The Wild West of Campaign Funding
For the first time since campaign laws were enacted, we’re facing a presidential campaign in which neither candidate will accept federal funds.
Refusing public money also removes the limitations that come with it. In a recent statement to the House, Paul S. Ryan of the Campaign Legal Center described “how current laws and regulations . . . have made this year’s elections a ‘Wild West’ of money in politics.”
Money = Free Speech?
U.S. campaign finance reform dates back to the Tillman Act of 1907, which outlawed the direct contributions of corporations to political campaigns. The government tightened the rules in 1940 with so-called pay-to-play regulations, designed to end corruption among federal contractors who were making campaign contributions in order to secure business.
More reform followed in the 1970s, some of it a reaction to irregularities uncovered during the Watergate scandal. At that time, the argument was made in Buckley v. Valeo that campaign contributions were a form of free speech and covered by the First Amendment. That decade also saw the creation of the Federal Election Commission (FEC), an agency dedicated to campaign finance regulation.
McCain-Feingold, or the Bipartisan Campaign Reform Act of 2002, was the most recent major federal legislation on campaign finance. In 2010, the idea of money as free speech returned in Citizens United v. Federal Election Commission, where corporate funding of independent political broadcasts was affirmed as falling within the rights entitled in the First Amendment.
The recent introduction of Super PACs also changes the face of campaign finance.
Obama Sets a Precedent
Current campaign finance law allows candidates to receive “matching funds” from the federal government if they abide by strict limits on campaign spending. These funds are available for both primary and general election campaigns.
In 2008, Barack Obama became the first candidate to decline federal matching funds for the general election. Mitt Romney has also declined all matching funds.
The new world of campaign finance has allowed the president to pile up a huge advantage. The Obama campaign’s March 31 FEC filing showed $104 million cash on hand—10 times more than the Romney campaign has in the bank.
The President employs a clever strategy, fundraising mostly for the benefit of the Democratic Party rather than his own reelection campaign. Political parties may give large sums of money to its candidates’ campaigns, while donations from individuals are limited. In this way, Obama and the Democrats have raised more than $350 million, including nearly $200 million for the president’s campaign.
Romney’s Victory Fund
FEC filings show that the Obama campaign raised $35 million in March, while Romney took in less than $13 million. However, Romney’s fundraising has shown new life since Rick Santorum dropped out of the race.
Earlier this month, Romney introduced the Romney Victory Fund. Donors are being asked to give $75,800 to the fund. Some of the donations will go directly to the Romney campaign and some to the Republican National Committee. But $40,000—the legal maximum of $10,000 each—will go to state party accounts in Idaho, Oklahoma, Vermont, and Massachusetts. The money in these accounts will be used to help Romney in the November election.
Big Money and Little Money
Some critics see these innovations as little more than legal money laundering. But they also reveal interesting differences in the sources of each candidate’s money.
More than 60% of Romney’s donations are $2,500 or more, while only 25% of Obama’s supporters give at that level. Some 45% of the money Obama raises is less than $200, while just 10% of Romney’s money comes from small contributors.
The Super PAC Factor
For Romney, the big equalizer for Obama’s cash advantage may be the Super PAC factor. So far, the liberal Super PACs have had little success in matching their conservative rivals. Priorities USA Action, a Super PAC that supports Obama, took in just $4.5 million from January through March. During that same period, Republican strategist Karl Rove’s American Crossroads Super PAC raised $49 million. The pro-Romney Restore Our Future Super PAC raised nearly $9 million in March alone.
Interactive Campaign Finance Explorer (The Washington Post)
Pushback for Romney Fund (The Wall Street Journal)
Campaign Legal Center, statement by Paul S. Ryan to Congressional Legal Forum on Campaign Finance, April 18, 2012