So You Want to Buy a President?

A Citizen's Guide: Glossary

Like any other business, Presidential campaign finance has its own highly specialized jargon. A sampling:

  • Bundling -- The practice of combining several small contributions into one large contribution. Under current federal law, it is illegal for an individual to give more than $1,000 to a Presidential candidate per election Since that limit was first introduced in the 1970s, however, fund-raisers have tried to overcome it by the completely legal and widespread practice of "bundling." Broadly it works like this: several $1,000 maximum contributions are solicited from, say, a corporation's executives and their families, and the checks are sent to a candidate all together in a large "bundle." While no individual has given more than the law allows, a lot of money has come from one place. (See contribution limits,FEC.)


  • Buckley v Valeo -- A 1976 U.S. Supreme Court decision which eliminated many federal funding restrictions and established the basic groundrules of current Presidential campaign financing. Following the revelations of corrupt campaign finance practices and "dirty tricks" which emerged from the Watergate scandal, Congress sharply tightened federal election law in 1974. The amounts that contributors could give and that candidates could spend were limited for all federal races. The new law also provided for public financing of Presidential elections, but not of Congressional races.
    Two years later, the U.S. Supreme Court ruled in Buckley v. Valeo, a lawsuit brought by an ideologically diverse group headed by conservative New York senator James Buckley, that many of the new restrictions were unconstitutional. While the Court upheld the law's limits on contributions to all races, it ruled that limits on Congressional campaign spending violated the First Amendment's "free speech" guarantee. If a candidate needed to spend money to get his message out, the justices reasoned, limiting the amount he could spend also restricted the amount he could say. As for Presidential races, the Court ruled, candidates could be held to spending limits but only if they had also agreed to accept public funding. A wealthy candidate who bankrolls his own campaign and doesn't take public money (Steve Forbes, for instance) can spend as much as he wants. (See also Matching Funds, FEC.)


  • Contribution Limits--The FEC's limits on who can give how much in Presidential races are fairly complex but basically it comes down to this: an individual can give a candidate a maximum of $1,000 during the entire primary season and another $1,000 for the general election. PACs may give no more than $5,000 for the primaries, and as much again for the general election. Corporations, labor unions, and foreign nationals may not give at all.
    There are of course a number of perfectly legal loopholes which make it possible to give far more than these limits allow. (See bundling, soft money.)


  • Fat Cat -- An all-purpose term, usually derogatory, used to describe any big political contributor, especially one who seeks influence in exchange for his money. Political scientist Herbert Alexander says the term was first popularized in the 1920s by The Baltimore Sun. According to Safire's Political Dictionary, however, the expression's roots go back to the late 1880s when the use of high-pressure tactics on contributors was called "fat-frying." A leading Republican fund-raiser of the time circulated a letter urging his colleagues to "fry the fat out of the manufacturers."


  • Federal Election Commission -- The agency created by Congress in 1974 to monitor compliance with federal election laws. The law which created the FEC, the Federal Election Campaigns Act, has been subject to two major overhauls by Congress, once in 1974 and again in 1979. The FEC's powers have also been shaped by a key US Supreme Court ruling in 1976. (See Buckley v Valeo) Campaigns and PACs are required to disclose their contributions and expenditures to the FEC. Those records are public documents which can be examined by anyone. The vagaries of campaign law, however, often make FEC disclosure records difficult to decipher. A typical entry will contain a only name, a date, and an amount. In the case of big donors, that usually tells little about how much has been given. Because they are listed under the names of individual givers, for instance, large "bundled" contributions will appear in FEC files as many apparently unrelated small contributions. The FEC has often been criticized, sometimes by its own members, for being ineffectual. Some campaigns have flouted its regulations knowing that by the time the FEC catches up to it, the election will be long past. The six FEC commissioners are appointed by the President and have traditionally been split 3-3 between Republicans and Democrats. That arrangement has virtually guaranteed gridlock on tough issues. (See soft money).


  • FECA -- The Federal Election Campaigns Act is the 1971 law which created modern campaign finance rules. (The FEC was created in 1974 when FECA was amended and strengthened in the aftermath of Watergate.) The law was intended to replace the old -- and widely ignored -- Federal Corrupt Practices Act of 1925.


  • Hard Money -- Individual campaign contributions which are subject to FEC limits. A Presidential candidate must give the FEC the name, occupation, and address of every person or group who gives him or her a contribution of $200 or more. The maximum limit for such "hard" contributions is $1,000 for an individual, per election up to a total of $25,000 per year for all candidates. (See PAC, soft money.)


  • Inaugural Committee -- While contributions to campaigns are subject to federal limits, donations to pay for a winner's inaugural are not. Inaugural committees do not have to publicly identify their contributors. President Clinton's 1992 inaugural committee raised large sums from corporate sponsors. Beer maker Anheuser-Busch, for example, donated products to the event as well as contributed $100,000 in cash. The $32 million inaugural was such a fund-raising success that its bank account still has a $9.7 million surplus.


  • Independent Expenditures -- Money spent on behalf of a candidate by citizens not affiliated with his or her campaign. Under current law, you can give as much as you want to a political group as long as that group's spending is not officially coordinated with a campaign. In 1988, the television ad which tied Democratic nominee Michael Dukakis to the parole of convicted murderer and rapist Willie Horton -- one of the most effective and memorable of the campaign -- was financed by an $8.5 million independent expenditure by a group of Republican consultants.


  • IRS Check-off -- The box on federal income tax returns which each taxpayer may mark in order to make a voluntary contribution to the Presidential Election Campaign Fund. Since 1973, federal elections have been partly funded by the public through the IRS check-off. (The original voluntary contribution was $1. In 1994, it was raised to $3.) The contribution -- which does not affect the amount you may owe in income tax -- has never been very popular with the public. Lately the Fund has been so starved for money that it has only been able to make partial payments of matching funds to candidates. (See matching funds.)


  • Leadership PACs -- Several politicians have founded ostensibly independent PACs which have been criticized as fronts for their own campaign fund-raising. In 1995, for instance, Senator Bob Dole disbanded his "Better America Foundation." Critics said BAF was a way for donors to give money to Dole free of FEC limits or reporting regulations. Although Dole closed BAF and made a list of its donors public, he has always maintained the foundation was a completely legitimate conservative think tank.


  • Legal Defense Funds -- Some politicians have established funds to help raise money to pay for their legal expenses. Supporters of President Clinton, for instance, may contribute to a fund paying for his defense in a sexual harassment suit brought against him by Paula Jones, a former Arkansas state employee. The fund also pays the legal bills of President and Mrs. Clinton arising from the various Whitewater investigations. Although it is not required to do so by law, the Clinton fund publicly identifies its donors and accepts no contributions larger than $1,000.


  • Loopholes--(See contribution limits, bundling, soft money.)


  • Matching Funds -- Public money given to Presidential candidates to pay for their campaigns. The federal government will match the first $250 of each contribution to a campaign. But candidates who want matching funds -- and all but the richest do -- must observe spending limits imposed by the FEC. Candidates who do not take matching funds may spend as much as they like.


  • PACs (Political Action Committees) -- Groups which raise money to donate to political candidates. PACs have been a political fact of life since 1943 when the Congress of Industrial Organizations (a forerunner of the AFL-CIO) formed a PAC to get around the ban on contributions from labor unions. They have only become important, however, since the campaign reforms of the 1970s which put limits on individual contributions to federal candidates. Under current federal law, a PAC may give no more than $5,000 to a federal candidate during the primaries, and another $5,000 during the general election.


  • Soft Money -- Contributions which are not subject to FEC limits. While the amount you can give directly to a candidate is tightly restricted, the amount you can give to the candidate's party is not. You may give as much as you want for such "party-building" activities as get-out-the-vote drives, bumper stickers, and voter registration efforts as long as that money is not spent on behalf of a specific candidate for federal office. This loophole in federal election law has made it possible for the parties to raise huge amounts through contributions to state party committees and the "non-federal" bank accounts of the Democratic and Republican National Committees. In the first half of 1995, the two national party committees raised a total of $30.6 million, according to a Common Cause analysis of federal record. The amount was a record for a six-month period.
    While "soft money" may theoretically not be spent on Presidential campaigns, it is impossible as a practical matter to tell the difference between a dollar spent on, say, President Clinton's campaign ads, and a dollar spent on a generic "Vote Democratic" commercial.
    "Soft money" was created when Congress amended the Federal Election Campaign Act in 1979 with an eye to encouraging giving to state and local party committees. While the FEC can do nothing to limit soft money, since 1991 it has required the parties to disclose the names of soft money givers.


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