Introduction to Bipartisan Campaign Reform Act of 2002 (BCRA)

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The Bipartisan Campaign Reform Act of 2002 (BCRA) was signed by the President and enacted on March 27, 2002. BCRA capped a seven-year effort by its congressional sponsors to change federal campaign law and marked the most significant amendment to the Federal Election Campaign Act (FECA) in more than a quarter century. The Senate version of the final bill, S. 27, principally sponsored by John McCain, Republican senator from Arizona, and Russell Feingold, Democratic senator from Wisconsin, initially passed the Senate on April 2, 2001, and was submitted to the House for consideration. The House version, H.R. 2356, principally sponsored by Christopher Shays, Republican representative from Connecticut, and Martin Meehan, Democratic representative from Massachusetts, passed the House on February 14, 2002. On March 20, 2002, the Senate approved the House version by a 60-40 vote in order to avoid a conference committee that would have been composed by many of the leading opponents of the bill. A series of technical amendments (H.Con.Res. 361) were approved by the House later that day, and subsequently ratified by the Senate on March 22, sending the final bill to the President.

Pillars of BCRA

Among its myriad of components, there are two key pillars of the Bipartisan Campaign Reform Act that have fundamentally transformed campaign finance law. First, the Act prohibits raising and spending "soft money" by federal officeholders and candidates and by the national parties, and severely restricts the use of soft money by state and local parties in relation to federal election activities. Second, the Act redefines what constitutes a campaign advertisement, subject to the disclosure requirements and contribution limits and contribution source restrictions of federal law.

Soft Money. In federal elections, "soft money" is defined as funds that are otherwise prohibited by law for use in campaign activity: funds that come from individuals in excess of the contribution limits or funds that come from corporate or union treasuries. Due to an exemption in the 1979 Amendments to the Federal Election Campaign Act, state and local parties were allowed to spend soft money on grassroots organizing and voter mobilization activities that impacted state as well as federal elections. Subsequent regulations by the Federal Elections Commission (FEC) expanded the soft money exemption, allowing the national parties also to raise and spend soft money for party-building and voter-mobilization activities. In 1988, the FEC even permitted the national parties to use soft money to pay for partisan television advertisements that benefited both state and federal candidates, so long as the soft money was used to pay for the non-federal share of the costs.

The parties had initially been slow to take advantage of this new source of revenue – until the 1996 reelection campaign of President Bill Clinton. In that election, the Democratic party realized the soft money exemption allowed the national party to raise unlimited amounts of soft money and then transfer the funds to state parties. State Democratic parties, in turn, could spend the soft money on non-federal election activity, including television and radio advertisements, that directly benefited the Clinton campaign.

Both parties promptly turned their attention to soft money. In the 2000 election cycle, national and congressional party committees broke all previous records in soft money fundraising. National Republican party committees raised $249.9 million in soft money and spent $252.8 million in soft money, while national Democratic party committees raised $245.2 million in soft money and spent $244.8 million (see Figure 1). More than half of this soft money was transferred to state parties and used to pay for television advertisements. Overall, 77% of party-sponsored television commercials relating to federal elections in the 2000 election were paid for by state parties. The national party committees and federal congressional committees combined purchased about 23% of the party airwaves that addressed federal elections. Not surprisingly, most of this state party spending activity took place in the nation’s most competitive states in the presidential election: Florida, Pennsylvania, California, Michigan, Washington, and Ohio. [For further discussion of soft money, click here]

BCRA sharply curtailed the role of soft money in federal elections. Most of the provisions of the new campaign finance law went into effect on November 6, 2002. Federal officeholders and candidates and the national parties are now prohibited from raising or spending soft money in most instances. As part of a congressional compromise, however, entities may contribute up to $10,000 in soft money (known as Levin funds) to each state and local party organization, if permitted by state law, that may be spent for voter mobilization activity in federal elections. Additionally, the Federal Election Commission has promulgated a series of regulations to loosen the soft money ban somewhat, much to the consternation of the congressional sponsors who have filed a lawsuit in response (Shays v. FEC).

Electioneering Communications. Although the Federal Election Campaign Act regulates expenditures in connection with federal elections, subsequent court rulings have narrowly defined what constitutes a "campaign advertisement" subject to the regulations. In a footnote to the 1976 landmark decision, Buckley v. Valeo, the U.S. Supreme Court drew what is facetiously known as the "magic words" standard. According to this standard, a political communication is subject to regulation if it expressly advocates the election or defeat of a candidate by using such words as "vote for," "elect," or "vote against." If such words of express advocacy are not used in the political communication, it is then deemed an "issue ad" rather than a campaign ad, beyond the scope of federal campaign regulations. The court recognized that all candidate advertisements, whether or not they use the magic words, are defined as campaign ads.

A series of academic studies in the 1996, 1998 and 2000 elections documented that very few political advertisements, even those sponsored by candidates, employ any of the magic words of express advocacy. In the 2000 elections, for example, 2% of television ads sponsored by political parties and independent groups used the magic words; only 10% of candidate ads used the magic words. [For further discussion of "issue advocacy," click here]

Yet, the bulk of political "issue ads" are nevertheless seen as promoting the election or defeat of specific candidates. For example, the following television ad aired in key states during the hotly contested Republican presidential primary race between George W. Bush, then-Governor of Texas, and Senator John McCain:

"Last year, John McCain voted against solar and renewable energy. That means more use of coal-burning plants that pollute our air. Ohio Republicans care about clean air. So does Governor Bush. He led one of the first states in America to clamp down on old coal-burning electric power plants. Bush’s clean air laws will reduce air pollution more than a quarter million tons a year. That’s like taking 5 million cars off the road. Governor Bush, leading, for each day dawns brighter."

Since the advertisement did not expressly advocate the election of George Bush or the defeat of John McCain, it was classified as an issue ad not subject to the disclosure requirements or contribution and source limitations of federal campaign laws.

The Bipartisan Campaign Reform Act provides a new definition of campaign ad versus issue ad. The law retains the magic words standard as well as the concept that any advertisement sponsored by a candidate is a campaign ad. But it also imposes a "bright-line standard" in which any broadcast advertisement that depicts a candidate within 30 days of a primary election or 60 days of a general election, and is targeted to the voting constituency of that candidate, constitutes an electioneering communication, subject to federal campaign laws.

Legislative History

Passage of the Bipartisan Campaign Reform Act did not come easily or quickly. The original version of BCRA, more commonly known as the McCain-Feingold bill, was introduced as S. 1219 in the 104th Congress on September 7, 1995. The original bill provided more than restrictions on soft money. It also called for voluntary spending ceilings in congressional races, free broadcast time and reduced rate mailing privileges to candidates who abided by the spending ceilings, and limits on self-financing of candidate campaigns. Each session of Congress thereafter, Senators McCain and Feingold introduced a modified version of their bipartisan campaign reform legislation.

The McCain-Feingold bill died short of a cloture vote in the Senate of the 104th Congress. In the following session, the House succeeded in passing its companion bill, H.R. 2183, better known as the Shays-Meehan bill. Senate sponsors in the 105th Congress, however, failed three times to break a filibuster on the Senate version. In the 106th Congress, the House again passed the Shays-Meehan bill (H.R. 417), only to be thwarted by another filibuster in the Senate. Even a scaled down Senate bill (S. 1593) in that same session providing only a ban on soft money was stopped by a filibuster.

Finally, in the 107th Congress, the latest McCain-Feingold bill (S. 27) survived an onslaught of 38 potentially crippling amendments which were disposed of with 26 roll call votes. On April 2, 2001, the Senate approved the McCain-Feingold bill by a vote of 59-41. As passed, the bill contained 22 amendments offered on the floor; 16 additional amendments were rejected.

The momentum for campaign reform now moved into the House. The House Administration Committee initiated a series of hearings on campaign finance reform from march through May of 2002. The committee favorably reported to the House a substantially weaker version of the Senate bill, known as the Ney-Wynn bill (H.R. 2360), and unfavorably reported the companion bill, H.R. 2356, sponsored by Representatives Shays and Meehan. On July 12, the House rejected by 203-228 a proposed rule to consider the campaign finance issue, leaving both bills suspended.

Beginning on July 19, 2001, a group of Blue Dog Democrats began circulation of a discharge petition ordering the House leadership to resume debate on the campaign finance bills. The petition needed 218 signatures to force a floor vote. On January 24, 2002, campaign finance reform proponents secured the last four signatures needed on the discharge petition. The House approved H.R. 2356 on February 7, 2002, on a 240-189 vote. The Senate approved an identical bill on March 22 in order to avoid a conference committee, which was signed into law by the President on March 27.

Court Challenges

Within a month of passage of the new campaign finance law, more than 80 plaintiffs—ranging from Sen. Mitch McConnell (R-KY) to the AFL-CIO to the Republican party—filed 11 different lawsuits challenging every provision of the Act. The U.S. Department of Justice and the Federal Election Commission (FEC) were the lead defendants in the suits, supported in their defense of BCRA by the principal congressional sponsors of the law, who intervened in the case. All the lawsuits were consolidated into one case, McConnell v. FEC.

After a mixed ruling by a lower three-judge federal panel last May, which was suspended on appeal, the Supreme Court took the case on a fast-track review schedule. The court even cut short its summer vacation in order to hear oral arguments, which took an extraordinarily long four hours. But the court did not dawdle in issuing a timely ruling – and the court did not leave much ambiguity in its thinking. In a 5-to-4 decision, the majority of the court ruled:

“[T]he statute’s two principal, complementary features – Congress’ effort to plug the soft money loophole and its regulation of electioneering communications – must be upheld in the main.”

The majority opinion, written by Justices Stevens and O’Connor, upheld the two key provisions of the campaign finance law: the ban on soft money in federal elections, and the regulation of campaign advertisements disguised as “issue ads.” The court did not stop there – nearly every element of BCRA in particular, and campaign finance regulation in general, was supported in the ruling.

Specifically, the court upheld:

  • The ban on national parties and officeholders raising and spending “soft money” – the unlimited contributions to parties from corporations, unions and wealthy individuals.
  • The limit on state parties spending soft money that affects federal elections.
  • The new definition of campaign advertisements subject to campaign finance regulation and disclosure, as any broadcast ad aired immediately before an election that depicts a federal candidate and targets that candidate’s constituency (known as “electioneering communications”). Such ads are now covered under campaign finance limits and disclosure requirements if they are aired 60 days before a general election or 30 days before a primary election.
  • The requirement that special interest groups use only regulated “hard money” to pay for electioneering communications and disclose where that money came from. Hard money consists of contributions from individuals or political action committees (PACs), subject to contribution limits and disclosure requirements.
  • The mandate that broadcast stations compile a public record of political ads and who paid for them.

The court invalidated only two provisions of the law: the ban on campaign contributions from minors, and the requirement that parties choose between making either independent expenditures or coordinated expenditures on behalf of candidates. The court affirmed most other aspects of campaign finance regulation and disclosure, and even admonished the Federal Election Commission for letting money in politics get so out of hand. FEC regulations, noted the court, created the problem of soft money. In the words of the Justices, “the FEC regulations permitted more than Congress, in enacting FECA (the original campaign finance law), had ever intended.”

Just as important, the court rejected out-of-hand the very narrow justification for campaign finance laws used by opponents of regulating money in politics – that campaign finance regulations are only justifiable to curtail the type of corruption that causes a change in legislative votes. The court expounded upon the fact that soft money leads not only to a possible change in legislative votes, but also to “manipulations of the legislative calendar, leading to Congress' failure to enact, among other things generic drug legislation, tort reform, and tobacco legislation.” To claim that such legislative scheduling actions do not change legislative outcomes, says the court, “surely misunderstands the legislative process.” As such, campaign finance regulation need not be based on such a narrow interpretation of corruption.

The court strongly affirmed the right of the public to know who is paying for campaign advertisements and with how much money. There were eight votes – all except Justice Thomas – for applying the basic disclosure requirements even as to the broader definition of “electioneering communications.”

While this ruling affects all federal elections, it will have a tremendous impact on next year’s presidential contest. The parties will no longer have access to hundreds of millions of dollars of corporate and union money that they have used in prior presidential elections to saturate the airwaves with largely negative campaign commercials. Similarly, there will be no more six-figure contributions from wealthy special interests to buy favors from the White House – not even a Lincoln bedroom sleepover.

Make no mistake about it: we have entered a new era of campaign finance reform. After years of retreating under increasingly lax rules of campaign finance regulations, the U.S. Supreme Court has handed the reform community the means to make sure that some campaign finance laws no longer are just loopholes.

Candidates and officeholders, parties and special interest groups, and even the FEC, must now recognize that the Bipartisan Campaign Reform Act, which effectively closes many of those loopholes, is the law of the land.

Read a detailed history of the litigation of BCRA

Read the Statement of Public Citizen President Joan Claybrook and Alan B. Morrison,* Founder of the Public Citizen Litigation Group

 Review the Ruling: McConnell v. FEC, No. 02-1674  (Dec. 10, 2003)