The Presidential nominee of each major party may become eligible for a public grant of $20 million (plus a cost-of-living adjustment (COLA)) for the general election campaign. In 1992, each major party nominee received $55.24 million. To be eligible, candidates must agree to limit their spending to the amount of the grant and must pledge not to accept private contributions for the campaign.1 Private contributions may, however, be accepted for a special account maintained exclusively to pay for legal and accounting expenses related to complying with campaign finance law. These legal and accounting expenses are not subject to the expenditure limit.2 In addition, candidates may spend up to $50,000 of their own money on the campaign.3 Such spending does not count against the expenditure limit.
Minor party candidates and new party candidates may qualify for partial general election funding, based on their party's electoral performance. Minor party candidates (nominees of parties whose Presidential candidates received between 5 and 25 percent of the vote in the preceding election) may receive public funds based on the ratio of their party's vote in the preceding Presidential election to the average of the two major party candidates in that election. New party candidates (nominees of parties that are neither major parties nor minor parties) may receive public funds after the election if they receive 5 percent or more of the vote. The amount is based on the ratio of the new party candidate's vote to the average vote of the two major party candidates in that election.4
Although minor and new party candidates may supplement public funds with private contributions and may exempt some fundraising costs from their expenditure limit, they are otherwise subject to the same spending limit and other requirements that apply to major party candidates.
Once the Commission certifies a candidate's eligibility, the Treasury Department makes the necessary payments.5
After the campaign, the Commission audits each candidate's committee to ensure that the funds were not misused and that the committee maintained proper records and filed accurate reports.6 A repayment may be required if the Commission determines that a committee:
A committee may dispute the Commission's initial repayment determination by submitting legal and factual materials to support its view. The committee may also request an oral presentation before the Commission.8
The Commission will take into account the committee's arguments when making its final repayment determination. The committee, however, must repay the amount specified in the final determination within the payment deadline unless it obtains a stay from the Commission pending an appeal of the agency's decision.9
The charts that appear in this section provide statistical information related to the Presidential general election process. (NOTE: Charts will appear in a new window.)
General election funding is relatively simple to administer, especially compared to the primary matching fund program. The Commission has, however, encountered several challenges related to the general election process. While some of these challenges deal with specific aspects of the program itself, such as determining candidate eligibility, others are somewhat peripheral. The role of private money (including soft money) in the general election, for example, has been one of the most difficult issues the Commission has addressed. This section discusses some of these peripheral issues, as well as those related to specific aspects of the general election funding program.
As explained in the "How General Election Funding Works" section above, candidates become eligible for general election funding based on their party affiliation (major, minor or new) and on their pledge to abide by the limitations and prohibitions of the statutes and regulations. Despite the relative simplicity of these criteria, the Commission has had to wrestle with questions concerning candidate eligibility in the general election.
Many of these questions have involved new party candidates. As noted above, these candidates may qualify for post-general election reimbursement if they receive at least five percent of the vote in the general election.10 Frequently, however, these candidates may be listed on some ballots as "independents" or as nominees of a state-level organization. The Commission has been asked to determine whether such candidates would be eligible for funding as "new party" nominees.
Under the statute, "eligible candidates" are, by definition, the nominees "of a political party for President and Vice President."11 Thus, on its face, the statute would appear to preclude public funding for independent candidates. On the other hand, Title 26 does not define the term "political party." Consequently, the Commission has relied on the definition found at 2 U.S.C. Sec.431(16): a political party is "an association, committee, or organization which nominates a candidate for election to any Federal office whose name appears on the election ballot as the candidate of such association, committee, or organization."
Applying this definition in Advisory Opinion (AO) 1980-3, the Commission determined that the Citizens Party would qualify as a political party once it received verification from any state that a candidate would appear on the ballot as a nominee of the party. Subsequently, in AO 1980-56, the Commission concluded that Barry Commoner, the Citizens Party's Presidential nominee, could qualify for post-election funding as a new party candidate even if he was not listed as the party's nominee on some states' ballots. The Commission noted that Mr. Commoner was registered with the FEC as a candidate of the Citizens Party, and that the statute required only that the candidate (not the party) receive five percent of the vote to qualify for public funds. Similarly, in AO 1980-96, the Commission confirmed that the various organizations sponsoring John Anderson's candidacy would qualify as political parties for purposes of the public funding rules. Therefore, Mr. Anderson, as the nominee of these parties, could qualify for post-general election funding if he received more than five percent of the vote.12
Although the Anderson opinion did not address the issue, some Commissioners felt that he should have been declared eligible for funding as an independent candidate. Commissioners John Warren McGarry and Frank P. Reiche filed separate statements supporting such a finding. Mr. Reiche argued that the Anderson campaign was "dedicated to the election of an independent candidate" and should not have been required to "cloak [itself] with the appearance of political party formality" to qualify for public funding. Both Commissioners cited legislative history and the U.S. Circuit Court's opinion in Buckley v. Valeo to support their case. The Circuit Court stated that independent candidates should be subject to the same eligibility requirements as other candidates:
In 1981, the Commission formally asked Congress to consider clarifying whether an independent candidate could qualify for general election funding.14
Apart from these independent and third party eligibility issues, some questions have arisen regarding the eligibility of particular major party candidates. In 1980, for example, the Carter-Mondale committee challenged the Commission's certification of funds for the Reagan-Bush campaign. The Carter campaign argued that Mr. Reagan was ineligible for general election funding because his campaign had illegally authorized several groups to make "independent expenditures" supporting his candidacy. The Reagan campaign, which denied the allegatons, had met the eligibility criteria. Therefore, under FEC regulations, the Commission could only suspend the campaign's certification if it found "patent irregularities suggesting the possibility of fraud."15 Having found no such evidence, the Commission certified the Reagan campaign's eligibility. The circuit court upheld the Commission's decision.16
Similarly, in 1988, the Commission was asked to withhold general election funds from the Dukakis-Bentsen campaign. The petitioners asserted that, because Senator Bentsen was also running for reelection to the Senate, his use of private contributions in that campaign would impermissibly supplement the Dukakis-Bentsen campaign's general election grant. The Commission denied the petitioners' request, citing regulations that specifically permit dual candidacy.17 The Commission also noted that there was no evidence of fraud. The U.S. Court of Appeals subsequently affirmed the Commission's decision to certify funds to the Dukakis-Bensten campaign.18
The certification of funds for the 1992 Clinton-Gore campaign was also questioned. The Republican National Committee (RNC) argued that a Clinton television program, which included an 800 telephone number that viewers could call to make contributions, was impermissibly financed by the Democratic National Committee (DNC). The Clinton campaign denied wrongdoing, stating that the campaign did not accept any of the 800-line contributions and that the DNC had legally paid for the program as a coordinated party expenditure. Applying the relevant regulatory provision,19 the Commission found no evidence of fraud, and subsequently certified the Clinton-Gore ticket eligible for general election funding.
Major party nominees who accept a public grant for the general election campaign may not supplement that grant with private funds. Instead, they must limit their campaign spending to the amount of the entitlement.20 That does not mean, however, that private funds have been totally excluded from the general election campaign process. In fact, the statute specifically permits some types of private spending, which may supplement the general election grants.
Political parties, for example, may spend money to support a Presidential candidate. National party committees may make "coordinated expenditures" to support their nominee. These expenditures may be made in consultation with the candidate's campaign.21 The funds used must have been raised under the limits and prohibitions of federal law.
Another statutory provision permits corporations and labor unions (both of which are prohibited from making contributions or expenditures in connection with federal elections) to encourage their executives, administrative personnel and/or members to support particular candidates.22 These so-called "partisan communications" may be financed with corporate or labor treasury funds.
The statute also permits unlimited "independent expenditures" to support or oppose particular candidates. In order to qualify as an "independent expenditure," the funds must be spent "without cooperation or consultation with. . .or at the request or suggestion of any candidate. . .or agent of such candidate."23 The funds expended must not be from prohibited sources, such as corporations or labor unions.24
Some observers have criticized this supplemental spending. Although it is legal, these critics contend that it compromises the statute's expenditure limits. The Commission, itself, held a similar view regarding independent expenditures that political committees made to support publicly funded Presidential candidates. It believed that 26 U.S.C. Sec.9012(f) limited these expenditures to $1,000. The Commission defended this limit against a number of legal challenges, arguing that without it, independent groups could effectively render the expenditure limits meaningless by spending large amounts to support publicly funded candidates. In 1985, however, the Supreme Court declared the limit unconstitutional.25
Despite the criticism leveled against supplemental private spending, it is clear that Congress intended to offer some limited means by which citizens could become involved in Presidential campaigns. As a result, independent expenditures, partisan communications, coordinated party expenditures and other types of private spending26 are specifically sanctioned by the statute, and are subject to its reporting requirements and other restrictions.
Money raised and spent outside the limitations and prohibitions of the federal election law is commonly called "soft money." It often consists of large donations from individuals, corporations and labor unions. These funds, which are usually given to state and national party committees, cannot legally be raised or spent to influence federal elections, but are acceptable under some state election laws. While these funds are used primarily for grass-roots activity, some critics have argued that soft money is being raised and spent in ways that may affect federal candidates, including those running for President.27 To fully understand the perceived soft money problem, one must examine how the money is raised and how it is spent.
Critics say that most of the soft money spending that benefits federal candidates occurs when a committee simultaneously supports both federal and nonfederal candidates. Party committees, for example, may purchase generic get-out-the-vote advertisements that benefit both their federal and nonfederal candidates. To pay for these ads, committees must use federal funds for the portion that benefits federal candidates, but may use soft money for the rest (i.e., the portion that benefits nonfederal candidates).28 Some critics have argued that the committees often underestimate the federal share of the expenses. If this occurs, soft money covers not only the costs attributable to nonfederal candidates, but also those related to federal (in some cases Presidential) candidates.
In an effort to address this problem, the Commission promulgated new regulations in 1991 that, in part, specify the minimum percentage of federal funds required to be spent for any activity that benefits both federal and nonfederal candidates.29 During Presidential election years, for example, national party committees must pay at least 65 percent of the costs related to generic party ads with federal funds.30
Even if soft money is spent according to these regulatory restrictions, some critics believe it will continue to impermissibly influence federal elections, particularly Presidential elections. They contend that soft money spending helps committees conserve federal funds ("hard dollars") that can later be spent to support federal candidates.
Many critics are also concerned about the way soft money is raised. They believe that the active role Presidential candidates and their associates play in raising soft money, at the very least, creates an appearance of undue influence on the candidates involved. In 1988, for example, the chief fundraisers for the Dukakis and Bush campaigns, Robert Farmer and Robert Mosbacher, each raised more than $20 million in soft money.31 Critics say that this activity affords soft money donors the very type of access and potential influence that the public funding program was designed to eliminate. (See Chapter 4.)
1. 26 U.S.C. Sec.9003.
2. 11 CFR 9003.3.
3. 26 U.S.C. Sec.9004(d).
4. 26 U.S.C. Sec.9003 and 9004.
5. 26 U.S.C. Sec.9006(b).
6. The audit and repayment procedures used for general election campaigns are much the same as those described in Chapter 1. (See 11 CFR 9007.1.) Issues related to FEC audits are discussed in the "Audits and Enforcement" section on page 15.
7. 26 U.S.C. Sec.9007(b).
8. 11 CFR 9007.2(c)(2) and (3).
9. 11 CFR 9007.2(c)(4), (d) and (i).
10. 26 U.S.C. Sec.9004.
11. 26 U.S.C. Sec.9002(4).
12. Mr. Anderson received 6.61 percent of the vote in the 1980 general election, and became the first new party candidate to receive post-general election funding. To date (4/93), he is the only non-major party candidate to receive general election funding.
13. Buckley v. Valeo, 519 F.2d 821, 887 (D.C. Cir. 1975)(citations omitted). The Supreme Court, in its subsequent decision, did not explicitly rule on this issue.
14. Federal Election Commission, Annual Report 1980, p. 6.
15. 11 CFR 9039.3(a)(3).
16. In re Carter-Mondale Reelection Committee, Inc., 642 F.2d 538 (D.C. Cir. 1980).
17. 11 CFR 110.8(d).
18. Boulter v. FEC, No. 88-1541 (D.C. Cir. Aug. 3, 1988)(unpublished order).
19. 11 CFR 9039.3(a)(3).
20. 26 U.S.C. Sec.9003(b).
21. Each national party committee may spend an amount equal to 2 cents multiplied by the national voting age population and adjusted for the cost of living. 2 U.S.C. Sec.441a(d). In 1992, the parties could spend up to $10,331,703.
22. 2 U.S.C. Sec.441b(b)(2)(A).
23. 2 U.S.C. Sec.431(17).
24. In FEC v. Massachusetts Citizens for Life , 479 U.S. 238 (1986), the Supreme Court created a narrow exception to this rule.
25. FEC v. NCPAC, 470 U.S. 480 (1985).
26. State and local parties, for example, may spend unlimited amounts for certain activities that may benefit their Presidential nominee, but do not count against the nominee's spending limit. These activities are "exempt" from the definitions of contribution and expenditure. 2 U.S.C. Sec.431(8)(B)(v),(x) and (xii), and (9)(B)(iv),(viii) and (ix).
27. See, for example, Frank J. Sorauf, Inside Campaign Finance: Myths and Realities (New Haven: Yale University Press, 1992), p. 148.
28. During the late 1970's and early 1980's, the Commission issued several advisory opinions (AOs) describing methods that committees could use to allocate expenses between federal and nonfederal candidates. See, for example, AOs 1978-10, 1978-28, 1978-46, 1978-50 and 1982-5.
29. 11 CFR 106.5 and 106.6.
30. In addition, the new rules require expanded reporting and specify that any funds raised by mentioning a federal candidate will be presumed to be federal funds.
31. Herbert E. Alexander and Monica Bauer, Financing the 1988 Election (Boulder: Westview Press, 1991), p. 77.
32. See Appendix 2.