Campaign Finance in the 2000 Federal Elections: Overview and Estimates of the Flow of Money

Publication Date: March 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Politics

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Abstract:

Federal election law regulates money in federal elections through a ban on union and corporate treasury money, limits on contributions, and uniform, periodic disclosure of receipts and expenditures. Money raised and spent under these laws to directly influence federal elections is commonly known as hard money. Money that is largely outside the restrictions and prohibitions of the federal regulatory framework - but raised and spent in a manner suggesting possible intent to affect federal elections - is commonly known as soft money. Of the three major elements of current federal regulation, the prohibition on union and corporate treasury money is perhaps the most important and best helps to explain the divide between hard and soft money activities. Just as interest groups, typically corporations and unions, are the key source of funding activities in the soft money arena, individual citizens are the primary sources for funding in the hard money arena.

Based on Federal Election Commission (FEC) data, it appears that $1.82 billion in federally-regulated (hard) money was spent to communicate with voters to influence federal elections in 2000. This includes: All candidate activity and communications: $1.61 billion; Independent expenditures (by PACs and parties): $26 million; Coordinated expenditures by parties (under 2 USC section 441a(d)): $51 million; National party hard money transfers to state/local parties (federal accounts): $133 million

On the soft money side, a rough 2000 estimate of between $582 - $683 million includes one reported FEC figure - for national party non-federal account transfers - and an amalgam of estimates by academic studies, experts, observers, and the best judgment of the author. The estimated total consists of: Issue advocacy by parties and interest groups: $208-$309 million; Exempt union/corporation activities aimed at members: $100 million; National party non-federal (soft money) transfers to state/local parties: $274 million

The overall estimate of $2.4 - $2.5 billion spent on federal elections in 2000, while serving to put these activities in some context, should be used with caution, as it comprises soft money estimates as well as hard and soft money data. It also omits some types of spending other observers believe should be included.

Aggregating nationwide data may also mask the true impact of interest group and party spending, which tends to be concentrated in a relatively small number of competitive races. Hence, the findings in this report should be weighed against recent academic studies which more closely examine the flow of money in the most competitive races. That closer scrutiny, combined with the broad overview herein, can best lead to a more accurate understanding of money in today's elections.