Campaign Finance

Campaigns

• 1974 Federal Election Campaign Act• Public financing of presidential elections• Limits on spending if accept public finance• Created Federal Election Commission• Required candidates and donors to report donations to

the FEC, with caps now on donations• Required candidates and donors to establish Political

Action Committees (PACs) to handle money end of the campaigns

• Limited amount of personal wealth candidates could spend

Campaigns

• Buckley vs. Valeo (1976)• restrictions on personal spending violate the First

Amendment• caps on contributions, however, do not• federal finance of campaign do not, as long as it

is voluntary (that is, candidates can opt to accept the money -- and the limits -- or not)

Campaigns

• Loopholes within the FECA• No limits on donations to party (“soft money”)• No limits on party spending for “get out the

vote” drives (“soft money”)• No limits on number of political action

committees• “bundling”

Campaigns

• 2002 Bipartisan Campaign Reform Act (BCRA)• Closed soft money loophole• Raised the limits on PAC contributions and other

donations• Bans “group sponsored” ads 30 days prior to a

primary and 60 days prior to general election

Campaigns

• Loopholes• PACs can raise unlimited amounts of money• 527 Organizations -- nonprofit issue advocacy

groups

Campaigns

• Basics of Campaign Finance Law

- 2002 Bipartisan Campaign Reform Act

• Campaign Finance and Electoral Success 2008

Campaigns

• In 2008 House elections, in only 2% of the races did the candidate with lower campaign contributions win

• In 2008 Senate races, in only 6% of the races did the candidate with lower campaign contributions win.

Campaigns

• Better financed campaigns generally have a better chance of success• They can hire better talent• They can buy advertising to rebut or make charges• They can extend the campaign longer and respond to

changes in the election atmosphere

• Efforts to curtail influence of money in campaigns began in earnest with post-Watergate reforms and have met with limited success

• So, should we be concerned about the role of money in politics?

10

Campaign Contribution

• Concern depends on why peopleof organizations contribute

• Do they contribute for policy/electoral reasons or for “service” reasons?

• When does it make sense to contribute?

Why Contribute?

•Assume two candidates: Democrat Don and Republican Ron

•Assume each has campaign contribution XD and XR, respectively, where “X” equals cash on hand

•Assume candidate with the most money is most likely to win, then...

Why Contribute

•We’ll define the probability that Demo Don wins as PD = XD

(XD+XR)

•And we’ll define the probability that Repub Ron wins as PD = XR

(XR+XD)

Why Contribute?

•Further, if we assume if both XD and XR is 0, then PD = PR = 0.5 (50%)

•In other words, if the money is equal, the race is a toss-up

•And if either has more money, then they have a better chance of winning

Why Contribute?

•For example, if Demo Don has all the money then, using the formula we developed we get:

•PD = 1D = 1 (1D+0R)

• Likewise, if Repub Ron has all the money, then he has a 100% chance of winning

Why Contribute?

•Notice that: PD = 1 - PR

•In other words, if we will assume if candidates are trying to win, then they will try to maximize their campaign contributions

Why Contribute

•Turn to page 201 and the Sierra Club example

Why Contribute

•Next week finish chapters 6 and 7