The Campaign Finance Institute has just released an analysis of national political party fundraising so far this election cycle.  The report concludes that the national parties are “holding their own” and refers to “the parties’ hard money success since 2002.”  This appears to be a revisionist attempt to demonstrate that the McCain-Feingold law (formally the Bipartisan Campaign Reform Act of 2002) did not harm the national political parties when it banned “soft money” donations by corporations and individuals to the party committees.  CFI’s director, Michael Malbin, made the same point today at a Bipartisan Policy Center panel discussion in which he and I both participated.  CFI’s conclusion is refuted by its own chart, which appears on the first page of the report, as well as by the prior year data that CFI did not include in that chart.

CFI’s chart shows that national party fundraising during the first 18 months of the current Presidential election cycle slightly exceeds what the national parties raised in 2002, an off-year Congressional election cycle, and the last cycle that preceded the effective date of the McCain-Feingold law.  In other words, it has taken the national parties ten years to claw their way back — in absolute terms — to where they were before McCain-Feingold.  In the meantime, there has been an explosion of funds flowing to outside groups such as 501(c)(4) social welfare organizations, which, unlike the fully transparent national political parties, generally are not required to disclose their donors.  The key point is that the relative position of the national political parties vis-a-vis the outside groups has shifted dramatically in favor of the outside groups.  Those outside groups are free to raise soft money — large corporate and individual donations — while the national party organizations remain uniquely subject to McCain-Feingold’s ban on soft money fundraising.  The end result is less disclosure and less of a voice for the political parties, which generally serve as moderating influences on the political system.

Another aspect of the story is that state and local party committees remain seriously impaired by McCain-Feingold and have had an even harder time recovering from it than the national parties.  Neil Reiff has an excellent article about the lingering effects on state parties here.

UPDATE:  I was pleased to see that the Campaign Finance Institute responded to my blog posting above by revising its online report so that their chart now includes the party spending data starting with 1992, rather than starting with 2000 as had been the case in the original version of their report.  But I was perplexed by Michael Malbin’s statement on Twitter that the revised chart “refutes” my blog posting about their report.  CFI’s revised chart seems to me to do just the opposite:  It confirms my posting above.  You be the judge.  The revised chart, which can be viewed here, confirms that the national political parties suffered a full-on body blow after McCain-Feingold took effect in 2003, and that it has taken them ten years to peel themselves off the mat.  Specifically, the revised chart shows that during the 1992, 1996, and 2000 Presidential election cycles, spending by the national party committees surged from cycle to cycle at an astounding clip.  The rapid rate of increased fundraising (yes, fueled by soft money) came to a sudden and dramatic halt after McCain-Feingold took effect.  Put another way, if you draw a line from the 1992 figure through the 1996 and 2000 figures on CFI’s chart, you will see the steep trend line.  The trend line for subsequent cycles, under the weight of McCain-Feingold, is far less steep.  The parties have shown an uptick in funding in 2012, but it still leaves them well below where the pre-McCain-Feingold trend line was headed.  And as I noted previously, the national parties are only now regaining ground that they lost after McCain-Feingold.  Meantime, the cost of competing in elections has steadily increased, meaning the parties need to raise more money each cycle than they did during the last one just to stand still.  The blow to the national parties has, of course, been far worse when viewed in relative terms, as compared to the outside groups that are so dominating the campaign space this year.  While the academics can (and I’m sure will) protest that past performance was no guarantee of future performance, and that the obvious drop-off in the trend line for national party fundraising after McCain-Feingold could have happened even without the change in the law, we lawyers like to say res ipsa loquitor.  The thing speaks for itself.

Photo of Robert Kelner Robert Kelner

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to…

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to play, and government ethics laws, as well as legal ethics rules.  His expertise includes the Federal Election Campaign Act, Lobbying Disclosure Act, Ethics in Government Act, Foreign Agents Registration Act, and Foreign Corrupt Practices Act.  He is also a leading authority on the arcane rules governing political contributions by municipal securities dealers, investment advisers, hedge funds, and private equity funds.  Mr. Kelner advises Presidential political appointees on the complex process of being vetted and confirmed for such appointments.

In addition, he regularly advises corporations and corporate executives on instituting political law compliance programs.  He conducts compliance training for senior corporate executives and lobbyists.  He has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance, as well as other corporate compliance matters.  Mr. Kelner regularly defends clients in investigations by the Federal Election Commission, the U.S. Department of Justice, the U.S. House & Senate Ethics Committees, the House Oversight & Government Reform Committee, the House & Senate Judiciary Committees, the House Energy & Commerce Committee and its Subcommittee on Oversight & Investigations, the Senate Finance Committee, the Senate Special Committee on Aging, the Senate Permanent Subcommittee on Investigations, the Senate Health, Education, Labor, and Pensions Committee, and other congressional committees.  He has prepared numerous CEOs and corporate executives for testimony before congressional investigation panels, and he regularly leads the Practicing Law Institute’s training program on congressional investigations for in-house lawyers.  He also defends clients in Lobbying Disclosure Act audits by the GAO and enforcement actions and audits by state election and lobbying enforcement agencies.

Mr. Kelner has appeared as a commentator on political law matters on The PBS News Hour, CNBC, Fox News, and NPR, and he has been quoted in the New York Times, Washington Post, Wall Street Journal, Legal Times, Washington Times, Roll Call, The Hill, Politico, USA Today, Financial Times, and other publications.