Balancing Campaign Finance Reform Against the First Amendment


Elizabeth M. Yang

Current laws governing campaign finance in the United States were born of the notion that the undue influence of money in the electoral process runs contrary to the nation’s ideals of democracy and equal participation by all in the political process. These concerns continue to form the regulation of campaign finance.

Under federal law, labor organizations and business corporations are prohibited from making any contributions or expenditures from their respective general treasury funds in connection with federal elections.1This prohibition of direct corporate involvement was begun in 1907 with the passage of the Tillman Act,2 and labor organizations were similarly banned from the process in 1947 by the Taft-Hartley Act.3 In 1971, the Federal Election Campaign Act (FECA) was adopted by Congress in an effort to require full disclosure of campaign contributions and expenditures in federal elections. In 1974, Congress amended the FECA by imposing contribution limits on individuals, political parties, and political action committees (PACs).4


Constitutional Considerations

The rationale of preventing corruption or the appearance of corruption in the electoral process is valid, but as lawmakers work to effect the passage of such legislation they must also take certain constitutional requirements into consideration—those of the First Amendment. A primary tenet of the First Amendment is to protect and encourage the rights of individuals and organizations to participate in our civic process. This unfettered ability to be involved in the political system, openly and without fear of reprisal, is an important privilege that should not be taken lightly.

Past and present court decisions have continued to uphold the First Amendment as a safeguard for unconstrained dialogue and debate related to governmental affairs. In the landmark decision of Buckley v. Valeo, the Supreme Court held that the right of individuals to make campaign contributions or expenditures is a clearly protected First Amendment right.5 Our fundamental rights of free speech and association in the political system are an integral part of this nation’s democratic process.

While the underlying concept of freedom of speech is frequently raised, very often the remaining corollary argument is forgotten; namely, that the ability of the government to regulate privileges bestowed by the First Amendment is severely limited. The Supreme Court has consistently held that, “‘[w]hen a law burdens core political speech,’ the law should be upheld ‘only if it is narrowly tailored to serve an overriding state interest.’”6 Clearly, in situations involving participation in the political process, the role of the government as the protector of the rights and privileges embodied in the Constitution must be weighed to the appropriate standard against its role as a regulator of the political process. Any and all campaign finance reform must be clearly framed in this context.


The Current State of Regulation

The methods of financing and running campaigns have changed a great deal since the inception of the FECA and its subsequent amendments. While spending on federal campaigns has tripled in the last twenty years, contribution limits that were established in 1974 remain in place and have never been raised or indexed for inflation. In the 1996 presidential election campaign cycle, $2.7 billion was spent and the parties collected more than $250 million dollars in soft money—three times more than in 1992. Questionable fundraising methods and the vast amounts of money being collected and spent on the campaign process have created a system that has caused the public to lose confidence with regard to those involved in the political process and the electoral process itself.

This disillusionment has led to varying campaign finance reform plans. The major component in all the plans revolves around the definition of federal election activity. Under current law, federal election activity encompasses “the process by which individuals, whether opposed or unopposed, seek nomination for election, or election, to Federal office.”7 The courts and the FEC have also defined federal election activity as encompassing any communication that expressly advocates the election or defeat of clearly identified candidates.8 Opposition to many reform plans is often phrased in terms of First Amendment considerations or on the basis that the proposed changes are not part of the federal elections process.



Disclosure requirements have historically been perceived as a valid means of deterring corruption or the appearance of corruption—“[s]unlight is said to be the best of disinfectants.”9 The current system incorporates a measure of assurance that contributions made to elected officials and candidates are not tainted because disclosure requirements exist with regard to contributions and expenditures made in federal election campaigns. Disclosure allows voters to make up their own minds based on the information that is placed before them. There are currently many different disclosure proposals being advocated as a means of enacting meaningful campaign finance reform.

One option fully embraces former Supreme Court Justice Brandeis’s notion of “sunlight” and its ability to act as an anticorruption agent. Bills have been introduced in Congress that would seek to repeal all federal contribution limits and provide for expedited and expanded disclosure of all contributions.10 The rationale behind such legislation is that eliminating contribution limits will enable challengers to raise the necessary funds to run a competitive race and that a system of full and timely disclosure of all contributions will allow the public to identify whether or not money is being used to unduly influence the process. The counter arguments to such suggestions are that disclosure is not enough in the current system and that a system with no limits will not even the playing field: to the same extent that challengers would have access to larger amounts of money, so too would incumbents.

Another disclosure option proposes to disclose the identities and amounts contributed to certain organizations that are involved in “issue advocacy”—speech relating to issues and policy positions that has become a large part of the political discussion identified with elections. The underlying assumption is that full disclosure of the identities of those responsible for the advertisements will allow the public to see who is trying to influence the outcome of an election. The countervailing argument is based in current law, where certain non-profit entities cannot be required to disclose their membership lists, as such actions are considered to be violative of freedom of association as protected by the due process clause of the Fourteenth Amendment.11


Contribution Limits

Current individual contribution limits were set in 1974. The following limits for contributions by individuals were established at that time as a means of controlling spending and providing for full disclosure:

These limits have not been adjusted subsequently for inflation or increases in the size of the electorate. The obvious result has been to force candidates to spend increasing amounts of time raising contributions in modest amounts from an ever expanding group of contributors.

The system has changed a great deal in the last two decades. Spending has risen rapidly with each passing election cycle, and the concept of full disclosure has been skirted by the advent of soft money. The FECA has had the unintended consequence of limiting the supply of campaign funding while the demand for campaign resources has risen dramatically.

In 1994, $724 million was spent on congressional races, a figure that represents a 1,000% increase over 1974, not including inflation. In the 1998 federal election cycle, congressional candidates raised a total of $781 million and spent $740 million. The 1996 presidential election included a record $2.7 billion being spent, which represents an increase of approximately $650 million more than was spent in 1992.

The static nature of current contribution limits has led to proposals of varying alternative systems meant to address the existing state of campaign finance. One option, as discussed earlier, would be to eliminate all contribution limits. This theory suggests that individuals and entities are spending money in the system and will continue to do so. Proponents of unlimited contributions believe that full disclosure will cover the influx of money in the system. Detractors cite the historic and currently upheld case law that money can create corruption or the appearance of corruption in the political process, and that contribution limits are a constitutional and valid means of eliminating such distrust of the system.

Another option would be to raise the limits on contributions. Doing so, while maintaining a ceiling, acknowledges inflation and other factors that have caused the price of campaigning to rise dramatically in the last quarter century. Most of these proposals involve tying the limits to an inflationary standard and providing for some measure of indexing thereafter. Opponents claim that there is already too much money in the system and that raising contribution limits will only create more problems and burden an already overloaded system.

A third option would be to lower the contribution limits. A recent study conducted by the Center for Responsive Politics suggests that current patterns of political giving are allowing a relatively small percentage of the general public to possess a disproportionate amount of influence over the electoral process because of the contributions being made. For example, approximately 235,000 individuals, representing just one-tenth of one percent of the American public, gave $1,000 or more in the 1996 elections, yet their contributions totaled $638 million in contributions to federal candidates, political parties, and PACs. On the other hand, about 630,000 individuals gave $200 or more; an estimated four percent of the population donated less than $200; and approximately 80 percent of Americans made no contributions.12


Issue Advocacy

Current laws and court decisions mandate that speech which advocates the election or defeat of a candidate, using specific language such as “vote for,” “vote against,” “elect,” or “defeat,” is considered to be “express advocacy,” and that any such activity must be financed by money regulated under the federal campaign finance system. The result of such a bright line test is that political speech which does not use such “magic words” (although it may mention the name of a candidate, use a likeness of a candidate, or espouse a candidate’s position on a certain issue) is considered to be issue advocacy, and can be financed by unregulated, undisclosed, and unlimited funds. Based on this distinction, the Supreme Court has historically upheld issue advocacy to be fully protected political speech under the First Amendment.13 The problem for courts and legislators lies in making a clear distinction between issue advocacy and speech that advocates the election or defeat of federal candidates. Attempts to create a solution to this problem have led to two different approaches by reformers.

One approach has been to acknowledge that issue advocacy has become a major loophole by which this nation’s federal election laws have been effectively evaded. This acknowledgement is coupled by an equal determination that, if issue advocacy is to continue, then it must be accompanied by full disclosure. In other words, individuals and groups who pay for issue advertising should be required to disclose their identities and the amount of funding spent on such activities.

Another approach has been to suggest that the Buckley bright line test of magic words is inadequate and unrealistic in light of current campaign practices, and thus a new standard must be developed. Proponents of this approach believe that sham issue advocacy—advertisements that mention a particular candidate or espouse a particular candidate’s viewpoint and are clearly intended to influence the outcome of an election—should be subject to disclosure and funding source limits. Specific alternative methods have included the suggestion that any paid advertisement which mentions the name of a candidate or uses a likeness of a candidate within a set period of time prior to an election would automatically be considered to be express advocacy, and as such subject to regulation.

It is important to remember, however, that any alternatives which would seek to limit issue advocacy are subject to the most strenuous of constitutional standards related to First Amendment exercises of free speech and association. Simply put, the actions of individuals and groups who seek to foster the discussion and debate of public issues and opinions are not held to the same standards of regulation and disclosure as the actions of individuals and groups who have a direct and intimate link to the political process.14

Historically, individuals and organizations have possessed the right to freely advocate certain public policy positions—clear issue advocacy that is uncoordinated with candidates has generally been allowed as a matter of good public policy and constitutional law. Courts have continually held that “issue discussions unwedded to the cause of a particular candidate hardly threaten the purity of elections. Moreover, and very importantly, such discussions are vital and indispensable to a free society and an informed electorate.”15 The First Amendment guarantees a protected right to speak, publish, and associate on behalf of political causes. The government cannot interfere with these actions, absent a compelling state interest.


Soft Money

Soft money has become a great issue of debate within the campaign finance arena. “Soft money” is defined as any funds that have been raised or spent outside of the limitations and prohibitions of the FECA—the term refers to money raised by the national and local committees of political parties for issue advocacy and nonfederal election purposes. Current law allows for the solicitation and contribution of soft money. These funds have been used, however, as a method by which contribution limits and traditional prohibitions have been successfully circumvented. Historically, funds that are not deemed to be connected to federal elections are not within the purview of the FECA, and thus money that is donated to the state or “nonfedera#148; accounts of state party committees is not considered part of the federal system and is not governed by the same strict disclosure rules.

As campaigning strategies have evolved in order to respond to greater costs and restrictions under current campaign finance law, there is currently a movement to reevaluate the use of soft money in the electoral process. The options involve a wholesale ban on soft money and/or limits on soft money contributions.

The elimination of soft money has become a popular mantra of campaign reformers. Proponents of such a ban argue that soft money is a vehicle by which prohibited sources, such as corporations and labor organizations, are able to affect the outcome of federal elections. These entities are able to skirt federal election laws by funneling money through a side door without disclosure—by making unlimited contributions to political party committees that may in fact be used to influence federal elections, but are currently not regulated because the requisite “magic words” have not been used. Advocates of a ban on soft money propose that, through these means, soft money is in fact being used to influence the outcome of federal campaigns and thus should be eliminated from the process.

The counter argument is that a complete ban on soft money would violate the First Amendment right to freedom of speech. Additionally, detractors argue that nonfederal activities such as grassroots efforts, voter registration drives, “get out the vote” activities, candidate trainings, basic administrative costs, and any other legitimate party-building activities that promote specific parties and issues should continue to be funded by soft money. These activities have traditionally been considered important to the general well-being of parties and their ability to involve people in the political process. Thus, it has always been considered a natural component of the electoral process that political parties should be allowed to take part in activities that seek to build the membership and increase the scope of involvement in the political process. However, the corollary of this argument is often used as a rebuttal in this ongoing debate. Proponents of a ban on soft money argue that the primary role of political parties is to effect the election of candidates to office; thus soft money is ultimately used to advocate the election or defeat of candidates for federal office.

Another suggested option would be to limit the amount of soft money that can be donated while also raising individual contribution limits. Reasonable limits on soft money contributions have been suggested as an alternative to a complete ban as a means of meeting First Amendment concerns regarding freedom of speech. Proponents of such a plan argue that limiting soft money is a good compromise, as it acknowledges the historical approach of Buckley with regard to setting limits on political communications as a means of preventing corruption or the appearance of corruption, while also allowing for the constitutionally protected right of free speech. Detractors of such proposals believe that any limits on soft money are not constitutional and unduly interfere with the right of individuals to support their state and local political parties and candidates.


Seeking a Balance

The current campaign finance system reflects a dichotomy of sorts: it is in some ways highly regulated, through disclosure and contribution limits as outlined by the FECA, and in other ways highly unregulated, as evidenced by the advent and increasing use of soft money and issue advocacy. The positions and beliefs of proponents and opponents of campaign finance reform are equally at odds, and reconciling these divergent viewpoints will not be easy.

Creating meaningful change in our campaign finance system is further challenged by the difficult task of balancing the government’s compelling interest in preventing corruption and preserving public trust in the electoral process against the maintenance of one of our most cherished rights ensured by the First Amendment—that of political speech and association. These issues will likely continue to be debated in our national, state, and local political forums as part of the ongoing struggle to ensure that our electoral process reflects the values of democratic participation.



1. Federal Election Campaigns, 2 U.S.C. § 441b(a) (1997).

2. Tillman Act of 1907, 34 Stat. 864 (January 26, 1907).

3. Taft-Hartley Act of 1947, 61 Stat. 136 (June 23, 1947).

4. Federal Election Campaigns, 2 U.S.C. § 441a (1997).

5. Buckley v. Valeo, 424 U.S. 1, 25 (1976).

6. Federal Election Commission v. Survival Education Fund, Inc., 65 F.3d 285, 297 (1995), quoting McIntyre v. Ohio Elections Commission, 514 U.S. 334 (1995).

7. Federal Election Campaigns, 2 U.S.C. § 431(1), (2), (8), (9) (1997).

8. Federal Election Commission v. Survival Education Fund., Inc., 65 F.3d 285, 289 (1995).

9. Louis Brandeis, Other People’s Money (National Home Library Foundation, 1933 ed.), 62.

10. H.R. 1922, 106th Congress, 1st Sess. (1999).

11. N.A.A.C.P. v. Alabama, 357 U.S. 449 (1958).

12. Center for Responsive Politics, “The Role of Big Donors” in Who’s Paying

13. Buckley v. Valeo, 424 U.S. 1, 39-40 (1976); see Federal Election Commission v. Massachusetts Citizens for Life, 479 U.S. 238 (1986).

14. Buckley v. Valeo, 519 F. 2d 821, 873 (D.C. Cir. 1975).

15. Ibid. At 873, 171 U.S. App. D.C. at 224.



Anderson, Annelise G., ed. Political Money: Deregulating American Politics—Selected Writings on Campaign Finance Reform. Stanford, CA: Hoover Institution Press, 2000.

Cooper, Marc. “California Bad Dreams,” The Nation 270, no. 12 (March 27, 2000): 4.

Cooper, Marc. “Clean Money in Maine,” The Nation 270, no. 21 (May 29, 2000): 22.

Dreyfuss, Robert. “Reform Beyond the Beltway: States as Laboratories of Clean Money,” The American Prospect 38 (May 1, 1998): 50.

Dreyfuss, Robert. “Reform Gets Rolling: Campaign Finance at the Grass Roots,” The American Prospect 45 (July 1, 1999): 39.

France, Steve. “Campaign Cash Cops: Reformers Fight Precedent and ‘Evil Special Internet Man’,” ABA Journal 85 (February 1999): 24-25.

Gais, Thomas L. Improper Influence: Campaign Finance Law, Political Interest Groups, and the Problem of Equality. Ann Arbor, MI: University of Michigan Press, 1998.

Malbin, Michael J., and Thomas L. Gais. The Day after Reform: Sobering Campaign Finance Lessons from the American States. Washington, D.C.: Brookings Institution Press, 1998.

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Miller, Ellen S., et al. “Character and Campaign Finance,” The American Prospect (March 27-April 10, 2000): 8.

Miller, Ellen S., et al. “Free Speech and Campaign Myth: How the First Amendment was Misused to Undo Campaign Finance Reform,” The Nation 266, no. 15 (1998): 22.

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Videos for the Classroom

“Campaign Finance Reform—Who Should Pay for Elections? NewsMatters.” This 15-minute video outlines basic facts about PACs, issue ads, and soft money. Includes poster and 12-page discussion guide with reproducible activities. Grades 6-12. Knowledge Unlimited, 1998. Available from Social Studies School Service ( or call 1-800-423-4246.

“Money Talks—The Influence of Money in American Politics: Bill Moyers’ Journal.” This 60-minute video focuses on the influence of corporate contributions on elections. Grades 9 and up. WNET, 1994. Available from Social Studies School Service ( or call 1-800-423-4246.

“National Desk Season III. Campaign Finance: Who’s Running the Show?” This 60-minute documentary is reported by broadcast journalist Morton Kondracke. Grades 10-12, adult. Whibley Island Films, Inc., 1999. Available from Shop PBS for Teachers ( or call toll free 1-877-PBS-SHOP .

“The Price of Power: Money in Politics.” This 28-minute video uses a low-budget legislative campaign to examine campaign finance issues in American politics. Grades 7-12. Cambridge Educational, 1993. Available from Social Studies School Service ( or call 1-800-423-4246.



Brookings Campaign Finance home page
A source for cases, legal and policy materials on campaign finance from the Brookings Institution

The Center for Public Integrity
Features databases of financial information about presidential candidates

Center for Responsive Politics
A website with several pages useful for the discussion of campaign finance reform, including “Coming to Terms: A Money-in-Politics Glossary.” (see Teaching Activities)

Common Cause
Includes a searchable database of special interest soft money contributions to the Democratic and Republican national party committees, a chronology of campaign finance reform (1979-1998), and other information about campaign financing.

Destination Democracy
Part of a multimedia toolkit developed by the Benton Foundation to help citizens navigate the issues of campaign finance. It offers an “Expressway Road Test” and analysis of answers involving attitudes toward campaign finance reform.

Federal Elections Commission
A source for information about federal campaign and election rules and financial information for and about political candidates, parties and PACs.

Issues in Depth: Campaign Finance Reform
A project of The American Prospect magazine from The Electronic Policy Network, it offers information about a variety of aspects of campaign finance reform and links to other sites.

Town Hall
Produced by the Heritage Foundation, a source for a conservative point of view on money and politics.


About the Author

Elizabeth M. Yang serves as staff director for the ABA Standing Committee on Election Law and associate director for the Division for Public Services.



Teaching Activities and Discussion Questions


Michelle Parrini and Jennifer Kittlaus

The following activities include the use of Internet resources. Teachers could go online to obtain these materials for the classroom, or assign students to do online research, depending upon the computer resources available.


1Begin with a class discussion of the issue this article poses: the balance between campaign finance reform and the First Amendment’s protection of free speech. As background, the teacher might outline or assign students to read all or portions of this article. Ask students how and why they think political speech is protected by the First Amendment. What do students know about (1) how political campaigns are financed and (2) what is motivating current proposals for campaign finance reform? One useful resource online is the chronology of campaign finance reform (1979-1998) on the Common Cause website. A good source for defining the terms used in the campaign finance debate is “Coming to Terms: A Money-in-Politics Glossary” on the Center for Responsive Politics website at:

2An important question in the campaign finance reform debate involves the distinction between “issue advocacy” and “express advocacy” made by the Supreme Court in Buckley v. Valeo (1976). Students could read the section on “Issue Advocacy” in this article, or go to the “Money-in-Politics” Glossary cited in Question 1, for definitions of these terms. Some people believe that “issue ads” press the legal and ethical limits of campaign finance law. Assign teams of students to research this topic and prepare to defend one of the following propositions: (1) issue ads push ethical limits, or (2) issue ads are ethical. One good source is “A Bag of Tricks: 2-Issue Advocacy,” a discussion of issue ads in the 1996 election campaigns by Lisa Rosenberg, found at:


3Ask students to check the 1996 “Campaign Finance Profile” of their U.S. congressional representative or senator (if one ran that year) using the database from the Center for Responsive Politics website at: What percentage of this individua#146;s campaign financing was attributed to contributions from (1) individuals? (2) PACs? (3) Ideological or single issue advocates? Ask students to report on their findings. What, if anything, surprised students about what they discovered?


About the Authors

Michelle Parrini is acting director of the ABA Division for Public Education’s school programs unit. Jennifer Kittlaus is an editor and assistant program director for the unit.