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An FEC primer on campaign finance law today

By Mark Stencel
June 13, 1997

Almost a quarter century ago, Tennessee Sen. Fred Thompson served as Republican counsel on the Senate Watergate committee. Now he chairs the Senate panel investigating the current White House fund-raising scandal.

The controversy came to light last year because of the reforms of Watergate, including requirements that campaigns and political parties regularly submit lists of their contributors to the Federal Election Commission. But the scandal also concerns the abuse of loopholes created by those reforms, including the parties' power to raise and spend nearly unlimited amounts of "soft money."

Largely driven by the revelations of Watergate, lawmakers in the 1970s passed a series of "good government" bills designed to repair the political process and rejuvenate public confidence in their elected officials. But holes in the new laws, and the lengthy investigations the reforms sometimes spawned, also deepened voter cynicism.

The clamor for new ethics codes and political fund-raising regulations didn't start with reports of misused campaign funds by the Nixon White House and reelection committee. Concerns about the rising cost of running for office and a handful of unrelated congressional scandals also increased the pressure for reform. Richard Nixon himself signed a major campaign finance bill into law just months before the botched burglary that doomed his presidency.

The following is a look at seven reforms that emerged from a series of laws amending the Federal Election Campaign Act of 1971 and from the Ethics in Government Act of 1978:

Ethics Rules

Reform: The House and Senate adopted codes of conduct in 1977 that limited the franking privileges that allow members to send mail to constituents at taxpayers' expense, eliminated office "slush funds" and imposed restrictions on outside income, including honoraria for speeches to interest groups. The rules also imposed limits on lobbying by former members of Congress and former Capitol Hill staff members. Impact: The congressional rules became law under the 1978 ethics act, which expanded the scope of the restrictions to include high-ranking officials in the executive and judiciary branches. Lawmakers could not agree on criminal sanctions for violations, so the act imposed civil penalties instead. In 1989, the House gave itself a pay-raise in exchange for a complete ban on income from honoraria. The Senate followed suit in 1991.

Financial Disclosure Forms

Reform: The congressional ethics rules that passed into law in 1978 required senators, representatives and some close relatives to file annual reports detailing their income and investments. The law also required congressional candidates and high-level officials in the executive and judiciary branches to disclose their personal finances. Impact: Reporters now routinely scour the financial disclosure forms of government officials in search of possible conflicts of interest. However, the forms do not require officials to disclose the exact amounts of their income and holdings -- just broad ranges that can disguise the real values.

Special Prosecutors

Reform: Congress passed a special prosecutor provision in the 1978 ethics law in part to respond to the Nixon-ordered firing of Watergate prosecutor Archibald Cox. U.S. attorneys general had long had the power to appoint outside counsel to investigate and prosecute illegal activity by top executive branch officials, as happened in Watergate. The 1978 law authorized the attorney general to seek a court-appointed counsel while limiting the circumstances under which a special prosecutor could be removed. The law also gave the House and Senate Judiciary committees some power to seek a special prosecutor -- later called an independent counsel. Impact: Congressional critics have complained about the scope of the special prosecutor law and the length and cost of some of the 17 investigations it has spawned. The Iran-Contra probe, for instance, lasted seven years and cost almost $50 million. Supporters say it is the only credible way for the executive branch to handle allegations of high-level wrong-doing. The independent counsel law survived a 1988 Supreme Court challenge and has been re-authorized three times -- most recently in 1994, after an 18-month lapse.

Limits on Political Contributions

Reform: The 1974 campaign finance law limited individual contributions to candidates for federal office to $1,000 for each primary, election and runoff. Contributions from political action committees (PACs) were limited to $5,000. Impact: Critics say these limits are too high. Reformers warn that special interest money still flows into campaigns, and that the law does nothing to control the parties' nearly unrestricted "soft money" accounts or growing independent expenditures -- money spent by unions and other interest groups to help a candidate without coordinating with his or her campaign. Others say the 1974 limits are too low, especially since the amounts have not been adjusted to account for inflation. Candidates complain they now must spend much of their time seeking contributions to keep up with increasing campaign costs.

Donor and Campaign Expenditure Reports

Reform: Under the 1974 election law, candidates, political parties and others who spend money in elections were required to file periodic campaign finance reports with the Federal Election Commission. Campaigns had to list expenditures and any contributor who gave $100 or more, including the donor's address, occupation and place of business. Impact: The 1974 legislation expanded disclosure requirements first signed into law by President Nixon in early 1972. To decrease the accounting burden on campaigns, Congress amended the law again in 1979, raising the threshold for identifying contributors from $100 to $200. Under the original law, candidates filed their fund-raising reports with the House clerk, the secretary of the Senate or the General Accounting Office. The 1974 law created the FEC as a central depository.

Taxpayer Campaign Funding

Reform: Public financing for presidential campaigns was intended to level the playing field for candidates while eliminating the need for major party nominees to seek political contributions during the general election. Presidential candidates began receiving federal funds for their campaigns under a system outlined in the 1971 campaign finance law and expanded in 1974. Third-party and independent candidates could collect taxpayer dollars if they received more than 5 percent of the vote in the general election. Qualified candidates in the primaries and caucuses could collect matching funds for contributions of $250 or less. Political parties also got federal subsidies to help pay for their national nominating conventions. Impact: By enabling more candidates to run, this reform has also extended the campaign season, often increasing fund-raising pressures on the candidates. And major party nominees still spend much of their time raising campaign cash for their parties.

During the primaries, candidates routinely violate state-by-state spending caps mandated by the matching-fund law. Candidates complain the spending ceilings, which are based on each state's voting-age populations, are too low, especially in small but important states such as Iowa and New Hampshire. Money for all the candidates comes from a voluntary check-off on federal tax forms, but low public participation means the fund sometimes runs low. Meanwhile, third-party and independent candidates complain the system unfairly favors the two major parties. In 1996, the major party nominees each received $62 million from federal taxpayers, while third-party candidate Ross Perot received half that, based on his showing in the 1992 race.

Campaign Spending Limits

Reform: The 1974 election law tried to restrict independent expenditures on behalf of candidates to $1,000. The law also sought to limit the amounts individuals could spend on their own campaigns -- $25,000 in House races, $35,000 in Senate races and $50,000 in presidential contests. Impact: The Supreme Court overturned most of these limits in a 1976 decision, Buckley v. Valeo. The court accepted the $50,000 spending cap for presidential candidates, if they agree to accept taxpayer subsidies for their campaigns. Otherwise, the court said campaign spending was a form of protected free speech. The decision has hampered efforts to further modify the campaign finance system, and some members of Congress are pressing for a constitutional amendment that would overturn the Buckley precedent.

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