In both nations, efforts to reform have been closely connected with scandals but also associated with a fear that the increasingly television-oriented nature of campaigns was pricing candidates or parties out of the political arena. These issues, in turn, led directly to major campaign finance legislation in the United States and Canada during the 1970s: The U.S. Congress enacted no fewer than five significant campaign laws during that decade, while the Canadian Parliament in 1974 approved the sweeping Election Expenses Act.
And today, both the U.S. and Canadian legislatures are contemplating major overhauls of their respective campaign laws amid the realization that existing statutes have produced some unforeseen and unintended consequences in their respective electoral systems.
Despite such parallels, however, it must be emphasized that the U.S. and Canadian experiences with campaign reform are not interchangeable. Foremost among the reasons is that the United States lacks a Canadian-style, party-oriented type of politics. In fact, the U.S. reforms of the 1970s tended to weaken the power of the political parties - so much so that some critics blame those laws for the brand of interest-group politics now omnipresent at both the federal and state levels.
As in Great Britain, Canada’s parliamentary system features a highly centralized party structure, and the important functions of fiscal coordination and distribution of money during elections rest largely with party committees. U.S. politics, on the other hand, centres on candidates, not parties. Money is most often contributed to candidates and their personal campaign committees, and political parties must compete with candidates for the available dollars. Campaign strategies and tactics, particularly since the advent of radio and television, tend to project a candidate’s personality; in many instances, party identification is downplayed or even totally ignored.
Any preface to a study of the federal political finance system in the United States also must underscore the fact that the Congress has been merely one of several players in determining how the system works. While Congress has drafted the laws and presidents have signed them, their actual implementation has been shaped by the interpretations of regulatory agencies and the courts, to say nothing of savvy election lawyers and political operatives constantly looking for innovative ways to avoid the law or to interpret it favourably.
For example, while Congress in 1974 loosened restrictions on the formation of political action committees, or PACs, it was an opinion handed down by the Federal Election Commission (FEC) in 1975 that prompted a dramatic increase in the number of corporate PACs. And the growth of these controversial groups was further accelerated in 1976, when the U.S. Supreme Court ruled that mandatory ceilings on spending in congressional campaigns violated the First Amendment to the U.S. Constitution.1 The result is that, today, reform efforts are being fueled in large part by concern over the increasing dependence on PACs to fund congressional campaigns.
The constant testing of the legal parameters of U.S. campaign finance law has produced a regulatory system that can best be described as a hybrid. On one hand, there is the presidential campaign structure, a highly regulated system in which candidates receive significant amounts of public funding in return for agreeing voluntarily to expenditure ceilings and limits on the use of their personal wealth. On the other hand, there is the congressional regimen, where - like the presidential system - candidates must disclose receipts and expenditures and abide by limits on contributions from individuals, PACs and political parties. Other than that, however, the political equivalent of the free market reigns in congressional races as a result of the 1976 Supreme Court ruling coupled with the unwillingness of the Congress to enact public financing and spending limits for campaigns for the Senate and the House.
The difference in the regulatory structures of presidential and congressional campaigns naturally has produced substantial variation in the issues confronting each system. It also has prompted reformers and their legislative allies to push to narrow those differences - by seeking to enact public financing and to impose constitutionally acceptable restrictions on congressional campaigns. The problems bedevilling the operation of U.S. campaign finance laws and the proposals to resolve them are a central focus of this study.
First, however, a short history is necessary to show how the current situation evolved.
HISTORY
The decade of the 1970s saw the most sweeping changes in federal election statutes since the Progressive Era more than 60 years earlier. As mentioned, five major campaign finance laws were passed by Congress before the decade was out: the Federal Election Campaign Act of 1971 and the FECA Amendments of 1974, 1976 and 1979 as well as the Revenue Act of 1971. While this surge of activity is often associated with the Watergate scandal of the early 1970s, it should be noted that two of these laws-the basic Federal Election Campaign Act and the Revenue Act - were enacted by Congress almost six months prior to the genesis of that scandal in mid-1972.
Prologue: 1925-71
The Federal Election Campaign Act replaced a statute that had been on the books more than 45 years: the Federal Corrupt Practices Act of 1925. That law, passed in response to the “Teapot Dome” scandal of the early 1920s, was, in turn, a codification of several campaign reform laws enacted in the 1907-11 period at the height of the Progressive Era.
Whatever the intentions of its framers, the Federal Corrupt Practices Act was notable mainly for its ineffectiveness during the years following its enactment. The law contained limits on spending in congressional races that were so unrealistically low that they were simply ignored by federal regulators as well as by candidates. The statute also required disclosure of campaign spending by candidates for Congress (presidential aspirants were not covered). However, it was so imprecisely worded that many candidates chose to interpret it as requiring disclosure of only their personal expenditures and thereby reported only a fraction of their actual campaign costs.
In 1940, Congress supplemented the Federal Corrupt Practices Act with a provision in the so-called Hatch Act limiting to $5 000 per year contributions by individuals to a federal candidate or campaign committee. This had little effect on restraining large contributors: a candidate would simply set up numerous campaign committees, and a well-endowed contributor could give $5 000 to each.
The pressure for changing this loophole-ridden system began building after the Second World War and received a major boost when John F. Kennedy appointed the President’s Commission on Campaign Costs in late 1961 (President’s Commission 1962). In May 1966, Kennedy’s successor, Lyndon B. Johnson, called upon Congress to pass comprehensive campaign finance reform - partly, he said, to deflect congressional criticism that Democratic Party donors were benefiting from lucrative federal contracts. “Despite the soaring expense of political campaigns, we have done nothing to insure that able men of modest means can undertake elective service unencumbered by debts of loyalty to wealthy supporters. We have laws dealing with campaign financing. But they have failed … They are more loophole than law. They invite evasion and circumvention. They must be revised.”2
But it was five more years before campaign finance reform was enacted into law. While reform legislation - belatedly backed by Johnson - was approved by Congress in 1966, it was suspended by the Senate a year later amid disagreements over how or whether it should be implemented.
Federal Election Campaign Act of 1971
Throughout both Canadian and U.S. history, campaign reform laws almost always have owed their enactment to scandal. “Response to scandal has been the usual impetus for electoral reform in Canada, whether it was the Pacific Scandal, the Winnipeg General Strike, or the FLQ crisis,” Patrick Boyer, a member of the Canadian Parliament, recently remarked (Canadian Study of Parliament Group 1990, 2). Likewise, the U.S. reform statutes adopted during the early part of the 20th century were a direct response to the excesses of the Gilded Age and the Teapot Dome affair; the Federal Election Campaign Act amendments of the mid-1970s were Watergate induced.
One of the few exceptions to this historical pattern was the passage of the original Federal Election Campaign Act of 1971, commonly known as FECA. Instead of scandal, the legislative impetus was a concern that rapidly rising campaign costs were pricing many candidates out of the market. According to figures