In the aftermath of Watergate, Congress passed the Federal Election Campaign Act, instituting a system of partial public financing for presidential primary candidates and full public financing for general election candidates. Candidates who qualify and agree to abide by certain restrictions receive payments from U.S. Treasury. The federal payments come out of the Presidential Election Campaign Fund, which is filled by the $3 check-off on federal income tax forms.
In 1996 the campaign finance system experienced a catastrophic failure. Laws were bent, if not broken, and stories about White House coffees, Lincoln bedroom sleepovers, and Chinese money filled the headlines through much of 1997. The Federal Election Commission proved ineffective at enforcing campaign finance laws that were themselves in need of an overhaul. Large soft money contributions to the political parties drew particular criticism.
After years of work campaign finance reform advocates achieved a major victory on March 20, 2002 when the Senate passed the Bipartisan Campaign Reform Act of 2002 (BCRA, also known as McCain-Feingold) in a 60 to 40 vote. President Bush quietly signed the measure into law (Public Law No. 107-155) on March 27, 2002; it took effect on November 6, 2002 although its constitutionality was challenged in the U.S. Supreme Court and legal wrangling continued well after the 2004 election. There were concerns that cutting off the flow of soft money to the parties would harm those institutions, but the parties adapted well to the new environment.
One small but noteworthy change brought about by BCRA was to raise the $1,000 limit on individual contributions to $2,000. The $1,000 limit had not been adjusted for inflation since the law was enacted in 1974 and was worth about one-third of the original level.
BCRA did not address shortcomings of the system of partial public funding. The federal income tax check-off is plagued by a low level of citizen participation -- in recent years only about 11 percent of filers have done the check off compared to 27.5 percent on 1976 returns. Another problem is that leading primary candidates, not wishing to be constrained by limits, are opting not to take primary matching funds (in 2004 Bush, Dean and Kerry opted out). In 2004 the Fund distributed a total of $207.5 million: $28.4 million in matching funds to eight primary candidates, $29.8 million for the two major party conventions, and $149.2 million to the two major party candidates for their general election campaigns.
A New Channel: the 527s
Ultimately, BCRA's effectiveness depends upon the Federal Election Commission's regulations, arrived at through an extensive rulemaking process. The FEC again proved ineffective. Legal challenges started immediately. In a complaint filed on Oct. 8, 2002 and amended on Jan. 21, 2003, Reps. Christopher Shays and Martin Meehan charged that the FEC's regulations "thwart and undermine the language and congressional purposes of Titles I and II of BCRA."
In Spring 2004 liberal groups such as America Coming Together (ACT) ("mobilizing voters to defeat George W. Bush"), The Media Fund ("media buying organization supporting a progressive message and defending Democrats from attack ads") and MoveOn.org Voter Fund, drawing backing from billionaire George Soros and others (example), engaged in a major campaign that paralleled that of the presumptive Democratic nominee Sen. John Kerry. Republicans protested. When on May 13, 2004 the FEC voted to delay a decision on regulating 527 committees, Republicans vowed to vigorously pursue their own 527 efforts. In a joint statement, Bush-Cheney campaign chairman Marc Racicot and RNC chairman Ed Gillespie said the decision "sets the stage for a total meltdown of federal campaign finance regulation in 2004." "The 2004 elections will now be a free-for-all," the two said in their statement. "Conservative groups now have the go-ahead they were waiting for as the commission has now made clear that these '527' groups will not be affected by the federal campaign finance rules, at least in 2004." Indeed in the the closing months of the campaign Republican aligned groups such as Progress for America Voter Fund and Swift Boat Veterans for Truth weighed in with significant advertising campaigns.
And so the money flowed.
According to the Center for Public Integrity (>),
53 committees that focused "largely or exclusively on the presidential
election" raised $246 million in the
2003-2004 cycle. All told "527 committees raised and spent just over
a half-billion dollars during the 2003-2004 election cycle." More
After a candidate qualifies by meeting the $100,000 threshold--raising $5000 in 20 states in contributions of $250 or less--his or her campaign becomes eligible to receive matching funds. Contributions from individuals of up to $250 are matched dollar for dollar with payments from the Presidential Election Campaign Fund. Candidates began receiving payments in January 2004. They must agree to comply with spending limits, based on the 1974 figure of $10 million, adjusted for inflation (in 2004 the limit was $37.31 million; when costs associated with fundraising were included it was actually higher).
These limits can pose difficulties; in 1996 a heated primary battle left the Dole campaign with little money for about four months leading up to the convention. Likewise in 2000 Gore had some lean months prior to the convention. DNC Chairman Terry McAuliffe vowed to avoid such a situation in 2004 and he emphasized that by the time the Democratic nominee was selected, the party would be ready with a check for the full amount of coordinated expenditures authorized under law, which is two cents times the voting age population of the United States. (11CFR109) As it happened Sen. Kerry raised more than $200 million between Super Tuesday and the Convention.
A candidate who chooses not to participate in the matching funds program can spend as much as he or she wants, but contributions from individuals still may not exceed $2,000. There is no limit to how much a candidate can spend of his or her own money. In the 2000 Republican primary campaign then Gov. George W. Bush declined matching funds and brought in more than $90 million in individual contributions, a record. In 2004 President Bush again declined matching funds and there were suggestions that he could raise upwards of $200 million although he faced no credible Republican challenger. Faced with this prospect, two of the Democratic candidates, former Gov. Howard Dean (on Nov. 8, 2003) and Sen. John Kerry (on Nov. 14, 2003), opted out of the public financing system as well.
Through Jan. 31, 2004 > the money going to the Democratic and Republican campaigns was roughly even. The campaign committees of the ten major Democratic candidates raised about $141.8 million in individual contributions compared to $142.2 million for Bush-Cheney '04. (That did not include contributions to compliance committees or the $6.7 million in individual contributions to fringe candidate Lyndon LaRouche). Early money is vital to a candidate's viability; 2004 also witnessed the phenomenon of late money. A Campaign Finance Institute analysis found that a majority of “pre-nomination” money "was raised and spent to affect the general election."
All told during the 2004
primaries, the Bush campaign raised $258.8 million in individual contributions;
221 Rangers raised at least $200,000 and 327 Pioneers raised at least $100,000.
Ten Democrats raised $351.0 million in individual contributions, led by
Kerry with $215.4 million in individual contributions. Six Democrats
and Ralph Nader received just over $28 million in matching fund payments.
Taking into account other receipts, transfers and money raised from committees,
the total receipts in the pre-nomination period for the campaign committees
alone added up to
$673.9 million; expenditures totaled $661.1
In addition, as mentioned
above, the party committees may spend some money on behalf of their nominees,
in the amount of 2 cents times the voting age population of the United
States; these coordinated expenditures amounted to $16.25 million for each
party in 2004.
Total Spending: More than $1 Billion
Note: Much of the FEC overview details for 2004 above were drawn from the FEC Feb. 3, 2005 press release "2004 Presidential Campaign Financial Activity Summarized."
Campaign Finance Institute (Steve Weissman and Ruth Hassan). “The $100 Million Exemption: Soft Money and the 2004 National Party Conventions.” Report issued on July 7, 2004.
Institute for Politics, Democracy & the Internet. March 13, 2006. "Small Donors and Online Giving: A Study of Donors to the 2004 Presidential Campaigns."
Texans for Public Justice. October 1, 2004. "Payola Pioneering: Exposing the Bush Pioneer/Ranger Network."
Democracy North Carolina. August 2003. "The Color of Presidential Money: North Carolina Case Study."
for Public Integrity's Buying of the President 2004
Michael J. Malbin, ed. March 2006. The Election After Reform: Money, Politics, and the Bipartisan Campaign Reform Act. Lanham, MD: Rowman & Littlefield Publishers, Inc.
David B. Magleby, Anthony
Corrado, and Kelly D. Patterson, eds. August 2006. Financing
the 2004 Election.
Old Information from the Primaries
Copyright © 2003, 2004,
2005, 2006 Eric M. Appleman/Democracy in Action.