A Citizen's Guide to Understanding Campaign Finance in America

The way in which campaigns are financed is the single most important issue we face in America today. Whatever other issues you may be concerned with, whether it be income inequality, climate change, criminal justice reform or healthcare, none of it can be resolved without first addressing the way in which political campaigns in the United States are financed.

Money has always been an integral part of American politics, but todays massive campaign operations and super PACS are far more than what anyone had ever imagined. Money from large wealthy donors has taken over our elections. Politicians rely on 0.26% of the population for nearly 70% of their campaign funding. In fact, just 158 families in the United States account for nearly half of all political spending.

The average cost of getting elected to congress is sky rocketing. The average spent by a winning Senator, $6 million, is nearly double what it was from the 1990’s. The total spending from the latest primary and special election in Alabama to replace Jeff Sessions' vacated seat was greater than $30 million.

The cost of winning a house seat has nearly quadrupled since 1986. The total amount spent by the candidates and outside groups in the June special election to fill the Georgia house seat of Tom Price was roughly $55 million.

Since there are limits on how much an individual can contribute to an actual candidate, the real growth in political spending has occurred by outside groups, Super PAC’s and dark money. One family, the Koch brothers, had famously pledged to spend up to $900 million on the 2016 election.

Why Campaign Financing is Important?

The entire financing structure has led to a whole host of problems. First and foremost, money has corrupted our electoral process. Our Supreme Court has ruled and defined corruption in the narrowest sense. That corruption only exists if there is quid pro quo. However, corruption and the corrupting influence of money is much broader than that. For example, our elected officials who sit on committees are fundraising from the people and the industries that they are responsible for regulating. In that circumstance there does not need to be a quid pro quo agreement for the corrupting influence of money to exist. It doesn’t take a lot of foresight to see the mutually beneficial relationship between the elected official and the large donor. It is an obvious conflict of interest. The elected representative will look favorably upon legislation that benefits his donor (who may not even be from his district) in order to get keep that revenue stream flowing.

The unregulated flow of money gives certain people preferential access  to our elected officials. This is what happens every day. A big donor gives, a big donor gets access, a big donor gets influence. If you are an average American, your influence over your representatives has been reduced and your speech has been limited. The chances you have the same preferential access to your elected officials are next to zero. We do not have the ability to be heard if we are not billionaires. In my district, NY-1, my representative’s biggest donors are the Koch brothers. They are in Kansas, yet they have a direct line and influence on the congressman who is supposed to be representing me in New York. The Koch’s and the other 158 families who are funding our electoral process aren’t just deciding who is going to win, but they are deciding who is even going to run.

Then there is the notion of our representatives actually doing the job of governing. Today, fundraising is a representative’s most important duty. Congressmen spend at least 4 hours on the phone soliciting donations. Our congressmen are spending this time fundraising when they could be attending to their committee assignments and solving any number of incredibly pressing issues and problems facing this country. We elect them to govern, but most of their time is spent fundraising. These politicians spend their time on the phone not with their constituents, but with wealthy people who can afford to write them big checks. They are not talking to teachers or plumbers or nurses and hearing the problems of working class Americans. They are hearing the problems of people who already have enough money to throw away on political campaigns. The person who sends a $10,000 check to a politician will always get his phone call answered, but the person who doesn’t, wont. What does that say about our country? About who we care about? Who we are listening to. 

The job of financing political campaigns impacts the people who would even want to run. It impacts the people who do run. It impacts how they govern. Who they govern for (their constituents or their financiers). It also impacts the kind of people who we see running for president. We don’t get the most qualified candidates for the job. Instead, we get the best fundraisers. It also impacts which areas of the country candidates will travel. Most Democratic fundraisers are in New York, Los Angeles or Silicon Valley so that is where the Democratic politicians spend most of their time. Fundraising also decides which elected officials sit on the most important committees. Back in the day, a Senator or congressman’s appointment to a committee was based upon seniority, today it is based upon fundraising.

Our current campaign financing structure is corrupt, it is dysfunctional, it is dangerous and it is broken. It is in desperate need of reform.  

Why Haven’t We Done Anything About It?

Well, we have tried. In the aftermath of the railroad scandals in the early 1900’s, Theodore Roosevelt was the first president to demand that congress ban corporate spending for political purposes. In response, congress passed a series of bills and amendments that made corporate contributions to political campaigns illegal. (‘Tillman Act of 1907’, ‘Federal Corrupt Practices Act’.) In the 1940’s following WWII and the steel workers strike, political contributions from labor unions were made illegal. In the 1970’s following the Watergate scandal, there were attempts at meaningfully regulating political campaign spending and fundraising. The Federal Election Campaign Act of 1971 (FECA) and subsequent 1974 amendments sought to increase the disclosures of contributions, place legal limits on campaign contributions, limit campaign expenditures, require campaigns to report the names, addresses and occupations of donors of more than $200 and provide for the public financing of presidential elections. The act also created the Federal Election Commission to oversee and enforce provisions of the law. FECA was an excellent step to control political spending.

Following the passage of FECA, there was a major push back from big money which resulted in a series of Supreme Court cases that struck down the key provisions of FECA and other campaign regulations. Those rulings weakened our electoral process and opened up our elections to unlimited and unregulated flows of money. 

The Supreme Court Cases that Destroyed Campaign Financing in American Elections

There are four key Supreme Court decisions which decimated our ability to regulate elections and control the flow of money. They were Buckley v. Valeo in 1976, Citizens United v. FEC in 2010, Speech Now v. FEC in 2010 and McCutcheon v. FEC in 2014.

The first case, and the probably the most important, was the decision in Buckley v. Valeo in 1976 which set the precedent for all to follow. Brought up in response to FECA, Buckley was the first notable linking of first amendment rights with political financing which equated money and political financing with free speech. The Buckley decision struck down and upheld various provisions of FECA, but the critical part of Buckley was the differentiation in terms of how the court interpreted the treatment of expenditures vs. contributions. That bifurcated how those items were treated under constitutional law. The court ruled that in terms of expenditures you cannot put limits (first amendment rights), but on contributions you can.  

Following Buckley was the more famous 2010 ‘Citizens United v. FEC’ which ruled that the government cannot restrict independent political expenditures of for-profit corporations, non-profit corporations or labor unions associations. While corporations and labor unions are still forbidden from contributing directly to campaigns or parties, ‘Citizens United’ reversed  a century of law and ruled that corporations could engage in independent political expenditures. The following ‘SpeechNow v. FEC ruling’ months later overturned rules limiting the amount corporations could spend. After 2010, corporations were able to contribute unlimited amounts of money to Super PACs that engaged in purely independent political expenditures.

In 2014, McCutcheon v. FEC was the last significant development in the destruction of our ability to regulate the corrupting influence of money into our political system. In McCutheon, the Supreme Court ruled that the aggregate contribution limit which previously limited individual contributors to an aggregate total of $117,000 was unconstitutional. The court upheld the per candidate contribution limits, but donors could give to as many candidates and organizations. It was this ruling that allowed the Koch brothers to commit to spending $900 million in a single election year.

What the Supreme Court Got Wrong

In 2010, the Supreme Court rulings reversed 100 years of law by reversing the restrictions on corporate spending and independent expenditures in elections. The court ruled that corporations should be allowed to engage in unlimited amounts of election spending so long as that there is no coordination with a campaign or a party. The majority opinion of the Supreme Court found that since corporations were disallowed from coordinating with campaigns or parties there wasn’t a chance for ‘quid pro quo’ corruption and that corporate independent expenditures were protected as free speech under the first amendment.

Since these large independent campaign expenses are unlimited, they have become an even bigger factor in powerful corporations and the wealthiest Americans gaining preferential access to elected officials. Additionally, these powerful groups gained unprecedented leverage over Representatives and Senators with the mere threat of the negative advertising power of Super PACs.

Besides the potential for outright corruption, the Supreme Court had completely ignored the concept of “the appearance of corruption”. When polled, the public overwhelmingly views corporate political expenditures as a method to gain unfair legislative access. This appearance of corruption in our electoral system is what led to Donald Trump’s ascension and why slogans such as “drain the swamp” were so effective. The mere appearance of corruption is toxic for any democracy.  

The Supreme Court also completely failed to recognize the inherent dangerous of having corporations involved in the political process. Contrary to Mitt Romney’s “Corporations are people my friend” comment in the 2012 election, corporations are not people. A corporation is an artificial legal entity that, unlike “people”, has perpetual life, limited liability and no ability to vote. Additionally, corporations are able to amass gigantic sums of money that a regular individual cannot. Corporations have no morality, no loyalty to United Sates and outside the duty to make a profit have no other purpose. Managers of these corporations have a fiduciary duty to maximize shareholder value. Therefore, if corporations are legally allowed engage in political spending then those corporate managers have a fiduciary duty to corrupt the government to favor their industry.

In order to justify the potential for unlimited political spending by corporations, the Supreme Court majority opinion argued that there is no such thing as “too much free speech.” However, since few private individuals can match the vast sums of money that corporations can amass, corporations have an unfair influence on the electoral process. Corporations now have the ability to outspend all others, to push other voices out of prime broadcasting spots and to dominate the “marketplace of ideas.” The unlimited spending by corporations thus marginalizes other less than well-funded groups or individuals.

The Supreme Court has taken a hacksaw to our ability to regulate campaign financing. The court has said the only constitutional grounds to go and discuss campaign limits are the grounds of corruption and the appearance of corruption, but the way they narrowly define corruption is that if you don’t have ‘quid pro quo’ then you don’t have corruption. The court has ignored the corrupting influence of money. There is a difference between individual corruption, where a politician takes cash bribes for their own enrichment and corruption of the process where wealthy people and industries are buying public policy. There is less individual corruption in congress than there ever had been, but the overall process is more corrupt than it has been maybe ever.

Why is Campaign Finance Reform Such an Uphill Battle?

Unlike almost any other issue in America, campaign finance reform has near universal support. Recent polling has shown support for an overhaul at 85%. This is an issue that crosses all party lines. Both Republican and Democratic voters support campaign finance reform. Politically, there is no other position. Every presidential candidate in the 2016 election talked about the influence of big money special interest in Washington. Jeb Bush said he wanted a constitutional amendment to overturn 'Citizens United'. Trump said 'I don’t want your money, I want your vote' and that was most of his appeal. Trump was going to take the country back from the people who unfairly rigged it. Hillary and Bernie both wanted a constitutional amendment. The entire country believes the system has been rigged in favor of the wealthy.

So, how can it be that reform is so difficult? In a word, Republicans.

While Republican voters overwhelming support campaign finance reform, the Republican party structure has taken the position that they believe speech is money and they oppose a constitutional amendment. They oppose every and any effort to fix the system.

Additionally, the ideology of Republican appointed Supreme Court Justices has destroyed our ability to regulate campaign finance. In the 6 key Supreme Court cases over the last 40 years, Republican appointed Supreme Court Justices have voted 28 times in favor and 7 times against loosening restrictions on campaign contributions and political expenditures for the wealthy. On the same cases Democratic appointed Supreme Court Justices voted 2 times in favor and 17 times against loosening those restrictions. 

Republican Justices alone are responsible for the hollowing of our protections against big money interests and the only way to fix it is with an a constitutional amendment. 

In 2014 Democratic Senator Tom Udall did propose that amendment to the constitution:

"The purpose of  Senate Joint Resolution 19 is to restore to Congress and the States the authority to set reasonable limits on financial contributions and expenditures intended to influence our elections. Over the last decade, a narrow majority of the United States Supreme Court has eviscerated nearly every reasonable campaign finance law that protects hardworking Americans and enables them to participate in our democracy. The Court's radical and novel reinterpretation of the First Amendment contradicts the principles of freedom, equality, and self-government upon which this Nation was founded. As a result of the Court's decisions, a small minority of wealthy individuals and special interests have been able to, and increasingly will be able to, drown out the voices of ordinary Americans and skew both the electoral process and public policy outcomes. This proposed amendment would restore the First Amendment as the Founders intended and preserve the protections that ensure all voices can be heard in the democratic process.”

That proposal to amend the constitution which required 66 (2/3rds of the Senate) to advance to the next step was voted down 54-42 on purely partisan lines. 54 Democratic senators voting for and 42 Republicans voting against. 100% of the Republican Senators voted against a resolution that 85% of American people support. 

If you walk around the country and talk to anyone, they will support this idea. If you go up to the hill in Washington DC and talk to a Republican congressman about it, they will slam the door in your face. They do not represent the people. They represent big money interest. 

Conclusion – The Amendment

What we have seen with this last election and the surge of populist candidates (whether real or fake) like Trump and Sanders, the dynamic is changing. The electorate is unsettled by money influencing our electoral process. We are going to see this keep changing and continuing to pressure Washington to change the rules. But there is a total division between what you hear and see out in America and what the polls show you and what you hear up on the hill in DC.

The fix to the constitution is simple. All we have to do is add one line. The constitution must grant congress the authority to regulate campaign contributions and expenditures.

It is up to us to force this change on Washington. Only an active well informed engaged electorate can make this change happen. It will not happen itself. 


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