The McCain-Feingold Act: Law Explained

Campaign finance reform is a complex issue that many would agree lacks clarity and consensus.

This article will provide an in-depth, unbiased explanation of the McCain-Feingold Act - from its bipartisan origins and objectives, to its journey through Congress, key provisions, legal challenges, and ultimate impact on campaign finance over the past two decades.

You will gain a comprehensive understanding of this pivotal piece of legislation, its foundational goals, critical judicial rulings that have shaped its implementation, and assessment of its lasting influence on election spending and reform going forward.

Introduction to the McCain-Feingold Act

The McCain-Feingold Act, also known as the Bipartisan Campaign Reform Act (BCRA) of 2002, aimed to reform campaign financing and spending by placing limits on "soft money" donations to political parties. This was a major amendment to the Federal Election Campaign Act.

McCain-Feingold Act Summary: Origins and Objectives

The McCain-Feingold Act was introduced in response to the increasing influence of soft money in elections, especially the 1996 and 2000 presidential campaigns. Soft money refers to funds donated to political parties that could be used for general party-building activities rather than directly supporting a candidate. However, critics argued this provided a loophole for special interests to influence campaigns.

The main objectives of the Act were to:

Ban national parties from raising or spending soft money
Place limits on election advertising by outside groups
Increase hard money contribution limits

It aimed to reduce the influence of big donors and special interests in elections.

The Bipartisan Effort: John McCain and Russ Feingold's Vision

The Act was the result of a bipartisan effort between Republican Senator John McCain and Democratic Senator Russ Feingold. They shared concerns about the growing role of soft money in elections and wanted to reform campaign finance laws.

Their vision was for a fairer and more transparent campaign finance system with clearly defined rules. They sought to reduce the influence of money in politics and empower small donors.

The Act's Journey Through Congress

The McCain-Feingold bill was first introduced in 1995 but failed to gain momentum. It was reintroduced in 1997 and debated extensively in both the House and Senate over several years.

In 2002, the bill finally passed in the House by a vote of 240-189 and in the Senate by 60-40. This bipartisan success was attributed to growing public demand for meaningful campaign finance reform.

Enactment and Initial Reactions

President George W. Bush signed the McCain-Feingold Act into law on March 27, 2002 despite initial threats to veto it.

The bill faced mixed reactions. Reform advocates praised it while political parties and special interest groups argued it infringed on free speech rights. Early legal challenges questioned its constitutionality but the Supreme Court upheld key provisions in 2003.

What was the impact of the McCain Feingold Act?

The McCain-Feingold Act, also known as the Bipartisan Campaign Reform Act (BCRA), was passed in 2002 to regulate campaign financing and prohibit unlimited "soft money" donations to political parties.

The key impacts of the legislation included:

Banned national parties from raising or spending non-federal funds, eliminating "soft money" donations. This restricted political parties to only using "hard money" donations made directly to candidates.
Placed limits on total contributions by an individual donor during an election cycle. This aimed to reduce the influence of wealthy donors.
Required disclosure of donors to certain nonprofit organizations that fund issue advocacy ads. This provided more transparency around funding sources.
Defined a new category of political advertising called "electioneering communications" and required disclosure of funding sources for them. This brought certain issue ads under campaign finance regulations.

The McCain-Feingold Act significantly altered campaign finance laws in the United States. However, key parts of the legislation were later struck down by Supreme Court decisions like Citizens United vs. FEC, which opened the door for new forms of unlimited political spending. Nonetheless, the spirit of McCain-Feingold continues to shape debates around money in politics today.

What did the Federal Election Campaign Act do?

The Federal Election Campaign Act (FECA) was originally passed in 1971 to regulate campaign financing and spending in federal elections. Some key things the law did:

Created limits on spending on media communications by campaigns. This included things like TV, radio, and print ads. The limits were intended to reduce the influence of money in elections.
Added additional penalties to the criminal code related to violations of election laws. This was meant to deter abuses of campaign finance regulations.
Imposed new disclosure requirements on federal campaigns. This required reporting of donations and expenditures above certain thresholds to increase transparency.

Over the years FECA has been amended several times, often in response to new campaign finance developments and court cases. But the original 1971 law focused on the key areas of regulating spending, enforcing laws through penalties, and improving disclosure. The goals were to limit the role of big money in elections and prevent corruption.

What is the campaign finance law of 2002?

The campaign finance law of 2002 refers to the Bipartisan Campaign Reform Act (BCRA), which is also known as the McCain-Feingold Act. This law was passed by the 107th United States Congress and signed into law by President George W. Bush in 2002.

The main purpose of the BCRA was to amend the Federal Election Campaign Act (FECA) and address issues related to campaign finance in federal elections. Some of the key provisions of the law include:

Banning soft money: The law banned national parties from raising or spending nonfederal money, also known as "soft money," which was previously used to fund things like party building activities. This aimed to prevent the influence of large donations on federal elections.
Regulating issue advocacy: The law sought to address "issue advocacy," which refers to political ads that avoid express advocacy (directly calling for the election or defeat of a candidate) but still aim to influence elections. The BCRA required disclosure for electioneering communications.
Increasing contribution limits: The law increased certain federal contribution limits to candidates, parties, and political action committees (PACs) to help offset the soft money ban.

The BCRA was controversial legislation that faced various legal challenges over the years. Key provisions were eventually overturned in court decisions like Citizens United v. FEC, which opened the door for new forms of unlimited political spending. But the law did bring major reforms when it was first enacted.

How does soft money get around campaign finance laws?

Soft money refers to political contributions that are not regulated by federal campaign finance laws. Here are some of the key ways soft money is able to circumvent regulations:

Soft money is often raised by national and state party committees for "party building" activities like voter registration drives or generic party advertising. These funds are not contributed directly to a candidate, so they avoid limits and disclosure rules.
Interest groups running "issue ads" that stop short of directly advocating for a candidate are not subject to campaign finance restrictions. These ads allow unlimited soft money to influence elections without technically breaching regulations.
Some tax-exempt non-profit organizations can raise and spend unlimited amounts of soft money on ads or voter drives as long as they avoid "express advocacy" for a candidate. This includes many 501(c)(4) social welfare groups and 501(c)(6) trade associations.
Joint fundraising committees with national parties can accept much larger soft money donations than regular party committees or PACs. Wealthy donors exploit this loophole to contribute over $300,000 in a single year.

In essence, soft money provides a way for interests groups, corporations, unions, and wealthy donors to spend unlimited amounts influencing elections. Closing loopholes around issue ads, nonprofit political activity, and joint fundraising have proven challenging despite multiple attempts at campaign finance reform.

What Did the Bipartisan Campaign Reform Act Do?

The Bipartisan Campaign Reform Act (BCRA), also known as the McCain-Feingold Act, was a 2002 law that introduced major amendments to the Federal Election Campaign Act in order to reform campaign finance laws and address issues related to the influence of money in politics.

Prohibiting 'Soft Money' Contributions to Political Parties

The act banned national political parties from soliciting or spending any funds not subject to federal limits, closing the "soft money" loophole. Soft money referred to unlimited donations made to parties intended for "party-building" activities rather than directly advocating for a candidate. This removed a major avenue for special interests to gain influence through large donations to parties.

Setting 'Hard Money' Contribution Limits

The legislation placed limits on "hard money" donations made directly to politicians' campaigns. The act increased contribution limits for individuals to adjust for inflation and provided an overall aggregate bi-annual limit on individual contributions to federal candidates and parties. Limits were also set for donations from PACs, corporations, and unions.

Regulating 'Issue Advocacy' and 'Express Advocacy' Ads

The BCRA attempted to address "issue ad" loopholes by more clearly defining electioneering communications. The FEC was granted authority over communications identifying specific candidates or parties within 30 days of a primary or 60 days of a general election. Restrictions were placed on where and when such ads could air.

Enhanced Disclosure Requirements for Political Spending

The legislation also increased transparency, expanding campaign finance disclosure requirements to further regulate donations and expenditures. Independent expenditures and electioneering communications became subject to reporting obligations.

Legal Challenges and the Overturning of McCain-Feingold

This section will chronicle the major lawsuits and U.S. Supreme Court decisions that challenged and ultimately overturned provisions of the McCain-Feingold Act.

Citizens United v. Federal Election Commission: The Game Changer

This 2010 Supreme Court case ruled that restrictions on independent political expenditures by corporations, associations and labor unions were unconstitutional. The 5-4 decision overturned provisions of McCain-Feingold that prohibited corporations and unions from using funds from their general treasuries to make independent expenditures for "electioneering communications".

The Court held that political speech is indispensable to a democracy, and the First Amendment protects such speech regardless of the identity of the speaker. This ruling opened the floodgates to unlimited corporate and union spending in federal elections.

McCutcheon v. Federal Election Commission: Further Erosion

In 2014, the Supreme Court struck down aggregate contribution limits, which was yet another blow to McCain-Feingold. The 5-4 decision eliminated the limit on total contributions one person could make to all federal candidates, parties and political action committees combined.

While the Court upheld the base limits on contributions to individual candidates and committees, striking down the aggregate limits effectively allowed greater overall spending by the wealthy to influence elections.

Federal Election Commission v. Ted Cruz for Senate and Its Implications

Recent decisions like the Ted Cruz case in 2022 have further weakened campaign finance restrictions. The Court ruled that a $250,000 loan a candidate makes to their own campaign cannot be subject to the $250,000 legal limit on repayment using post-election funds.

This effectively enables candidates to loan their campaigns unlimited sums and be repaid from contributions made after the election. The implications are a greater role for personal wealth in campaigns.

The Role of Chief Justice John Roberts and the First Amendment

Behind several seminal campaign finance decisions is Chief Justice John Roberts. His views on free speech rights, anti-corruption interests and the First Amendment have shaped the Court's dismantling of McCain-Feingold.

Roberts authored the Court's opinion in McCutcheon and joined the majority in Citizens United. His influence elevated First Amendment principles over efforts to reduce the role of big money in politics through legislation like McCain-Feingold.

Analysis of McCain-Feingold's Impact Over Time

Assessing the Reduction of Corruption and Influence

The McCain-Feingold Act, also known as the Bipartisan Campaign Reform Act (BCRA), was passed in 2002 with the aims of reducing corruption and the appearance of corruption in federal elections. In the years following its passage, there were mixed views on whether the act achieved these goals.

On one hand, the act did lead to a decrease in "soft money" donations to political parties. Soft money refers to funds not subject to federal regulations and limits. This type of donation was seen as increasing the risk of corruption. By banning national parties from raising or spending soft money, the act reduced a major avenue for potentially corrupting contributions.

However, the act's impact was limited over time by the rise of new spending channels. "Issue advocacy" groups, later designated "527 organizations" after the IRS code they fall under, began spending large amounts on political advertising while avoiding regulation under the act. Later, the 2010 Supreme Court case Citizens United v. FEC opened the floodgates to unlimited independent political expenditures by corporations and unions. This gave rise to Super PACs and increased outside spending.

So while the act initially reduced some corrupt channels of money in politics, loopholes and new avenues of spending opened over time. There are disagreements on whether it ultimately met its anticorruption goals. Some argue it reduced the appearance of quid pro quo corruption. Others counter that influence and access resulting from large donations still enable a kind of "corruption."

The Evolution of Campaign Finance: From 527s to Super PACs

In the years after McCain-Feingold was passed, new groups and strategies emerged to channel political money while avoiding the regulations. These evolutions opened up major loopholes limiting the act's effectiveness over time.

One of the first such groups were "527 organizations," named after the section of the IRS tax code they fall under. These tax-exempt groups began raising and spending unlimited funds for issue advocacy - advertising and campaigns about political issues without directly advocating for a candidate. By avoiding express advocacy, they avoided McCain-Feingold's regulations. Major examples included Swift Boat Veterans for Truth and MoveOn.org.

The next major development circumventing regulations was the Citizens United Supreme Court case in 2010, which overturned previous bans on corporate and union political spending. This gave rise to Super PACs - political action committees that can raise and spend unlimited funds as long as they do not coordinate directly with candidates and parties. Super PACs spent over $1 billion in 2020 alone.

So while McCain-Feingold aimed to limit money in politics, the evolutions of 527s and Super PACs opened up new channels that undercut its goals. This "hydraulic theory" argues that money in politics behaves like water - if restricted in one area, it will simply flow to other channels. The exponential growth of outside and independent expenditures in elections over the past 20 years lends credence to this theory.

The Billion-Dollar Presidential Campaigns: A New Normal?

One clear trend in recent decades is the massive increase in spending on presidential campaigns. Critics argue McCain-Feingold has done little to restrain this growth in spending over time.

In 1996, the presidential race between Bill Clinton and Bob Dole saw total spending around $240 million. In 2000 between Bush and Gore, this grew to around $343 million. The 2008 race between Obama and McCain cost over $1 billion total. In 2020, total spending was over $14 billion - a more than fifty-fold increase from 1996.

Some argue this shows McCain-Feingold failed to have any mitigating effect on the explosive growth in campaign costs over the past 20 years. Others counter that political advertising and activity is simply more expensive in the digital media age. And the rise of small donors mitigates some corruption concerns.

Either way, billion-dollar presidential campaigns - unthinkable in the 1990s - are now the norm. There is little sign that this trend of ever-increasing campaign spending will slow down anytime soon. The question is whether new reforms or public financing programs can restrain this spiral.

The Interplay with Public Financing of Campaigns

The McCain-Feingold Act had important implications for the public financing of presidential campaigns. Public financing provides federal funds to nominees if they agree to spending limits. But the act's failure to restrain outside groups and spending likely contributed to its decline.

In the 1990s, most major party nominees used public financing for their general election campaigns. But over time, more and more declined it - seeing the spending limits as putting them at a disadvantage. The 8-to-1 public financing spending limit also lost relevance as campaigns began regularly raising hundreds of millions privately.

In 2008, Barack Obama became the first major nominee to decline public funds entirely in the general election. Most experts see this as a pivotal moment that effectively ended the public financing system for presidential campaigns. Outside conservative groups had already heavily outspent John Kerry in 2004. Obama likely recognized he would need immense sums to compete as well.

So while McCain-Feingold didn't directly end public financing, its failure to control outside spending was likely a death knell. Candidates realized they needed to raise unprecedented sums to compete, viewing public financing limits as crippling. This exemplifies the "hydraulic" nature of money in politics over time.

Conclusion: The Legacy and Future of the McCain-Feingold Act

Revisiting the Act's Foundational Goals and Achievements

The McCain-Feingold Act, also known as the Bipartisan Campaign Reform Act (BCRA), aimed to increase transparency in campaign financing and reduce the influence of "soft money" donations from corporations, unions, and wealthy individuals. When it was passed in 2002, the Act initially achieved some success in accomplishing these goals by banning unlimited soft money donations to political parties and requiring disclosure of electioneering communications. It helped shine a light on previously opaque campaign finance practices.

However, the Act's achievements were diminished over time as new channels emerged for special interest groups to influence elections with undisclosed "dark money." Key provisions were also overturned in Supreme Court decisions like Citizens United vs. FEC. So while McCain-Feingold represented an important step forward, its lasting impact was limited without further reform.

The Lasting Influence on Campaign Finance Reform

Despite being partially overturned, the McCain-Feingold Act did have some lasting effects on campaign finance laws and norms around transparency. For example, restrictions on coordination between candidates and outside groups remain in place. Requirements for political committees to disclose donors are also still active. These measures continue to promote accountability and accessibility around funding sources.

Concepts within the Act like banning soft money donations and requiring disclaimers on political ads have influenced more recent legislation as well. So while the Act itself was diminished, its core ideas around transparency and fairness have shaped related laws and regulations over the past two decades.

The Current State of Campaign Finance and Future Outlook

Today's campaign finance system allows essentially unlimited spending by super PACs and non-profit groups with very limited disclosure requirements. This has enabled special interest groups to wield tremendous influence through largely anonymous "dark money." With recent Supreme Court rulings further loosening regulations, comprehensive reform is needed to control outside spending and enhance transparency.

Potential future laws may focus on policies like increased disclosure rules, public campaign financing, stricter coordination standards, and a constitutional amendment to restore Congress' authority to regulate campaign spending. But any meaningful reform will require surmounting political divisions and an increasingly deregulated landscape shaped by court decisions. Still, the core ideas behind McCain-Feingold could inform new legislation to mitigate special interest influence on elections.