States have since done so.
At the time of the FECA Amendments of 1974, the PAC issue received far less attention than the series of mandatory spending limits placed on congressional races. These limits never took effect. They were to be wiped out little more than a year later by a landmark Supreme Court ruling.
Buckley v. Valeo: Campaign Reform and the Constitution
In January 1975, a few days after the 1974 law became effective, a suit was brought contending that the new law violated several rights guaranteed by the First Amendment to the U.S. Constitution.5 On 30 January 1976, a little more than a year after the case was filed, the Supreme Court reversed a U.S. Court of Appeals ruling and found several major sections of the FECA Amendments of 1974 to be unconstitutional (Buckley v. Valeo 1976). The decision was to have a significant impact on the regulation not only of federal elections but also of state and local elections.
In Buckley v. Valeo, the court faced a difficult judicial task: to balance the First Amendment rights of free speech and free association against the clear power of the legislature to enact laws to protect the integrity of the electoral system. The central question was posed by Justice Potter Stewart during oral arguments: Is money speech and speech money? Or, stated differently, is an expenditure for speech the same thing as speech itself, given the expenditures necessary to buy broadcast time or newspaper space to reach large audiences?
A majority of the court answered the question in the affirmative, ruling expenditure limits to be a “substantial” restraint on free speech that could prevent a candidate from making “significant use of the most effective modes of communication.” Consequently, the Supreme Court rejected as unconstitutional the mandatory spending limits placed on presidential and congressional campaigns by the 1974 law. Also thrown out were restrictions on the amount a candidate could spend using his or her personal resources. (The 1971 FECA law had limited presidential and vice-presidential candidates to contributing $50 000 of their own money or that of their immediate family; for Senate and House candidates, the thresholds were $35 000 and $25 000, respectively.)
However, the court made a significant exception to this finding: If a candidate voluntarily accepted public financing, the government could require him or her to abide by campaign expenditure limits and other restrictions as a condition of that acceptance. The impact of this was to preserve the presidential financing structure outlined in the 1974 FECA amendments; during the last four presidential elections, all but one of the major candidates have taken public funding and abided by the prescribed limits. But the Buckley decision invalidated the spending ceilings in congressional races because the 1974 law did not provide public financing as a means of enticing legislative candidates to comply voluntarily with the limits.
While eliminating mandatory spending limits, the justices ruled the other major underpinning of the 1974 FECA amendments - contribution limits - to be constitutional. The court asserted that these represented only a marginal restriction on a contributor’s First Amendment rights because “the quantity of communication by the contributor does not increase perceptibly with the size of his contribution.” In this instance, the court said that First Amendment considerations were outweighed by the possible influence of large contributors on a candidate’s positions, which, in turn, could lead to real or perceived corruption once the candidate took office.
Finally, the Supreme Court, while upholding the concept of a bipartisan regulatory commission to administer campaign finance laws, ruled the nomination procedure of the new Federal Election Commission to be unconstitutional. The court said that the requirement in the 1974 FECA amendments that four of the six commission members be appointed by Congress represented an attempt by the legislative branch to assume powers reserved for the President. The need for Congress to reconstitute the FEC to meet the court’s objections opened the way for the third debate over federal campaign finance law within five years.
FECA Amendments of 1976
The 1976 FECA amendments were designed to conform the law to the Buckley decision. That decision, in fact, gave Congress 30 days to transform the Federal Election Commission into a body entirely appointed by the president. President Ford wanted legislation that would simply remedy the FEC’s constitutional flaws, and he argued against Congress reopening the entire campaign finance reform debate. He did not get his wish, as Congress undertook significant revisions dealing with the FEC’s powers. A highly partisan clash over PACs ensued as labour, alarmed at a FEC decision favourable to the growth of corporate PACs, sought to limit the fund-raising ability of such committees.
The FEC, formally organized in April 1975, was created to centralize the administrative and enforcement functions that had been divided between three different congressional offices in the FECA legislation in 1971. From the outset, there was apparent potential for conflict between the new commissioners’ ties to Capitol Hill and their responsibility for impartial handling of campaign finance issues involving Congress: under the procedure ultimately ruled unconstitutional by the Supreme Court in 1976, four of the first six appointments to the commission were former U.S. House members.
Nonetheless, conflict soon erupted between some powerful members of Congress and their ex-colleagues on the Commission. In fact, Congress rejected the first two regulations proposed by the FEC.6
Meanwhile, in November 1975, barely two months before the Buckley decision, the FEC issued advisory opinion (AO) 1975-23 in the so-called SunPAC case. In a 4-2 decision, the FEC ruled that SunPAC, the Sun Oil Co.’s political action committee, could use corporate funds to solicit voluntary political contributions from employees and stockholders. Reassured by the FEC about the legal validity of corporate PACs, the business community soon recognized their potential as a means of competing with labour unions for political influence. Consequently, in the six months following the SunPAC decision, the number of corporate PACs more than doubled.
Labour, which had badly miscalculated how much the FECA Amendments of 1974 would benefit corporate PACs, counter-attacked when the FECA Amendments of 1976 reached the floor of Congress. Angered by FEC’s SunPAC opinion, labour lined up behind a Democratic Party proposal under which companies would be allowed to solicit PAC contributions only from stockholders and “executive or administrative personnel.”
But the Republicans, who saw in corporate PACs a major new ideological and financial ally, rushed to their defence, arguing that the Democrats’ proposal would tip the “partisan advantage” towards labour. President Ford hinted at a veto if the restrictions on corporate PACs remained in the Bill. Ultimately, a compromise was reached under which corporate PACs were permitted to seek contributions from all company employees, by mail, twice a year. Although the restrictions hardly pleased business interests, they did little to impede the continuing growth of corporate and trade association PACs during the decade that followed.
The 1976 PAC debate also provided another lesson in campaign finance reform’s law of unforeseen consequences. While the Republicans viewed corporate and trade association PACs as their natural allies, many of these PACs turned out to be far more pragmatic than ideological in their choice of candidates: a substantial portion of their donations were directed to Democrats in the years to come. This increasingly angered the Republicans as time went on, and, little more than a decade after the 1976 FECA amendments, a Republican president and Grand Old Party (GOP) congressional leaders were advocating an outright abolition of PACs. (See “Congressional Campaigns” in the next section for discussion of the PAC issue.)
To meet the constitutional objections raised by the Supreme Court, the 1976 FECA amendments also reconstituted the FEC as a six-member body appointed by the president and subject to confirmation by the Senate. Having lost the ability to directly appoint commissioners, Congress moved aggressively to make its own partisan recommendations to the President when seats on the Commission came open. (See “The FEC under Fire” in the following section.)
