BCRA's Effect on Candidate-Centerd and Legislation-Centered Issue Advertising

Erika Falk

To understand the effects of the Bipartisan Campaign Reform Act (BCRA) on issue advertising, especially pure issue advertising (advertising having nothing to do with candidates or elections), one must first reach back and understand how the Federal Election Campaign Act (FECA) 1971/1974 and the corresponding Supreme Court Decision of Buckley v. Valeo molded and shaped our understanding of issue ads.

In the wake of questionable contributions to Nixon’s campaign and the following Watergate scandal, Congress passed sweeping legislation designed to limit the corrupting influence of money in federal elections. Among other things, the FECA limited contributions to federal candidates and parties for spending on advertising connected with federal elections. It also made it illegal for national banks, corporations, and labor organizations to make contributions in connection with a federal election. The law was quickly challenged in the court case Buckley v. Valeo, in which the Supreme Court decided that determining what constituted spending “for the purposes of influencing” a federal election was central to the constitutionality of the law.

In an effort to make sure the law was not overly broad, the Court determined that contribution limits would only apply to spending on campaign advertising that employed express advocacy (i.e., used words such as “vote for,” “elect,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” “reject”). Spending that did not use these explicit exhortations would be considered issue advertising and not candidate advertising and as a result spending on these ads could come in any amount and would not be subject to the contribution limits or limits on corporate or union funds.

By 1996, parties, unions, and corporations realized they could make very effective federal campaign commercials that could be paid for with money not subject to federal regulations as long as they did not use the “magic” explicit words. These ads were considered “issue ads” from a legal perspective and were not regulated, though they were campaign-related communications. Thus, for much of the last decade issue ads have been defined by what they are not (i.e., explicit campaign-related communications). Issue ads are ads that can be paid for with money not subject to contribution limits and bans on union and corporate money.

This resulted in two types of issue ads: those that advocate for or against the election or defeat of a candidate (albeit implicitly), usually referred to as sham or candidate-centered issue ads, and those that seek to mobilize constituents, policy makers, or regulators in support of or in opposition to legislation or regulatory policy, called legislation-centered or pure issue ads.

The passage of the BCRA in March 2002 signaled the beginning of a new legal understanding of a “campaign communication,” and if one used the same logic of the past, an issue ad. In other words, the new law, by defining de jure what must be paid for with hard money, de facto also distinguishes issue from candidate ads.

The BCRA identifies election-related communications more broadly than the Court had in Buckley. The new law decides which ads are subject to limits on contributions and disclosure requirements not by looking exclusively at the explicit content of the ads, as was done in the past, but also by looking at sponsorship, content, context, and medium. Though the details of the effects of the new law in combination with existing law and regulation are still being debated and new regulations still being formulated, broadly speaking one can create a four-part typology to understand what ads may be paid for with what types of money.

A. National Parties and Campaigns: Because national parties, and campaigns may only spend hard money (money subject to contribution limits), one can assume by extension that all ads produced by these types of organizations are considered candidate ads, regardless of what they say or when and where they air.

B. State and Local Parties: Only some ads sponsored by state and local parties must be paid for with hard money. Ads sponsored by these organizations are only considered candidate ads if they “promote or attack or support or oppose” a candidate for federal office. This applies to all ads regardless of when and where they run (unless they run on the Internet, in which case they are not subject to hard money requirements). By extension then state and local party (print or broadcast) ads that attack or support a candidate for federal office are candidate ads and all others are issue ads.

C. Corporations, Unions, National Banks, or Organizations Receiving Funding From These: Ads sponsored by corporations1, unions, national banks, or by organizations that receive funding from corporations or unions must be paid for with hard money only if they refer to a clearly identified candidate for federal office, are broadcast (including cable or satellite), can be received by 50,000 people in the candidate’s district or state, and air within 60 days of a general election or 30 days of a primary (called the window). These organizations can run soft money ads without explicit language advocate for candidates as long as they run outside the window, advertise only its executive and administrative employees or shareholders, run in small markets or markets not in the mentioned candidate’s district, or only in print or on the Internet. Phone banking, mass mailings, bill boards, or other types of advertising could also be paid for with soft money. Explicit ads for candidates must be paid for with hard money no matter where or when they run and of course messages that do not mention a candidate can run at any time.

D. Individuals, Partnerships, Non-Corporations, and Other Types of Organizations That Do Not Receive Union or Corporate Funding 2: Individuals, partnerships, non-corporations, and all other types of organizations that do not receive union or corporate funding, including some ideological corporations, have no limits on contributions related to political advertising even if the appeal is explicit, as long as there is no coordination between them and the campaigns. However, there are disclosure requirements depending on the type of organization and how much is raised. Theoretically then, all of these ads are issue ads.

Among the issues that are not fully clear is where political action committees (PAC’s) fall. The FEC is considering regulation that would require PAC’s to pay for ads that promote, attack, support, oppose federal candidates with hard money (ads that also include state candidates would be paid for according to a formula of hard and soft money). However, rule making on this issue won’t be completed until June. Also among the current debates is what constitutes a media outlet. News stories, commentaries and editorials from broadcast stations, newspapers, magazines, or other periodicals not controlled by a political party or candidate were exempted from the FECA.

Based on what we expect from the new law and corresponding regulation, the greatest effect of the BCRA on issue advertising will be on the national parties. Party sponsored, candidate-centered issue ads that were previously allowed to be paid for with soft money will now have to be paid for with hard money.

Research done by the Annenberg Public Policy Center on nationwide broadcast advertising during the 1999-2000 election cycle showed that almost all (99.8%) of the ads run by the parties mentioned a candidate and had an attack component. The major party ads were just as likely to mention a candidate from March to August (outside the window) as they were from September to November (inside the window). At least in 2000, no matter when they were run, party ads were almost always about federal candidates. Because the new law requires all spending by the national parties and all ads sponsored by state and local parties that support or attack a candidate to come from regulated contributions, and because almost all the ads run by the parties promote or oppose candidates, the new law should have a major impact on how the parties pay for candidate-centered issue ads. Since parties tend not to run pure issue ads, the BCRA should have minimal impact on party-sponsored pure issue advertising.

It is less clear what the impact will be on non-party candidate-centered broadcast ads that run inside the window. Fully 84% of non-party broadcast ads run right before the general election in 2000 mentioned a candidate, but the new law would apply only to those ads funded with corporate or union money. Since disclosure was not required, it not clear what percent of ads were paid for with these funds, though by some estimates it was high. Until there are concrete regulations, it is also not clear how PAC sponsored ads will be affected.

Pure issue ads also run inside the window and they sometimes mention candidates. When candidates are mentioned in pure issue ads, it is almost always in the context of the name of a bill that is identified by the sponsors (who also happen to be candidates). Data from the Annenberg Public Policy Center research on pure issue advertising in Washington, D.C. show such ads are very uncommon. Data from 2002 indicate that of the 39 pure issue ads broadcast after August, only one mentioned a candidate. Even at that, this ad would only be accidentally caught in the BCRA net if had been paid for with union or corporate funds. This suggests that the number of pure issue ads that mention a candidate and fall inside the window is quite small and there should be minimum impact on such pure issue advertising. Even if such ads were to be accidentally caught, organizations still have many options that would enable them to air pure issue ads. For example, organizations could run these ads in newspapers, refer to the bill by its number or title without sponsor names, eliminate the candidate’s district from the airing schedule, air the ads outside the window, or even pay for the ads with hard money. As a result, the BCRA should little impact on pure issue advertising.

Of course non-party ads (candidate-centered or pure) sponsored outside the window or inside the window but not with union or labor funds should not be affected though there are greater disclosure requirements than before if they mention a candidate.

Though the full impact of the BCRA on issue advertising is yet to be determined, generally speaking the law should have a significant impact on party sponsored candidate ads and relatively little impact pure issue ads regardless of sponsorship. How much the law will affect non-party sponsored ads about candidates for federal elections will be determined by the degree to which union and corporate money pays for these ads and how the regulations are written and enforced particularly regarding political action committees.

Erika Falk is the Washington Research Director for the Annenberg Public Policy Center in Washington, DC.

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1. In a 1986 Supreme Court decision in Federal Election Commission v. Massachusetts Citizens for Life, the Court determined that ideological corporations were different from profit-driven corporations and would be exempt from some of the regulations regarding spending on federal elections. To get these exemptions, these ideological corporations had to meet five criteria: a) They are social welfare organizations incorporated under 501(c)(4); b) Their mission is primarily advocacy; c) They do not accept corporate or union money; d) There are no shareholders; and e) The corporation does not engage in business activity. Corporations meeting all of these criteria are able to pay for ads in the window period with soft money. [return]

2. Assuming these organizations are not PAC's. [return]