Keeping America’s Campaign Finance Laws on Track

By passing the Bipartisan Campaign Reform Act, better known as McCain-Feingold, Congress took steps in 2002 to fix the nation’s campaign finance system. The law enacts curbs on soft money and issue advertising, but equally important is the next step, guaranteeing effective enforcement. That means reforming the Federal Election Commission.

Created in 1974, the FEC was charged by Congress with enforcing Watergate-era reforms. Never very strong to begin with, the FEC's power has eroded over time. Today it is an under-funded, understaffed agency with little ability to punish violations. Recent national campaigns have seen massive evasion or outright disregard of campaign laws — and, in the end, very few penalties or prosecutions. Moreover, decisions by the FEC have led to more, not fewer, opportunities for abuse. FEC rulemaking in the 1970s opened the door to “soft money,” the principal abuse later targeted by McCain-Feingold. And in 2004, the FEC ruled that political parties can accept “soft money” for conventions – even though the law prohibits soft-money donors from giving to conventions.

What’s Wrong with the FEC?

• It created the“527 loophole.” Groups known as 527s (named for their tax code designations) are exempt from campaign finance laws because they claim independence from candidates and parties. This allows huge sums of money to flood the political system. In March of 2004 Senator Russell Feingold warned that the 527 rule would create “a new circumvention of the election laws, so soon after we closed the last loophole it created.”
• It lacks independence. The FEC’s budget is controlled by Congress, and its members are selected by congressional leaders of both parties. Commissioners thus lack the independence they need to write strong rules to implement the laws or take strong measures to enforce them.
• Its structure makes action difficult. The Commission needs four votes to act, while commissioners are split with three Democrats and three Republicans.
• Enforcement procedures are cumbersome. Procedures created by Congress make it virtually impossible for the commission to resolve a complaint during the same election cycle in which it is filed, according to a frustrated former commissioner, Scott Thomas.

Needed: A New Enforcer

A 2002 Task Force led by a respected former FEC chairman, Trevor Potter, proposed replacing the FEC with a new enforcement body with the independence and the powers to enforce the campaign finance laws. The task force recommends creation of an agency that:

• Is run by a single administrator, appointed by the president and confirmed by the Senate.
• Is independent of the executive branch.
• Has the authority to act quickly and to punish violations through fines and cease-and-desist orders, subject to review by administrative law judges.
• Has adequate resources to do its job and a funding process that insulates it from congressional pressure.
• Can refer violations to the Justice Department for criminal investigation.

In addition, the Task Force proposes setting stronger penalties (including felony penalties) for campaign violations, and allowing individuals to appeal to the courts if the agency chooses not to act on a complaint.

Similar provisions have the support of U.S. Senators John McCain and Russ Feingold and U.S. Representatives Christopher Shays and Marty Meehan. They have introduced legislation to create a new Federal Election Administration that:

• Is run by a chair and two additional administrators appointed by the president and confirmed by the Senate.
• Has the power to impose civil penalties and cease-and-desist orders, subject to judicial review.
• Has other enforcement powers, including the ability to audit campaigns and to apply to the courts for temporary restraining orders and preliminary injunctions.

In July of 2004, Sen. McCain testified before the Senate’s Committee on Rules and Administration, saying, “The Federal Election Commission is a failed agency. It has failed in its principal mission — to interpret the campaign finance laws correctly and to enforce the laws effectively.”