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1 [1] (December 3, 2018)

handle is hein.crs/crsmthzzbwd0001 and id is 1 raw text is: Congressional Research Service I ft r rgthcIegittiv~debate~anco 1914 December 3, 2018 Campaign Finance: Key Policy and Constitutional Issues Campaign Finance Policy: The Basics For more than a century, Congress has attempted to limit potential corruption and ensure transparency in campaigns through two major approaches: (1) limiting sources and amounts of financial contributions and (2) requiring disclosure about contributions and expenditures. Two major federal statutes, enacted a generation apart, establish most of modern campaign finance policy. The Federal Election Campaign Act (FECA), first enacted in 1971 and substantially amended in 1974, 1976, and 1979, is the nation's primary campaign finance statute. FECA and its 1970s amendments established or updated longstanding provisions about which entities and practices campaign finance law regulates. In 2002, Congress amended FECA by enacting the Bipartisan Campaign Reform Act (BCRA) to address money and activities that were widely perceived to affect elections, but were not then regulated by campaign finance law. FECA limits the amount of money that individuals, parties, and political action committees (PACs) can contribute to campaigns, parties, or PACs. In 2018, individuals could contribute up to $2,700 per candidate, per election (for a total of $5,400 for the primary and general elections). PACs can contribute up to $5,000 per candidate, per election. Except for super PACs, political committees may not accept contributions above the limits set in FECA. FECA also requires disclosure about certain campaign fundraising and spending, and it established the Federal Election Commission (FEC) to administer the act. BCRA banned previously unregulated or soft money in federal elections and established a new political advertising concept known as electioneering communications to regulate money spent on certain communications that refer to clearly identified federal candidates during pre-election periods. FECA prohibits corporations and unions from using their treasury funds to make contributions. The act also bars contributions from national banks, government contractors, and foreign nationals. Despite the prohibition on treasury- fund contributions, corporations and unions may form affiliated, but legally, distinct PACs to make contributions. Those contributions must come from voluntary donations; the corporation cannot simply route its treasury funds through a PAC. Constitutional Considerations for Legislation Several federal court rulings have had a significant impact on the regulatory scope of FECA and inform the constitutional bounds of campaign finance regulation. Such pivotal rulings may be instructive should Congress consider policy options to amend FECA. Limits on Contributions and Expenditures In its landmark 1976 ruling, Buckley v. Valeo, the Supreme Court established the framework for evaluating the constitutionality of campaign finance regulation. According to the Court, limits on campaign contributions, which involve giving money to an entity, and expenditures, which involve spending money directly for electoral advocacy, implicate rights of political expression and association under the First Amendment. The Court, however, held that contribution limits are subject to a more lenient standard of review than expenditures because they impose only a marginal restriction on speech, and they will be upheld if the government can demonstrate that they are a closely drawn means of achieving a sufficiently important governmental interest. In contrast, the Court held that because they impose a substantial restraint on speech and association, expenditure limits are subject to strict scrutiny, requiring that they be narrowly tailored to serve a compelling governmental interest. Significantly for Congress if it considers legislation, the Court's recent case law has announced that only quidpro quo candidate corruption or its appearance constitute a sufficiently important governmental interest to justify limits on contributions and expenditures. (Quid pro quo corruption involves an exchange of money or something of value for an official act.) In addition, the Court has rejected government interests in lessening influence over or access to elected officials, decreasing the costs of campaigns, and equalizing financial resources among candidates. Therefore, with some exceptions, courts have generally upheld limits on contributions, concluding that they serve the governmental interest of protecting elections from corruption, and invalidated limits on independent expenditures, concluding that they do not pose a risk of corruption. Limits on Corporate and Labor Union Spending In a 2010 ruling, Citizens United v. FEC, the Supreme Court invalidated two prohibitions on corporations and unions using their treasury funds for independent electoral spending: the longstanding ban on independent expenditures and the 2002 ban on electioneering communications. As a result, corporations and labor unions are not required to establish a PAC for such spending. According to the Court, independent electoral spending is protected speech-regardless of whether the speaker is a corporation-and merely permitting a corporation to engage in such speech through a PAC does not allow the corporation to speak directly nor does it alleviate the First Amendment burden created by such limits. Prohibition on Foreign Nationals In 2012, the Supreme Court summarily affirmed a three- judge federal district court panel ruling that upheld the www.crs.gov 1 7-5700 0

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