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Key Provisions of the Shays-Meehan Bill (H.R. 2356 plus proposed Manager’s Amendment)

The Shays-Meehan bill was scheduled for debate last July, but was withdrawn by House Republican leaders after they lost a procedural vote. The legislation is very similar to the McCain-Feingold-Cochran bill, which the Senate passed on April 2, 2001 by a vote of 59 to 41. Key provisions of Shays-Meehan include:

1. Bans soft money for federal elections.

National parties may not raise, direct or spend soft money, which are the unlimited contributions to political parties from corporations, unions and individuals. State parties, officeholders and candidates may generally not spend soft money for federal election activity. There is an exception for contributions of up to $10,000 annually for state party voter registration, get-out-the-vote and generic activities that do not refer to a clearly identified federal candidate or utilize radio or TV ads. In addition, national and state parties may not direct funds to 501(c) and 527 tax-exempt organizations.

2. Prohibits corporations and unions from spending treasury money on pre-election TV or radio sham "issue ads."

The ban covers broadcast ads that refer to a clearly identified federal candidate within 60 days of a general election or 30 days of a primary and that are directed at members of the candidate's electorate. Should this standard become law it will be challenged in court by opponents. So they statute provides guidance to the Supreme Court for conducting a review. If the Supreme Court finds this standard constitutionally insufficient, it can consider an alternative standard: whether the communication promotes or attacks a candidate, and suggests no plausible meaning other than an exhortation to vote for or against. The corporate ban on spending on sham issue ads also encompasses certain non-profit groups (501c4 advocacy and 527 political organizations). Finally, if any individual or group other than a corporation or union spends more than $10,000 on such communications in a year, it must publicly disclose its identity, place of business and contributors of $1,000 or more. There is no restriction on the financing of print (including voter guides), mass mail, phone or Internet communications.

3. Strengthens the law allowing candidates to pay the "lowest unit charge" for pre-election TV time, and extends the benefit to national political parties supporting candidates.

The bill attempts to reduce the high cost of running TV ads during election campaigns. These charges account for much of the rising cost of political campaigns, which are paid for by private contributors. The bill specifies that the rate broadcasters charge may not exceed the lowest unit charge paid by other customers for the same period of time within the previous six months. Moreover, the candidate or party may not be "preempted" from such time by higher-paying advertisers. Currently, broadcasters force candidates to pay exorbitant rates for non-preemptible time.

4. Increased disclosure of federal political contributions and expenditures.

The bill provides for disclosure of donations over $200 to presidential inaugural committees, clearer identification of the sponsors of print and electronic election advertising, public access to broadcasters' records of political ads regarding candidates and national issues, and more rapid public disclosure of pre-election "independent expenditures" expressly advocating the election or defeat of a candidate (including the donors).

5. Increases the maximum limits on "hard money" contributions by individuals.

The bill raises the limit on individual contributions to candidates from $1,000 per election (or $2,000 counting both primary and general election) to $2,000 ($4,000 primary and general) for Senate and presidential candidates only -- but not for House ones. This is a compromise between supporters of the Senate-passed McCain-Feingold-Cochran bill, which raises many of the existing legal "hard money" limits, and those in the House who wish to maintain at least some of the current levels. There is no change in the amount an individual can contribute to a single PAC ($5,000 a year); however the annual contribution limit to national parties goes from $20,000 to $25,000 and for state parties from $5,000 to $10,000. All the new levels, except for state parties, are indexed for biannual adjustment to inflation. The bill also raises the annual aggregate total an individual can contribute to candidates, PACs and parties from $25,000 a year ($50,000 per 2-year cycle) to $95,000 per cycle. Of this amount, up to $37,500 may go to candidates and $57,500 to national and state parties and PACs (but not more than $37,500 to the state parties and PACs).

6. Increased contribution limits for opponents of self-financed wealthy candidates in Senate elections.

Under this so-called "millionaires amendment", from the Senate-passed bill, a formula based largely on state voting age population establishes a Athreshold@ level of expenditures from personal funds by Senate candidates. When a candidate spends twice this amount of personal funds, an opponent is permitted to raise funds from individuals up to three times the legal maximum ($6,000 per election). At four times the threshold, the opponent can accept up to six times the legal maximum. And at ten times the threshold, the opponent can take both six times the maximum and unlimited funds from a state or national political party. This provision is not applicable to the House of Representatives.

October 2001

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