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CAMPAIGN 2000: A Users Guide

Campaign Financing Regulated by Tortuous Tangle of Rules

Spending: Behind calls for reform are complex laws with many loopholes. This year, Republican and Democratic candidates will each receive about $67 million in public funds for November election.


WASHINGTON — Although John McCain and Bill Bradley ended their presidential campaigns last week, their vigorous calls for campaign finance reform have given the perennial issue new prominence. But the federal election system behind the sound bites and posturing is complex and riddled with loopholes.

Here's a look at the key laws, how campaigns bend them, and some proposed reforms:


Candidates vying for the Democratic and Republican presidential nominations fund their campaigns with a combination of donations from individuals, political action committees and public funds. To qualify for public money, candidates must raise at least $5,000, in contributions of $250 or less, in at least 20 states. The federal government gives candidates up to $250 in matching funds for each individual donation they receive during the primary season, up to $16.9 million.

Individuals may donate up to $1,000 per candidate. Individual donations of $200 or more must be reported to the Federal Election Commission, which enforces campaign finance laws. Corporations and unions are barred from giving directly to candidates for federal office, but they may create political action committees, which receive contributions of up to $1,000 each from their members and can donate up to $5,000 per candidate. Foreign corporations (except their U.S. subsidiaries) and foreign citizens (except immigrants with green cards) are not permitted to contribute.

All candidates must agree to abide by federal election laws and file regular reports to the FEC detailing their donations and spending. But only those candidates who choose to accept public matching funds must adhere to state-by-state and total spending limits. This primary season, GOP candidates Texas Gov. George W. Bush and multimillionaire Steve Forbes chose not to accept public money, so they were able to spend freely.

This year's spending limit for candidates who accepted matching funds is, technically, about $33.8 million. But because the rules allow candidates to exempt 20% of their spending, plus legal and accounting services, the actual amount a candidate is limited to spending from the beginning of the primary season until his party's national convention is closer to $40 million.

Campaigns that violate state spending limits are subject to federal penalties, but the FEC normally does not impose the fine until long after the campaign is over--if at all. Candidates who accept matching funds must limit their use of personal funds: They cannot use more than $50,000 of their own money.

General Elections

After the party conventions, nominees receive federal funding to run their campaigns. The amount is adjusted for inflation; this year it will be about $67 million each for the Republican and Democratic candidates. Candidates from minor parties that received at least 5% but less than 25% of the popular vote in the previous election are eligible for a percentage of the full grant; this year's Reform Party nominee will get $12.6 million. Candidates for new parties may be also receive public funding if they receive more than 5% of the vote, but not until after the election. Candidates of minor parties are not subject to the same restrictions on raising money.

To receive such funds, candidates must pledge not to raise money from individuals, PACs or party committees, except to cover legal and accounting expenses. (Individuals and PACs can double the maximum allowed contribution to a candidate by giving to his campaign's so-called "compliance fund.") Candidates also are restricted in this phase of the campaign to using no more than $50,000 of their own money.

The public funding is provided by federal taxpayers who check off the box on their returns indicating that $3 ($6 for joint filers) will go to the Presidential Election Campaign Fund. This designation does not increase filers' tax liabilities.


The public also funds the national party conventions. This year both of the major parties received $13.2 million from the government for their conventions in August. Because the Reform Party candidate received more than 5% of the vote in the last presidential election--the federal standard--that party also is eligible for federal funds; it received $2.5 million for its convention.

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