Campaign-Finance Reform: History and Timeline

Updated July 22, 2020 | Infoplease Staff

A look at early campaign finance legislation and efforts to regulate fund raising for political campaigns

by Beth Rowen
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Over the past several decades, political campaigns in the U.S. have become increasingly costly and unsavory. Nevertheless, campaign finance remains a divisive issue. Proponents of campaign finance limits argue that wealthy donors and corporations hold too much sway in elections and as a result, corrupt campaigns. Those favoring less regulation contend that campaign donations are a form of free speech.

Campaign finance legislation dates to 1867, but the regulation of campaign fundraising didn't become a major issue until the early 20th century, prompted by the presidential election of 1896, which introduced a new era of campaign advertising and the custom of seeking donations from businesses.

The Whiff of Corruption in Campaigns Not a New Phenomenon

Patronage was prevalent in early campaigns, and the spoils system was in full swing by the time Andrew Jackson took office in 1828. Jackson was famous for appointing contributors to plum positions in his administration. The spoils system factored into the assassination of James Garfield. One of the president's supporters and speech writers, Charles Guiteau, shot and killed Garfield after being denied a post in his administration. The assassination led to passage of the Pendleton Act of 1883, which required that civil service positions be filled based on merit and exam results rather than party affiliation.

Vote-buying was another form of corruption in early presidential races. Political parties and candidates printed their own ballots and often paid voters to submit them. The government didn't take responsibility for printing ballots until 1896.

The movement to rein in campaign fundraising and spending gathered steam once again after Watergate, when corruption in politics reached its peak and public confidence in public officials hit a nadir.

Below is a timeline of campaign-spending regulations.

1890 1920 1940 1970 2000
The Naval Appropriations Bill banned the practice of seeking campaign donations from navy yard workers. It was the first federal regulation regarding campaign finance.
The Tillman Act prohibits corporations and national banks from contributing money directly to presidential or congressional campaigns. The law, which only applies to general elections, was widely flouted through loopholes. It is the first law to attempt to regulate federal campaigns.
The Federal Corrupt Practices Act (also called the Publicity Act) requires House candidates to disclose campaign spending and the source of all campaign contributions. It is the first federal campaign disclosure law.
The Federal Corrupt Practices Act is amended and requires that Senate candidates also adhere to the disclosure rules set forth in the law. The amended law also set spending limits for all congressional candidates.
In Newberry v. United States, the Supreme Court rules that the Federal Corrupt Practices Act is unconstitutional because the Constitution does not grant Congress the authority to regulate political parties or federal primary elections. Therefore, spending limits are no longer required in Congressional elections, and campaign finance regulation is further weakened.
Congress amends the Federal Corrupt Practices Act. New provisions of the law include: a ban any corporation contribution to a federal campaign, candidates must disclose the source of contributions greater than $50, patronage is prohibited, and Senate candidates can spend $.03 for each voter based on numbers from the previous election and cannot spend more than $25,000. Same rule applies to House candidates but they cannot spend more than $5,000. The law serves as the primary source of guidelines for campaign finance until 1971, but its provisions are easily skirted. In fact, President Lyndon Johnson declares it "more loophole than law."
The Public Utilities Holding Act prohibits public utility companies, which had become increasingly powerful and influential in politics, from contributing to federal campaigns.
The Hatch Act bans most federal employees from contributing to candidates in national elections and from participating in political activity or campaigns.
The Smith Connelly Act bans labor unions from making direct contributions to federal campaigns. In response, unions create political action committees to raise money for campaigns. The first, established by the Congress of Industrial Organizations, set the standard for future PACs.
In response to passage of the Smith Connelly Act, the Congress of Industrial Organizations establishes the first political action committee to raise money for campaigns. Union members voluntarily give money to the PAC independent of the union. PACs use their money and influence to help elect their favored candidates.
In addition to limiting the power of labor unions, the Taft-Hartley Act also reinforced prohibitions on unions, banks, and corporations making contributions to federal candidates.
The Revenue Act established a public campaign fund for eligible presidential candidates. Taxpayers can voluntarily contribute $1 to the fund by checking a box on federal income tax returns (this provision was set forth in 1968 under the Long Act). The law also introduces a $50 tax deduction for individual filers for contributions to local, state, or federal candidates.
The Federal Election Campaign Act (FECA), which replaces Federal Corrupt Practices Act, is passed. The law:
  • institutes disclosure requirements for federal candidates, political parties, and political action committees of donations more than $100.
  • sets spending limits for candidates and their family members: $50,000 cap for presidential and vice presidential candidates, $35,000 for Senate candidates, and $25,000 for House candidates.
  • requires disclosure of contributions above $100. Contributions above $5,000 had to be reported within 48 hours of receipt.
  • allows union officials to establish and solicit contributions from union members for a political fund.
  • sets caps on television advertising to $.10 voter in the previous election or $50,000.

Rather than having one body charged with oversight over the law, the Clerk of the House, the Secretary of the Senate, and the Comptroller General of the United States General Accounting Office (GAO) monitored compliance, which made enforcement difficult.

After Watergate, public confidence in government reaches a new low and stricter campaign finance laws are widely embraced. Congress passes several amendments to the Federal Election Campaign Act. The amendments:
  • create of the bipartisan Federal Election Commission, which oversees and enforces the law.
  • set contribution limits to federal campaigns: individuals cannot spend more than $1,000 on a single campaign and they are limited to a total of $25,000 to all federal candidates; PACs cannot contribute more than $5,000 to one campaign (this provision thereby legitimized political action committees).
  • set spending caps for candidates: presidential candidates can spend up to $10,000,000 for primaries and $20,000,000 for the general election; senate candidates can spend $100,000 or $.08 per eligible voter for primaries and $150,000 or $.12 per eligible voter for general elections; and House candidates are limited to $70,000 for both primary and general elections.
  • establish the provision that presidential candidates can receive public funding if their party received at least 25% of the vote in the previous federal election. In addition, the public fund for presidential candidates will match private donations presidential candidates receive.
Sen. James Buckley (R-NY) and others challenged a number of the 1974 amendments to FECA, saying the spending limits violated free speech rights. The case ended up in front of the Supreme Court. In Buckley v. Valeo the Supreme Court upheld the limits on contributions from individuals, disclosure rules, and the public financing of campaigns, saying they maintain the integrity of elections and prevent corruption. However, the Court struck down spending limits imposed on candidates and individuals or groups. "It is clear that a primary effect of these expenditure limitations is to restrict the quantity of campaign speech by individuals, groups and candidates," the Court said. "So long as persons or groups eschew expenditures that in express terms advocate the election or defeat of a clearly defined candidate, they are free to spend as much as they want to promote the candidate and his views." The ruling opened the floodgates to issue ads that clearly endorse—or attack—a candidate but refrain from using terms such as "vote for," "defeat," or "elect."
In order to comply with the Supreme Court ruling in Buckley v. Valeo, Congress amends FECA. Amendments limit the amount individuals can give to PACs to $5,000 and $20,000 to a national party committee, repeal spending limits on candidates (except for those who accept public funding), change how members of the FEC are elected so now the president appoints committee members and the Senate confirms them, and unions and corporations can only create one PAC per organization.
Additional amendments are made to FECA, and they weaken the law by creating the loophole that allows individuals, unions, and corporations to give unlimited sums to parties and national party committees for "party-building" purposes. These donations are known as "soft money."
The Bipartisan Campaign Reform Act, also known as the McCain-Feingold law, banned "soft money," unlimited contributions to parties and national party committees. The law also defined political issue ads paid for by corporations or unions as "electioneering communications" and prohibited the broadcast of such ads within 30 days of a primary or within 60 days of a general election.
In McConnell v. The Federal Election Commission, the Supreme Court upholds major aspects of the Bipartisan Campaign Reform Act. The justices vote, 5–4, that the ban on unlimited donations to political parties does not violate free speech. However, the court acknowledges that the ruling will not end the flow of enormous sums of money in campaigns. "Money, like water, will always find an outlet," writes Justices John Paul Stevens and Sandra Day O'Connor.
The Supreme Court takes up the Bipartisan Campaign Reform Act again, in Federal Election Commission v. Wisconsin Right to Life. This time the court rules, 5—4, that bans on ads paid for by corporations or unions in the weeks leading up to an election are an unconstitutional restriction on the right to advocate on an issue. "Discussion of issues cannot be suppressed simply because the issues may also be pertinent in an election," Chief Justice John Roberts wrote in the majority opinion. "Where the First Amendment is implicated, the tie goes to the speaker, not the censor."
The Supreme Court rules, 5–4, in Citizens United v. Federal Election Commission that the government cannot restrict the spending of corporations, unions, and other groups for political campaigns, maintaining that it's their First Amendment right to support candidates as they choose. In the majority decision, Justice Anthony Kennedy said, "We now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption." The Citizens United decision resulted in the proliferation of super PACs that opened the floodgates for unlimited amounts of money to be poured into political campaigns. It also dismantled the McCain-Feingold campaign-finance law.
In another blow to campaign-finance reform, the Supreme Court strikes down caps on the total amount individuals can donate to federal campaigns and political parties. The court rules 5–4 in McCutcheon v. Federal Election Commission that the limits violate free speech protections. The limit had been a total of $48,600 every two years for all federal candidates and an aggregate of $74,600 to political parties and committees. In a stinging dissent, Justice Stephen G. Breyer said, "If Citizens United opened a door, today’s decision we fear will open a floodgate," referring to the influence of money in politics. Limits on contributions to a single candidate by an individual donor ($2,600 per candidate in primary and general elections) are not affected by the decision.
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