Origins

Campaign money in the U.S. system comes in two forms: "hard money" and "soft money". Hard money refers to donations made directly to political candidates. These must be declared with the name of the donor, which becomes public knowledge, and are limited by federal caps. Soft money refers to contributions made to political parties, and are largely uncapped. However, they cannot go directly into supporting a candidate, but rather into such elements as what are known as "issue" ads, which are advertisements for a candidate's positions or thinly veiled attacks on the opponent's positions. This is far different from the intended use of soft money, which was to fund "party building activities" such as get-out-the-vote efforts or voter registration drives.

However, this money was quickly used to fund advertisements. For example, a wealthy individual could give $5 million in soft money to the Democratic Party. The party could then spend this money on political ads. These ads could not tell you to "Vote for Smith", "Elect Smith", "Send Smith to Congress", "Vote Against Jones", "Defeat Jones", or anything of that sort. However, they could go something like this: "John Smith is an honest man who stands up for the people. Bill Jones is a chronic liar who's taken money from special interests and advocated cutting Social Security. Call Bill Jones and tell him how you feel about this." The use of the phrases "vote for", "elect", "defeat", etc. was ruled illegal in the 1976 U.S. Supreme Court decision Buckley v. Valeo. The decision also held that limitations on donations to candidates were acceptable (to limit the "appearance of corruption"). On the other hand, the Court said, limitations on campaign spending were unconstitutional.

Campaign finance reform had been debated for years without any major changes to campaign finance laws. It was a major issue in the 2000 U.S. presidential election, especially with candidates John McCain and Ralph Nader. Organizations in favor of campaign finance reform include Common Cause, Democracy 21, and Democracy Matters. Organizations directly challenging the Supreme Court's decision to equate spending money to influence elections with constitutionally-protected free speech, include ReclaimDemocracy.org, the National Voting Rights Institute, and U.S. PIRG.

Bipartisan Campaign Reform Act of 2002

In 2002, spurred by (amongst other things) the collapse of Enron, a major contributor to politicians at all levels of the U.S. system, reformers in the U.S. House of Representatives were able to pass the Bipartisan Campaign Reform Act (BCRA), also called the McCain-Feingold bill after its chief sponsors, John McCain and Russ Feingold. The U.S. Senate then gained the requisite 60 votes to shut off debate (in fact, 68) and passed the House version of the bill 60-40 on March 20, 2002. It was signed into law by President Bush on March 27, 2002. He said, in part, "I believe that this legislation, although far from perfect, will improve the current financing system for Federal campaigns... Taken as a whole, this bill improves the current system of financing for Federal campaigns, and therefore I have signed it into law." The bill was the first overhaul of campaign finance laws since the post-Watergate scandal era.

The BCRA was a mixed bag for those who wanted to remove the money from politics. It eliminated all soft money donations--but it also doubled the contribution limit of hard money, from $1,000 to $2,000. In addition, the bill banned "issue ads" (paid for with soft money not donated to parties) in the periods 30 days before a primary election and 60 days before a general election.

This provision were challenged as unconstitutional by groups and individuals including the California State Democratic Party, the National Rifle Association, and Republican Senator Mitch McConnell (Kentucky), the Senate Majority Whip. After moving through lower courts, the U.S. Supreme Court heard oral arguments in a special session in September 2003. On Wednesday, December 10, 2003, the Supreme Court issued a ruling that upheld the key provisions of McCain-Feingold; the vote on the court was 5 to 4. Justices John Paul Stevens and Sandra Day O'Connor wrote the majority opinion; they were joined by David Souter, Ruth Bader Ginsburg, and Stephen Breyer, and opposed by Chief Justice William Rehnquist, Anthony Kennedy, Clarence Thomas, and Antonin Scalia.

Other methods

However, this is only one battle in movement for campaign finance reform. Another route some groups are trying is public financing of campaigns. There are several ways of instituting public financing.

One method gives each candidate a certain, set amount of money. In order to qualify for this money, the candidates must have a minimum level of support in opinion polls. The candidates are not allowed to accept outside donations if they receive this money. This procedure is currently in place in races for the state legislature in Maine.

Another method allows the candidates to raise funds from private donors, but provides matching funds for the first chunk of donations. For instance, the government might "match" the first $250 of every donation by giving one dollar for the first $250 by any donor. A system like this is currently in place in the U.S. presidential primaries.

Supporters of public financing claim that it is the only way to truly get money out of politics. In addition, they claim that matching funds provide a necessary encouragement to raise money in small donations. Many critics say that such plans discriminate against smaller candidates, especially in systems with only two political parties. They also claim that government subsidization of political speech is contrary to the spirit of democracy.

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