[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1366 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 1366

   To amend the Federal Election Campaign Act of 1971 to reform the 
 financing of campaigns for election for Federal office, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 17, 1997

Mr. Baesler (for himself, Mr. Turner, Ms. Harman, Mr. Berry, Mr. Boyd, 
Mr. Condit, Mr. Cramer, Mr. Goode, Mr. Holden, Mr. John, Mr. Lipinski, 
 Mr. McIntyre, Mr. Minge, Mr. Peterson of Minnesota, Mr. Sisisky, Mr. 
  Stenholm, Mr. Tanner, and Mr. Blumenauer) introduced the following 
      bill; which was referred to the Committee on House Oversight

_______________________________________________________________________

                                 A BILL


 
   To amend the Federal Election Campaign Act of 1971 to reform the 
 financing of campaigns for election for Federal office, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Federal Election 
Reform Act of 1997''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purposes; findings.
              TITLE I--SPENDING LIMITS IN HOUSE ELECTIONS

Sec. 101. Limits on expenditures by candidates.
Sec. 102. Limits on expenditures by political parties.
Sec. 103. Limits on independent expenditures.
TITLE II--EXPANDING SCOPE OF CONTRIBUTIONS AND EXPENDITURES SUBJECT TO 
                              FEDERAL LAW

Sec. 201. Ban on soft money of political parties.
Sec. 202. Treatment of certain advocacy communications as expenditures 
                            subject to regulation.
Sec. 203. Treatment of amounts contributed or expended for recount 
                            activities.
                        TITLE III--OTHER REFORMS

Sec. 301. Increasing disclosure of contributions and expenditures.
Sec. 302. Prohibition of leadership committees.
Sec. 303. Prohibition of fundraising on behalf of certain nonprofit 
                            organizations.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Effective date.
Sec. 402. Nonseverability of provisions.

SEC. 2. PURPOSES; FINDINGS.

    (a) Purposes.--The purposes of this bill are as follows:
            (1) Restore the public confidence in, and the integrity of, 
        our democratic system.
            (2) Strengthen and promote full and free campaign 
        discussion and debate.
            (3) Relieve elective office seekers and office holders from 
        the limitations on purposive political conduct and discourse 
        that can arise from excessive attention to fundraising.
            (4) Reduce corruption and undue influence, or the 
        appearance thereof, in the financing of Federal election 
        campaigns.
            (5) Afford nonpreferential terms of access to elected 
        office holders by interested members of the public, in keeping 
        with the constitutionally guaranteed right to petition the 
        Government for the redress of grievances.
    (b) Findings.--Congress makes the following findings:
            (1) The current Federal campaign finance system, with its 
        perceived preferential access to lawmakers for interest groups 
        capable of contributing sizable sums to lawmakers' campaigns, 
        has aroused a widespread loss of public confidence in the 
        fairness and responsiveness of elective government. It has 
        undermined the belief, necessary to a functioning democracy, 
        that the government exists to serve the needs of all the 
        people.
            (2) The United States Supreme Court, in Buckley v. Valeo, 
        424 U.S. 1 (1976), disapproved mandatory spending limits as an 
        available remedy for such effects, while approving campaign 
        contribution limits.
            (3) Since that time, campaign expenditures have risen 
        steeply in Federal elections. Between 1976 and 1996, spending 
        by candidates for the United States Congress rose from some 
        $115,000,000 to $765,300,000, an increase several times the 
        rate of inflation.
            (4) As campaign spending has escalated, voter turnout has 
        steadily declined. In 1996 it fell to its lowest point since 
        1924, and stands now at the lowest level of any democracy in 
        the world.
            (5) Coupled with out-of-control campaign spending has come 
        an incessant necessity of fundraising, due to a large extent 
        from candidates adopting an defensive ``arms race'' posture of 
        constant readiness against the risk of massively financed 
        attacks on whatever they may say or do.
            (6) This campaign finance system has had a deleterious 
        effect on those who hold public office, as endless fundraising 
        pressures intrude upon the performance of constitutionally 
        required duties. Capable and dedicated officials have left 
        office in dismay over these distractions and negative public 
        perceptions that the fundraising process engenders. 
        Furthermore, numerous qualified citizens have declined to seek 
        office because of the prospect of having to raise the 
        extraordinary amounts of money needed in today's elections. As 
        talented incumbent and potential public servants express such 
        sentiments and act accordingly, the quality of representation 
        suffers.
            (7) Contribution limits are inadequate by themselves to 
        check these trends. As long as campaign spending is effectively 
        unrestrained, supporters can find ways to protect their favored 
        candidates from being outspent. Since 1976, in fact, major 
        evasion routes have been found and exploited to get around 
        contribution limits.
            (8) Among such avenues have been personal spending by 
        wealthy candidates, independent expenditures that assist or 
        attack an identified candidate, and the use of national, State, 
        or local political parties as a conduit for money assisting or 
        attacking such candidates.
            (9) Wealthy candidates are free under the present system to 
        spend any amount they want out of their own resources. While 
        such spending may not be self-corrupting, it introduces the 
        very defects the Supreme Court has wanted to avoid. For the 
        effectively limitless character of such resources obliges a 
        wealthy candidate's opponents to reach for ever larger amounts 
        of outside support, with the deleterious effects previously 
        described.
            (10) Experience shows further that there is an identity of 
        interest between candidates and political parties. The parties 
        exist to support candidates, not the other way around. Party 
        expenditures in support of, or in opposition to, an 
        identifiable candidacy are therefore effectively candidate 
        spending.
            (11) Political experience also shows that so-called 
        ``independent'' support, whether by individuals, committees, or 
        other entities, can be and often is coordinated with a 
        candidate's campaign, by means of tacit understandings, without 
        losing its nominally independent character. Likewise, 
        contributions to a political party, ostensibly for ``party-
        building'' purposes, can be and often are routed, by undeclared 
        design, to the support of identified candidates.
            (12) The actual, case-by-case detection of coordination 
        between candidate, party, and independent contributor is, as a 
        practical matter, impossible in a fast-moving campaign 
        environment, and in cases where there may in fact be no 
        coordination, the candidate risks losing control over the tone, 
        clarity, and content of his or her own campaign.
            (13) So-called ``issue advocacy'', by or through parties or 
        independent contributors, need not as a practical matter call 
        expressly for the election or defeat of a named candidate to 
        cross the line into campaign advocacy. Any clear objective 
        indication of purpose, such that voters may readily observe 
        where their electoral support is invited, will suffice.
            (14) When State parties or other entities operating under 
        State law receive funds, often called ``soft money'', which may 
        directly or indirectly affect Federal elections, the State 
        parties and entities become de facto agents of the national 
        party. The subjection of these funds to pertinent Federal 
        limitations becomes necessary and proper to the effective 
        regulation of national campaigns.
            (15) The exorbitant level of money in the political system 
        has served to distort our democracy by giving large 
        contributors a favored access to elected officials, thus 
        undermining the ability of ordinary citizens to petition their 
        government. Concerns over the potential for corruption and 
        undue influence and the appearances thereof have left the 
        citizenry cynical, the reputation of elected officials 
        tarnished, and the moral authority of government weakened.
            (16) The 2 decades of experience since the Supreme Court's 
        1976 Buckley ruling show that reasonable limits on campaign 
        expenditures are now necessary. These limits must 
        comprehensively address all avenues of expenditure, lest 
        creative and devastating circumvention ensue.
            (17) The Supreme Court based its Buckley decision on a 
        concern that spending limits could narrow political speech ``by 
        restricting the number of issues discussed, the depth of their 
        exploration, and the size of the audience reached.''. The 
        experience of the past 20 years is otherwise: It is unlimited 
        expenditure that can drown out or distort political discourse 
        in a flood of distractive repetition. Reasonable spending 
        limits will increase the opportunity for previously muted 
        voices to be heard and thereby increase the number, depth, and 
        diversity of ideas presented to the public.
            (18) Issue advocacy which does not promote or oppose an 
        identified candidate needs to remain unregulated, as does the 
        traditional freedom of the press to report and editorialize 
        about candidates and campaigns.
            (19) In establishing reasonable limits on campaign 
        spending, it is necessary that they reflect the realities of 
        modern campaigning in a large, diverse population with 
        sophisticated and expensive modes of communication. The limits 
        must allow citizens to benefit from a full and free debate of 
        issues and permit candidates to garner the resources necessary 
        to engage in that debate. The expenditure limit established in 
        this Act for elections to the House of Representatives was 
        determined after careful review of spending patterns in the 3 
        most recent elections. For example:
                    (A) More than three-fourths of major party House 
                candidates spent less than the $700,000 limit 
                established here, and roughly three-fourths of open 
                seat candidates, running in typically very competitive 
                elections, spent $700,000 or less.
                    (B) Furthermore, and perhaps most significantly, 
                fully half of challengers who defeated incumbent House 
                Members, and half of all winners in close races, spent 
                $700,000 or less.
                    (C) Thus, it is clear from recent experience that a 
                limit of $700,000 will be high enough to allow an 
                effective level of competition, with an opportunity for 
                diverse points of view to be heard, and it will be low 
                enough to circumscribe finally the most egregiously 
                high spending levels and to be a bulwark against future 
                excesses of even greater magnitude.

              TITLE I--SPENDING LIMITS IN HOUSE ELECTIONS

SEC. 101. LIMITS ON EXPENDITURES BY CANDIDATES.

    (a) In General.--Title III of the Federal Election Campaign Act of 
1971 (2 U.S.C. 431 et seq.) is amended by adding at the end the 
following new section:

         ``expenditure limits for candidates in house elections

    ``Sec. 323. (a) In General.--Notwithstanding any other provision of 
this title, the amount of funds expended by a candidate or the 
candidate's authorized committee (from any source) with respect to any 
House election may not exceed $700,000 for the election cycle involved.
    ``(b) Special Rules for Certain Candidates and Elections.--
            ``(1) Runoff election.--In the case of a candidate who is 
        participating in a runoff House election, the limit on 
        expenditures under subsection (a) with respect to the election 
        cycle involved shall be increased by 20 percent.
            ``(2) General election candidate winning closely contested 
        primary.--In the case of a candidate who is participating in a 
        general House election who won the previous primary election by 
        a margin not greater than 15 percentage points, the limit on 
        expenditures under subsection (a) with respect to the election 
        cycle involved shall be increased by 50 percent.
            ``(3) Special election.--In the case of a candidate who is 
        participating in a special House election, the amount of funds 
        expended by the candidate or the candidate's authorized 
        committee may not exceed $700,000 for the election (including 
        any related primary election).
    ``(c) Indexing of Amounts.--
            ``(1) In general.--The amount of each limitation 
        established under this section shall be adjusted as follows:
                    ``(A) For calendar year 2001, each such amount 
                shall be equal to the amount described, increased (in a 
                compounded manner) by the percentage increase in the 
                price index (as defined in paragraph (2)(A)) for 1999 
                and 2000.
                    ``(B) For calendar year 2003 and each second 
                subsequent year, each such amount shall be equal to the 
                amount for the second previous year (as adjusted under 
                this subparagraph), increased (in a compounded manner) 
                by the percentage increase in the price index for the 
                previous year and the second previous year.
            ``(2) Rounding.--In the case of any amount adjusted under 
        this subsection which is not a multiple of $500, the amount 
        shall be rounded to the nearest highest multiple of $500.''.
    ``(d) Exclusion of Certain Expenditures.--In determining the amount 
of funds expended by a candidate for purposes of this section, there 
shall be excluded any amounts expended for--
            ``(1) legal services rendered in connection with complying 
        with the requirements of this title or any State law, 
        responding to complaints or investigations by the Commission or 
        the House of Representatives, or any other legal representation 
        related to the election involved which is rendered on behalf of 
        or in defense of the candidate or the candidate's authorized 
        committee;
            ``(2) Federal, State, or local income taxes on earnings of 
        a candidate's authorized committees; and
            ``(3) services related to a recount of the results of a 
        Federal election or an election contest concerning a Federal 
        election.
    ``(e) Treatment of Funds Expended by Authorized Committee.--For 
purposes of this section, any funds expended by any authorized 
committee of a candidate shall be considered to be expended by the 
candidate.
    ``(f) Penalties for Excess Expenditures.--A candidate who expends 
funds with respect to a House election in an amount greater than the 
applicable limit for the candidate and election under this section 
shall pay a penalty to the Commission in an amount equal to--
            ``(1) in the case of a candidate who expends funds in an 
        amount equal to or less than 105 percent of such applicable 
        limit, the amount by which the funds expended exceed such 
        limit; or
            ``(2) in the case of a candidate who expends funds in an 
        amount greater than 105 percent of such applicable limit, 300 
        percent of the amount by which the funds expended exceed such 
        limit.''.
    (b) Election Cycle and House Election Defined.--Section 301 of such 
Act (2 U.S.C. 431) is amended by striking paragraph (19) and inserting 
the following:
    ``(19) The term `election cycle' means, with respect to a 
candidate, the period beginning on the day after the date of the most 
recent general election for the specific office or seat which such 
candidate seeks and ending on the date of the next general election for 
such office or seat.
    ``(20) The term `House election' means an election for the office 
of Representative in, or Delegate or Resident Commissioner to, the 
Congress.''.

SEC. 102. LIMITS ON EXPENDITURES BY POLITICAL PARTIES.

    (a) In General.--Section 315(d) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 441a(d)) is amended by adding at the end the 
following new paragraph:
    ``(4) The national committee of a political party, or a State 
committee of a political party, including any subordinate committee of 
a State committee, may not make any expenditure in connection with any 
candidate who is affiliated with such party for election for the office 
of Representative in, or Delegate or Resident Commissioner to, the 
Congress, which is held after December 31, 1998, which exceeds $30,000, 
without regard to whether the party's expenditures are made in 
coordination with the candidate or are made independently from the 
candidate.''.
    (b) Conforming Amendments.--Section 315(d) of the Federal Election 
Campaign Act of 1971 (2 U.S.C. 441a(d)) is amended--
            (1) in paragraph (1), by striking ``(2) and (3)'' and 
        inserting ``(2), (3), and (4)''; and
            (2) in paragraph (3)--
                    (A) in subparagraph (A) in the matter preceding 
                clause (i), by striking ``one Representative,'' and 
                inserting the following: ``one Representative in the 
                case of an election held prior to January 1999,'', and
                    (B) in subparagraph (B), by striking ``for election 
                to the office of Representative, Delegate, or Resident 
                Commissioner'' and inserting ``in a House election held 
                prior to January 1999''.

SEC. 103. LIMITS ON INDEPENDENT EXPENDITURES.

    Section 315 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441a) is amended by adding at the end the following new subsection:
    ``(i)(1) Notwithstanding any other provision of this title, no 
person (other than any person subject to limitations on expenditures 
under subsection (d)(4)) may make independent expenditures in 
connection with a House election with respect to an election cycle in 
an amount greater than $25,000.
    ``(2) The amount of the limitation under paragraph (1) shall be 
adjusted for each biennial period beginning after the 2000 general 
election in the same manner as the amounts of limitations on 
expenditures by candidates established under section 323(a) are 
adjusted under section 323(c).''.

TITLE II--EXPANDING SCOPE OF CONTRIBUTIONS AND EXPENDITURES SUBJECT TO 
                              FEDERAL LAW

SEC. 201. BAN ON SOFT MONEY OF POLITICAL PARTIES.

    Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 
431 et seq.), as amended by section 101(a), is further amended by 
adding at the end the following new section:

    ``restrictions on use of non-federal funds by political parties

    ``Sec. 324. (a) Any Use of Funds by National Parties.--A political 
committee of a national political party may not solicit, receive, 
transfer, direct, or expend any funds for the purpose of influencing an 
election for Federal office unless the funds are subject to the 
limitations, prohibitions, and reporting requirements of this title.
    ``(b) Expenditure of Funds by State and Local Parties During 
Federal Election Years.--A political committee of a State or local 
political party may not expend any funds during a year in which an 
election for Federal office is held in the State for the purpose of 
influencing an election for Federal office unless the funds are subject 
to the limitations, prohibitions, and reporting requirements of this 
title.
    ``(c) Exclusion of Certain Expenditures.--For purposes of this 
section, funds shall not be considered to be expended for the purpose 
of influencing an election for Federal office if the funds are expended 
for any of the following activities:
            ``(1) Any communication which does not portray by name, 
        reference, representation, or likeness, a candidate for 
        election for Federal office, or which does not similarly 
        portray the Congress or either of its Houses.
            ``(2) Administrative expenses of a State or local political 
        party.
            ``(3) A convention of a State or local political party.''.

SEC. 202. TREATMENT OF CERTAIN ADVOCACY COMMUNICATIONS AS EXPENDITURES 
              SUBJECT TO REGULATION.

    (a) In General.--Section 301(9)(A) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 431(9)(A)) is amended--
            (1) by striking ``and'' at the end of clause (i);
            (2) by redesignating clause (ii) as clause (iv); and
            (3) by inserting after clause (i) the following new 
        clauses:
            ``(ii) any payment for a communication which portrays by 
        name, reference, representation, or likeness a candidate for 
        election for Federal office, together with words such as `vote 
        for', `vote against', `elect', `defeat', `support', `oppose', 
        or `reject';
            ``(iii) any payment for a communication which is 
        disseminated during the 90-day period ending on the date of an 
        election and which portrays by name, reference, representation, 
        or likeness a candidate for election for Federal office; and''.
    (b) Conforming Amendment Relating to Independent Expenditures.--
Section 301(17) of such Act (2 U.S.C. 431(17)) is amended by striking 
``by a person expressly advocating the election or defeat of a clearly 
identified candidate''.

SEC. 203. TREATMENT OF AMOUNTS CONTRIBUTED OR EXPENDED FOR RECOUNT 
              ACTIVITIES.

    (a) Subjecting Amounts to Limits Applicable to Contributions.--
Section 315(a) of the Federal Election Campaign Act of 1971 (2 U.S.C. 
441a(a)) is amended by adding at the end the following new paragraph:
    ``(9) Any funds provided to a political committee for purposes 
relating to a recount of the results of a Federal election or an 
election contest concerning a Federal election shall be subject to the 
limitations applicable to contributions under this subsection.''.
    (b) Treatment as Expenditures.--Section 301(9)(A)(i) of the Federal 
Election Campaign Act of 1971 (2 U.S.C. 431(9)(A)(i)) is amended by 
striking ``office;'' and inserting the following: ``office, or made by 
any person with respect to a recount of the results of a Federal 
election or an election contest concerning a Federal election;''.
    (c) Segregation of Amounts.--Section 302(b) of such Act (2 U.S.C. 
432(b)) is amended by adding at the end the following new paragraph:
    ``(4) Any funds provided to a political committee for purposes 
relating to a recount of the results of a Federal election or an 
election contest concerning a Federal election shall be segregated from 
and may not be commingled with any other funds of the committee, and 
may not be used for any other purpose.''.

                        TITLE III--OTHER REFORMS

SEC. 301. INCREASING DISCLOSURE OF CONTRIBUTIONS AND EXPENDITURES.

    (a) Removing Threshold for Disclosure of Contributions.--
            (1) Accounting requirements for political committees.--
        Section 302(c)(3) of the Federal Election Campaign Act of 1971 
        (2 U.S.C. 432(c)(3)) is amended by striking ``$200'' and 
        inserting ``$1''.
            (2) Contents of reports.--
                    (A) In general.--Section 304(b)(3) of such Act (2 
                U.S.C. 434(b)(3)) is amended by striking ``$200'' each 
                place it appears in subparagraphs (A), (F), and (G) and 
                inserting ``$1''.
                    (B) Persons making independent expenditures.--
                Section 304(c)(2)(C) of such Act (2 U.S.C. 
                434(c)(2)(C)) is amended by striking ``$200'' and 
                inserting ``$1''.
    (b) Notice of Certain Independent Expenditures.--Section 304(c) of 
such Act (2 U.S.C. 434(c)) is amended by adding at the end the 
following new paragraph:
    ``(4) Any person making an independent expenditure consisting of a 
communication broadcast or disseminated during the 10-day period ending 
on the date of an election shall disclose the communication to the 
candidate involved and the candidate's opponent prior to the time the 
communication is broadcast or disseminated.''.

SEC. 302. PROHIBITION OF LEADERSHIP COMMITTEES.

    Section 302 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
432) is amended by adding at the end the following new subsection:
    ``(j) A candidate for Federal office or an individual holding 
Federal office may not establish, maintain, finance, or control a 
political committee, other than a campaign committee for the election 
of the candidate or the individual.''.

SEC. 303. PROHIBITION OF FUNDRAISING ON BEHALF OF CERTAIN NONPROFIT 
              ORGANIZATIONS.

    Title III of the Federal Election Campaign Act of 1971 (2 U.S.C. 
431 et seq.), as amended by sections 101(a) and 201, is further amended 
by adding at the end the following new section:

 ``prohibiting fundraising on behalf of certain nonprofit organizations

    ``Sec. 325. (a) Political Parties.--No national, State, district, 
or local committee of a political party may solicit any funds for or 
make any donations to any organization that is exempt from Federal 
taxation under section 501(c) of the Internal Revenue Code of 1986.
    ``(b) Candidates and Officeholders.--No candidate for Federal 
office or individual holding Federal office may raise funds for or on 
behalf of any organization exempt from Federal taxation under section 
501(c) of the Internal Revenue Code of 1986 if--
            ``(1) the organization is established, maintained, or 
        controlled by the candidate or individual; and
            ``(2) voter registration or get-out-the-vote campaigns 
        comprise a significant portion of the organization's 
        activities.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. EFFECTIVE DATE.

    Except as provided in section 402, this Act and the amendments made 
by this Act shall apply with respect to elections held after December 
31, 1998.

SEC. 402. NONSEVERABILITY OF PROVISIONS.

    If any provision of this Act or any amendment made by this Act is 
found unconstitutional, no provision of this Act or any amendment made 
by this Act may take effect or remain in effect.
                                 <all>