Campaign Finance

1
Campaign Finance
2
Campaigns

• 1974 Federal Election Campaign Act
• Public financing of presidential elections
• Limits on spending if accept public finance
• Created Federal Election Commission
• Required candidates and donors to report
  donations to the FEC, with caps now on donations
• Required candidates and donors to establish
  Political Action Committees (PACs) to handle
  money end of the campaigns
• Limited amount of personal wealth candidates
  could spend

3
Campaigns

• Buckley vs. Valeo (1976)
• restrictions on personal spending violate the
  First Amendment
• caps on contributions, however, do not
• federal finance of campaign do not, as long as it
  is voluntary (that is, candidates can opt to
  accept the money -- and the limits -- or not)

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Campaigns

• Loopholes within the FECA
• No limits on donations to party (soft money)
• No limits on party spending for get out the
  vote drives (soft money)
• No limits on number of political action
  committees
• bundling

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Campaigns

• 2002 Bipartisan Campaign Reform Act (BCRA)
• Closed soft money loophole
• Raised the limits on PAC contributions and other
  donations
• Bans group sponsored ads 30 days prior to a
  primary and 60 days prior to general election

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Campaigns

• Loopholes
• PACs can raise unlimited amounts of money
• 527 Organizations -- nonprofit issue advocacy
  groups

7
Campaigns

• Basics of Campaign Finance Law
• 2002 Bipartisan Campaign Reform Act
• Campaign Finance and Electoral Success 2008

8
Campaigns

• In 2008 House elections, in only 2 of the races
  did the candidate with lower campaign
  contributions win
• In 2008 Senate races, in only 6 of the races did
  the candidate with lower campaign contributions
  win.

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Campaigns

• Better financed campaigns generally have a better
  chance of success
• They can hire better talent
• They can buy advertising to rebut or make charges
• They can extend the campaign longer and respond
  to changes in the election atmosphere
• Efforts to curtail influence of money in
  campaigns began in earnest with post-Watergate
  reforms and have met with limited success
• So, should we be concerned about the role of
  money in politics?

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Campaign Contribution

• Concern depends on why peopleof organizations
  contribute
• Do they contribute for policy/electoral reasons
  or for service reasons?
• When does it make sense to contribute?

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Why Contribute?

• Assume two candidates Democrat Don and
  Republican Ron
• Assume each has campaign contribution XD and XR,
  respectively, where X equals cash on hand
• Assume candidate with the most money is most
  likely to win, then...

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Why Contribute

• Well define the probability that Demo Don wins
  as PD XD (XDXR)
• And well define the probability that Repub Ron
  wins as PD XR
  (XRXD)

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Why Contribute?

• Further, if we assume if both XD and XR is 0,
  then PD PR 0.5 (50)
• In other words, if the money is equal, the race
  is a toss-up
• And if either has more money, then they have a
  better chance of winning

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Why Contribute?

• For example, if Demo Don has all the money then,
  using the formula we developed we get
• PD 1D 1 (1D0R)
• Likewise, if Repub Ron has all the money, then he
  has a 100 chance of winning

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Why Contribute?

• Notice that PD 1 - PR
• In other words, if we will assume if candidates
  are trying to win, then they will try to maximize
  their campaign contributions

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Why Contribute

• Turn to page 201 and the Sierra Club example

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Why Contribute

• Next week finish chapters 6 and 7