Order Code IB87020
CRS Issue Brief for Congress
Received through the CRS Web
Campaign Financing
Updated January 12, 2000
Joseph E. Cantor
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Evolution of the Current System
Campaign Finance Practices and Related Issues
Increased Campaign Costs
PACs and Other Sources of Campaign Funds
Competitiveness in Elections
Perceived Loopholes in Current Law
Bundling
Soft Money
Independent Expenditures
Issue Advocacy
Policy Options
Campaign Spending Limits and Government Incentives or Benefits
Limiting PACs and Bolstering Other Sources
Promoting Electoral Competition
Closing Perceived Loopholes in Current Law
Bundling
Soft Money
Independent Expenditures
Issue Advocacy
Legislative Action in Recent Congresses
105th Congress
106th Congress
LEGISLATION
FOR ADDITIONAL READING
CRS Issue Briefs
CRS Reports

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Campaign Financing
SUMMARY
Concerns over financing federal elections
Democrats in the 101st-103rd Congresses
have become a seemingly perennial aspect of
passed bills with spending limits, benefits, and
our political system. The most enduring issues
PAC and loophole curbs. The 101st and 103rd
have been high campaign costs and reliance on
Congress bills were not reconciled; a 102nd
interest groups for needed campaign funds.
Congress conference bill was vetoed.

Reformers in the 104th Congress sought a
Rising election costs have fostered a
similar measure but failed on a Senate cloture
sense in some quarters that spending is out of
vote; House Republicans offered a bill giving
control, with too much time spent raising
parties and local citizens a greater role, which
funds and elections “bought and sold.” But
was defeated, as was a Democratic alternative.
many see spending in line with costs of other
goods and services, especially media, with high
The 105th Congress saw 135 proposed
spending reflecting a desirable level of elec-
reform bills and numerous hearings. The
toral competition.
House debated reform twice. On March 30,
1998, it considered a GOP-leadership bill and
Debate has also centered on the role of
three narrower measures under suspension of
interest groups in campaign funding, especially
rules, passing one bill to ban foreign national
through political action committees (PACs).
contributions and one to improve disclosure
But funds from that component have dropped
and enforcement and defeating the leadership
since 1988 and, while interest groups' role still
bill and the Paycheck Protection Act. In
underlies the debate, PACs per se have been
response to a discharge petition drive, the
increasingly supplanted by other concerns.
House renewed consideration of the issue on
May 21, in a lengthy process focused on the
Especially since the 1996 elections,
“freshman bipartisan bill” (H.R. 2183), 11
concerns grew over large sums of money
substitutes, and a constitutional amendment.
raised outside federal election law. Devices
Debate ended August 6, with passage of H.R.
such as soft money and issue advocacy raised
2183, as revised (the Shays-Meehan bill).
questions over current regulations’ integrity
and feasibility of any campaign money limits.
On three occasions in the 105th Congress,
the Senate debated the McCain-Feingold bill
The differences in perceptions of the
(the Shays-Meehan companion), each time
campaign finance system are compounded by
ending in failed cloture votes: three in October
different reform approaches of the major
1997, and one each in February and September
parties. Democrats have tended to favor
1998 on a narrowed version of the bill. With
spending limits, usually with public funding or
the latter vote, the campaign finance issue died
benefits to induce voluntary adherence. Re-
for the 105th Congress.
publicans have, in general, opposed such limits
and public funding, seeking instead to change
In the 106th Congress, the House passed
the mix of funding sources and encourage
the Shays-Meehan bill, as amended, on
competition and local resident giving.
September 14. Senate debate on the issue
began October 13 and ended October 20,
following two unsuccessful cloture votes.
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MOST RECENT DEVELOPMENTS
Senator Mitch McConnell and Majority Leader Trent Lott announced November 4 that
the Rules and Administration Committee would hold hearings in Spring 2000 on campaign
finance reform and would mark up legislation at that time: S. 1816 (Hagel-Kerrey), to limit
soft money donations to national parties, increase limits on hard money contributions, and
increase and expedite disclosure. (An identical bill—H.R. 3243—was offered in the House
by Rep. Terry.) On November 3, the House Education and Labor Committee reported H.R.
2434 (Goodling), the Worker Paycheck Fairness Act of 1999.
BACKGROUND AND ANALYSIS
Evolution of the Current System
Today’s federal campaign finance law evolved during the 1970s out of five major
statutes and a paramount Supreme Court case. That case not only affected earlier statutes,
but it continues to shape the dialogue on campaign finance reform.
The 1971 Federal Election Campaign Act (FECA), as amended in 1974, 1976, and 1979,
imposed limits on contributions, required disclosure of campaign receipts and expenditures,
and set up the Federal Election Commission (FEC) as a central administrative and
enforcement agency. The Revenue Act of 1971 inaugurated public funding of presidential
general elections, with funding of primaries and nominating conventions added by the 1974
FECA Amendments. The latter also imposed certain expenditure limits, struck down by the
Supreme Court’s landmark Buckley v. Valeo ruling [424 U.S. 1 (1976)].
In the Buckley ruling, the Court upheld the Act’s limitations on contributions as
appropriate legislative tools to guard against the reality or appearance of improper influence
stemming from candidates’ dependence on large campaign contributions. However, Buckley
invalidated the Act’s limitations on independent expenditures, on candidate expenditures from
personal funds, and on overall campaign expenditures. These provisions, the Court ruled,
placed direct and substantial restrictions on the ability of candidates, citizens, and associations
to engage in protected First Amendment rights. The Court saw no danger of corruption
arising from large expenditures, as it did from large contributions, which alone could justify
the First Amendment restrictions involved. Only voluntary limits could be sustained, perhaps
in exchange for government benefits. Such a plan was specifically upheld in the existing
presidential public funding system, as a contractual agreement between the government and
the candidate. The Court’s dichotomous ruling, allowing limits on contributions but striking
down mandatory limits on expenditures, has shaped subsequent campaign finance practices
and laws, as well as the debate over campaign finance reforms.
Campaign Finance Practices and Related Issues
Since the mid-1970s, the limits on contributions by individuals, political action
committees (PACs), and parties, and an absence of congressional spending limits, have
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governed the flow of money in congressional elections. Throughout the 1980s and much of
the 1990s, the two paramount issues raised by campaign finance practices were the
phenomena of, first, rising campaign costs and the large amounts of money needed for
elections and, second, the substantial reliance on PACs as a source of funding. Concerns
were also voiced, by political scientists and the Republican congressional minority, over a
third issue: the level of electoral competition, as affected by finance practices. Finally,
perceived loopholes in current law were a source of increasing debate since the mid-1980s.
Today, the debate has shifted considerably. The PAC issue has been greatly supplanted
by more fundamental issues of electoral regulation, with observers finding new appreciation
for the limited and disclosed nature of PAC money. Concerns over competition have abated
since Republicans won control of Congress in 1994, despite the perceived incumbency bias
in the finance system. The issue of high campaign costs and the concomitant need for vast
resources continues to underlie the debate, but even this has been almost overshadowed —
particularly since 1996—by concerns over the system’s perceived loopholes. Although these
practices are (largely) presumably legal, they may violate the law’s spirit, raising a basic
question of whether money in elections can, let alone should, be regulated.
Increased Campaign Costs
Since first being systematically compiled in the 1970s, campaign expenditures have risen
substantially, even exceeding the overall rise in the cost of living. Campaign finance authority
Herbert Alexander estimated that $540 million was spent on all elections in the U.S. in 1976,
rising to $4 billion in 1996. Aggregate costs of House and Senate campaigns more than
sextupled between 1976 and 1996, from $115.5 million to $765.3 million, while the cost of
living rose by less than threefold. Preliminary 1998 data show an overall decline to $740.4
million, with Senate spending nearly the same as in 1996 but House spending notably less than
1996, due, in some measure, to an almost 20% drop in the number of candidates. Campaign
costs for average winning candidates, a useful measure of the real cost of running for office,
show an increase on the House side from $87,000 in 1976 to $679,000 in 1996, with a drop
to $666,000 in 1998; a winning Senate race went from $609,000 in 1976 to $3.8 million in
1996, increasing to $4.5 million in 1998.
The above data are cited by many as evidence that our democratic system of government
has suffered as election costs have grown to levels often considered exorbitant. Specifically,
it is argued that officeholders must spend too much time raising money, at the expense of their
public duties and communicating with constituents. The high cost of elections and the
perception that they are “bought and sold” are seen as contributing to public cynicism about
the political process. Some express concern that spiraling campaign costs has resulted in
more wealthy individuals seeking office or determining election winners, denying
opportunities for service to those lacking adequate resources or contacts. Others see a
correlation between excessive, available money and the perceived increased reliance on
sophisticated, often negative media advertising.
Not all observers view the high cost of elections with alarm. Many insist we do not
spend too much on elections, and maybe that we don’t spend enough. They contrast the
amount spent on elections with that spent by government at all levels, noting that only a
fraction of a percent is spent to choose those who make vital decisions on the spending of tax
dollars. Similarly, they contrast election costs with spending on commercial advertising: the
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nation’s two leading commercial advertisers, Proctor & Gamble and General Motors, spent
more in promoting their products in 1996 ($5 billion) than was spent on all U.S. elections that
year. In such a context, these observers contend, the costs of political dialogue may not be
excessive.
High election costs are seen largely as a reflection of the paramount role of media in
modern elections. Increasingly high television costs and costs of fundraising in an era of
contribution limits require candidates to seek a broad base of small contributors—a
democratic, but time-consuming, expensive process—or to seek ever-larger contributions
from small groups of wealthy contributors. It has been argued that neither wealthy candidates
nor negative campaigning are new or increasing phenomena but merely that better disclosure
and television’s prevalence make us more aware of them. Finally, better-funded candidates
do not always win, as some recent elections show.
PACs and Other Sources of Campaign Funds
Issues stemming from rising election expenses were, for much of the past two decades,
linked to substantial candidate reliance on PAC contributions. The perception that
fundraising pressures might lead candidates to tailor their appeals to the most affluent and
narrowly “interested” sectors raised perennial questions about the resulting quality of
representation of the whole society. The role of PACs, in itself and relative to other sources,
became a major issue; in retrospect, however, it appears that the issue was really about the
role of interest groups and money in elections, PACs being the most visible vehicle thereof.
As discussed below, the PAC issue per se has seemed greatly diminished by recent events,
while concerns over interest group money through other channels have grown.
Through the 1980s, statistics showed a significant increase in PAC importance. From
1974-1988, PACs grew in numbers from 608 to a high of 4,268, in contributions to House
and Senate candidates from $12.5 million to $147.8 million (a 400% rise in constant dollars),
and in relation to other sources from 15.7% of congressional campaign receipts to 33.7%.
Although PACs remain a considerable force, data show a relative decline in their role since
1988: the percentage of PAC money in candidate receipts dropped to a low of 27% in 1994
(with slight rises through 1998, to 29.7%); the number of PACs dropped to 3,798 in 1998;
contributions to candidates increased negligibly in constant dollar terms ($206.8 million in
1998); and, after signs that individual giving to candidates had been declining as a component
(vis-a-vis PACs), some leveling off has occurred recently, with individuals providing 62% of
Senate and 53% of House receipts in 1998, for example.
It should be noted that, despite the aggregate data on the relative decline of the PAC
role, it provides a still considerable share in various subgroups. For example, in 1998, House
candidates got 36% of their funds from PACs, and House incumbents received 42%. To
critics, PACs raise troubling issues in the campaign financing debate: Are policymakers
beholden to special interests for help in getting elected, impairing their ability to make policy
decisions in the national interest? Are PACs overshadowing average citizens, particularly in
Members’ states and districts? Does the appearance of quid pro quo relationships between
special interest givers and politician recipients, whether or not they actually exist, seriously
undermine public confidence in the political system?
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Defenders of PACs have long viewed them as reflecting the nation’s historic pluralism,
representing not a monolithic force but a wide variety of interests. Rather than
overshadowing individual citizens, these observers see them merely as groups of such citizens,
giving voice to many who were previously uninvolved. PACs are seen as promoting, not
hindering, competition in elections, by funding challengers in the more closely contested
races. In terms of influence on legislative votes, donations are seen as generally given to
reward past votes and decisions rather than to alter future ones. Defenders also challenge the
presumed dichotomy between special and national interest, asserting that the latter is simply
the sum total of the former. PACs, they argue, offer the public clearer knowledge of how
interest groups promote their agendas, particularly noteworthy in comparison with the flood
of money in 1996 and 1998 that was undisclosed and unregulated.
Competitiveness in Elections
Many view the campaign finance system in terms of a general imbalance in resources
between incumbents and challengers, as evidenced by a spending ratio of more than 3.5:1 in
recent House and some 2:1 in recent Senate elections. (In 1998, there was a much closer ratio
in the House, with an average expenditure of $643,000 for an incumbent vs. $252,000 for a
challenger—a 2.6 to 1 ratio, while the average Senate incumbent’s $4.7 million exceeded the
average challenger’s $2.9 million by 1.6 to 1.) Incumbents’ generally easier access to money
is seen as the real problem, not the aggregate amounts spent by all candidates.
Those concerned about competitiveness also view the PAC issue through this lens. With
some 79% of PAC contributions going to incumbents in 1998, the question of PACs “buying
access” with those most likely to be elected is seen as a more serious problem than the
generally high amounts of PAC giving in the aggregate. But others dispute that the problem
is really an incumbency one or that electoral competition should be the main goal of reform.
After all, there is a fair degree of turnover in Congress (through defeats, retirements, etc.),
and the system does allow changed financing patterns with sometimes unexpected results, as
it did in 1994. Aggregate incumbent-challenger disparities may be less meaningful, it is noted,
than those on the closer spending levels in hotly contested or open races.
Perceived Loopholes in Current Law
Interest has intensified, especially since 1996, over campaign finance practices that some
see as undermining the law’s contribution and expenditure limits and its disclosure
requirements. Although these practices may be legal, they are seen as “loopholes” through
which electoral influence is sought by spending money in ways that detract from public
confidence in the system and that are beyond the scope intended by Congress. Some of the
prominent practices are bundling, soft money, independent expenditures, and issue advocacy.
Bundling. This involves collecting checks for (and made payable to) a specific
candidate by an intermediate agent. A PAC or party may thus raise money far in excess of
what it can legally contribute and receive recognition for its endeavors by the candidate.
Soft Money. This refers to money that may indirectly influence federal elections but is
raised and spent outside the purview of federal laws and would be illegal if spent directly on
a federal election. The significance of soft money stems from several factors: (1) many states
permit direct union and corporate contributions and individual donations in excess of $25,000
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in state campaigns, all of which are prohibited in federal races; (2) under the 1979 FECA
Amendments, such money may be spent by state and local parties in large or unlimited
amounts on grassroots organizing and voter drives that may benefit all party candidates; and
(3) publicly-funded presidential candidates may not spend privately raised money in the
general election. In recent presidential elections, national parties have waged extensive efforts
to raise money for their state affiliates, partly to boost the national tickets beyond what could
be spent directly. In 1996, $262 million in soft money was raised by the major parties, which
some saw as circumvention of the Clinton and Dole campaign limits; in 1998, the parties
raised $224 million in soft money.
Independent Expenditures. The 1976 Buckley ruling allowed unlimited spending by
individuals or groups on communications with voters to expressly support or oppose clearly
identified federal candidates, made without coordination or consultation with any candidate.
Independent expenditures totaled $11.1 million in 1992 and $22.4 million in 1996. These
expenditures may hinder a candidate’s ability to compete with both an opponent and outside
groups. They may also impair a sense of accountability between a candidate and voters, and
many question whether some form of unprovable coordination may often occur in such cases.
Issue Advocacy. Although federal law regulates expenditures in connection with federal
elections, it uses a fairly narrow definition for what constitutes such spending, per several
court rulings on First Amendment grounds. The law, as affected by court rulings, allows
regulation only of communications containing express advocacy, i.e., that use explicit terms
urging the election or defeat of clearly identified federal candidates. By avoiding such terms,
groups may promote their views and issue position in reference to particular elected officials,
without triggering the disclosure and source restrictions of the FECA. Such activity, known
as issue advocacy, is often perceived as having the intent of bolstering or detracting from the
public image of officials who are also candidates for office. In 1996, an estimated $135
million was spent on issue advocacy; the estimate for 1998 ranged from $275-$340 million.
Also, groups ranging from labor unions to the Christian Coalition promoted their policy views
through voter guides, which presented candidates’ views on issues in a way that some saw
as helpful to some candidates and harmful to others, without meeting the standards for FECA
coverage.
Policy Options
The policy debate over campaign finance laws proceeds from the philosophical
differences over the underlying issues discussed above, as well as the more practical, logistical
questions over the proposed solutions. Two primary considerations frame this debate. What
changes can be made that will not raise First Amendment objections, given court rulings in
Buckley and other cases? What changes will not result in new, unforeseen, and more
troublesome practices? These considerations are underscored by the experience with prior
amendments to FECA, such as PAC growth after the 1974 limits on contributions.
Just as the overriding issues have centered, at least until recently, around election costs
and funding sources, the most prominent legislation long focused on controlling campaign
spending, usually through such voluntary government incentives as public funding or
cost-reduction benefits, and on limiting or banning PACs and generally altering the relative
importance of various funding sources. Some have seen both concepts primarily in the context
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of promoting electoral competition, to remedy or at least not exacerbate perceived inequities
between incumbents and challengers. Increasingly since the mid-1980s, concerns over
loopholes that undermine federal regulation have led to proposals to curb such practices,
particularly since the 1996 elections. (Conversely, proposals have also urged less regulation,
on the ground that it inherently invites circumvention.)
Campaign Spending Limits and Government Incentives or Benefits
The debate over campaign finance reform has often focused on the desirability of limiting
campaign spending. To a great extent, this debate has been linked with public financing of
elections. The coupling of these two controversial issues stems from Buckley’s ban on
mandatory spending limits. The ruling allowed voluntary limits, with adherence a prerequisite
for subsidies. Hence the notion arose since the 1970s that spending limits must be tied to
public benefits, absent a constitutional amendment.
Public funding not only serves as an inducement to voluntary limits, but by limiting the
role of private money, it is billed as the strongest measure toward promoting the integrity of
and confidence in the electoral process. Furthermore, it could promote competition in
districts with strong incumbents or one-party domination. Public financing of congressional
elections has been proposed in nearly every Congress since 1956 and was passed by the
Senate twice in the 93rd Congress. The nation has had publicly funded presidential elections
since 1976, and tax incentives for political donations were in place from 1972 to 1986.
Objections to public financing are numerous, many rooted in philosophical opposition
to funding elections with taxpayer money, supporting candidates whose views are antithetical
to those of many taxpayers, and adding another government program in an era of fiscal
restraint. The practical objections are also serious: How can a system be devised that
accounts for different natures of districts and states, with different styles of campaigning and
disparate media costs, and that is equitable to all candidates—incumbent, challenger, or
open-seat, major or minor party, serious or “longshot?”
A major challenge to spending limit supporters has been how to curb, if not eliminate,
public funding from their proposals. Although spending limits may have wide public support,
most evidence suggests far less support, even cynicism, for public financing. Some principal
bills in recent Congresses were revised, moving from a strong public subsidy component to
more cost-saving benefits (e.g., reduced postal and broadcast rates), whose cost may be borne
less directly, if at all, by taxpayers. Despite efforts to downplay public funding, congressional
opposition to spending limits has remained strong. In the 105th Congress, the principal reform
bills debated on the floor contained neither campaign spending limits nor public funds,
reflecting not only the overriding concerns over soft money and issue advocacy but also the
changed political climate since the 1970s.
Stemming from the spending limits debate have been proposals to lower campaign costs,
without spending limits. Proposals for free or reduced rate broadcast time and postage have
received some notable bipartisan support. Such ideas seek to reduce campaign costs and the
need for money, without the possibly negative effects of arbitrary limits.
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Limiting PACs and Bolstering Other Sources
Until recently, most proposed bills sought, at least in part, to curb PACs’ perceived
influence, either directly, through prohibition or reduced limits, or indirectly, through
enhancing the role of individuals and parties. Current law allows individuals to give $1,000
per candidate, per election, while most PACs—if they qualify as “multicandidate
committees”—may give $5,000 per candidate, increasing their ability to assist candidates, and
without an aggregate limit such as that affecting individuals.
Three chief methods of direct PAC curbs were prominent in proposals advanced through
the mid-1990s: banning PAC money in federal elections; lowering the $5,000 limit; and
limiting candidates’ aggregate PAC receipts. These concepts were included, for example,
in all of the bills that the House and Senate voted on in the 101st-104th Congresses.
Although support for such proposals was fueled by a desire to reduce the perceived role of
interest groups, each proposal had drawbacks, such as constitutional questions about limiting
speech and association rights and the more practical concern over the 69% devaluation of
the $5,000 limit by inflation since it was set in 1974.
Yet another concern raised during that period was the potential encouragement for
interest groups to shift resources to “independent” activities, which are less accountable to
voters and more troublesome for candidates in framing the debate. Furthermore, independent
advertisements were often marked by negativity and invective. If such prospects gave pause
to lawmakers during the 1980s, the surge of financial activity outside the framework of
federal election law since 1996 has largely dampened attempts to further limit PACs. The
major reform bills in the 105th Congress contained no additional PAC restrictions.
Partly because of this problem, both before and after 1996, many have looked to more
indirect ways to curb PACs and interest groups, such as raising limits on individual or party
donations to candidates. Raising these limits has also been proposed on a contingency basis
to offset such other sources as wealthy candidates spending large personal sums on their
campaigns. While higher limits might counterbalance PACs and other groups and offset
effects of inflation, opponents observe that few Americans can afford to give even $1,000,
raising age-old concerns about “fat cat” contributors.
House Republicans have pushed to boost the role of individuals in candidates’ states or
districts, to increase ties between Members and constituents. By requiring a majority of
funds to come from the state or district (or prohibiting out-of-state funds), supporters expect
to indirectly curb PACs, typically perceived as out-of-state, or Washington, influences.
Increasing or removing party contribution and coordinated expenditure limits has also
received support. Supporters say that party support can be maximized without concern about
influence peddled, while strengthening party ties and facilitating effective policymaking.
Opponents note that many of the prominent allegations in 1996 involved party-raised funds.
Also, even with some degree of philosophical agreement on increasing the party role, current
political realities present some obstacles, i.e., the difference in the relative resources of the
parties: the Republican national committees’ federal accounts raised over $285 million in the
1998 election cycle, compared with $160 million by the Democratic committees.
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Promoting Electoral Competition
Proposals to reduce campaign costs without limits are linked to broader concerns about
electoral competition. Political scientists tend to view spending limits as giving an advantage
to incumbents, who begin with name recognition and perquisites of office (e.g., staff,
newsletters). Challengers often spend money just to build name recognition. Limits, unless
high, may augment an institutional bias against challengers or unknown candidates.
Conversely, public funding could help challengers to compete with well-funded incumbents.
Many of those concerned about electoral competition consequently oppose spending
limits, although they are philosophically opposed to public funding. These individuals tend
to favor approaches reflecting more “benign” forms of regulation, such as allowing higher
limits on party contributions to challengers in early stages, or, generally, allowing greater
latitude in challengers’ ability to raise needed funds. At the very least, these individuals insist
that changes not be made that, in their view, exacerbate perceived problems.
Closing Perceived Loopholes in Current Law
Proposals have increasingly addressed perceived loopholes in the FECA, and indeed this
area is now the primary focus of reform efforts. This debate underscores a basic philosophical
difference between those who favor and oppose government regulation of campaign finances.
Opponents say that regulation invites attempts at subterfuge, that interested money will
always find its way into elections, and that the most one can do is see that it is disclosed.
Proponents argue that while it is hard to restrict money, it is a worthwhile goal, hence one
ought to periodically fine-tune the law to correct “unforeseen consequences.” Proposed
“remedies” stem from the latter view, i.e., curtail the practices as they arise.
Bundling. Most proposals in this area, which is seen as less an issue now than in prior
years, would count contributions raised by an intermediary toward both the donor’s and
intermediary’s limit. An agent who had reached the limit could not raise additional funds for
that candidate. Proposals differ as to specific agents who could continue this practice (e.g.,
whether to ban bundling by party committees or by all PACs).
Soft Money. This practice has provided the greatest opportunity to date for spending
money beyond the extent allowed under federal law. Soft money is not well understood,
which, in part, is why there are so many approaches to deal with it. Some insist the problem
has been exaggerated. Because of 1991 FEC rules that national parties disclose non-federal
accounts and allocate soft versus hard (i.e., federally permissible) money, we are more aware
of soft money and better able to keep it from financing federal races than we were previously.
Serious differences still exist. Reformers want to curb what they view as an inherent
circumvention of federal limits, while parties want to protect a source of funding that has
bolstered their grassroots efforts. Proposed reforms have included: specifying a “federal
election period” in which soft money cannot be spent by state parties; prohibiting the use of
any soft money in mixed (federal-state) activities; prohibiting national party committees and
federal candidates from raising or distributing soft money; codifying the FEC’s requirements
for allocation of soft versus hard money among federal, state, and local candidates; and
requiring disclosure of or limitation on spending by tax-exempt groups and labor and
corporate soft money (including limits on unions’ political use of worker dues). Beyond
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legislative solutions have been proposals for the FEC to restrain the soft money practice
through promulgating new regulations. These differences reflect, to some extent, the lack of
consensus on where the soft money problem lies.
Independent Expenditures. Short of a constitutional amendment to allow mandatory
limits on campaign spending (such as the Senate debated in 1988, 1995, and 1997), most
proposals aim to promote accountability. They seek to prevent indirect forms of consultation
with candidates and to ensure that the public knows that these efforts are not sanctioned by
candidates. Many bills have sought to tighten definitions of independent expenditure and
consultation and to require more prominent disclaimers on ads. Many spending limits/
benefits bills have provided subsidies so those attacked in such ads may adequately respond.
Issue Advocacy. Addressing this practice, a form of soft money, involves broadening
the definition of federal election-related spending. A 1995 FEC regulation offered such a
definition, using a “reasonable person” standard, but this was struck down by a 1st Circuit
federal court in 1996; this decision was later upheld by an appeals court but is at variance with
an earlier 9th Circuit ruling. The FEC has been reluctant to enforce the regulation pending
further judicial or legislative action. Some recent bills (including McCain-Feingold and Shays-
Meehan in the 105th Congress) have sought to codify a definition of “express advocacy” that
allows a communication to be considered as a whole, in context of such external events as
timing, to determine if it is election-related. Finding a definition that can withstand judicial
scrutiny may be the key to bringing some of what is labeled “issue advocacy” under the
FECA’s regulatory framework. This has emerged since 1996 as probably the thorniest aspect
of the campaign finance debate.
Legislative Action in Recent Congresses
Congress’ consideration of campaign finance reform has steadily increased since 1986,
when the Senate passed the PAC-limiting Boren-Goldwater Amendment, marking the first
campaign finance vote in either house since 1979 (no vote was taken on the underlying bill).
With Senate control shifting to Democrats in 1986, each of the next four Congresses saw
intensified activity, based on Democratic-leadership bills with voluntary spending limits
combined with inducements to participation, such as public subsidies or cost-reduction
benefits. In the 100th Congress, Senate Democrats were blocked by a Republican filibuster.
In the 101st - 103rd Congresses, the House and Senate each passed comprehensive bills based
on spending limits and public benefits; the bills were not reconciled in the 101st or 103rd,, while
a conference version achieved in the 102nd was vetoed by President Bush.
With Republicans assuming control in the 104th Congress, neither chamber passed a
reform bill. A bipartisan bill based on previous Democratic-leadership bills was blocked by
filibuster in the Senate, while both Republican- and Democratic-leadership bills—with starkly
different approaches—failed to pass in the House. [For further discussion, see CRS Report
98-26, Campaign Finance Reform Activity in the 100th - 104th Congresses.]
105th Congress. In the 1996 elections, press accounts focused on large sums of money
raised and spent outside the purview of federal election law, while allegations mounted
concerning foreign campaign money raised by the Democratic National Committee. As the
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105th Congress began, reform supporters vowed major legislative efforts, but House and
Senate leaders expressed priority interest in investigating the 1996 violations. [See CRS Issue
Brief IB97045 for discussion of investigations and hearings on 1996 election abuses.]
In the face of leadership reluctance to schedule debate on campaign finance reform,
several task forces were created to seek consensus on proposals; most notable of these was
the House Freshman Bipartisan Task Force on Campaign Finance Reform, which held forums
and produced H.R. 2183. Some 135 reform bills were introduced during the 105th Congress,
with media attention focused from the outset on the McCain-Feingold and companion
Shays-Meehan bills, initially S. 25 and H.R. 493, which were endorsed by the President in his
1997 State of the Union Address. House and Senate Democratic leaders offered bills similar
to those in the 104th Congress: S. 11 and H.R. 600.
Hearings. Committees in both chambers held hearings in the 105th Congress, including:
! Senate Rules and Administration Committee—January 30, May 14, and June
25, 1997, on general reform issues and, in the latter case, on political use of
union dues;
! Senate Governmental Affairs—September 23, 24, 25, and 30, 1997, on
reform issues;
! Senate Judiciary Subcommittee on Constitution, Federalism, and Property
Rights— February 24, 1998, on term limits and campaign finance reform;
! House Judiciary Subcommittee on the Constitution—February 27, 1997, on
proposed constitutional amendments to allow mandatory campaign spending
limits, and September 18, 1997, on issue advocacy;
! House Education and Workforce Subcommittee on Employer-Employee
Relations— March 18, July 9, December 11, 1997, and January 21, 1998, on
use of union dues;
! House Oversight Committee—October 30-31, November 6-7, 1997,
February 5 and 26, and March 5,1998, on general reform issues; and
! House Government Reform and Oversight Subcommittee on Government
Management, Information, and Technology — March 5, 1998, on FEC
reform.
House Activity. Reform supporters sought to force a scheduled vote, beginning on
October 24, 1997, with a petition to discharge various bills from committee. On November
13, the last day of the first session, the Speaker and GOP leaders said the House would vote
on reform legislation by March 1998. On March 18, 1998, the House Oversight Committee
reported H.R. 3485, a Republican leadership bill to ban party-raised soft money, adjust
contribution limits, protect dissenting workers and stockholders from political use of union
and corporate money, guard against vote fraud, and require issue advocacy disclosure. House
action, planned for the week of March 23, was postponed after some reformers protested
their inability to offer a substitute based on McCain-Feingold. On March 27, House leaders
announced that reform would be considered on March 30, under a suspension of the rules.
On March 30, the Republican leadership brought four bills to the floor under suspension
of the rules. Two were defeated: H.R. 3581 (Thomas), a revision of the comprehensive H.R.
3485, as reported, by 74-337; and H.R. 2609 (Schaffer),the Paycheck Protection Act, by 166-
246. The other bills passed: H.R. 34 (Bereuter), to ban foreign national contributions and
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expenditures in U.S. elections, by 369-43; and H.R. 3582 (White), to improve disclosure and
enforcement (based on H.R. 3485), by 405-6.
The second phase of House activity developed out of reform supporters’ revival of the
discharge petition for H.Res. 259, a rule to allow consideration of specified Members’
proposals. By April 22, 1998, the petition had over 200 signatures, out of a needed 218. In
response, Speaker Gingrich announced that day that the House would reconsider the issue
by May, with the freshman bipartisan H.R. 2183 as the base bill and amendments and
substitutes allowed. Under H.Res. 442, reported from the Rules Committee on May 20
(H.Rept. 105-545) and passed on May 21, debate began May 22 on H.R. 2183, 11 substitute
amendments, and H.J.Res. 119 (DeLay), a constitutional amendment to allow regulation of
contributions and expenditures; the latter was defeated June 11 by 29-345 (and 51 “present”).
Non-germane perfecting amendments were submitted to the Rules Committee, which
on June 4 reported H.Res. 458 (H.Rept. 105-567), making in order 258 amendments to the
11 substitutes previously made in order, with additional germane amendments expected on
the floor. On June 17, prior to passage of the second rule, the House defeated substitute no.
1—the White commission proposal. Following passage of H.Res. 458 on June 18 (by 221-
189), the House began debate on substitute no. 13 (Shays/Meehan). On July 17, the House
accepted a unanimous consent agreement that made in order 55 amendments to Shays-
Meehan. The House passed the Shays-Meehan substitute on August 3 by 237-186, after six
days of debate, adoption of 23 amendments, and rejection of 18 others. On August 6, the
House passed H.R. 2183, as modified by the text of the amended Shays-Meehan substitute.
Final passage, on a vote of 252-179, followed rejection of the Doolittle and Hutchinson-Allen
substitutes, by votes of 131-299 and 147-222 (with 61 “present”), respectively.
Senate Activity. Early action came March 18, 1997, with defeat of S.J.Res. 18, the
Hollings constitutional amendment to allow mandatory campaign spending limits (38-61).
McCain-Feingold sponsors vowed to seek Senate action in the fall of 1997, despite lack
of Republican leadership support, announcing on September 19 a substitute bill; it deleted
spending limits and benefits, focused on restricting soft money and issue advocacy and
improving disclosure and enforcement, and added a required union notice to nonmembers of
rights to dues rebates for political spending and a restriction on party support for wealthy
candidates. Following a unanimous consent agreement to consider the bill and proposed
amendments and a presidential pledge to call the Senate into special session to consider
reform, the Senate began debate on the revised S. 25 on September 26. On September 29,
Majority Leader Lott offered the Paycheck Protection Act as an amendment (text of S. 9,
same as S. 1663). On October 7, an unsuccessful cloture vote (53-47) appeared to end
debate on McCain-Feingold. A second cloture vote failed on October 8 (52-47), and a third
failed on October 9 by the same margin. The Senate also failed to invoke cloture on the Lott
amendment on October 7 (52-48) and October 9 (51-48). McCain-Feingold supporters
continued to press the issue and, on October 30, reached agreement with the leadership for
a vote on that bill and a GOP substitute by March 6, 1998.
The second Senate debate on campaign finance in the 105th Congress began February
23, 1998, focused on S. 1663 (the Lott Paycheck Protection bill), a substitute amendment
(no. 1646) containing the McCain-Feingold language (from the revised bill of September
1997), and a new Snowe-Jeffords amendment (no. 1647), to modify McCain-Feingold. That
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modification replaced the broader express advocacy definition with the term “electioneering
communications,” i.e., spending on broadcast ads in the last 60 days of a general election or
30 days of a primary that refer to a federal candidate, once a group spent $10,000 in a year
on such messages. Snowe-Jeffords required disclosure of such activity by any group and
prohibited their financing with union and for-profit corporation funds. On February 25, the
Snowe-Jeffords language was added to the McCain-Feingold amendment by voice vote.
Key votes included failed motions to table McCain-Feingold, by 48-51 and 48-50 on
February 24 and 25, respectively, and Snowe-Jeffords (prior to inclusion in McCain-
Feingold), by 47-50 on February 25; a cloture vote on the modified McCain-Feingold
amendment, defeated by 51-48 on February 26; and a cloture motion on S. 1663, defeated
by 45-54 on February 26. Senate consideration ended that day, after the two cloture
attempts.
A third and final Senate debate, prompted by passage of the Shays-Meehan bill in the House,
began September 9, 1998, as the modified McCain-Feingold bill was offered as amendment
no. 3554 to S. 2237, the Interior appropriations bill. A cloture motion to end debate failed
September 10 by a 52-48 vote, after which Senator McCain withdrew it from further
consideration, ending hopes for reform in the 105th Congress.
106th Congress. Thus far, 53 reform bills (16 Senate, 37 House) have been introduced,
notably including: S. 26 (McCain-Feingold), as considered in the previous Congress; S. 1593,
a more narrowly-focused version thereof; S. 1816 (Hagel), a bipartisan bill to limit soft money
and raise hard money contribution limits, and its companion H.R. 3243 (Terry); H.R. 417
(Shays-Meehan), a slightly revised version of the bill passed by the House in 1998; H.R. 1867
(Hutchinson), the “freshman” bill of the 105th Congress; H.R. 1922 (Doolittle), a deregulation
alternative from the prior Congress favored by many Republicans; and H.R. 2668 (Thomas),
proposing relatively noncontroversial changes in federal election law.
House. Speaker Hastert announced plans to consider the issue during the week of
September 13. Supporters of H.R. 417 sought an earlier vote, through a discharge petition
by Blue Dog and freshman Democrats, but were able to garner 202 signatures—16 short of
the 218 necessary—prior to the August recess. The House Administration Committee held
hearings—June 17 and 29 and July 13 and 22—and, on August 2, ordered four bills reported:
one favorably—H.R. 2668 (Thomas); two without recommendation—H.R. 1867
(Hutchinson) and H.R. 1922 (Doolittle); and H.R. 417, unfavorably. On August 5, the Rules
Committee agreed on a rule, allowing for consideration of Shays-Meehan (as base bill), 10
amendments, and three substitutes: texts of the other bills reported by House Administration.
The rule—H.Res. 283 (H.Rept. 106-311)—was passed by voice vote, when debate
began September 14. The House passed H.R. 417 (252-177), with three perfecting
amendments—two on foreign money in U.S. elections, one on reimbursement for political use
of government vehicles. Six perfecting amendments were defeated, as were three substitutes
(Doolittle, Hutchinson, and Thomas); one perfecting amendment was withdrawn.
On November 3, the House Education and the Workforce Committee reported H.R.
2434 (Goodling), the Worker Paycheck Fairness Act of 1999. This measure had been offered
as an amendment to Shays-Meehan but was withdrawn prior to a vote on it.
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Senate. The Rules and Administration Committee held a hearing March 24, on hard
money contribution limits. Plans by reform supporters to force debate on some form of
McCain-Feingold before the August recess were shelved after Majority Leader Lott pledged
debate by mid-October. In a move to augment support, sponsors of McCain-Feingold on
September 16 offered S. 1593, consisting of three sections of the more comprehensive S. 26:
curbing party soft money, protecting rights of dissenting non-union members regarding
political use of dues money, and raising some contribution limits. Debate on S. 1593 began
on October 13. Two amendments were adopted on October 14:
! McConnell amendment 2293—to require Senators to report credible
corruption information to Ethics Committee and provide for mandatory
minimum bribery penalties for public officials (voice vote).
! McCain amendment 2294—to provide for disclosure of certain money
expenditures of parties and to promote expedited availability of reports (77-
20 vote).
Two additional amendments were offered October 15, along with cloture motions:
! Daschle amendment 2298—to substitute text nearly identical to the House-
passed Shays-Meehan bill (H.R. 417).
! Reid amendment 2229 (to amendment 2298)—perfecting amendment to
substitute text of S. 1593 as offered, plus McCain disclosure amendment
adopted October 14.
A motion to table the Reid amendment failed October 18 by 1-92. Cloture motions on the
Reid and Daschle amendments failed October 19 by 53-47 and 52-48, respectively. On
October 20, the Senate voted (53-47) to table a measure allowing reconsideration of
campaign reform and (52-48) to move on to other legislation. Majority Leader Lott declared
the issue dead for this year, but McCain-Feingold sponsors vowed to continue their efforts.
On November 4, Senator Mitch McConnell and Majority Leader Trent Lott announced
that the Rules and Administration Committee would hold hearings in the spring of 2000 on
campaign finance reform and would mark up legislation at that time. The bill slated for
markup is S. 1816 (Hagel-Kerrey), which would limit soft money donations to national
parties, increase limits on hard money contributions, and increase and expedite disclosure.
LEGISLATION
H.R. 417 (Shays-Meehan)
Bipartisan Campaign Finance Reform Act of 1999. Broadens express advocacy
definition. Bans national party and federal candidate soft money raising. Curbs state party soft
money spending on federal-related activity. Tightens coordination definition. Bans parties
from independent and coordinated expenditures on behalf of candidate. Requires greater
notice of non-union members’ rights to rebates of dues payments used for political purposes.
Bans party coordinated expenditures for candidates not limiting personal funds to $50,000.
Increases FEC disclosure and enforcement. Establishes study commission to make
recommendations. Bans foreign national donations (including soft money) and fundraising
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from government property. Introduced Jan. 19, 1999; jointly referred to Committees on
House Administration, Education and the Workforce, Government Reform, Judiciary, Ways
and Means, and Rules. Ordered reported unfavorably by House Administration Aug. 2, 1999
(H. Rept. 106-297, Pt. 1). Passed House, as amended, Sept. 14, 1999 (252-177).
! Perfecting amendments adopted: (1) Bereuter/Wicker #6, to ban financial
activity in federal elections by non-citizens or -U.S. nationals, i.e., ends
permanent resident alien exemption (242-181); (2) Faleomavaega #1, to
clarify law to exempt U.S. nationals from ban on foreign national financing
of U.S. elections (by voice vote), and (3) Sweeney #21, to require federal
candidates (not in office) who use government vehicles for campaign
purposes to reimburse Treasury at full cost (261-167).
! Perfecting amendments rejected: (1) Whitfield #24, to increase limit on
candidate contributions to $3,000 (127-300); (2) Whitfield #23, to increase
aggregate annual limit to $75,000 (123-302); (3) Doolittle #26, to change
express advocacy exemption for voter guides (189-238); (4)
Shaw/Calvert/Gallegly #5, to require 50% in-state resident funding in
congressional races (179-248); (5) DeLay #27, to exempt Internet
communications from coverage under federal election law (160-268); (6)
Ewing #18, to replace severability clause with non-severability (167-259).
! Perfecting amendment withdrawn: Goodling #15, to replace Beck
provision with prior approval by all agency shop workers for use of dues/fees
for non-collective bargaining purposes.
! Substitute amendments rejected:
• Doolittle—Citizen Legislature and Political Freedom Act. To abolish all
contribution limits, repeal presidential public financing system, require electronic
filing by all committees, and increase disclosure in last 90 days of election.
Introduced as H.R. 1922, May 25, 1999; referred to Committee on House
Administration. Ordered reported without recommendation Aug. 2, 1999 (H. Rept.
106-296, Pt. 1). Defeated as substitute Sept. 14, 1999 (117-306).
• Huchinson-Brady-Moran (KS)—Campaign Integrity Act of 1999. To ban
national party and federal candidate soft money raising, ban inter-state party soft
money transfers, require disclosure of issue advocacy spending, abolish party
coordinated expenditure limits, double the individual aggregate limit, index all
contribution limits prospectively, and require electronic disclosure by committees
exceeding $50,000 in activity. Introduced May 19, 1999; referred to Committee
on House Administration. Ordered reported without recommendation Aug. 2,
1999 (H. Rept. 106-294). Defeated as substitute Sept. 14, 1999 (99-327).
• Thomas—Campaign Reform and Election Integrity Act of 1999. To ban soft
money and independent expenditures by foreign nationals, increase soft money
disclosure, require electronic disclosure by all committees with activity of
$50,000+, require 24-hour electronic disclosure and immediate Internet posting in
last 90 days of election for $200+ contributions and independent expenditures,
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require secondary payee disclosure, allow written responses to questions where law
is clear and unambiguous and offer “safe harbor” protection, change standard to
initiate action to “reason to seek additional information,” create escrow account for
$500+ contributions that a committee plans to return, allow administrative fine
schedule for minor reporting violations. Introduced Aug. 2, 1999; referred to
Committee on House Administration. Ordered reported favorably Aug. 2, 1999
(H. Rept. 106-295). Defeated as substitute Sept. 14, 1999 (173-256).
H.R. 2434 (Goodling)
Worker Paycheck Fairness Act of 1999. Requires prior approval by all agency shop
workers for use of dues/fees for non-collective bargaining purposes. Introduced Jul. 1, 1999;
referred to Committee on Education and the Workforce. Ordered reported Nov. 3, 1999 (25-
22 vote).
S. 1593 (McCain-Feingold)
Bipartisan Campaign Reform Act of 1999. Bans soft money raising by national parties
and federal candidates. Curbs state party soft money spending on "federal election activity."
Requires greater notice of non-union members’ rights to rebates of dues payments used for
political purposes. Raises limits on individual contributions to state parties and on aggregate
federal contributions per year. Introduced Sept. 16, 1999; referred to Committee on Rules
and Administration. Debate began October 13 and ended October 20, following unsuccessful
cloture votes on two key amendments.
S. 1816 (Hagel)
Open and Accountable Campaign Financing Act of 2000. Imposes annual limit on soft
money donations to national party committees. Increases (hard money) limits on individual
and PAC contributions. Requires broadcasters to make available information on election-
related or public policy advertising. Increases and expedites disclosure under federal election
law. Introduced Oct. 28, 1999; referred to Committee on Rules and Administration.
[Identical bill offered in House—H.R. 3243 (Terry)]
FOR ADDITIONAL READING
CRS Issue Briefs
CRS Issue Brief IB98025. Campaign Finance: Constitutional and Legal Issues of Soft
Money, by L. Paige Whitaker.
CRS Reports
CRS Report 97-973. Business and Labor Spending in U.S. Elections, by Joseph E. Cantor.
CRS Report RS20346. Campaign Finance Bills in the 106th Congress: Comparison of
Shays-Meehan, as passed, with McCain-Feingold, as revised, by Joseph E. Cantor.
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CRS Report RL30162. Campaign Finance Bills in the 106th Congress: House, by Joseph
E. Cantor.
CRS Report RL30166. Campaign Finance Bills in the 106th Congress: Senate, by Joseph
E. Cantor.
CRS Report RL30299. Campaign Finance Debate in the 106th Congress: Comparison of
Measures Under House Consideration, by Joseph E. Cantor.
CRS Report 96-689. Campaign Finance: First Amendment Issues and Major Supreme
Court Cases, by Thomas M. Durbin.
CRS Report RS20073. Campaign Finance Bills, 106th Congress: Comparison of Shays-
Meehan & McCain-Feingold Proposals, by Joseph E. Cantor.
CRS Report 98-26. Campaign Finance Reform Activity in the 100th - 104th Congresses, by
Joseph E. Cantor.
CRS Report 98-282. Campaign Finance Reform: A Legal Analysis of Issue and Express
Advocacy, by L. Paige Whitaker.
CRS Report 97-1040. Campaign Financing: Highlights and Chronology of Current Federal
Law, by Joseph E. Cantor.
CRS Report RS20355. Comparison of Political Organizations under the Tax Code and
Political Committees under Federal Election Law, by Marie B. Morris.
CRS Report 97-680. Free and Reduced-Rate Television Time for Political Candidates, by
Joseph E. Cantor, Denis Steven Rutkus, and Kevin B. Greely.
CRS Report 97-91. Soft and Hard Money in Contemporary Elections: What Federal Law
Does and Does Not Regulate, by Joseph E. Cantor.
CRS Report RS20133. The Presidential Election Campaign Fund and Tax Checkoff:
Background and Current Issues, by Joseph E. Cantor.
CRS Report 97-555. The Use of Union Dues for Political Purposes: A Discussion of Agency
Fee Objectors and Public Policy, by Gail McCallion.
,CRS Report 97-618. The Use of Union Dues for Political Purposes: A Legal Analysis, by
John Contrubis and Margaret Mikyung Lee.
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