinion), confirming that the 1971 law permitted a corporation to use treasury money to establish, operate and solicit contributions to a PAC. The opinion also permitted corporations and their PACs to solicit the corporation's employees as well as its stockholders. The 1976 amendments, however, put significant restrictions on PAC solicitations, specifying who could be solicited and how solicitations would be conducted. In addition, a single contribution limit was adopted for all PACs established by the same union or corporation.
Building upon the experience of the 1976 and 1978 elections, Congress made further changes in the law. The 1979 amendments to the FECA (P.L. 96-187), enacted on January 8, 1980, included provisions that simplified reporting requirements, encouraged party activity at State and local levels and increased the public funding grants for Presidential nominating conventions. Minor amendments were adopted in 1977, 1982, 1983 and 1984.
In one decade, Congress has fundamentally altered the regulation of Federal campaign finances. Through the passage of the Revenue Act, the FECA and its amendments, Congress has provided public financing for Presidential elections, limited contributions in Federal elections, required substantial disclosure of campaign financial activity and created an independent agency to administer and enforce these provisions.
1. Congressional Quarterly Weekly Report, Vol. xxvii, No. 49, December 5, 1969, p. 2435; Clerk of the House, "The Annual Statistical Report of Contributions and Expenditures Made During the 1972 Election Campaigns for the U.S. House of Representatives" (1974), p. 161; Secretary of the Senate, "The Annual Statistical Report of Receipts and Expenditures Made in connection with Elections for the U.S. Senate in 1972" [undated], p. 33.
2. "Contribution" and "expenditure" are special terms defined in 2 U.S.C. and 11 CFR.
3. "Separate segregated fund" is a special term defined in 2 U.S.C. and 11 CFR.
4. In 1966, Congress enacted a law to provide for public funding of Presidential elections, but suspended the law a year later. It would have included a taxpayers' checkoff provision similar to that later embodied in the 1971 law.
5. Comptroller General of the United States, "Report of the Office of Federal Elections of the General Accounting Office in Administering the Federal Election Campaign Act of 1971" (February 1975), pp. 23 and 24.
6. "Political committee" is a special term defined in 2 U.S.C. and 11 CFR.
7. The Supreme Court stayed it judgment concerning Commission powers for 30 days; the stay was extended once.