Campaign Contribution Limits: Selected Questions About McCutcheon and Policy Issues for Congress

April 7, 2014 (R43334)

Contents

Tables

Summary

Recently invalidated aggregate limits on federal campaign contributions capped the total amount that one can give to all candidates, parties, or political action committees (PACs). For the 2014 election cycle, the aggregate limit for individual contributions was $123,200.The Supreme Court of the United States struck down the aggregate limits on April 2, 2014. Alabama contributor Shaun McCutcheon and the Republican National Committee (RNC) brought the case, McCutcheon v. FEC, after the aggregate limits prevented McCutcheon from contributing as desired to federal candidates and parties during the 2012 election cycle. The decision does not affect "base limits" that individuals may contribute to particular candidates or parties. Instead, McCutcheon permits individuals to give limited contributions to an unlimited number of candidates, political parties, and political action committees.

This report offers a preliminary analysis of major policy issues and potential implications that appear to be most relevant as the House and Senate decide whether or how to respond to McCutcheon. With the aggregate limits relaxed, additional funds might flow to candidate committees, party committees, or PACs. Joint fundraising committees and leadership PACs might expand as tools to funnel large contributions to multiple candidate committees, parties, or PACs. Disclosure of contributors who exceed the current aggregate limits might also be a policy concern. It is important to note that whether these possibilities will occur is unclear at this time.

This report will be updated to reflect major developments. This version of the report supersedes previous versions.


Campaign Contribution Limits: Selected Questions About McCutcheon and Policy Issues for Congress

Scope of the Report

This report is intended to respond to Congress's ongoing interest in campaign finance policy following the Supreme Court's April 2014 McCutcheon decision.1 The report relies on a question-and-answer format designed to highlight key information in a brief and accessible way. This report offers a preliminary analysis of major policy issues and potential implications that appear to be most relevant as the House and Senate assess the ruling and consider whether or how to respond. The report discusses possible implications of the case for campaign fundraising or disclosure to illustrate policy issues that might be relevant for congressional consideration. This report does not provide a legal analysis of the case or of legal issues that might affect the policy matters discussed here. Other CRS products provide additional information about various policy and legal issues.2

The parties in McCutcheon and those filing amicus briefs make numerous arguments for and against the existing contribution limits. This report does not attempt to address all those arguments. It also does not address various arguments surrounding legal matters in the case, such as which level of constitutional scrutiny courts should apply or whether courts should defer to Congress to establish contribution limits.

This report will be updated to reflect major developments and as policy implications become clearer.

What are the major public policy issues surrounding the McCutcheon case?

McCutcheon v. FEC involves a challenge to the aggregate amount (discussed below) that an individual can contribute to federal candidates, political parties, and political action committees (PACs). During the 2012 election cycle, Alabama donor Shaun McCutcheon wished to contribute more than the existing aggregate limits to candidates and the Republican National Committee (RNC). Prohibited from making and receiving the contributions, McCutcheon and the RNC filed suit against the Federal Election Commission (FEC), which enforces the Federal Election Campaign Act (FECA) contribution limits.3 In September 2012, a three-judge panel of the U.S. District Court for the District of Columbia upheld the aggregate limits. Through a review process specified in the Bipartisan Campaign Reform Act (BCRA), the case was then appealed to the Supreme Court.4 On October 8, 2013, the Court heard oral argument.

On April 2, 2014, the Court issued a plurality opinion striking down the aggregate limits on constitutional grounds. The decision does not affect base limits (discussed below) that individuals may contribute to particular candidates or parties. Instead, McCutcheon permits individuals to give limited contributions to an unlimited number of candidates, political parties, and political action committees. For example, both before and after McCutcheon, an individual could give a total of $5,200 to a congressional candidate during the 2014 election cycle. After McCutcheon, that individual contributor can contribute to up to $5,200 to as many candidates as he or she chooses. Before the decision, the aggregate limits would have functionally capped the number of candidates, parties, or PACs a contributor could support.

What are the existing contribution limits? Which ones does McCutcheon affect?

FECA, as amended, specifies two different kinds of contribution limits. The first are individual limits. These limits, sometimes also called base limits, place a ceiling on the amount that an individual, party, or PAC can contribute to a single candidate, party, or PAC during a single election. Second, FECA limits the aggregate amount an individual can contribute to all candidates, parties, or PACs. The aggregate limit on individual contributions appears to be most relevant for McCutcheon.

Table 1 below summarizes the relevant individual and aggregate limits for 2013-2014.5 As the table shows, individuals can contribute up to

McCutcheon does not affect these limits.

The aggregate limits set overall caps on the amount an individual can contribute. For 2013-2014, pre-McCutcheon, individual contributions could total no more than $123,200. Of that amount, $48,600 could go to candidates, with the remaining $74,600 to parties and PACs. The PAC limits do not apply to super PACs or other political committees (i.e., Carey committees) that can accept unlimited contributions for use in independent expenditures.7 As Table 1 shows, the plurality decision in McCutcheon invalidated these aggregate limits.

Table 1. Selected Federal Contribution Limits, 2013-2014

Limits marked with an asterisk (*) are adjusted biennially for inflation.

 

Recipient

Contribution Type or Limit Type

Principal Campaign Committee

Multicandidate Committee (most PACs, including leadership PACs, but not super PACs)

National Party Committee (DSCC; NRCC, etc.)

State, District, Local Party Committee

Individual Contributions

Unaffected by McCutcheon

$2,600 per election*

$5,000 per year

$32,400 per year*

$10,000 per year (combined limit)

Aggregate Limit on Individual Contributions

Invalidated by McCutcheon

$48,600 to all candidates*

$74,600 to all PACs and parties*

$74,600 to all PACs and parties*

$48,600* of the $74,600* limit (see left) may go to state/local parties and PACs.

Overall Biennial Limit on Individual Contributions

Invalidated by McCutcheon

$123,200*

Source: CRS adaptation from FEC, "Contribution Limits for 2013-2014," http://www.fec.gov/info/contriblimitschart1314.pdf.

Notes: The table assumes that leadership PACs would qualify for multicandidate status. The original source, noted above, includes additional information and addresses non-multicandidate PACs (which are relatively rare). Multicandidate committees are those that have been registered with the FEC (or, for Senate committees, the Secretary of the Senate) for at least six months; have received federal contributions from more than 50 people; and (except for state parties) have made contributions to at least five federal candidates. See 11 C.F.R. §100.5(e)(3). In practice, most PACs attain this status automatically over time. Contributions to super PACs are unlimited, as are those to PACs employing the Carey exemption for independent expenditures. For additional discussion, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed].

Why were the existing limits in place?

Contribution limits have been a hallmark of campaign finance policy and law for decades. Congress established most of the current contribution limits in the 1970s when it enacted and amended FECA.8 Most recently, Congress updated all but the PAC contribution limits with the 2002 enactment of BCRA. BCRA also adjusted most contribution limits for inflation and reaffirmed congressional support for an overall aggregate limit.9

Contribution limits are generally justified as a way to avoid real or perceived quid pro quo corruption (e.g., "vote-buying").10 Essentially, Congress established the existing individual limits at a threshold at which it believed struck a balance between permitting donors to support their favored candidates while also limiting potential corruption. Support for the aggregate limits generally rests with a concept known as the "anti-circumvention rationale," which holds that an overall limit is necessary to protect the individual limits. Supporters generally argue that if a contributor were permitted to make an unlimited number of contributions, it would make little difference that each individual contribution were capped. Such donors might still enjoy outsized influence in elections and policymaking, therefore potentially corrupting both.11

Opponents of the aggregate limits contend that the limits cap the amount of political speech or association a contributor can exercise. As CRS has noted elsewhere, appellants (McCutcheon and the RNC) in the case argued that unlike base limits, the aggregate contribution limits act as a spending limit by unconstitutionally restricting the number of candidates, parties, and PACs that an individual can support.12 More specifically, some contend that the aggregate contribution limits set an arbitrary threshold, beyond which additional contributions allegedly become corrupt. Opponents also generally argue that aggregate contributions, and contributions to parties and PACs generally, carry a lower risk of corruption than contributions to individual candidates.13 Opponents of the existing limits also suggest that provisions in FECA, FEC regulations, or both already sufficiently protect against circumvention of the individual contribution limits through limits on coordination, coordinated party expenditures, and earmarking.14 Finally, some contend that limits on contributions to parties force donors to contribute to arguably less-accountable "outside" groups—which are not subject to limits—such as super PACs or 501(c) organizations.15

Which policy issues might Congress consider?

It is unclear precisely how the campaign environment, and the need for related legislation or oversight, might be affected by the McCutcheon decision. This section briefly discusses some of the more prominent implications that could arise.

Developments thus far suggest that debate will continue about whether existing provisions in law or regulation sufficiently guard against a single contributor amassing potentially corrupting influence or whether new law or regulation is necessary. For some, existing restrictions on earmarking16 contributions, and the fact that party committees, joint fundraising committees, or PACs are legally separate entities from candidate campaigns, limit the potential for abuse. In fact, the plurality opinion in McCutcheon rejects various hypotheticals involving outsized donor influence as "either illegal under current campaign finance laws or implausible."17 For others (including the McCutcheon dissenting opinion), aggregate contributions exceeding current limits could violate the spirit of the individual limits and inherently create the potential for corrupting influence. Those favoring additional regulation might also raise concerns about whether larger aggregate contributions could allow candidates to circumvent the base limits by using joint fundraising committees, leadership PACs, or both.

Individual Campaigns and Individual Donors

Fundraising and Relationships Among Non-Candidate Committees

Joint Fundraising Committees

Contributions to Parties

PACs and Leadership PACs

General Considerations

Beyond the policy approaches noted above, other general considerations might now be relevant as Congress decides whether or how to proceed. Brief selected points appear below.

Conclusion

The debate over contribution limits is unlikely to end even now that the Court has decided McCutcheon. This report has provided a preliminary overview of policy issues that may be relevant as that debate continues in Congress and beyond. The most obvious implications from eliminating the aggregate limits could be for individual campaigns, parties, or PACs that are able to receive contributions which might today be precluded from donors who had already "maxed out." Scenarios that could magnify individual contributions through contributions to multiple political committees, such as joint fundraising committees, may also develop. It is important to note that actual donor behavior and fundraising practices will depend heavily on individual preferences and strategic decisions.

Footnotes

1.

McCutcheon v. Federal Election Commission, 572 U.S. ___ (slip op.), http://www.supremecourt.gov/opinions/13pdf/12-536_e1pf.pdf.

2.

On campaign finance policy generally, see CRS Report R41542, The State of Campaign Finance Policy: Recent Developments and Issues for Congress, by [author name scrubbed]. On campaign finance law generally, see CRS Report RL30669, The Constitutionality of Campaign Finance Regulation: Buckley v. Valeo and Its Supreme Court Progeny, by [author name scrubbed]. For additional discussion of legal issues surrounding McCutcheon, see CRS Report WSLG873, Supreme Court Strikes Overall Limits on Campaign Contributions in McCutcheon, by [author name scrubbed]; CRS Report WSLG842, McCutcheon and Its Potential Impact on Campaign Finance Law, by [author name scrubbed]; CRS Report WSLG546, Supreme Court To Hear Constitutional Challenge To Aggregate Contribution Limits, by [author name scrubbed]; and CRS Report WSLG363, The Supreme Court, Citizens United, and Further Challenges to Campaign Finance Law: Aggregate Contribution Limits, by [author name scrubbed].

3.

FECA is 2 U.S.C. §431 et seq.

4.

For additional discussion, see CRS Report WSLG546, Supreme Court To Hear Constitutional Challenge To Aggregate Contribution Limits, by [author name scrubbed]. BCRA is P.L. 107-155; 116 Stat. 81. BCRA amended FECA.

5.

Because McCutcheon concerns contributions made during the 2012 election cycle, limits subject to inflation adjustments for that cycle were slightly less than those noted in the table. For example, the individual contribution limit for contributions per candidate, per election, was $2,500 rather than $2,600.

6.

If a runoff election were held, individuals could contribute an additional $2,600.

7.

Independent expenditures (IEs) are disbursements used to call for election or defeat of federal candidates. On the definition of independent expenditures, see 2 U.S.C. §431(17). For additional discussion of super PACs, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed].

8.

Previous limits originated in the early 1900s, although at the time FECA was enacted, the existing campaign finance regulatory structure was generally considered to be ineffective. For additional historical discussion, see, for example, Robert E. Mutch, Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law (New York: Praeger, 1988); and Raymond J. La Raja, Small Change: Money, Political Parties, and Campaign Finance Reform (Ann Arbor, MI: University of Michigan Press, 2008).

9.

See §307, P.L. 107-155; 116 Stat. 102-103.

10.

The McCutcheon plurality opinion and dissent address varying governmental interests justifying campaign finance contribution limits. For additional discussion, see CRS Report WSLG873, Supreme Court Strikes Overall Limits on Campaign Contributions in McCutcheon, by [author name scrubbed].

11.

See, for example, Brief of Democratic Members of the United States House of Representatives as Amici Curiae in Support of Appellee, http://fec.gov/law/litigation/mccutcheon_sc_house_amici_brief.pdf, p. 20-22.

12.

CRS Report WSLG546, Supreme Court To Hear Constitutional Challenge To Aggregate Contribution Limits, by [author name scrubbed].

13.

See, for example, Brief for Appellant Shaun McCutcheon, http://fec.gov/law/litigation/mccutcheon_sc_mcc_brief.pdf, pp. 18-23; 45-50.

14.

See the "Which policy issues might Congress consider?" section of this report for additional discussion. In brief, all three provisions are designed to limit the potential for evading contribution limits. The coordination concept largely concerns the financial value of in-kind contributions or services, such as the polling data transmitted from a party to a campaign. Political parties may make expenditures (coordinated party expenditures) in consultation with candidates subject to limits. Earmark rules specify that even if candidate contributions are routed through another source, they are attributed to the original donor. See, in particular, 11 C.F.R. §109.20; 11 C.F.R. §109.32; and 11 C.F.R. §110.6 respectively.

15.

The PAC contribution limit does not apply to super PACs and "Carey committees" accepting contributions to separate accounts maintained only for independent expenditures. For additional discussion, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed].

16.

As noted previously, earmarking concerns identifying the original source of a contribution passed through another entity (a "conduit," such as a political party). See chapter 6 in Federal Election Commission, Federal Election Commission Campaign Guide: Political Party Committees, Washington, DC, August 2013, http://www.fec.gov/pdf/partygui.pdf.

17.

McCutcheon v. Federal Election Commission, 572 U.S. ___ (slip op.); p. 4.

18.

Although some social science research has studied why political contributors give money, there is relatively little empirical data about why people give the amounts they do (particularly why they choose to "max out"). On existing research, see, for example, Bertram N. Johnson, Political Giving: Making Sense of Individual Campaign Contributions (Boulder, CO: First Forum Press, 2013); and Peter L. Francia, et al., The Financiers of Congressional Elections: Investors, Ideologues, and Intimates (New York: Columbia University Press, 2003).

19.

For additional discussion, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed].

20.

This scenario assumes that a donor could give $2,600 for both the primary and general elections (totaling $5,200 for the entire election cycle) and that there would be 435 House and 33 Senate contests (excluding delegate races and assuming that a contributor gave to one candidate in each race).

21.

J. Breyer, McCutcheon v. Federal Election Commission, 572 U.S. ___ (slip op.); see especially pp. 14-20 and Appendix B.

22.

Public Citizen, Beware of a Naive Perspective: A Prebuttal to U.S. Supreme Court Rulings in McCutcheon v. Federal Election Commission, report, part 1 of 2, Washington, DC, January 7, 2014, pp. 6-10, http://www.citizen.org/documents/mccutcheon-campaign-finance-analysis-report.pdf.

23.

Bob Biersack, McCutcheon's Multiplying Effect: Why An Overall Limit Matters, Center for Responsive Politics, blog posting, September 17, 2013, http://www.opensecrets.org/news/2013/09/mccutcheons-multiplying-effect-why.html.

24.

2 U.S.C. §434(b)(3)(A).

25.

On JFC regulations generally, see 11 C.F.R. §102.17.

26.

For additional discussion, particularly concerning allocation and reporting requirements, see Appendix B in Federal Election Commission, Federal Election Commission Campaign Guide: Political Party Committees, Washington, DC, August 2013, http://www.fec.gov/pdf/partygui.pdf. For a contemporary example of joint fundraising, see Anthony Corrado, "Fundraising Strategies in the 2012 Campaign," in Campaigns and Elections American Style, ed. James A. Thurber and Candice J. Nelson, 4th ed. (Boulder, CO: Westview, 2014), pp. 103-104. JFCs developed through a series of FEC advisory opinions (AOs). See, for example, AOs 1977-14; 1977-20; and 1979-35.

27.

Discussion of this and similar figures appears throughout the oral-argument transcript, http://www.supremecourt.gov/oral_arguments/argument_transcripts/12-536_7l48.pdf . See especially pp. 20-25. See also Bob Biersack, McCutcheon Decision: Add Some More Zeroes to That Check, Center for Responsive Politics, blog posting, April 2, 2014, http://www.opensecrets.org/news/2014/04/mccutcheon-decision-add-some-more-z.html.

28.

This scenario assumes that a donor could give the $32,400 maximum for the 2014 cycle to each of the three national party committees.

29.

See, for example, Ray La Raja, "McCutcheon Decision Could be Good News After All," Washington Post "Monkey Cage" blog posting, April 3, 2014, http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/04/03/the-mccutcheon-decision-could-be-good-news-after-all/?wprss=rss_national&_monetaClick=eyJ3aWRnZXRfaW5zdGFuY2VfaWQiOiJiNTIxNDNjNC1lMzIxLTRmNWUtOTQwNC1lMDU4OWMxN2JmNmIiLCJjb250YWluZXJfaWQiOiJyZXZfYWRfNyIsImVsZW1lbnRfcG9zaXRpb24iOiIwIiwibGlua19pZCI6ImUzODQ2ZjI5LTEwZDctNGU2MS04YzIxLWI2MTA1MzU0YTNkZCIsImFkX2lkIjoiYmRlNjU4MDgtN2FmNy00ODE0LWE0N2QtZjY1NzYzMzEwZjdiIiwiY2xpY2tfaWQiOiIzZTQ1ODIxMC05NWIwLTQ2ODItOWYwNy1jMDViYjJkMDkyOTYiLCJ3YXBvX3Zpc19pZCI6ImZkYTkwMmM1LWQwYTEtNDkxZS1iZTJjLWU4ODdjNjg3ZmYwYiIsIndhcG9fc2Vzc19pZCI6bnVsbCwid2Fwb19sb2dpbl9pZCI6bnVsbCwicHViaWQiOiJ3cCJ9; and Nathaniel Persily, "Bringing Big Money Out of the Shadows," New York Times, April 2, 2014, http://www.nytimes.com/2014/04/03/opinion/bringing-big-money-out-of-the-shadows.html?hp&rref=opinion.

30.

See, for example, Bob Biersack, McCutcheon's Multiplying Effect: Why An Overall Limit Matters, Center for Responsive Politics, blog posting, September 17, 2013, http://www.opensecrets.org/news/2013/09/mccutcheons-multiplying-effect-why.html.

31.

In a 2003 rulemaking, the FEC determined that although leadership PACs are "affiliated" with candidates, candidate committees and leadership PACs have separate contribution limits. On those rules and the agency's rationale, see Federal Election Commission, "Leadership PACs," 68 Federal Register 67013, December 1, 2003.

32.

See, for example, Charles Fried, "It's Not Citizens United," New York Times, October 2, 2013, p. A23.

33.

For additional discussion, see CRS Report RS22644, Coordinated Party Expenditures in Federal Elections: An Overview, by [author name scrubbed] and [author name scrubbed].

34.

Senate limits are based primarily on VAP, whereas House limits are based primarily on a flat allocation. Specifically, the limits for Senate candidates and House candidates in single-district states are the greater of 2 cents multiplied by the VAP, adjusted for inflation, or $20,000, adjusted for inflation. The limit for House candidates in multi-district states is $10,000 (the 1974 base amount) plus adjustments for inflation, which have greatly increased the current limits over base amounts. See 2 U.S.C. §441a(d)(3).

35.

For 2014 limits, see Federal Election Commission, "Price Index Adjustments for Expenditure Limitations and Lobbyist Bundling Disclosure Threshold," 79 Federal Register 7190-7192, February 6, 2014. If a joint expenditure designation between state and national parties were in place, the spending party, relying on both parties' limits, could spend $189,000 and $5.6 million respectively.

36.

2 U.S.C. §§441a(d)(3), 441a(c). If a joint expenditure designation between state and national parties were in place, the spending party, relying on both parties' limits, could spend $94,400 and $189,000 respectively. State party committees may authorize their national counterparts to make coordinated-party expenditures on their behalf (or vice versa). If such agreements exist, one party could essentially assume the spending limit for another in particular states, in which case the total limits per state would effectively be double the amounts noted above. Parties may also make coordinated expenditures on behalf of presidential candidates. Limits for the 2016 cycle have not been announced.

37.

For additional discussion of hard money, soft money, and BCRA, see CRS Report R41542, The State of Campaign Finance Policy: Recent Developments and Issues for Congress, by [author name scrubbed].

38.

11 C.F.R. 109.21.

39.

Most notably, these include the Shays v. FEC cases.

40.

2 U.S.C. §441a(a)(8); 11 C.F.R. §110.6. For independent expenditures (which candidate committees do not make), donor identity can remain unclear. For additional discussion, see CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed].

41.

This scenario is distinct from bundling, in which an event host, for example, collects several checks made out to the candidate campaign and delivers them to the campaign. Bundling reporting requirements apply to lobbyists in some circumstances. See 2 U.S.C. §434(i).

42.

McCutcheon v. Federal Election Commission, 572 U.S. ___ (slip op.); p. 33.

43.

Ibid., pp. 33-35.

44.

Federal Election Commission, "Supreme Court Issues Opinion in McCutcheon et al. v. FEC," press release, April 2, 2014, http://fec.gov/press/press2014/news_releases/20140402release.shtml. For commissioner reaction as of this writing, see Ann M. Ravel, Vice Chair, and Ellen L. Weintraub, Commissioner, Federal Election Commission, "Statement of Vice Chair Ann M. Ravel and Commissioner Ellen L. Weintraub on McCutcheon v. FEC," press release, April 2, 2014, http://www.fec.gov/members/ravel/statements/McCutcheonStatement_AMR_ELW.pdf.

45.

See, for example, Kenneth P. Doyle, "Impasse at FEC Means No New Rules Likely in Response to McCutcheon Ruling," Daily Report for Executives, April 4, 2014, pp. A-18.

46.

See, for example, CRS Report R42042, Super PACs in Federal Elections: Overview and Issues for Congress, by [author name scrubbed]; and CRS Report R41542, The State of Campaign Finance Policy: Recent Developments and Issues for Congress, by [author name scrubbed].

47.

CRS Report WSLG842, McCutcheon and Its Potential Impact on Campaign Finance Law, by [author name scrubbed]. See also, for example, Adam Liptak, "Ruling Hints More Campaign Finance Dominoes May Fall," New York Times, April 3, 2014, http://www.nytimes.com/2014/04/04/us/politics/ruling-hints-more-campaign-finance-dominoes-may-fall.html?hp&_r=0,.