Process by which money is raised and spent to promote candidates for public office and their platforms and to publicize views on public issues, legislation, ballot questions, and other political matters.

Beginning in 1867, Congress attempted to regulate various kinds of political finance. The earliest efforts limited solicitation of political funds from government employees or on government property. Later laws prohibited contributions from corporations or national banks to candidates for federal office. In 1911 Congress enacted spending limits and disclosure requirements for House and Senate campaigns. Many states passed similar laws during the late 1800’s and early 1900’s.

In 1925 Congress consolidated its regulations in the Corrupt Practices ActCorrupt Practices Act. One reason for the passage of this act was the 1921 Supreme Court decision in Newberry v. United States, which held that primary elections could not be regulated by Congress. The Court reversed that ruling in Smith v. Allwright[case]Smith v. Allwright[Smith v. Allwright] (1944). In 1939 Congress passed the Hatch ActHatch Act prohibiting participation in politics by employees of the U.S. government. The Court upheld this restriction in United Public Workers v. Mitchell[case]United Public Workers v. Mitchell[United Public Workers v. Mitchell] (1947) and reaffirmed that holding in United States Civil Service Commission v. Letter Carriers[case]United States Civil Service Commission v. Letter Carriers[United States Civil Service Commission v. Letter Carriers] (1973).

The Corrupt Practices Act was replaced in 1971 with the Federal Election Campaign ActFederal Election Campaign Act. Its primary objectives were strengthening reporting requirements and limiting spending for media advertising. Although the act did accomplish some of what it was intended to do in the 1972 presidential campaign, that campaign also experienced the Watergate scandal and numerous abuses of campaign finance laws, which led to the passage of amendments to the act in 1974. The new provisions included limits on campaign expenditures, limits on campaign contributions, creation of an enforcement agency (the Federal Election Commission), public funding of presidential campaigns, and strengthened disclosure requirements.

The Federal Election Campaign Act amendments were immediately challenged in the courts. In Buckley v. Valeo[case]Buckley v. Valeo[Buckley v. Valeo] (1976), the government defended the law on the grounds that it regulated conduct (the giving and spending of money) and was a reasonable regulation of such conduct. The Court held, however, that even though there was a nonspeech element (monetary transactions) involved, the law was basically a regulation of political communication, and therefore, the government had to demonstrate that the law was designed to achieve a compelling interest and that it was narrowly tailored to achieve that objective. The Court found that the compelling interest involved was the avoidance of corruption or the appearance of corruption. This interest supported the disclosure requirements; the contribution limits to candidates for individuals, political action committees (PACs), and political parties; and the public funding of presidential campaigns. Unconstitutional were limits on expenditures by campaigns not publicly funded, by candidates in support of their own campaigns (if not publicly funded), and by groups and individuals spending in support of candidates but independently of their campaigns. In 1978, in the case of First National Bank of Boston v. Bellotti, the Court expanded the right to spend money to promote one’s political views to corporations seeking to influence state referendum campaigns on public issues.

Buckley remains the cornerstone of Court doctrine on the financing of political speech. The Court has expanded its ruling that independent expenditures in support of candidates may not be limited. That right was extended to political action committees in Federal Election Commission v. National Conservative Political Action Committee[case]Federal Election Commission v. National Conservative Political Action Committee[Federal Election Commission v. National Conservative Political Action Committee] (1985) and to political parties in Colorado Republican Campaign Committee v. Federal Election Commission[case]Colorado Republican Campaign Committee v. Federal Election Commission[Colorado Republican Campaign Committee v. Federal Election Commission] (1996). The 1985 case allowed a political action committee unlimited independent expenditures in support of a presidential candidate who had accepted public funding. In the Colorado case, the Court held that money spend by the Colorado Republicans for attack ads against the expected Democratic candidate before the GOP had chosen its own candidate was an independent expenditure that could not be limited under the Federal Election Campaign Act.

In the only exception to its Buckley ruling that disclosure requirements are constitutional, the Court held in Brown v. Socialist Workers ’74 Campaign Committee[case]Brown v. Socialist Workers ’74 Campaign Committee[Brown v. Socialist Workers ’74 Campaign Committee] (1982) that an Ohio statute requiring disclosure of the names and addresses of campaign contributors to every political party could not be enforced against the Socialist Workers Party because of the threat of harassment of its supporters, an excessive burden on their right to freedom of association.

The Court reaffirmed its Buckley ruling on contribution limitations in California Medical Association v. Federal Election Commission[case]California Medical Association v. Federal Election Commission[California Medical Association v. Federal Election Commission] (1981). In that case the Court upheld Federal Election Campaign Act limitations on contributions by individuals and unincorporated associations to multicandidate political committees. Later the same year, however, the Court held unconstitutional a local ordinance that placed a $250 limit on individual contributions to committees supporting or opposing ballot questions. The act limits individual contributions to $1000 per candidate in any election. The low local limit placed too much of a burden on freedom of association, the Court said in Citizens Against Rent Control v. Berkeley[case]Citizens Against Rent Control v. Berkeley[Citizens Against Rent Control v. Berkeley] (1981).

Several Court decision have dealt with the relationship between corporations and political action committees. In Federal Election Commission v. National Right to Work Committee[case]Federal Election Commission v. National Right to Work Committee[Federal Election Commission v. National Right to Work Committee] (1982), the Court upheld the electoral campaign act’s provisions making it unlawful for a corporate PAC to solicit money from outside the corporation for contribution to federal election campaigns. In a later decision, Federal Election Commission v. Massachusetts Citizens for Life[case]Federal Election Commission v. Massachusetts Citizens for Life[Federal Election Commission v. Massachusetts Citizens for Life] (1986), the Court ruled that a nonprofit corporation could not be required to finance expenditures in connection with elections by creating a separate fund for collection of voluntary contributions (that is, a political action committee). With respect to small nonprofits, the burden on First Amendment rights was too great, the Court held.

The Court revisited this issue in Austin v. Michigan State Chamber of Commerce[case]Austin v. Michigan State Chamber of Commerce[Austin v. Michigan State Chamber of Commerce] (1990), which involved a Michigan campaign finance law modeled after the Federal Election Campaign Act. The Michigan chamber of commerce, a nonprofit corporation with more than eight thousand members, of whom more than 75 percent were for-profit corporations, wanted to fund political expenditures from its general treasury, as the Massachusetts Citizens for Life had been allowed to do. The Court found that although the Massachusetts group had been formed almost exclusively to promote political viewpoints and was not funded by for-profit corporations, the chamber of commerce was a general-purpose organization and was funded by for-profit corporations. Therefore although the Massachusetts group had been exempt from the requirement that it form a PAC to promote its political views, the chamber of commerce was not.

• Bibby, John F. Politics, Parties, and Elections in America. 4th ed. Chicago: Nelson-Hall, 1999.
• Sorauf, Frank J. Inside Campaign Finance: Myths and Realities. New Haven, Conn.: Yale University Press, 1992.
• _______. Money in American Elections. Glenview, Ill.: Scott, Foresman and Co., 1988.
• Tribe, Laurence H. American Constitutional Law. 3d ed. Mineola, N.Y.: Foundation Press, 1999.

Buckley v. Valeo

Elections

First National Bank of Boston v. Bellotti

Political parties

Political party system

Smith v. Allwright

United Public Workers v. Mitchell