Campaign finance

- [Instructor] Let's talk a little bit about money and elections in the United States, and the various actors that might be involved. You of course at the center of the action, you have the various campaigns for the candidates. Then you have the party committees that will try to influence the election, and we'll talk about how in a little bit. You have individuals who besides being voters, can also be donors. And then you have organizations. It could be corporations, it could be interest groups, it could be labor unions. And then last but not least, we have these two boxes where you see PAC 1 and PAC 2. The obvious question is, what is a PAC? Well it stands for political action committee, and they've been around for decades. A simple way to think about is it's a way to pool resources which then can be donated to other parties to influence an election. But how can the money actually flow? Well as you can see, it can flow in many, many, many different ways. And to help us understand this, I'm gonna introduce some terminology that you might've heard before. There is hard money. Hard money is money that is actually regulated by the Federal Election Committee, and there are caps in terms of how much people can donate to various parties. In general, any donation to a candidate's campaign is considered hard money. That would be hard money there coming from the individuals. This would be hard money right over here coming from that PAC which has pooled a bunch of money. This would be hard money right over here coming from that PAC to Donald Trump's campaign. This would be hard money coming from the Democratic party to Hillary Clinton's campaign, or from the Republican party to Donald Trump's campaign. If there's something called hard money, perhaps there's also something called soft money, and you would be correct. There is something called soft money. A simple definition for soft money is it doesn't have the regulations that hard money does. An example of it would be let's say the Democratic party here, some of the money that they spend, so I'll just draw some of the money they spend, this part right over here. Maybe some of the money that the Republican party spends during the election, it's used for what's sometimes known as party building activities to get more people to join their party, or to advertise about certain issues. As long as it's done not in coordination with the candidate's campaigns, this is not going to have any limit. Some of the money that goes from an individual to a party, or some of the money that goes from a PAC to a party, can also be considered soft money if once again, if it keeps separate from coordinating with the candidate's actual campaign, and used for those party building activities. Now party building is a pretty broad definition. Soft money has been demonized a lot because people say well, it's just a way of getting around campaign finance regulations. Because even though it might not be directly coordinated with a candidate's campaign, it can influence an election in a pretty significant way. Now to further understand this diagram, you see these dotted lines between the corporations or the labor unions and these political action committees. What does that mean? Well a political action committee can be connected or sponsored by a corporation or a labor union, but it cannot receive funds directly from the treasury of that corporation or labor union. The corporation can sponsor it, can say hey, this is associated with us. If it's say, a labor union, it can go to its membership and say hey, I want you to donate to this PAC. If it's a corporation it can go to its management team and say hey, let's all donate to this PAC personally. Or it could go to its shareholders and say hey, why don't we all donate to this PAC? Because this PAC can donate money to the party or the candidate that might help influence the election in a way that might benefit us, or benefit the corporation. Now an attempt to limit soft money came in 2002, when you have the Bipartisan Campaign Reform Act of 2002, often known as McCain-Feingold, who are the two sponsors in the Senate. Among other things, it tried to limit this soft money. After this Act, even this party spending would have to be hard money. It would have to be subjected to the caps when they are raising that money. It also made clear that corporations and labor unions couldn't participate in what's called election nearing activities, where they're spending money on say, issue-based ads with oftentimes, the intent of influencing the election, especially in the run up to the election. This was made explicitly illegal as well. This gets challenged in 2010 where you have this major case, Citizens United versus the Federal Election Committee. Citizens United was an organization that was releasing a movie called Hillary the Movie during the 2008 election. This was a movie that was pretty negative on Hillary Clinton. The argument of the government was that hey, even though this looks like a movie, it's really political advertising. It's electioneering as we go into the run up to an election, and so Citizens United, which is a nonprofit corporation should not be able to do this. But the Supreme Court ruled in Citizens United's favor. They said, as long as they are not coordinating with the actual candidate's campaigns, they are allowed based on the notion of free speech to directly participate in electioneering in the run up to an election. And to a large degree, the Citizens United ruling from 2010 really gutted the strength of the Bipartisan Campaign Reform Act of 2002. That Act was trying to curtail soft money, that for the most part, was going through parties. But now post-Citizens United, on both sides, folks started to say gee, I could start an organization that pools money. Let's call that a PAC. But I'm gonna keep it independent. It's not gonna coordinate in any other way with the elections of the individual candidates, and so this is often referred to technically as an independent expenditure PAC. Here, post-Citizens United, I can get unlimited funding from corporations, or from individuals that is not regulated in terms of spending caps. And now I can spend an unlimited amount of money on electioneering to try to influence the campaign. Because of the power of these types of independent expenditure PACs, they have been termed Super PACs. Now the key difference between a Super PAC and a regular PAC is that the regular PACs that we talked about have limitations in terms of how much money people can donate to them. They actually even can't take direct money from the treasuries of a corporation or a labor union. They also had limitations in terms of how much they could donate to an individual campaign. But they could donate to a campaign. A Super PAC, on the other hand, can take unlimited amounts of funds from individuals, from other PACs, and it could actually take money from corporate treasuries themselves. As long as they are independent of the candidates' campaigns, they don't coordinate with them, they can spend as much money as they would like. So as always, it's really interesting to think about what is going to be the eventual repercussions of Citizens United versus FEC? We've already seen in the 2016 elections money approaching a billion dollars in terms of Super PAC money. What is the influence it has on the democracy? But a lot of folks might immediately demonize the Super PAC and said say, money was already in politics and this is just making it worse. Where now you have corporations that are essentially being able to directly contribute large amounts of money. We've always had issues with foreign nationals contributing to our elections. We've always tried to prevent that. But a corporation can have ownership from around the world even if it's a United States-based corporation. How do you prevent foreign interest from showing up through this money? But on the other hand, I encourage you to read the Supreme Court's rulings because they had some very strong arguments in terms of a slippery slope. If you don't allow Citizens United to publish a movie, saying that it's electioneering, at what point what is something a political organization, or a media organization? And the Supreme Court found it very difficult to regulate Citizens United without going down a slippery slope where they would have to regulate a whole set of corporations and media. I'll let you think about it, but these questions are quite interesting.