The role of money in a democracy has been a topic of philosophical debate for centuries. In this country, historians say that concern over the sources and amounts of campaign contributions dates back at least as far as the late 1800's. At that time, voters were concerned that their elected officials might be controlled by the donors who financed their campaigns.1

Out of this concern came the notion of taxpayer-financed elections. The first bill to include a public funding provision was introduced in December 1904 by Representative William Bourke Cockran of New York. He believed that "it might be possible for the government of the United States to do away with any excuse for soliciting large subscriptions of money" by financing elections with public funds.2 In 1907, President Theodore Roosevelt advocated "an appropriation for the proper and legitimate expenses of each of the great national parties."3 Similar sentiments were expressed, and legislative proposals introduced, during much of the first half of this century.

Yet, despite its enduring appeal with some lawmakers, a public funding law was not passed until 1966, and much of that statute was subsequently repealed. The momentum it generated, however, led to the eventual passage of the Federal Election Campaign Act of 1971 (FECA) and the Revenue Act of 1971. Then, in 1974, as a reaction to the events of Watergate,4 Congress enacted the 1974 amendments to the FECA, which established public financing of Presidential primaries, nominating conventions and the Presidential election itself by amending the Presidential Election Campaign Fund Act and by enacting the Presidential Primary Matching Account Act.5

This funding program, which has financed every Presidential election since 1976, consists of three parts:

The Federal Election Commission (FEC) administers the public funding program. The Commission determines which candidates and committees are eligible for public funds, and in what amounts. The U.S. Treasury then makes the necessary payments, giving first priority to the party conventions, second priority to general election nominees, and third priority to primary candidates. Later, the Commission audits all of the committees that received public funds to ensure that they used the funds properly. Based on the Commission's findings, committees may have to repay amounts to the U.S. Treasury.

The program is funded by the checkoff that appears on federal income tax forms. Using the checkoff, individuals may designate one dollar of their tax money to the Presidential Election Campaign Fund. Since 1973, taxpayers have designated more than $660 million to the fund. The Commission, in turn, has certified about $661 million to 83 campaigns and national party conventions.6 Payments per election cycle have ranged from $71.4 million in 1976 to $176.9 million in 1988.7 When repayments are taken into account, the fund balance stands at roughly $3.5 million.

While disbursements from the fund are indexed to inflation, the one-dollar tax checkoff is not. Consequently, as inflation increases, more and more taxpayers must participate to keep the fund solvent. In recent years, however, public participation in the tax checkoff has gradually decreased from a high of 28 percent in 1980 to less than 18 percent in 1992, hastening the inevitable shortfall. As a result, the Commission projects a deficit for the 1996 election, unless Congress takes legislative action.

As we enter a period of broad re-evaluation of campaign finance law, the Commission offers this report to chronicle its experience with the Presidential public funding program. The report focuses on persistent problems, how the Commission has dealt with them and, in some cases, Commission suggestions for legislative remedies.8

The report is organized into five sections. The first three document the three phases of the public funding program; the fourth attempts to evaluate Presidential public funding in light of its original goals; and the final chapter examines the tax checkoff and the projected funding deficit for 1996.

1. Robert E. Mutch, Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law (New York: Praeger, 1988), p. xvii.

2. House Election Committee hearings, 1906, 41, as quoted in Mutch, p. 35.

3. Congressional Record, December 3, 1907, 78, as quoted in Mutch, p. 36.

4. See, for example, Final Report of the Senate Select Comm. on Presidential Campaign Activities, S. Rep. No. 981, 93d Cong., 2d Sess. 581 (1974), regarding President Nixon's price supports for milk and contributions by the milk industry to the Committee to Re-elect the President.

5. For a more complete historical summary, see Appendix 4.

6. See Chart 5-2, pp. 38-39.

7. See Appendix 3.

8. For a more detailed description of the Commission's administration of the public funding program, see Appendix 1 of this report and the relevant chapter in each of the Commission's annual reports, 1975-1992.