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The Federal Election Campaign Act is in fact two separate laws, one in 1972 and the other in 1974, that have reshaped the way money is spent in federal elections in the United States. These two laws have basically structured the fund raising and spending of federal-level political campaigns ever since.

The first law was passed in 1972 in response to the outcry after the mess of the Watergate break-in, which was a clear symbol that election campaigns had grown completely out of control. The Federal Election Campaign Act of 1972 essentially replaced all past laws governing campaign fund raising and spending. It placed no limit on overall spending, but it did restrict the amount that could be spent on mass-media advertisement, including television. It limited the amount that candidates and their families could contribute to their own campaigns and required disclosure of all contributions and all expenditures in excess of $100. Essentially, this act strove to limit the role of labor unions and corporations in federal political campaigns. It also provided some tax protection for major-party presidential candidates to protect them from paying massive amounts of taxes on their campaign funds.

This act clearly was riddled with loopholes, and these loopholes were massively exploited in the 1974 off-year elections. In response to the outcry, Congress passed another law, the Federal Election Campaign Act of 1974. In summary, this act did the following:

  • Created the Federal Election Commission. This commission consists of six nonpartisan (in theory, anyway) administrators who simply exist to enforce the requirements of this act.
  • Provided public financing for presidential primaries and general elections. Essentially, the government will match funding for any candidate provided that candidate stick within the other provisions of this bill.
  • Limited presidential campaign spending. Any candidate that accepts federal support has to agree to limit his or her own spending.
  • Limited contributions. Citizens can contribute up to $1,000 to a single candidate, and can contribute at most $25,000 to a given election among all the candidates. Groups can contribute up to $5,000 to a candidate in any election.
  • Required disclosure. Each candidate must file periodic reports with the FEC deatialing contributions and spending.

In 1976, both acts changed significantly. The Supreme Court in Buckley v. Valeo threw out the provision of the 1972 act that restricted how much an individual could contribute to his or her own campaign, opening the door to financially self-supporting candidates such as H. Ross Perot, Steve Forbes, and Arianna Huffington. Also in 1976, a monstrous loophole was added to the 1974 act, allowing unions, corporations, and special interest groups to set up political action committees which can essentially donate to candidates at will with little restriction (as long as the committee has fifty volunteer donors and the committee donates to five or more candidates).

In the intervening years, countless ways to skirt these regulations have been discovered. One very common way is that of soft money, in which money is donated to the political party for promotion of that party, and in turn, promotion of its candidates. Another common tactic is the setting up of various committees to run their own ads, independent of the campaigns, that support one candidate or another. A third technique is bundling, where a large group or family will tie their donations together, each of which would be legal under the law, but with their union makes a statement to the candidate in terms of who is supporting the candidate.

These acts have many loopholes and are fairly outdated. Many legislators, most prolifically Senator John McCain of Arizona, are currently seeking to revise this legislation in one way or another, but until the public outcry is loud enough, significant change in the current setup will probably not happen.

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