How does the system work?

The system of financing election campaigns in the United States has evolved over the last thirty years, with Congress having created significant changes at the federal level by passing a comprehensive Federal Election Campaign Act (FECA) in 1971 and significantly amending it three years later on the heels of the Watergate scandals. The Federal Election Commission (FEC) was created at that time to oversee the funding process, and a voluntary system of public financing was implemented at the Presidential level. Briefly, the system relies on private funding of election campaigns, with mandatory disclosure of contributions and spending, and with some restrictions placed on the size of contributions to candidates by both individuals and political actions committee (for specifics on Campaign Finance Law, the FEC, and public financing in the Presidential race, see http://www.opensecrets.org/).

While federal laws regulate election to the Presidency and the Congress, states and cities typically pass their own regulations for state and local races, and therefore the picture of campaign financing is actually quite complex. Most interesting are recent innovations with respect to voluntary public financing of election campaigns.

Two systems of public financing have been implemented in the United States: partial and full. In cities like New York, Los Angeles, and Oakland CA, and in a number of states as well as in the Presidential primary, partial public financing is a voluntary option which qualified candidates may choose. In the system, candidates typically agree to receive public financing that matches the private funds they have raised. These “matches” range from one public dollar for each private dollar raised, as in the Presidential primary, to six dollars for each dollar raised, as in the New York City system. In return, candidates are typically required to abide by spending limits and sometimes engage in mandatory debates with opponents (for the NY Campaign Finance Board see http://www.nyccfb.info/).

In1996, the first system of full public financing of elections – this time at the state level – was passed in an initiative process by a majority of Maine voters (see http://www.curtislibrary.com/). The Clean Election Act provides full public financing to all qualified candidates for the Maine legislature. In return, candidates agree to refuse all private contributions and to refrain from using their own funds in their campaigns. Similar laws have since passed in Arizona, Maine, Connecticut, North Carolina, New Mexico and elsewhere. (see http://www.publicampaign.org/).

In addition to the “hard” money described above that is regulated by laws on contributions and/or disclosure, campaigns often receive the benefits of “soft” money contributions. These are unlimited contributions that may be given to political parties which can then be used to support specific candidates through advertising, get out the vote, or other spending. Finally, there is the category of “independent expenditures.” This involves money spent in support of a candidate by individuals or groups without any contact or discussion with the candidate or her campaign (see http://www.opensecrets.org/).