Eight years ago, the Supreme Court decision in Citizens United v. FEC defined the modern federal campaign finance system. How did we get there, and how has the system continued to evolve?

Since the passage of the Federal Election Campaign Act (FECA) of 1971, congressional action and court rulings have interacted to shape the rules of the road. Early legislative efforts in 1971 and 1974 were tempered by the Supreme Court in its 1976 decision in Buckley v. Valeo. The soft money era that grew partially from 1979 amendments to FECA was structured by federal court rulings requiring disclosure and consistent definitions for “nonfederal” and “joint” activities by parties.

When Congress further regulated party fundraising and spending with the Bipartisan Campaign Reform Act (BCRA) of 2002, the Supreme Court weighed in again, first allowing many of the new rules with its McConnell v. FEC decision. In a series of subsequent decisions, however, most prominently Citizens United, courts have eased those restrictions and opened the process to many more potential spenders and donors acting with few, if any, limits.

So what has been the effect of these changes on fundraising and spending in federal campaigns?

At the highest levels, the changes appear quite modest. Following a surge in spending in congressional elections in 2010 (perhaps reflecting the Republican “wave” in that cycle), there has been no growth at all in the overall amount spent in congressional races when adjusted for inflation. Presidential campaigns are inherently idiosyncratic, but real spending in those also has declined since reaching its peak in 2008.

Senate

Direct spending by Senate candidates has declined each cycle since 2012, from $748 million in 2012 to $625 million in 2016. (There are, of course, only 33 or 34 Senate races each cycle, and the distribution of states by size and cost also vary from one cycle to another, so comparisons can be misleading).

House

Spending by House candidates also has declined from a peak of $1.1 billion in 2012 to $970 million in 2016. While these races also are subject to changes based on competitiveness — wave elections in 2006 and 2010 and challenges to new party majorities in 2008 and 2012, for instance — there is no denying the flattening of the growth curve after Citizens United.

Party spending

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Parties are more complicated because of the impact of presidential campaigns on fundraising, but overall a similar pattern appears. Spending by Republican Party organizations has been little changed since 2004. And while there was an increase for Democrats in 2016, growth in spending has been modest for them as well, with no obvious acceleration after 2010.

The other traditional participants in financing federal campaigns are political action committees (PACs). These voluntary organizations have been a significant source of direct contributions, especially to congressional campaigns, for nearly 40 years.

But court decisions, most famously Citizens United, created new types of PACs that are allowed to spend unlimited amounts from unrestricted sources so long as the spending is independent of candidates or parties. That doesn’t tell the full story of the increased importance of “outside spending” since the courts opened the system in 2010, however.

There are other groups now free to spend unrestricted funds advocating the election or defeat of candidates. These groups contend that they are not required to register with the FEC as any sort of PAC because their primary purpose is something other than electoral politics. This spending itself isn’t new. But the use of funds from a virtually unrestricted range of sources, including corporations, began with the most recent court rulings.

In 2016, more than one out of every five dollars spent in connection with presidential and congressional campaigns was spent by committees and groups with access to unlimited and unrestricted sources of funds.

The following chart shows the growing influence of outside spending relative to overall federal campaign spending (outlined in the first chart).

This shift in spending has been fostered by an equally important shift in sources for all of this money. A system founded on the principle of individuals giving limited, disclosed contributions directly to candidates, parties and PACs has morphed into a system that allows individuals and organizations to give hundreds of thousands, or even millions of dollars, to groups to spend in elections, some of whom are closely aligned with candidates and parties, without disclosure.

During the 2016 election cycle, the top 20 individual donors (whose contributions were disclosed) gave more than $500 million combined to political organizations. The 20 largest organizational donors also gave a total of more than $500 million, and more than $1 billion came from the top 40 donors.

At a time when Donald Trump and Bernie Sanders were confirming that large numbers of people donating small amounts could fund successful campaigns, the extraordinary role being played by the very few donors who give the most may be the most important element in this new era.



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