From the FEC • Public Funding of Presidential Elections • The FEC and the Federal Campaign Finance Law

The public financing of presidential elections, first administered in 1976, remains controversial – and widely misunderstood. The basic idea is that it's worth spending tax dollars to replace a system that encourages the unchecked solicitation of private money.

Here's how it works: Fueled by the voluntary checkoff on tax forms (now $3), the Presidential Election Campaign Fund matches up to $250 of each contribution made to eligible primary candidates. In return, the candidates must promise that they will limit spending to a certain amount and follow certain other rules. Then, in the general election season, the presidential candidates receive a lump sum in return for not accepting any further private donations.

Contribution limits
	To a candidate or candidate committee per primary or general election	To a national party committee per year	To any other political committee per year	Total per calendar year
Individuals	$1,000	$20,000	$5,000	$25,000
PACs	$5,000	$15,000	$5,000	No limit

Source: Federal Election Commission

In 1996, for example, the Clinton and Dole campaigns each received about $75 million in taxpayer money after promising not to spend more than $111 million (with a few exemptions).

The 1974 legislation also established contribution limits and rules about disclosure remain that remain in effect to this day. For instance, campaigns must name all contributors who donate more than $200 in a year.

From the text of the Buckley v. Valeo decision: A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money.

Two major parts of the 1974 legislation were struck down by the Supreme Court. The post-Watergate amendments had also established mandatory spending limits – restricting total spending for all federal races, and even limiting independent spending on behalf of federal candidates.

Those provisions were struck down in the 1976 Buckley v. Valeo decision, in which the court ruled that they violated the First Amendment. The court also struck down a provision that would have limited how much money a candidate can contribute to his or her own campaign.

But by and large, the reforms seemed to be doing what they were intended to do.

For a while.