Who Finances Political Campaigns & Why Should You Care?
Even though the stakes have never been higher, the urge not to vote remains tempting (but you should do it, please don’t get it twisted). Far more than dissatisfaction with any one candidate, one of the most discouraging factors at play is the seismic influence of money. The average voter is laughably ill-equipped to stand against the Goliath that is our shadowy system of campaign financing. And thanks to recent, conservative-led Supreme Court decisions, it’s only getting harder to get any clarity about who may be influencing politicians and policy.
With the global reach of social media, foreign influence in our elections is also more apparent than ever. As dark money flows from shadow organizations into super PACs, the idea that our elections are being bought and sold every few years is becoming more and more obvious and egregious.
For this election and beyond, we need to clearly establish who is financing political campaigns, as well as reassess how we can improve the system to hold true to being a democracy. For too long and with continually higher stakes, the influence of big money has had a stranglehold on elections, and it needs to change before we lose our voice forever.
How Money’s Flow Into Politics Was Formed
Throughout the 1900s, legislation like the Federal Corrupt Practices Act of 1925 and Hatch Act of 1939/1940 enabled Congress to limit contributions, as well as increase disclosure of donations to campaigns. These laws were largely ignored or circumnavigated against until the passing of the 1971 Federal Election Campaign Act.
The Federal Election Campaign Act initiated the modern transparency for campaign finance, including full reporting of campaign contributions and expenditures, as well as spending on media. However, FECA also provided the framework for PACs (political action committees), which are segregated funds established by corporations and unions, where these organizations could then solicit contributions from individuals.
The first dispute of campaign contributions arose in 1976 in the case of Buckley vs. Valeo, where the Supreme Court struck down parts of 1974 amendments to FECA, ruling that expenditure limits conflict with freedom of speech. This meant that there were no restrictions on contributions from individuals or groups as long as they were independent actors of any official election campaigns. Essentially, this gave rise to the power of PACs, which have been one of the most influential fundraising tools since the '70s.
Our most recent modern reform effort came with the 2002 Bipartisan Campaign Reform Act (aka the McCain-Feingold Act) which aimed to address two key issues: soft money and issue advocacy. Soft money is defined as funds perceived to influence elections but not regulated by campaign finance law, for example, using funds for large contributions for "party-building" activities. Additionally, McCain-Feingold aimed to bar corporations and unions from using their treasury funds to finance issue advertisements.
The first challenge to McCain-Feingold was everyone’s favorite Senator Mitch McConnell’s, in the 2003 case McConnell Vs Federal Election Commission, which with the support of over 84 organizations — ranging from the ACLU to NRA to even the California Democratic Party — challenged the BCRA within days of its passing. As the lawsuit was accelerated so disputes could be settled before the 2004 election, federal judges struck down parts of the soft money contributions but upheld restrictions for political commercials.
Perhaps the most well-known challenge to campaign financing has been Citizens United, a 2010 Supreme Court case which reversed campaign-finance restrictions in place by McCain-Feingold and enabled corporations and other outside groups to spend unlimited amounts of money on elections.
The case was brought by conservative nonprofit group Citizens United, who challenged the FEC’s finance rules after they were prohibited from airing a film critical of Hillary Clinton. With a 5-4 majority, the Supreme Court sided with Citizens United, opening up the floodgates for special interest groups and corporations to spend freely on elections. As it’s been over a decade since its ruling, the impact of Citizens United is well-entrenched in our current federal elections today.
Where We Are Today
A landmark outcome of Citizens United was the creation of super PACs, which are able to raise unlimited amounts of money on items independent of campaigns (such as advertising), but cannot coordinate or make direct contributions to campaigns or party coffers.
The biggest difference between super PACs and PACs is that the latter are able to donate directly to candidates, with a cap at $5,000 per year to a candidate per election. For the 2020 election, super PACs have spent $1.2 billion so far.
A loophole enabled by Citizens United was that 501(c)(4) organizations (aka social welfare organizations) and limited-liability corporations (LLCs) can donate to campaigns under the protections of free speech. Not only is it possible in some states to anonymously start an LLC, but Congress actually has placed budget riders in spending bills to prevent agencies from regulating the social welfare groups political spending.
Dark money groups can make unlimited donations to super PACs. Although super PACs are required to disclose their donors, these organizations that donate to them are not required to do the same. A study on dark money by Stan Oklobdzija, a political scientist from UC San Diego, uncovered the names of donors to a multi-million dollar campaign associated with conservative positions for a 2012 California ballot initiative, particularly the Koch brothers-backed “Americans for Job Security.”
Oklobdzija finds that donors who previously donated to liberal candidates used dark money to support conservative causes. This brings to light that many simply donate to protect public perception of themselves while secretly favoring legislation that goes against who they want to portray to the community. Additionally, Oklobdzija also notes from a separate study that the 2016 election saw at least $178 million in dark money spending with most of it aimed at Congressional races and 76 percent going to conservative groups. When we talk about foreign influence in elections, these are what’s being used. The worst part? Dark money is still being used to finance elections today.
Even this past February, The Intercept reported that foreign-funded dark money groups are currently lobbying the IRS to repeal the little remaining reporting requirements. Furthermore, as the Director of National Intelligence (an Obama-appointed official well-respected across the intelligence community) warns that Russia, China, and Iran are all aiming to influence the 2020 election for or against Trump, we’re currently in a place where dark money is widely going untouched. And when people say America is being "bought and sold," this is the most direct practice.
How Should Elections Be Financed?
The unfortunate part about election financing is that Americans have never seen a time where money didn’t play some sort of influence in politics. Not only has this led to a "pay for play" system, but it also brings up the debate on how much of a voice corporations and businesses should have against individuals.
As corporations can almost always outspend individuals, their interests will always be loudest. Although the political climate is changing to where employees are now demanding their company have an opinion aligning with their own (as was the recent case with Coinbase), dark money has shown us that it’s relatively easy to publicly donate to a campaign to appease employees, then support whatever is favorable economically under shadow donations.
To combat the influence of dark money and unchecked spending on elections, some popular arguments include:
Ending Citizens United
While it’s not the catch-all solution, it’s a step towards reducing dark money spending and limiting the amount of influence the mega-wealthy have on elections. This includes curbing foreign influence in elections as well.
Enable Public and Citizen Campaign Finance
This would give a wider range of candidates a better chance in elections, allowing people to run without constantly having to fundraise. Additionally, offering credits or subsidies for donations from everyday citizens can be helpful as well, making their dollar stretch further.
Improving Donation Transparency
With dark money as prevalent as ever, closing the loopholes to ensure foreign influence and corruption are a thing of the past. Our democracy needs to be the voice of its citizens, not other countries trying to sway themselves into being the dominant world power.
