Campaign Financing

Campaign Financing

Author: Nick Hernandez

12.6.3: Evaluate the roles of polls, campaign advertising, and the controversies over campaign funding.

12th grade students in Government class.


Read the two articles and watch the short clip. When you are done with this, take the four question quiz. After the quiz, answer the following:

What most surprised you about the rules of campaign financing? Do you think the system needs reform? Why? How would you reform it?

See More
Introduction to Psychology

Analyze this:
Our Intro to Psych Course is only $329.

Sophia college courses cost up to 80% less than traditional courses*. Start a free trial now.


The Power of Money

The Power of Money: The Ethics of Campaign Finance Reform

The Senate Ethics Committee is currently investigating five senators, including some of its most prominent and powerful members, for possible conflicts of interest. These five senators received a total of nearly $1.4 million in contributions from Lincoln Savings and Loan chief Charles Keating, and are accused of interceding to protect the failing thrift against a timely takeover by federal regulators after receiving Keating's contributions. By the best estimates, it will now cost American taxpayers $2.5 billion to pay off Lincoln's insured depositors--$1.3 billion more than it might have if regulators had acted promptly to close down the insolvent S&L. The much-publicized case of the "Keating Five" is just the most recent and prominent example of the influence of money on politics.

Today, the cost of a congressional campaign often exceeds $1 million per candidate, and Senate campaigns average $4.3 million, often costing $10 million or even $15 million. Once in office, a senator needs to raise more than $10,000 every week to fund his or her re-election campaign, and much of that money ends up coming from political action committees (PACs) and other special interests. In the 1986 congressional campaign, for example, candidates spent a total of about $300 million with about a third of that total ($103 million) raised from PACs.

While congressional candidates can accept no more than $5000 from any PAC, ingenious donors and politicians have devised numerous "backdoor" funding channels. Most of Sen. Alan Cranston's contributions from Charles Keating, for example, came in the form of support for voter registration drives aimed at registering voters likely to favor Cranston, while John Glenn benefitted from contributions to a political committee that he controlled.

Critics of the current system of campaign financing argue that the high cost of office-seeking and current ways of meeting those costs not only distract elected officials from their primary task of lawmaking, but leave the door open to the influence of special interests. When a politician is influenced by either the need to solicit contributions from special interests to finance a costly election campaign, or by a sense of obligation to benefactors, the politician may no longer represent the interests of his or her entire constituency.

Furthermore, the ability to influence electoral outcomes with infusions of cash poses a significant challenge to the idea of equality expressed in the principle of "one man, one vote" upon which democratic government is based. If the outcome of elections can be determined by the amount of money spent on the political campaign, then special interest donors have greater power to influence elections than the average voter. Such a situation unjustly violates the principle of equality that is fundamental to democratic government.

Fifteen years ago, Congress amended the Federal Election Campaign Act of 1971, to limit total campaign expenditures in federal elections in order to block the power of special interest money. But the Supreme Court ruled important sections of the law unconstitutional, holding that they violated the constitutionally protected right of free expression. The reform effort was further undermined by a loophole that permitted candidates to raise campaign funds from PACs, and opened the door to the massive amounts of PAC money flowing into candidates' war chests.

To address these issues, the Center for Applied Ethics held a one-day conference on Campaign Finance Reform last fall. The conference, funded in part by the California Council for the Humanities, a state program of the National Endowment for the Humanities, featured a distinguished panel representing a broad range of perspectives on the ethical issues surrounding campaign finance reform.

The first speaker, Dr. Herbert Alexander, is a nationally recognized expert on the issue of campaign reform. Alexander framed the debate by acknowledging the widespread belief that special interests influence politics through campaign contributions. But while acknowledging that campaign contributions create the potential for conflicting obligations on the part of lawmakers, he held that it is "an affront to the integrity of ... elected officials to suggest their votes are 'bought' by their contributors." Given the many demands on a politician, the competition for a politician's ear or favorable vote, and the $5000 limit on PAC contributions, Alexander argued that no single PAC can expect to "buy" special favors from a politician with a campaign contribution.

Moreover, he claimed, even if campaign contributions from special interest groups influenced political decisions, restrictions on campaign financing would not eliminate this influence. Such restrictions would simply lead special interest groups to shift their resources from campaign contributions to lobbying.

American election campaigns, Alexander said, are "under-financed rather than over-financed." Noting that our current political system favors incumbents, Alexander argued that challengers, who must establish name recognition to unseat incumbents, need to wage well-financed campaigns, and this argues against imposing limits on campaign financing.

But Dr. Timothy Lukes, Professor of Political Science at Santa Clara University, challenged Alexander's claim that PACs don't wield much political influence. Lukes pointed out that even government-financed school lunches reflect the special interest influence of the dairy industry, the beef industry, and other agricultural groups. Lawmakers routinely "scheme" to incorporate special provisions into legislation favored by campaign contributors. The money of the PACs, he said, created "an enviable source of power--diproportionately allocated to those with fat wallets." And that money, he insisted, greatly assists the campaigns of incumbents, who regularly win over 95 percent of their campaigns against newcomers. Contrary to Alexander's claim, Lukes believes that PAC money overwhelmingly favors incumbents over challengers.

Prof. Lukes offered a radical prescription to cure the system: "take the money out of the hands of the campaigners altogether." In his view, paid political advertising should be banned, and replaced with information and debates financed and presented by independent media and independent political groups.

A different set of prescriptions was proposed by Pete McCloskey, a former Republican congressman from California. Citing his experience in Congress, McCloskey argued that the emphasis on money does indeed have a corrupting influence on politics, and keeps good candidates from running for office. McCloskey suggested several corrective measures to reform the electoral system, including limitations on the size of political contributions, public financing of political campaigns, and restrictions on total campaign spending. McCloskey also suggested that to encourage competent new candidates to challenge incumbents, we should pay higher salaries to elected officials, limit the number of terms or the length of service of elected officials, and severely restrict incumbents' access to the use of paid staff and free postage for political purposes.

To Dr. Bruce Cain, a visiting professor of political science at the University of California at Berkeley, the problem of special interest campaign contributions was not so much a problem of money influencing policies as a problem of money influencing electoral outcomes--in effect undermining the fundamental principle of "one man, one vote." Cain noted that "the thrust of democratic reform in the twentieth century has been to make individuals more, not less equal, with respect to their voice in government, e.g. inequities in the franchise and vote weighting have been largely, though not completely, eliminated in US politics." Thus, he observed, "limiting the power of money is a natural extension of the impulse towards equity"--not necessarily because campaign contributions are immoral "bribes" of some sort, but because limits on campaign contributions serve to "redistribute" political power away from those with money. This, he suggested, is a legitimate political goal, but one whose legitimacy depends on one's conception of equity.

Whether justified as an attempt to lessen the influence of special interests or to achieve greater electoral equity, campaign finance reform is currently being warmly embraced on the floors of the Senate and the House. There, nearly all politicians pay at least lip service to the need to address ethics in financing campaigns. Whether these efforts will succeed in making the mix of money and politics more ethical still remains to be seen.

Political Ethics Checklist
Stephen Gillers, a professor of legal and judicial ethics at New York University School of Law, recently published an editorial in The Nation (Jan. 29, 1990) on the topic of legislative ethics. Gillers outlines certain factors to consider when attempting to ascertain if that quacking you hear is really coming from a duck. Specifically, he suggests that actions by a legislator on behalf of a campaign contributor may be suspect if:

The recipient of help is not a constituent of the legislator, and there is not other persuasive reason for the legislator's help except the contribution.
The beneficiary of the legislator's help is a large contributor.
The legislator devotes extraordinary personal attention to the matter [by] making phone calls and holding meetings. Such actions raise more doubts, for example, than a form letter from an aide.
The size of the group the legislator's help will benefit is relatively small. There is little reason to doubt a lawmaker's independence if an action will benefit a million consumers, more reason if it will profit a small group of generous supporters, and more reason still is assistance for those generous supporters comes at the expense of the million consumers.
Questionable conduct occurs on a regular basis. There is considerably less inclination to give a legislator the benefit of the doubt if we see repeated actions that suggest improper motives.

Source: "The Power of Money." Santa Clara University. Markkula Center for Applied Ethics. Spring 1990. Web. May 10, 2015.

Summary of Citizens United v FEC Supreme Court Decision


In a 5-4 decision, the U.S. Supreme Court ruled that corporations and unions have the same political speech rights as individuals under the First Amendment. It found no compelling government interest for prohibiting corporations and unions from using their general treasury funds to make election-related independent expenditures. Thus, it struck down a federal law banning this practice and also overruled two of its prior decisions. Additionally, in an 8-1 decision, the Court ruled that the disclaimer and disclosure requirements associated with electioneering communications are constitutional.

The Court's decision in Citizens United likely calls into question laws in 24 states, including Connecticut, prohibiting corporations from making independent expenditures from their general treasury. While the ruling's immediate effect is unclear, experts predict it is only a matter of time before these laws will be challenged in court or repealed by state legislatures. Experts also predict that, since the laws are vulnerable, they will be difficult for state election officials to enforce. In Connecticut, CGS §§ 9-613(a) and 9-614(a) prohibit independent expenditures by businesses and unions, respectively.

The decision's impact on Connecticut's lobbyist and contractor contribution and solicitation bans and the Citizens' Election Program (CEP) is less clear. The U.S. Court of Appeals for the 2nd Circuit asked the parties in Green Party of Connecticut, et al. v. Garfield, et al., 648 F. Supp. 2d 298 (D. Conn. 2009) to file supplemental briefs addressing these issues. The state contends there is little, if any, effect while the Green Party asserts the opposite.


In January 2008, Citizens United, a nonprofit corporation, released a 90 minute documentary entitled Hillary: The Movie (hereinafter Hillary). The movie expressed opinions about whether then-senator Hillary Clinton, a candidate for the Democratic presidential nomination, was fit for the presidency. Citizens United distributed the movie in theaters and on DVD, but also wanted to make it available through video-on-demand. It produced advertisements promoting the film and wanted to show them on broadcast and cable television. To pay for the video-on-demand distribution and the advertisements, Citizens United planned to use its general treasury funds.

As amended by § 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA), federal law prohibits corporations and unions from spending their general treasury funds on “electioneering communications” or for speech that expressly advocates the election or defeat of a candidate. An “electioneering communication” is any broadcast, cable, or satellite communication that (1) refers to a clearly identified candidate for federal office, (2) is made within 30 days of a primary election or 60 days of a general election, (2 U.S.C. § 441b), and (3) is publicly distributed (11 CFR § 100.29(a)(2)).

Citizens United, fearing that Hillary would be covered under § 441b, sought an injunction in December 2007 against the Federal Elections Commission (FEC) in federal district court, arguing that § 441b is unconstitutional as applied to Hillary. The district court denied this motion and granted summary judgment to the FEC.

Additionally, Citizens United argued that BCRA's disclaimer and disclosure requirements are unconstitutional as applied to Hillary and the advertisements promoting Hillary. Under BCRA § 311, televised electioneering communications funded by anyone other than a candidate for office must include a clear, readable disclaimer displayed on the screen for at least four seconds. The disclaimer must identify the person or organization responsible for the advertisement, that person or organization's address or website, and a statement that the advertisement “is not authorized by any candidate or candidate's committee” (§ 441d(a)(3)).

Further, under BCRA § 201, any person who spends more than $10,000 on electioneering communications during a calendar year must file a disclosure statement with the FEC (§ 434(f)(1)). The statement must identify the person making the expenditure, the amount, the election to which the communication was directed, and the names of certain contributors (§ 434(f)(2)). Again, the district court ruled against Citizens United and granted summary judgment to the FEC. Citizens United appealed to the U.S. Supreme Court.


The issues on appeal were whether, as applied to Hillary, (1) § 441b's prohibition on corporate independent election expenditures was constitutional and (2) BCRA's disclaimer, disclosure, and reporting requirements were constitutional.

After oral arguments in March 2009, the Court ordered a reargument for September that same year. It asked the parties whether it should overrule two prior campaign finance cases (1) Austin v. Michigan Chamber of Commerce, 494, U.S. 652 (1990), which held that political speech may be banned based on the speaker's corporate identity and (2) McConnell v. Federal Election Comm'n, 540 U.S. 93, 203–209 (2003), which upheld a facial challenge to limits on electioneering communications. Deciding that the issue of § 441b's application to Hillary could not be resolved on narrower ground, the Court began its analysis with the sustainability of Austin.


Independent Expenditures by Corporations

The Court overruled Austin, striking down § 441b's ban on corporate independent expenditures. It also struck down the part of McConnell that upheld BCRA § 203's extension of § 441b's restrictions on independent corporate expenditures. The Court held that the “government may not suppress political speech on the basis of the

speaker's corporate identity. No sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations.” An analysis of this holding follows.

As Applied Challenge. First, the Court held that the case could not be resolved on an as applied basis without chilling political speech. Under an “as applied” challenge, the Court's review of the law's constitutionality is limited to the set of facts in the case before it. The Court therefore broadened the case from Citizens United's initial narrower arguments, focusing only on Hillary, to reconsider both the validity of its prior decisions in Austin and McConnell and the facial validity of § 441b.

In reaching this decision, the Court reasoned that among other things:

1. Citizen United's narrower arguments, including that Hillary is not an “electioneering communication,” are not sustainable under a fair reading of § 441b, and

2. it must therefore consider the statute's facial validity or risk prolonging its substantial chilling effect.

Facial Challenge to § 441b. In considering the facial challenge, the Court applied strict scrutiny; thus requiring the government to demonstrate that the statute served a compelling interest and was narrowly tailored to meet that interest. A “facial challenge” requires the Court to look at the law and determine if it is unconstitutional as written.

In noting the need for strict scrutiny, the Court stated that a ban on independent expenditures is a ban on speech. In its analysis, the Court found that prior to Austin, the First Amendment applied to corporations (First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765) and the protection was extended to the context of free speech (NAACP v. Button, 371 U.S 415).

In Austin, the Court held that antidistortion was a compelling government interest that justified a ban on independent election expenditures by corporations and unions. It ruled that large aggregations of wealth, accumulated with the help of the corporate form, may have corrosive or distorting effects, thus justifying a ban on corporate independent expenditures. The Citizens United Court reasoned that “differential treatment of media corporations and other corporations cannot be squared with the First Amendment and there is no support for the view that the Amendment's original meaning would permit suppressing media corporations' free speech.” Austin, it found, interferes with the “open marketplace” of ideas protected by the First Amendment. As a result of this reasoning, the Court was not persuaded by the government's arguments on (1) anticorruption and (2) shareholder protection.

Anticorruption. The Court addressed the government's anticorruption argument and ruled that independent expenditures “do not give rise to corruption or the appearance of corruption.” The Court reasoned:

1. Although Buckley identified a sufficiently important governmental interest in preventing corruption or the appearance of corruption, that interest was limited to quid pro quo corruption.

2. This interest justifies restrictions on direct contributions to candidates, but not on independent expenditures.

3. Influence over and access to elected officials does not mean that those officials are corrupt and the appearance of influence or access “will not cause the electorate to lose faith in our democracy.”

4. Twenty six states do not ban corporate independent expenditures, and the government did not argue that the absence of a ban in these states has led to increased corruption.

Shareholder Protection. Lastly, the Court rejected the government's argument that shareholders should be protected from being compelled to fund corporate speech. The Court reasoned:

1. Under a shareholder protection interest, if shareholders of a media corporation disagreed with its political views, the government would have the authority to restrict the media corporation's political speech.

2. If Congress had been interested in protecting shareholders, it would not have limited the ban on corporate independent expenditures to the 30 and 60 day windows preceding an election.

3. The ban is overinclusive because it includes corporations that only have a single shareholder.

Disclaimer and Disclosure Requirements

The Court ruled that BCRA's disclaimer and disclosure requirements are constitutional as applied to both Hillary and advertisements for it. Citing Buckley and McConnell, the Court found that disclaimers and disclosure requirements may burden the ability to speak, but they impose no ceiling on campaign-related activities or prevent anyone from speaking. However, the Court acknowledged that these could be challenged if a plaintiff could show a reasonable probability that disclosing contributors' names would subject them to threats, harassment, or reprisal.

In rejecting Citizens United's as-applied challenge, the Court held that

1. the advertisements for Hillary are “electioneering communications;”

2. disclosure requirements do not need to be limited to “speech that is the functional equivalent of express advocacy;”

3. “the public has an interest in knowing who is speaking about a candidate shortly before an election;” and

4. Citizens United presented no evidence that its donors have faced any threats, harassment, or reprisals.


The Supreme Court's decision in Citizens United likely calls into question laws in 24 states, including Connecticut. According to the Center for Competitive Politics, an organization tracking First Amendment issues, state responses thus far have varied. Some, like Ohio and Pennsylvania, are reviewing the case and have not yet decided how to proceed. At least one, Montana, has said its ban will remain until it is successfully challenged in court. Most have introduced bills that, among other things, repeal the independent expenditure ban; require stockholder approval prior to an independent expenditure; or establish corporate disclosure requirements for independent expenditures. Table 1 summarizes state responses to date.

Source: Adams, Terrance; Sulliva, Kristin. "Summary of Citizens United." Connecticut General Assembly. Office of Legislative Research. March 2, 2010. Web. May 10, 2015.

Political comedian (both in and out of character) talks about what he has learned about Campaign Finance laws since starting Colbert SuperPAC

Source: Ouyang, Annie. "Colbert and his Colbert Super PAC". Online Video Clip. Youtube. Youtube, April 8, 2013. Web. May 10, 2015.