Soft and Hard Money in Contemporary Elections: What Federal Law Does and Does Not Regulate Page: 3 of 6
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CRS-3
by a person expressly advocating the election or defeat of a clearly identified candidate
which is made without cooperation or consultation with any candidate, or any
authorized committee or agent of such candidate, and which is not made in concert with,
or at the request or suggestion of, any candidate, or any authorized committee or agent
of such candidate.
Such expenditures have typically been undertaken by a small number of PACs to support
or oppose candidates to a greater extent than permitted as direct contributions. Because
independent expenditures use express advocacy, hard money is required: activity is
disclosed, and funds must be from federally-permissible sources and amounts. (This is
different from issue advocacy, as will be discussed below.)
As an expenditure (not a contribution), total spending is not limited, per the Buckley
v. Valeo ruling (see below). Hence, independent expenditures are sometimes viewed as
loopholes in current law. But again, while spending is not subject to limits, contribution
limits and reporting requirements fully apply. (If an expenditure were made with the
knowledge or cooperation of a candidate, it would be deemed an in-kind contribution to
the candidate, subject to FECA limits.) In Colorado Republican Federal Campaign
Committee v. Federal Election Commission [116 S. Ct. 2309 (1996)], the Supreme Court
ruled that parties, like PACs and other groups, may engage in this form of spending.
Buckley v. Valeo Ruling
Many court cases have affected federal campaign finance law, but the Supreme
Court's Buckley v. Valeo decision [424 U.S. 1 (1976)] has played a paramount role in
shaping both the law and reform efforts. Essentially, the Court declared that both
contribution and expenditure limits restricted certain First Amendment rights. However,
the Court said that reasonable contribution limits could be justified by a countervailing
governmental interest, in protecting the integrity of the electoral system from real or
apparent corruption, arising from donations to or activity coordinated with candidates.
The Court saw no such justification for spending limits, as it saw no inherent corruption
from large expenditures of money by candidates or outside groups.3 Hence, the Court
struck down prior limits on expenditures, whether by a campaign committee, a candidate
from personal funds, or an independent group appealing directly to voters. Only voluntary
limits, such as in the presidential public funding system, were sanctioned by the Court.
Activity Outside of Federal Regulation: Soft Money
The concept of soft money was developed by labor unions, after the 1943 ban (made
permanent in 1947) on union money in federal elections. Labor responded most notably
with PACs, to raise voluntary donations from members. Unions also found ways to use
their treasury money to influence public policy (aside from union PAC contributions in
federal races), e.g., state and local candidate donations, and "nonpartisan" education, get-
out-the-vote, and registration drives.4 Three major soft money types are discussed below.
3 The Court distinguished (as does the law) between a contribution, where authority to spend money
to influence voters is transferred from donor to candidate (or committee), and an expenditure, where
the source pays directly for a communication with voters.
4 Alexander Heard, The Costs of Democracy (Chapel Hill: Univ. of N.C. Press, 1960), p. 177-178.
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Cantor, Joseph E. Soft and Hard Money in Contemporary Elections: What Federal Law Does and Does Not Regulate, report, March 15, 2002; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc816973/m1/3/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.