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In 1971, the Federal Election Campaign Act (S. 382) was enacted to bring transparency and oversight to candidates’ campaign finances and donations, as well as restricted spending on political advertisements. It completely reformed prior campaign finance laws, notably resulting in the creation and proliferation of political action committees (PAC).
Among other reforms, the Federal Election Campaign Act required federal candidates to file quarterly reports of their contributions and expenditures. Furthermore, an amendment to the bill set new limits for campaign spending and instituted stricter provisions to limit big money in politics than ever before. Its original form, however, had significant loopholes that later got closed.
In this article, the Zero Theft Movement will explore the history of this major shift in U.S. campaign finance law and how it got reformed multiple times.
For a more complete history of U.S. campaign finance laws, check out:
Legislative History of the Federal Election Campaign Act
The Federal Election Campaign Act was introduced in the U.S. Senate on May 6, 1971. It won approval just a day shy of three months in a landslide vote of 88-2. The House of Representatives, near the end of the year, passed its own version of the bill.
The House and the Senate convened in order to synthesize the two separate bills into what is now known as the Federal Election Campaign Act. On February 7, 1972, then-President Richard Nixon signed the bill into law.
Richard Nixon in 1969
Nixon released a statement three days after signing the bill…
“S. 382, the Federal Election Campaign Act of 1971, limits the amount candidates for Federal elective offices may spend on advertising, not just on radio and television, but through all communications media. It limits contributions by candidates and their families to their own campaigns. It provides for full reporting of both the sources and the uses of campaign funds, both after elections and during campaigns. By giving the American public full access to the facts of political financing, this legislation will guard against campaign abuses and will work to build public confidence in the integrity of the electoral process.”
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Noteworthy Provisions and Features of the Federal Election Campaign Act
As stated at the beginning of the article, the Federal Election Campaign Act set disclosure requirements for all parties involved in federal election activities—candidates, political party committees (PPCs), and PACs.
During non-election years, current and former presidential candidates must file either quarterly or monthly reports. The same applies for election years, unless presidential campaign committees have, as of Jan. 1, received or anticipate receiving $100,000+ in contributions or $100,000+ in expenditures. In this case, the campaign committee is required to file expenditures monthly.
Reporting schedules and thresholds, however, are subject to change whenever FECA gets amended. Refer to the Federal Election Commission for the most current information on reporting schedules and limits.
Political action committees
The Federal Election Campaign Act instituted a “basic legislative framework for separate segregated funds,” i.e. PACs (according to the FEC’s short history of campaign finance laws). Corporations and unions cannot make direct contributions to federal candidates under the Tillman Act and Taft-Hartley Act, so instead, they started creating PACs due to an exception in FECA. Since 1971, corporations and unions have had the ability to provide funding for their candidate without breaking any campaign finance laws.
The law allows a group to “establish, operate and solicit voluntary contributions” through its political action committee. These funds can then go towards contributions to federal elections.
1974 amendments to FECA
In 1974, only a few years after the enactment of FECA, the Watergate scandal erupted. The examination into the Nixon administration uncovered its myriad dubious dealings and morally questionable acts. The First Amendment Encyclopedia writes, “The various investigations brought to light numerous campaign-finance abuses, including illegal contributions from corporations, cash contributions, hidden funds controlled by the Nixon reelection committee, and favors extended to donors in exchange for large contributions.”
The fallout of the Watergate scandal sparked Congress to approve a series of major amendments to the Federal Election Campaign Act. Important loopholes finally got closed, after years of deficiencies in oversight and enforcement.
Tax avoidance creates a grey area where the powerful can unethically, though legally, get out of paying a good chunk of their taxes. Find out if the system is rigged against the general public…
Forming a regulatory body under FECA
The FECA, in a 1974 amendment, called for the formation of the Federal Election Commission (FEC), an independent campaign finance regulatory agency that has remained in operation to this day. The FEC has the authorization to establish rules and regulations, as well as investigate and demand civil penalties for infringements of the law.
Six members make up the commission, all selected by the president with the advice and approval of the Senate. Up to three members can belong to the same political party, and a majority (four votes and over) must be reached for the commission to take action. Two seats get vacated biennially.
Contribution limits under FECA
Individuals could contribute only $1,000 per election to any federal campaign, and up to $25,000 in total. The bill also set limits on the amount individuals could contribute to a political party, PPC, and PAC.
Political committees could now contribute only $5,000 to a candidate.
The 1974 amendments also imposed a limit of $1,000 per election on independent spending by an individual or group “relative to a clearly identified candidate.” In addition, they limited the amount candidates for federal office could spend on their own campaigns and the amount parties could spend in support of candidates and on their national nominating conventions.
Buckley v. Valeo (1976)
The 1974 amendments spurred legal action from Senators James L. Buckley and Eugene McCarthy against the Secretary of State, Francis R. Valeo. The two Senators contended that the amendments were unconstitutional, as they arguably violated the public’s right to free speech.
The Supreme Court ruled the 1974 amendments to the Federal Election Campaign Act infringed upon the First Amendment (free speech), particularly campaign self-financing. Nevertheless, the Court let the restrictions on spending in presidential campaigns stand. The Court Justices argued that those limits safeguarded election integrity. Also, contribution limits for individuals and PACs remained.
Soft Money vs Hard Money
Akin to most, if not all, other legislation, the Federal Election Campaign Act still had loopholes. Corporations, unions, and PACs figured out how to bypass campaign finance laws by donating with ‘soft money’ instead of ‘hard money’
Soft money refers to contributions to a political party or PAC with little regulations, including no donation cap/limit. The funds can come from any source (e.g. individuals, PACs, corporations, etc.)
Hard money refers to a direct contribution to a political candidate from an individual or PAC. The FEC has established strict laws regulating hard money donations.
Political parties could collect soft money donations for ‘party-building’ activities, from corporations, labor unions, and wealthy individuals. Ostensibly independent advocacy organizations avoided violating FECA laws by funding political advertising for specific candidates without using prohibited language outlined in the bill. The ads did not “expressly advocate” for the defeat or election of a candidate. This includes words such as “support” or “oppose.”
Soft Money Donations between 1993-2001
|Democrats||$45.6 million||$122.3 million||$92.8 million||$243 million||$199.6 million|
|Republican||$59.5 million||$141.2 million||$131.6 million||$244.4 million||$221.7 million|
|Total||$105.1 million||$263.5 million||$224.4 million||$487.4 million||$421.3 million|
The Present Federal Election Campaign Act
The Federal Election Campaign Act has stood the test of time, still serving as the foundational component of campaign finance law today. Amendments have been made over the years due to debates over free speech violations.
Anti-corruption groups such as Move to Amend and RepresentUs have mobilized against the belief that the way one decides to spend their money is tantamount to a speech act. These groups, therefore, do not believe that limiting campaign contributions can be considered a violation of an individual’s, company’s, or union’s right to free speech.
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Beyond the Federal Election Campaign Act…
An educated public is an empowered public. We consistently publish informational articles on ZeroTheft.net that inform you all about the rigged layer of the economy in short, digestible pieces. You can better protect yourself and others from the schemes of crony capitalists.
The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
Terms like ‘steal,’ ‘theft,’ and ‘crime’ will frequently appear throughout the article. Zero Theft will NOT adhere strictly to the legal definitions of these terms (since congress sells out). We have broadly and openly defined terms like ‘steal’ and ‘theft’ to refer to the rigged economy and other debated unethical acts that can cause citizens to lose out on money they deserve to keep.