Money: Who Gives It, Who Gets It

Presidential candidates spent $2.34 billion in the 2012 U.S. election campaign, more than four times the 2004 amount, based on Federal Election Commission filings.

President Barack Obama, the first major-party nominee to reject federal funding for the general election in 2008, spent $1.107 billion in 2012. His Republican challenger Mitt Romney spent $1.24 billion. Each amount was double the combined $646.7 million that Republican President George W. Bush and Democratic nominee John Kerry spent in 2004 and in total was about double the $1.2 billion that Barack Obama and Republican John McCain spent in 2008.

These are huge increases compared with historic spending on Presidential elections.

The Cost of Running for President

These are the total amounts of money spent by presidential candidates Barack Obama and Mitt Romney in the 20012 elections, according to the FEC and the Center for Responsive Politics. (Note: Both Barack Obama and Mitt Romney declined to accept federal funds in the primary and general elections.)

Candidate Total Funds Raised
(in millions $)
Federal Funds
(in millions $)
Barak Obama $1,107 $0.00
Mitt Romney/td> $1,238$0.00

Attacks of the PACs

Groups that want to have influence in U.S. politics often form political action committees. PACs, Political Action Committees, can contribute to candidates and parties and can spend money independently, such as by running their own ads. Business corporations and labor unions are prohibited from donating to candidates or spending their own money on campaigns, but they can legally form PACs funded by donations from their individual members.

A new element in the 2012 presidential race was the candidate Super PAC. Because of the U.S. Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission (see “The Court Weighs In” below), these Super PACs can raise unlimited funds from individuals, corporations and unions to support or oppose federal candidates. Donors are contributing lots more money to directly support their candidates by using Super PACs to avoid the normal candidate contribution limits. In 2012 there were 1,310 super PAC’s that raised $828,224,700 and spent $609,417,654 supporting candidate campaigns. These huge “independent” expenditure campaigns may exceed $1 billion in 2016.

How Did We Get Here?
A Short History of Campaign Finance

The effect of campaign contributions on politics has been a concern throughout America’s history. Congress passed a law making corporate contributions to federal campaigns illegal in 1907. President Richard Nixon signed into law the Federal Election Campaign Act (FECA) of 1971. Among other things, the law required candidates and donors to report their political contributions and spending.

After the Watergate scandal of 1972–1974, which involved big donors to President Nixon’s campaign, legislators revisited the campaign finance issue. The FECA amendments signed into law in 1974 represented the most comprehensive campaign finance legislation ever adopted at the federal level.

Among other things, the law:

  • Strengthened requirements for reporting of campaign contributions and spending.
  • Set new limits on spending in congressional elections.
  • Limited the size of contributions to candidates and parties and put a cap on an individual’s total contributions per campaign cycle.
  • Created a system of public financing to support the campaigns of presidential candidates who agree to specific contribution and spending limits.
  • Created an independent agency, the Federal Election Commission, to enforce the new rules.

The Court Weighs In

In 1976, the Supreme Court held parts of the FECA unconstitutional with its decision in Buckley v. Valeo. The Court declared that mandatory spending limits on congressional campaigns violated the Constitution’s free-speech protections. However, the justices let stand the spending limits for presidential candidates who accepted public funds, asserting that these were voluntary limits and thus could pass constitutional muster.

The Court also ruled in Buckley that independent groups and individuals could spend unlimited amounts of money—a decision that has had an enormous and lasting impact. Though the Court may have been thinking of small, local groups, this decision gave rise to large amounts of money being spent by national interest groups.

The 2010 Citizens United v. Federal Election Commission ruling by the U.S. Supreme Court that the First Amendment protects corporate and union political funding and that the government may not ban political spending by them in candidate elections. It struck down previous campaign finance reform provisions that prohibited such groups from “electioneering communications,” such as broadcast, cable or satellite communications that mention a candidate within 60 days of a general election or 30 days of a primary. The case did not involve the federal ban on direct contributions from corporations or unions to candidates or political parties, which are still illegal in federal races. But, the introduction of candidate Super PACs (see “Attack of the PACS”) into the 2012 presidential race with their “big money” influence is an unfortunate result.

Public Funding of Presidential Elections

Candidates in every presidential election since 1976 have been eligible to receive public funds to cover some of the costs of their campaigns. The idea behind public funding of presidential elections is to make candidates less dependent on contributions from special interests and wealthy donors. Public money for presidential elections comes from a fund supported by the “taxpayer check-off” on individual tax returns.

The public financing system is voluntary for candidates—it offers them a deal, which must be made attractive for them to agree to it. The deal is: If you agree to limit the amount of money you raise and spend and play by our rules, we will give you lots of money for your campaign—partial funding in the primaries and full funding in the general election. Up until 2000, almost all candidates found this set of trade-offs agreeable and participated.

In 2000, the system began to show weakness, when George W. Bush declined to accept public financing for the primaries and instead raised more money from private sources. Both he and his Democratic opponent Al Gore accepted public financing in the general election, though. Neither Obama nor Romney accepted public funding in 2012.

It seems very likely that the best financed candidates will forgo public financing in both the primary and general elections in 2016.

How Much Can You Give a Candidate?

Want to support a candidate yourself? Individuals may contribute up to $2,700 to a presidential candidate during the primary election campaign, whether or not the candidate accepts public matching funds.

During the general election, major-party candidates who have accepted public funding may not accept individual campaign contributions, with minor exceptions. However, if a candidate does not accept public financing for the general election (this happened for the first time in 2008), then individuals can contribute another $2,700 to a presidential candidate for the general election.

The sky’s the limit when a presidential candidate refuses to accept public funds and the accompanying restrictions on campaign contributions and spending.

Independent Advocacy: Really Independent?

For interest groups that want to influence elections, help favored candidates, and damage candidates they don’t like, there are ways to do so independently of the official campaigns and political parties.

Independent Expenditures

Individuals, corporations, unions, and political action committees can spend unlimited amounts of money on advertising and other activities endorsing individual candidates. This is perfectly legal as long as the spending is disclosed to the FEC and is not coordinated with a candidate’s campaign. (The reason for this rule is that “independent” activities that are coordinated with the campaign are not truly independent.)

Issue Advocacy

Issue ads just before an election or issue ads run by electoral organizations are often designed to build support for a candidate without explicitly telling the audience to vote for the candidate. This has made issue advocacy an increasingly popular way for corporations, labor unions and others to try to influence the outcome of federal elections. However, all issue ads are not candidate ads in disguise. Our constitutional right to speak in the media to elected officials about issues that are important to us can be expressed through issue ads.