Campaign Finance: An Overview

Publication Date: April 2007

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Politics

Type:

Abstract:

Concerns over financing federal elections have become a seemingly perennial aspect of our political system, long centered on the enduring issues of high campaign costs and reliance on interest groups for needed campaign funds. Rising election costs had long fostered a sense in some quarters that spending was out of control, with too much time spent raising funds and elections "bought and sold." Debate had also focused on the role of interest groups in campaign funding, especially through political action committees (PACs). Differences in perceptions of the campaign finance system were compounded by the major parties' different approaches. Democrats tended to favor more regulation, with spending limits and public funding or benefits a part of past proposals. Republicans generally opposed such limits and public funding.

The 1996 elections marked a turning point in the debate's focus, as it shifted from whether to further restrict already regulated spending and funding sources to addressing election-related activities largely or entirely outside federal election law regulation and disclosure requirements (i.e., soft money). While concerns had long been rising over soft money in federal elections, its widespread and growing use for so-called issue advocacy since 1996 raised questions over the integrity of existing regulations and the feasibility of any limits at all. Following 1996, reform supporters offered legislation whose primary goals were to prohibit use of soft money in ways that could affect federal elections and to bring election-related issue advocacy communications under federal regulation. In both the 105th and 106th Congresses, the House passed the Shays-Meehan bill, but the Senate failed to invoke cloture to allow a vote on the companion McCain-Feingold bill. The 106th Congress did, however, agree on an aspect of campaign reform, in passing P.L. 106-230, to require disclosure by certain tax-exempt political organizations organized under Section 527 of the Internal Revenue Code. Such groups exist to influence elections, but many had not been required to disclose financial activity (to the FEC or IRS).

In the 107th Congress, the Senate passed McCain-Feingold, as amended, and the House passed the companion Shays-Meehan bill, as amended. The Senate then passed the House bill, which was signed into law by President Bush as the Bipartisan Campaign Reform Act of 2002 -- BCRA (P.L. 107-155), constituting the first major change to the nation's campaign finance laws since 1979.

In the 2004 elections, more than $400 million was raised and spent by "political organizations" organized under Section 527 of the Internal Revenue Code but outside of federal election law regulation. In response to this perceived circumvention of election law regulation, the 109th Congress has examined the role of 527 groups in federal elections, and the House has passed legislation to address it.

This report (formerly CRS Issue Brief IB87020) provides an overview of campaign finance law governing federal elections, issues raised in recent years by campaign finance practices, and recent legislative activity and proposals in Congress, with a focus on the current (109th) Congress. It will be updated as developments warrant.