U.S. Senate Republican Policy Committee - Larry E. Craig, Chairman - Jade West, Staff Director

No. 41 October 1, 1997

S. 25 - McCain-Feingold Campaign Finance Bill

Calendar No. 183

S. 25 was introduced on January 21, 1997, and referred to the Committee on Rules and Administration. The Committee did not hold hearings on the bill, and no committee report was issued. The bill was discharged from the Committee on September 25.
NOTEWORTHY

Under a unanimous consent agreement, Senator McCain on September 29 modified S. 25 as introduced. Immediately thereafter, the Majority Leader offered the Paycheck Protection Act (similar to S. 9) as an amendment, filled the amendment tree, and made the Lott Amendment No. 1265 the pending business. The U.C. does not preclude the offering of additional amendments, but none would be in order prior to disposition of the pending Lott amendment. Votes are likely to begin October 7.

On September 24, Senator Daschle released a letter affirming the intent of all 45 Senate Democrats to support the yet-to-be-drafted "new substitute" bill. However, only three of these Democrats (and two Republicans, Senators Thompson and Collins) signed on to the substitute. S. 25 as introduced had 31 cosponsors, one a Republican.

S. 25, as introduced, would have banned PAC contributions to House and Senate candidates, and would have provided free and discounted television advertising rates to candidates who complied with spending limits, but the modified version contains neither of these provisions; however, they may be offered as an amendment.

S. 25 retains the ban on "soft money" contributions to political parties and provides for the regulation of issue advocacy communication.

Further, the bill, as modified, places a number of restrictions on state and local political parties as many of their activities would come under federal regulation.

PARLIAMENTARY NOTE

Under the unanimous consent agreement, Senator Lott was recognized immediately after Senator McCain offered his modification to S. 25. Once recognized, the Majority Leader filled both sides of the amendment tree, moved to recommit the bill, and filled the amendment tree to the motion to recommit. For more information, see chart 3 (page 84) and chart 1 (page 74) of Riddick's Senate Procedure (1992). This means that the Lott amendment, the Paycheck Protection Act (S. 9), must be disposed of before any other amendment can be offered.

BILL PROVISIONS

Note: This section describes many of the provisions contained in the modification to S. 25, as offered by Senator McCain on September 29. Technically, the bill is not a substitute, but in essence, it is a complete substitute for S. 25 as introduced.
Title I of the modified bill bans "soft money" (money raised and spent outside of the limits of Federal election law) for national political parties. Under the bill, no national committee of a political party (including congressional campaign committees) may receive or spend any funds that are not subject to the "limitations, prohibitions, and reporting requirements" of the Federal Election Campaign Act (FECA). The same rule applies to state and local committees, that is they are prohibited from spending soft money for any "Federal election activity." That term is defined in the bill as:

voter registration activity within 120 days before a federal election;

voter identification, get-out-the-vote activity, or general campaign activity conducted in connection with any election that includes a candidate for federal offices [generally referred to as "party-building activity"]; and

a communication that refers to a clearly identified candidate for federal office and that is made for the purpose of influencing a federal election, regardless of whether the communication contains express advocacy [this would appear to include multi-candidate brochures which include local and federal candidates and/or local party sample ballots].

State and local parties would be able to use soft money for state electioneering, as allowed by state law, including contributions to and/or campaign activities conducted solely on behalf of candidates for state or local office; and costs of state, district and local party conventions and the nonfederal share of party administrative and overhead expenses.
Also, the bill raises the aggregate hard money contribution limit for individuals from $25,000 to $30,000.
The bill further expands FECA by: providing that fundraising costs of state and local parties for "federal election activity" are subject to federal campaign law; prohibiting state and national parties from making solicitations for, or donations to, tax-exempt organizations; and prohibiting candidates for federal office from soliciting, receiving or spending soft money (these provisions are all in section 101).
Title II of the substitute broadens the definition of "express advocacy" in order to regulate expenditures for political communications which currently do not fall under federal election law authority -- that is, if they do not, in express terms ("vote for," "vote against," etc.) advocate the election or defeat of a candidate. The McCain-Feingold bill purports to draw a new "bright line" between issue ads and independent expenditures (which are paid for with hard money out of federally regulated PACs). Under McCain-Feingold, communications that: (1) "in context can have no reasonable meaning other than to advocate the election or defeat of one or more clearly identified candidates" or, (2) refer to a candidate in a paid broadcast advertisement within 60 days of the election, or (3) express "unmistakable and unambiguous support for or opposition to one or more clearly identified candidates when taken as a whole and with limited reference to external events, such as proximity to an election," would be subject to FECA. The bill provides an exemption for voting records and voting guides from its definition of express advocacy, but with strict provisos on allowable content.
Section 204 places an additional prohibition on national and state committees, in that once the party nominates a candidate, the committee shall not make both coordinated and independent expenditures with respect to the candidate during the election cycle. Section 205 defines what constitutes "coordination" with a candidate.
Title III addresses disclosure by providing for regulations to require greater use of electronic filing of FEC forms using computers and facsimile machines. It also requires the FEC to make electronic reports available on the Internet within 24 hours of their receipt. The bill also provides for random post-campaign audits and investigations (if a majority of the FEC agrees) in order to ensure compliance with campaign laws, and extends the period during which the FEC may begin an audit. Also, the bill amends FECA with respect to identifying the source of advertisements, and mandates that the campaign provide the name, address and occupation of all donors of contributions above $200 (under current law, they must make a best effort to obtain the complete information). Further, it provides additional reporting requirements for independent expenditures for amounts aggregating $10,000 or more (section 203), and soft money disbursements of persons other than political parties (section 307).
Title IV bars political parties from making "coordinated expenditures"on behalf of a Senate candidate who does not agree to limit his or her personal spending (including funds of the candidate's immediate family) to $50,000 per election.
Title V makes it an "unfair labor practice" for a labor organization not to provide an "objection procedure" for non-union employees so that they may request a refund of the portion of their agency fees used for political activities. [Unlike the amendment language added by Senator Lott (S. 9, the Paycheck Protection Act) to S. 25 as modified, the McCain-Feingold provision does not apply to labor union members, does not apply paycheck protection requirements to corporations, and does not make failure to do so a violation of federal campaign law.]
Also, the bill codifies recent FEC regulations that prohibit the use of campaign funds for purposes that are inherently personal, and prohibits a Senator or Representative from using the frank for mass mailings during an election year unless the member is not running for re-election.
Title V also addresses fundraising on federal property by amending title 18 of the U.S.C. to say, "It shall be unlawful for any person to solicit or receive a donation of money or other thing of value for a political committee or a candidate for Federal, state or local office from a person who is located in a room or building occupied in the discharge of official duties by an officer or employee of the United States." Section 506 addresses contributions and donations by foreign nationals and Section 507 provides for a prohibition of contributions by minors.
Title VI provides for expedited review of constitutional issues and sets the effective date for 60 days after the date of enactment or January 1, 1998, whichever occurs first.

ADMINISTRATION POSITION

On September 30, the Administration issued its Statement of Administration Policy on S. 25 as modified, saying it "strongly supports Senate passage," but "strongly opposes any amendments which would undermine campaign finance reform," specifically referencing the Paycheck Protection Act. The statement also makes reference to letters from the President to Senators dated September 23, 1997. Thirty-two Republican Senators replied to that letter on September 25, saying in part: "We appreciate your suggestion that passing this bill is the 'responsible' thing to do in order to restore the public trust. Our view differs from yours, however, in that we believe it's not more laws, but more people obeying the laws, that will restore the public trust."

BACKGROUND

Campaign finance reform is one of the more contentious and difficult issues that Congress faces. The difficulties are caused in part by partisanship, in part by the competition between incumbents and challengers, in part -- mostly, some would say -- by the tension between freedom (represented here by the First Amendment) and order (represented by the FECA, which the First Amendment trumps), and in part by the connection between money and communicating which is especially important for a vast republic in an electronic age.
On January 21, Senators McCain and Feingold introduced S. 25. In order to attract additional votes, the Senators continued to modify the bill, and on September 19 they announced a pared-down version of the bill, but no bill language was provided. That same day, Senator Lott attempted to reach unanimous consent for the bill's consideration, but Senator Daschle objected. Then at the behest of the Minority Leader, President Clinton on September 23 pledged to use his constitutional authority to keep the Senate in session "if any attempt is made to bring this bill up in a manner that would preclude sufficient time for debate." [See Administration Position, above, for an excerpt from the response to the President of 32 Senators.] That day, the same u.c. language which had earlier been rejected by the Minority Leader was accepted. The next day, Senator Daschle announced all 45 Senate Democrats would support the substitute bill, which finally was offered on September 29.
Recent Votes

In recent years, the Senate and the House of Representatives have had dozens of votes on campaign finance reform bills:
S. 25 (as introduced) contained many of the provisions that were in Senator McCain's
S. 1219 of the 104th Congress. That bill underwent a cloture vote June 25, 1996, and by a vote of 54-46, cloture was not invoked (Record Vote No. 168). Eight Republicans (five of whom serve in the 105th: Jeffords, McCain, Snowe, Specter and Thompson) joined 46 Democrats supporting cloture.

In the 103d Congress, both the Senate and the House passed campaign finance bills (S. 3 / H.R. 3), but no bill was ever presented to the President. In the Senate, final passage came after some 35 roll call votes on amendments. Seven Republicans joined 53 Democrats in passing the bill on June 17, 1993. However, more than a year later the majority twice was unable to obtain cloture on a motion to request a conference. (On those two votes, about 90 percent of Republicans voted against cloture.) At the end of the Congress, the bills died, to the relief of most Republicans who believed that the proposals were a partisan power grab.
In the 102d Congress, after another partisan struggle, a bill (S. 3) was presented to President Bush. He vetoed it. The veto message repeated several Republican themes on campaign finance reform. President Bush said, the bill "perpetuat[ed] the corrupting influence of special interests and the imbalance between challengers and incumbents." It also "limit[ed] political speech protected by the First Amendment and [would] inevitably lead to a raid on the Treasury to pay for the act's elaborate scheme of public subsidies." It is widely believed that no bill would have made its way to the President's desk if the 102d Congress had believed for a moment that he would sign it.

Views of Senator McCain

The following are excerpts from Senator McCain's statement in the Congressional Record on September 26, 1997:

"The Senate now begins a debate that will determine whether or not we will take an action that most Americans are convinced we are utterly incapable of doing -- reforming the way we are elected to office. Most Americans believe that Members of Congress have no greater priority than our own reelection. Most Americans believe that every
one of us -- whether we publicly advocate or publicly oppose campaign finance reform -- is working either openly or deceitfully to prevent even the slightest repair to a campaign finance system that they firmly believe is corrupt. Most Americans believe we will let this Nation pay any price, bear any burden to ensure the success of our personal ambitions -- no matter how dear the cost might be to the national interest.
"Now is the moment when we can begin to persuade the people that they are wrong. Now is the moment when we can show the American people that we take courage from our convictions and not our campaign treasuries.
"I am a conservative, and I believe it is a very healthy thing for Americans to be skeptical about the purposes and practices of public officials and refrain from expecting too much from their Government. Self-reliance is the ethic that made America great, not consigning personal responsibilities to the State.
"I would like to think that we conservatives could practice the self-reliance which we so devoutly believe to be a noble public virtue, and rely on our ideals and our integrity to enlist a majority of Americans to our cause, rather than subordinate those ideals to the imperatives of fundraising. I would like to think the justice of our cause, the good sense of our ideas will appeal to a majority of Americans without the need to fund that appeal with obscene amounts of money.
"I am a conservative, and I believe that a conservative's primary purpose in public life is to give Americans a Government that is less removed in style and substance from the people, and to help restore the public's faith in an America that is greater than the sum of its special interests. That, I contend, is also the purpose of meaningful campaign finance reform.
"Opponents of campaign finance reform will argue that there is no public hue and cry for reform. But that is because the people don't believe that either the incumbent opposing reform, or the challenger advocating it, will honestly work to repair this system once he or she has been elected under the rules that govern it. They distrust both of us. They believe that this system is so thoroughly riddled with financial temptations that it corrupts us all.
"The opponents of reform will tell you there isn't too much money in politics. They will argue there's not enough. They will observe that more money is spent to advertise toothpaste and yogurt than is spent on our elections.
"I don't care, Mr. President. We should not concern ourselves with the costs of toothpaste and yogurt marketing. We aren't selling those commodities to the people. We are offering our integrity and our principles, and the means we use to market them should not cause the consumer to doubt the value of the product.
"I want to stress the purposes upon which this legislation is premised: First, for reform to become law, it must be bipartisan. Second, genuine reform must lessen the amount of money in politics: as the need for money escalates, the influence of those who give it rises exponentially. Third, reform must level the playing field between challengers and incumbents."

Views of Senator McConnell

Senator McConnell is known to be a leading opponent of S. 25. The following is excerpted from an article by Sen. McConnell, as published in the National Review, June 30, 1997. edition:

"Reading the Clinton-endorsed McCain-Feingold bill, one can only conclude that the era of big government is just beginning. The Courts have repeatedly ruled that communications which do not 'expressly advocate' the election or defeat of a candidate cannot be regulated by the government, yet McCain-Feingold would have the Federal Election Commission policing such ads if 'a reasonable person' would 'understand' them to advocate election or defeat. Out of 260 million Americans, just which one is to be this 'reasonable person?'
"The McCain-Feingold bill seeks to quiet the voices of candidates, private citizens, groups and parties. Why? Because, it is said, 'too much' is spent on American elections. The so-called reformers chafe when I pose the obvious question: 'compared to what?'
"In 1996 -- an extraordinarily high-stakes, competitive election in which there was a fierce ideological battle over the future of the world's only superpower -- $3.89 per eligible voter was spent on congressional elections. May I be so bold as to suggest that spending on congressional elections the equivalent of a McDonald's 'extra value' meal and a small milkshake, per eligible voter, is not 'too much?'
"The reformers are not dissuaded by facts. Their agenda is not advanced by reason. It is propelled by the media, some politicians, and the recent infusion of millions of dollars in foundation grants to 'reform' groups. Fortunately, the majority of this Congress is not ideologically predisposed toward the undemocratic, unconstitutional, bureaucratic finance scheme embodied in McCain-Feingold.
"Where do we go from here? After ten years of fighting and filibustering assaults on the First Amendment advanced under the guise of campaign finance 'reform,' I am heartened by the honest debate in this Congress. In the House of Representatives, John T. Doolittle's bold proposal to repeal government-proscribed contribution limits and the taxpayer-financed presidential system of (illusory) spending limits has more cosponsors than McCain-Feingold's companion bill, the Shays-Meehan speech rationing scheme. In the Senate, McCain-Feingold's fortunes cling pathetically to the specter that the Government Affairs investigation into the Clinton campaign finance scandal will fuel public pressure for reform, any 'reform.'
"My goal is to redefine 'reform,' to move the debate away from arbitrary limits and toward expanded citizen participation, electoral competition and political discourse. McCain-Feingold is a failed approach to campaign finance that has proven a disaster in the presidential system. McCain-Feingold would paper over the presidential spending limit system's fatal flaws and extend the disaster to Congressional elections. Experience argues for scuttling it entirely.
"The best way to diminish the influence of any particular 'special interest' is to dilute their impact through the infusion of new donors contributing more money to campaigns and political parties. Those who get off the sidelines and contribute their own money to the candidates and parties of their choice should be lauded, not demonized. The increased campaign spending of the past few elections -- a cause and effect of increased competition -- should be hailed as evidence of a vibrant democracy, not reviled as a 'problem' needing to be cured.
"My prescription for reform includes contribution limits adjusted, at the least, for inflation. The $1,000 individual limit was set in 1974 when a new Ford Mustang cost just $2,700. The political parties should be strengthened, the present constraints on what they can do for their nominees, repealed. These would be steps in the right direction."

OTHER VIEWS

Recent Policy Committee Papers

The following papers recently issued by the RPC provide some background on the issues related to this legislation (all are available on the RPC's homepage, on the Trunk Line, and from SR-347):

1-27-97 -- Paying for Football, Paying for Politics: Packers and Patriots Versus Politicos

3-13-97 -- Buckley in a Nutshell: Notes on the Constitutional Law Regulating Political Contributions and Political Expenditures

3-24-97 -- Campaign Reform and the Dispersion of Power: The Parable of the Wise and Foolish Rulers
4-10-97 -- Putting Campaign Spending into Context: Are We Spending Too Much To Elect a President?
5-1-97 -- Democrats May Offer FEC Funding Amendment to Supplemental: Appeals Court Orders FEC To Pay Attorney's Fees In Free Speech Case
5-13-97 -- Are We Spending Too Much to Elect Congress? Advertising Costs and Congressional Campaigns
7-31-97 -- $135 of TRIM Brochures Brings FEC Lawsuit: Should Pamphleteers Be Licensed?
9-02-97 -- What is at Stake for the Left and the Right (and the Middle): Does "Campaign Reform" Mean "Control"?
9-03-97 -- Congress Most Vulnerable Constitutionally When Regulating Speech: How Much Campaign "Reform" Will the Constitution Tolerate?
9-05-97 -- How Campaign "Reform" Might Have Turned Out: Thankfully, the Constitution Stands in the Way
10-01-97 -- McCain-Feingold's Beck Provision versus Paycheck Protection -- S. 25 Provides Neither Paycheck Protection Nor Beck Codification

POSSIBLE AMENDMENTS

Lott -- [Pending amendment.] The Paycheck Protection Act, which forbids corporations and unions from taking money from stockholders or employees for political activities -- unless the stockholder or employee first gives express, written consent for such political uses.
Unknown sponsor -- To limit, rather than to ban, soft-money contributions.
Ashcroft -- Term limits.
Lieberman -- Revise the Pendleton Act.
Dorgan -- Unknown.
Feingold -- Spending limits: the following description is from a Legislative Notice from 1996 detailing the spending-limits provisions that were contained in S. 1219, Senator McCain's bill from the 104th Congress. It is anticipated an amendment with similar language will be offered by a Democrat Senator.

S. 1219's Spending-Limits Provisions

S. 1219 [104th Congress] encourages Senate candidates to agree to campaign spending limits (for both the primary and general elections) that are based on their State's voting-age population. Under the formula in the bill, the limits range from over $8 million in California to about $1.5 million in numerous smaller-population states. Candidates who comply with the spending limits are entitled to receive three key benefits: 30 minutes of free broadcast time; a broadcast discount (equal to 50 percent of the lowest advertising rate); and reduced postage rates.
To qualify for the three benefits, a candidate must, among other things, raise 10 percent of the general election spending limit (or $250,000, whichever is less) from individuals, 60 percent of whom reside in the candidate's own state. Section 241 of the bill extends this same 60/40 rule to the total dollar amount of all contributions received by the campaign, not just the threshold amount. Also, before candidates can qualify for the benefits, they must agree to spend no more than $250,000 of their own money on their campaigns (in most States the limit is lower).
Contribution limits are raised if a qualifying candidate faces an opponent who is not submitting to the limits: When a nonparticipating candidate exceeds the spending limits, the qualifying candidate's contribution limit is raised from $1,000 to $2,000, and if a nonparticipating candidate exceeds the limits on use of personal funds, that also triggers a rise in the contribution limit from $1,000 to $2,000.