The Transformation of the Campaign Financing Regime for U.S. Presidential Elections

Abstract

Since the mid-1970s, the United States system for the financing of presidential election campaigns has been a mixture of private fundraising by candidates, parties, and outside groups and optional public financing for candidates (and for political party conventions). The 2008 presidential election-with its record-breaking $1.8 billion campaign (including an astounding $745.7 million raised by then-Democratic candidate Barack Obama) (FEC 2009) - demonstrated that the current system is in the midst of a major transformation. This chapter explains how the system is changing, offers possible reasons for the transformation, and evaluates the transformation normatively. Part I shows how the system is changing in four ways. (1) The voluntary presidential public financing system is no longer viable; candidates who opt in do so out of weakness, not strength. (2) A major share of private campaign contributions to presidential candidates in 2008 have come through campaign finance “bundlers” and from micro-donors giving very small amounts via the Internet. (3) Thanks to a U.S. federal law, Bipartisan Campaign Reform Act of 2002 (BCRA), political parties can no longer accept very large campaign contributions (“soft money”) from wealthy individuals, corporations, and labor unions to pay for political advertising. (4) Wealthy individuals, corporations, and labor unions have shifted some, though not necessarily all, of the money that used to go to political parties and to “issue advocacy” into outside groups (including so-called “527 organizations”).Part II explains that these four changes have likely arisen from a number of factors including: (1) the failure of the U.S. Congress to update the presidential public financing system, first enacted in 1974; (2) enactment of BCRA and the U.S. Supreme Court’s shifting interpretation of the constitutionality of campaign finance law; (3) the rise of cheap political speech via the Internet; and (4) continued political polarization.Part III explores normative implications. The potential for quid pro quo corruption of candidates appears to remain low, thanks to a series of laws imposing contribution limits. Sale of access to candidates, however, remains a feature of U.S. presidential elections even post-BCRA. From the standpoint of political equality, the transformation offers a mixed bag with somewhat offsetting effects. Thus, the collapse of the public financing system may have anti-egalitarian effects, but those effects are somewhat militated by the rise of micro-donors. The end of soft money and the rise of outside non-party political organizations in theory could lead to weakened political parties, but continued polarization of the electorate have kept parties thriving even under BCRA and the shifting constitutional ground rules of the U.S. Supreme Court.