The other major part of the 1974 law still in effect sharply curtailed the role of that long-time fixture of American politics - the large contributor. In contrast to the millions of dollars contributed by men such as insurance magnate Clement Stone and the hundreds of thousands by General Motors heir Stewart Mott during the 1972 campaign, individuals were barred from giving a presidential or congressional candidate more than $1 000 per election. They also were not permitted to exceed an annual aggregate ceiling of $25 000 for contributions to all federal candidates and committees (see table 1.1).
If the FECA Amendments of 1974 shut off one major source of campaign cash, they spurred the growth of another: the political action committee, or PAC. In that respect, the 1974 law provides an example of campaign reform’s law of unforeseen consequences: Given the pluralistic and dynamic nature of the U.S. political system, efforts to solve one set of problems plaguing the system almost invariably give rise to another set of problems. As noted earlier, PACs have served to increase the role of special interests in the political process and have become as controversial as the individual “fat cats” of yesteryear; however, the institutionalization of contributions raised through PAC solicitation systems and PAC special interest pleading linked to lobbying causes more concern than did the individualistic large contributor of earlier years.
Table 1.1 Contribution limits
(in dollars)
Source: Federal Election Commission.
aFor purposes of this limit, each of the following is considered a national party committee: a party’s national committee, the Senate Campaign committees and the National Congressional committees, provided they are not authorized by any candidate.
bCalendar year extends from January 1 through December 31. Individual contributions made or earmarked to influence a specific election of a clearly identified candidate are counted as if made during the year in which the election is held.
cEach of the following elections is considered a separate election: primary election, general election, run-off election, special election and party caucus or convention which has authority to select the nominee.
dA multicandidate committee is any committee with more than 50 contributors which has been registered for at least six months and, with the exception of state party committees, has made contributions to five or more federal candidates.
eLimit depends on whether or not party committee is a multicandidate committee.
fRepublican and Democratic Senatorial Campaign committees are subject to all other limits applicable to a multicandidate committee.
gGroup includes an organization, partnership or group of persons.
N/A = not applicable.
PACs were legal prior to the passage of the 1974 law. But, traditionally, they were utilized primarily by labour unions, which collected voluntary political contributions from members and funnelled them to favoured candidates. While the FECA of 1971 legitimized PACs, the blossoming of the corporate PAC can be traced to the 1974 FECA amendments, in which Congress repealed the provision of the 1939-40 Hatch Act barring corporations and unions that held federal contracts from forming PACs.
Ironically, it was organized labour that took the lead in lobbying for the repeal: unions with government contracts to train workers were concerned that they would have to abolish their PACs unless the law was changed. But the far more significant impact was to allow many large corporations with defence contracts to establish PACs. Many of the largest companies in the United States have since done so.
At the time of the FECA Amendments of 1974, the PAC issue received far less attention than the series of mandatory spending limits placed on congressional races. These limits never took effect. They were to be wiped out little more than a year later by a landmark Supreme Court ruling.
Buckley v. Valeo: Campaign Reform and the Constitution
In January 1975, a few days after the 1974 law became effective, a suit was brought contending that the new law violated several rights guaranteed by the First Amendment to the U.S. Constitution.5 On 30 January 1976, a little more than a year after the case was filed, the Supreme Court reversed a U.S. Court of Appeals ruling and found several major sections of the FECA Amendments of 1974 to be unconstitutional (Buckley v. Valeo 1976). The decision was to have a significant impact on the regulation not only of federal elections but also of state and local elections.
In Buckley v. Valeo, the court faced a difficult judicial task: to balance the First Amendment rights of free speech and free association against the clear power of the legislature to enact laws to protect the integrity of the electoral system. The central question was posed by Justice Potter Stewart during oral arguments: Is money speech and speech money? Or, stated differently, is an expenditure for speech the same thing as speech itself, given the expenditures necessary to buy broadcast time or newspaper space to reach large audiences?
A majority of the court answered the question in the affirmative, ruling expenditure limits to be a “substantial” restraint on free speech that could prevent a candidate from making “significant use of the most effective modes of communication.” Consequently, the Supreme Court rejected as unconstitutional the mandatory spending limits placed on presidential and congressional campaigns by the 1974 law. Also thrown out were restrictions on the amount a candidate could spend using his or her personal resources. (The 1971 FECA law had limited presidential and vice-presidential candidates to contributing $50 000 of their own money or that of their immediate family; for Senate and House candidates, the thresholds were $35 000 and $25 000, respectively.)
However, the court made a significant exception to this finding: If a candidate voluntarily accepted public financing, the government could require him or her to abide by campaign expenditure limits and other restrictions as a condition of that acceptance. The impact of this was to preserve the presidential financing structure outlined in the 1974 FECA amendments; during the last four presidential elections, all but one of the major candidates have taken public funding and abided by the prescribed limits. But the Buckley decision invalidated the spending ceilings in congressional races because the 1974 law did not provide public financing as a means of enticing legislative candidates to comply voluntarily with the limits.
While eliminating mandatory spending limits, the justices ruled the other major underpinning of the 1974 FECA amendments - contribution limits - to be constitutional. The court asserted that these represented only a marginal restriction on a contributor’s First Amendment rights because “the quantity of communication by the contributor does not increase perceptibly with the size of his contribution.” In this instance, the court said that First Amendment considerations were outweighed by the possible influence of large contributors on a candidate’s positions, which, in turn, could lead to real or perceived corruption once the candidate took office.
Finally, the Supreme Court, while upholding the concept of a bipartisan regulatory commission to administer campaign finance laws, ruled the nomination procedure of the new Federal Election Commission to be unconstitutional. The court said that the requirement in the 1974 FECA amendments that four of the six commission members be appointed by Congress represented an attempt by the legislative branch to assume powers reserved for the President. The need for