[House Report 113-291]
[From the U.S. Government Publishing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    113-291

======================================================================



 
   TO AMEND THE INTERNAL REVENUE CODE OF 1986 TO PROHIBIT THE USE OF 
              PUBLIC FUNDS FOR POLITICAL PARTY CONVENTIONS

                                _______
                                

 December 12, 2013.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mrs. Miller of Michigan, from the Committee on House Administration, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany H.R. 94]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on House Administration, to whom was referred 
the bill (H.R. 94) to amend the Internal Revenue Code of 1986 
to prohibit the use of public funds for political party 
conventions, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                Background and Need for the Legislation

    The Presidential Election Campaign Fund, established by 
Congress, was first used in the Presidential campaign of 1976. 
It provides taxpayer support for presidential campaigns in 
three forms: payments to candidates in primary elections to 
match qualifying individual donations, fixed grants to 
candidates in general elections who agree to forego individual 
donations and fixed grants to major parties to fund 
presidential nominating conventions.
    The PECF is financed by allowing taxpayers to check a box 
on their tax returns designating an amount for the Fund. The 
amount was originally set at $1 per individual and subsequently 
increased to $3 per individual. If the taxpayer checks the box, 
that amount of their individual tax liability is directed to 
PECF. Checking the box does not change the amount of tax paid, 
so the PECF reduces Treasury funds available for other 
purposes.
    The number of taxpayers who indicated their support for 
taxpayer financial of presidential campaigns by checking the 
box to divert funds to PECF peaked in 1980 at 28.7 percent. It 
has declined consistently since then, to 5.1 percent in 2012. 
Support for the PECF by candidates also has declined. In 2000 
major candidates began rejecting the PECF matching funds during 
the primary campaign in order to avoid the restrictions that 
accompanied them. In 2008 then-candidate Obama rejected PECF 
funds in the primary election and also became the first major 
party candidate to reject the general election grant. In 2012 
only three candidates (Gary Johnson, Buddy Roemer and Jill 
Stein) applied for PECF funds. Neither major party candidate 
accepted the PECF grant in the general election.
    With the decline in candidate participation to nearly zero, 
the remaining use of the PECF is to provide grants to major 
party's to conduct their presidential nominating conventions. 
In 2012 each major party received approximately $18 million for 
its convention. In addition to the $36 million total from PECF, 
the parties raised approximately $80 million in private funds.
    Reports prepared by Senator Coburn using records from the 
Federal Election Commission showed that the conventions held in 
2008 spent over $2 million for travel expenses, almost as much 
for catering and over $6 million for salaries. The reports also 
show payments for gift bags, flowers and entertainment. At a 
time when budgets are being cut in important programs across 
the federal government, diverting taxpayer resources to these 
costs is not appropriate.
    During the consideration of H.R. 94, Representative Brady 
offered an amendment that would repeal the taxpayer financing 
of party nominating conventions and allow parties to raise 
funds for conventions and other purposes in a separate account 
subject to the limitations on sources and amounts that 
currently apply to the parties. Representative Brady withdrew 
the amendment and the Chairman agreed to work with him to seek 
agreement on legislative language. No agreement has been 
achieved but additional discussions on the approach embodied in 
Representative Brady's amendment may occur prior to the bill 
being considered by the House.

                       Introduction and Referral

    On January 3, 2013, Congressman Tom Cole of Oklahoma 
introduced H.R. 94, which was referred to the Committee on 
House Administration.

                                Hearings

    There were no legislative hearings held on H.R. 94.

                        Committee Consideration

    On June 4, 2013, the Committee on House Administration met 
to consider H.R. 94. The Committee ordered the bill reported 
favorably to the House without amendment by voice vote with a 
quorum present.

                         Committee Record Votes

    In compliance with House Rule XIII, clause 3(b), requiring 
the results of each record vote on an amendment or motion to 
report, together with the names of those voting for and 
against, to be printed in the Committee report, the Committee 
states that there were no record votes during the Committee's 
consideration of H.R. 94.

            Committee Oversight Findings and Recommendations

    In compliance with House Rule XIII, clause 3(c)(1), the 
Committee states that the findings and recommendations of the 
Committee, based on oversight activities under House rule X, 
clause 2(b)(1), are incorporated into the general discussion 
section of this report.

            Statement of Budget Authority and Related Items

    The bill does not provide new budget authority, new 
spending authority, new credit authority, or an increase or 
decrease in revenues or tax expenditures and a statement under 
House Rule XIII, clause 3(c)(2), and section 308(a)(1) of the 
Congressional Budget Act of 1974 is not required.

               Congressional Budget Office Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                     June 26, 2013.
Hon. Candice Miller,
Chairman, Committee on House Administration,
House of Representatives, Washington, DC.
    Dear Madam Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 94, a bill to 
amend the Internal Revenue Code of 1986 to prohibit the use of 
public funds for political party conventions.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Maggie 
Morrissey and Matthew Pickford.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 94--A bill to amend the Internal Revenue Code of 1986 to prohibit 
        the use of public funds for political party conventions

    Summary: H.R. 94 would amend federal law to prohibit the 
use of public funds for political campaign conventions. By 
eliminating that option, CBO estimates that enacting H.R. 94 
would reduce direct spending by $126 million over the 2014-2023 
period. In addition, the legislation would affect direct 
spending and federal penalties related to campaign financing 
(some of which are recorded in the budget as revenues and are 
available to be spent without further appropriation); CBO 
estimates, however, that any such effects would not be 
significant. Because the bill would affect direct spending and 
revenues, pay-as-you-go procedures apply. The staff of the 
Joint Committee on Taxation (JCT) estimates that enacting the 
legislation would have no impact on federal income tax 
revenues.
    JCT has determined that H.R. 94 contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 94 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2014    2015    2016    2017    2018    2019    2020    2021    2022    2023   2014-2018  2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDING
Estimated Budget Authority........................       0       0       0       0       0       0       0       0       0       0         0           0
Estimated Outlays.................................       0     -40       0       0       0     -42       0       0       0     -44       -40        -126
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted before the end of 2013. We estimate 
that enacting the bill would reduce direct spending but would 
have no significant effect on revenues (including penalties).
    The Presidential Election Campaign Fund (PECF) provides 
money for Presidential election campaigns including political 
party conventions. The fund is financed by taxpayers who 
voluntarily designate on their income tax returns that a 
portion of their annual tax liability ($3 for individual income 
tax filers and $6 for joint returns) be credited to the PECF. 
The voluntary earmarking of a portion of a taxpayer's liability 
does not affect the amount of tax owed to the federal 
government or the amount of any refund owed to that taxpayer. 
Use of the fund has gradually diminished in recent years along 
with the amounts credited to the fund. In 2012, $35 million was 
credited to the fund and during the most recent Presidential 
campaign, spending from the PECF totaled $36 million for 
political conventions organized by the two major political 
parties. In addition, the two major party candidates did not 
accept public funding for their campaigns and other candidates 
received a little more than $1 million for their campaigns.
    CBO estimates that eliminating the use of the PECF to fund 
political campaign conventions would reduce direct spending by 
$126 million over the 2014-2023 period. That estimate is based 
on PECF spending on political conventions over the last two 
Presidential election cycles.
    Reducing the use of the PECF could reduce the 
administrative costs that the Federal Election Commission 
incurs to oversee the use of amounts drawn from that fund 
during Presidential election campaign cycles. However, because 
of the diminished use of the funds in recent years, CBO expects 
any such savings would be insignificant.
    Enacting H.R. 94 could affect federal revenues by 
decreasing the collection of fines for violating campaign 
finance law. Such collections are recorded in the budget as 
revenues and, in certain cases, such amounts may be spent 
without further appropriation. CBO estimates that any net 
changes in revenues and associated direct spending would be 
insignificant because of the small number of possible 
violations.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The changes in outlays that are subject to those pay-
as-you-go procedures are shown in the following table. Enacting 
the legislation would have no significant effect on revenues 
(including penalties).

             CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 94, AS ORDERED REPORTED BY THE COMMITTEE ON HOUSE ADMINISTRATION ON JUNE 4, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  By fiscal year, in millions of dollars--
                                                   -----------------------------------------------------------------------------------------------------
                                                     2013   2014   2015    2016   2017   2018   2019    2020   2021   2022   2023   2013-2018  2013-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 NET INCREASE OR DECREASE (-) IN THE [ON-BUDGET] DEFICIT

Statutory Pay-As-You-Go Impact....................      0      0     -40      0      0      0     -42      0      0      0     -44       -40       -126
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 94 
contains no intergovernmental or private-sector mandates as 
defined in UMRA.
    Previous CBO estimate: On June 21, 2013, CBO transmitted a 
cost estimate for H.R. 95, a bill to reduce federal spending 
and the deficit by terminating taxpayer financing of 
Presidential election campaigns and party conventions, as 
ordered reported by the Committee on House Administration on 
June 4, 2013. On May 13, 2013, CBO transmitted a cost estimate 
for H.R. 2019, the Kids First Research Act of 2013, as 
introduced on May 16, 2013. The three bills would affect the 
Presidential Election Campaign Fund. H.R. 95 and H.R. 2019 have 
identical provisions that would eliminate the PECF, while under 
H.R. 94, spending for presidential party conventions would end 
but other spending could continue. Those differences are 
reflected in the CBO cost estimates.
    Estimate prepared by: Federal Spending: Maggie Morrissey 
and Matthew Pickford; Intergovernmental and Private-Sector 
Mandates: Joint Committee on Taxation.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                    Performance Goals and Objectives

    In compliance with House Rule XIII, clause 3(c)(4), the 
Committee states that the general discussion section of this 
report includes a statement of the general performance goals 
and objectives, including outcome-related goals and objectives, 
for which H.R. 94 authorizes funding.

                   Constitutional Authority Statement

    Congress has the power to enact this legislation pursuant 
to Amendment XVI of the U.S. Constitution relating to the 
collection of income tax and additionally to Article I, Section 
4 of the U.S. Constitution granting Congress the authority to 
make laws governing the time, place and manner of holding 
Federal elections.

                          Advisory on Earmarks

    In accordance with House Rule XXI, clause 9, the Committee 
states that H.R. 94 does not contain any congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9(e), 9(f), or 9(g) of rule XXI.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *



Subtitle H--Financing of Presidential Election Campaigns

           *       *       *       *       *       *       *


            CHAPTER 95--PRESIDENTIAL ELECTION CAMPAIGN FUND

     * * * * * * *
[Sec. 9008. Payments for presidential nominating conventions.]

           *       *       *       *       *       *       *


SEC. 9006. PAYMENTS TO ELIGIBLE CANDIDATES.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Insufficient Amounts in Fund.--If at the time of a 
certification by the Commission under section 9005 for payment 
to the eligible candidates of a political party, the Secretary 
determines that the moneys in the fund are not, or may not be, 
sufficient to satisfy the full entitlements of the eligible 
candidates of all political parties, he shall withhold from 
such payment such amount as he determines to be necessary to 
assure that the eligible candidates of each political party 
will receive their pro rata share of their full entitlement. 
Amounts withheld by reason of the preceding sentence shall be 
paid when the Secretary determines that there are sufficient 
moneys in the fund to pay such amounts, or portions thereof, to 
all eligible candidates from whom amounts have been withheld, 
but, if there are not sufficient moneys in the fund to satisfy 
the full entitlement of the eligible candidates of all 
political parties, the amounts so withheld shall be paid in 
such manner that the eligible candidates of each political 
party receive their pro rata share of their full entitlement. 
In any case in which the Secretary determines that there are 
insufficient moneys in the fund to make payments under 
subsection (b)[, section 9008(b)(3),] and section 9037(b), 
moneys shall not be made available from any other source for 
the purpose of making such payments.

           *       *       *       *       *       *       *


[SEC. 9008. PAYMENTS FOR PRESIDENTIAL NOMINATING CONVENTIONS.

  [(a) Establishment of Accounts.--The Secretary shall maintain 
in the fund, in addition to any account which he maintains 
under section 9006(a), a separate account for the national 
committee of each major party and minor party. The Secretary 
shall deposit in each such account an amount equal to the 
amount which each such committee may receive under subsection 
(b). Such deposits shall be drawn from amounts designated by 
individuals under section 6096 and shall be made before any 
transfer is made to any account for any eligible candidate 
under section 9006(a).
  [(b) Entitlement to Payments from the Fund.--
          [(1) Major parties.--Subject to the provisions of 
        this section, the national committee of a major party 
        shall be entitled to payments under paragraph (3), with 
        respect to any presidential nominating convention, in 
        amounts which, in the aggregate, shall not exceed 
        $4,000,000.
          [(2) Minor parties.--Subject to the provisions of 
        this section, the national committee of a minor party 
        shall be entitled to payments under paragraph (3), with 
        respect to any presidential nominating convention, in 
        amounts which, in the aggregate, shall not exceed an 
        amount which bears the same ratio to the amount the 
        national committee of a major party is entitled to 
        receive under paragraph (1) as the number of popular 
        votes received by the candidate for President of the 
        minor party, as such candidate, in the preceding 
        presidential election bears to the average number of 
        popular votes received by the candidates for President 
        of the United States of the major parties in the 
        preceding presidential election.
          [(3) Payments.--Upon receipt of certification from 
        the Commission under subsection (g), the Secretary 
        shall make payments from the appropriate account 
        maintained under subsection (a) to the national 
        committee of a major party or minor party which elects 
        to receive its entitlement under this subsection. Such 
        payments shall be available for use by such committee 
        in accordance with the provisions of subsection (c).
          [(4) Limitation.--Payments to the national committee 
        of a major party or minor party under this subsection, 
        from the account designated for such committee shall be 
        limited to the amounts in such account at the time of 
        payment.
          [(5) Adjustment of entitlements.--The entitlements 
        established by this subsection shall be adjusted in the 
        same manner as expenditure limitations established by 
        section 315(b) and section 315(d) of the Federal 
        Election Campaign Act of 1971 are adjusted pursuant to 
        the provisions of section 315(c) of such Act.
  [(c) Use of Funds.--No part of any payment made under 
subsection (b) shall be used to defray the expenses of any 
candidate or delegate who is participating in any presidential 
nominating convention. Such payments shall be used only--
          [(1) to defray expenses incurred with respect to a 
        presidential nominating convention (including the 
        payment of deposits) by or on behalf of the national 
        committee receiving such payments; or
          [(2) to repay loans the proceeds of which were used 
        to defray such expenses, or otherwise to restore funds 
        (other than contributions to defray such expenses 
        received by such committee) used to defray such 
        expenses.
  [(d) Limitation of Expenditures.--
          [(1) Major parties.--Except as provided by paragraph 
        (3), the national committee of a major party may not 
        make expenditures with respect to a presidential 
        nominating convention which, in the aggregate, exceed 
        the amount of payments to which such committee is 
        entitled under subsection (b)(1).
          [(2) Minor parties.--Except as provided by paragraph 
        (3), the national committee of a minor party may not 
        make expenditures with respect to a presidential 
        nominating convention which, in the aggregate, exceed 
        the amount of the entitlement of the national committee 
        of a major party under subsection (b)(1).
          [(3) Exception.--The Commission may authorize the 
        national committee of a major party or minor party to 
        make expenditures which, in the aggregate, exceed the 
        limitation established by paragraph (1) or paragraph 
        (2) of this subsection. Such authorization shall be 
        based upon a determination by the Commission that, due 
        to extraordinary and unforeseen circumstances, such 
        expenditures are necessary to assure the effective 
        operation of the presidential nominating convention by 
        such committee.
          [(4) Provision of legal or accounting services.--For 
        purposes of this section, the payment, by any person 
        other than the national committee of a political party 
        (unless the person paying for such services is a person 
        other than the regular employer of the individual 
        rendering such services) of compensation to any 
        individual for legal or accounting services rendered to 
        or on behalf of the national committee of a political 
        party shall not be treated as an expenditure made by or 
        on behalf of such committee with respect to its 
        limitations on presidential nominating convention 
        expenses.
  [(e) Availability of Payments.--The national committee of a 
major party or minor party may receive payments under 
subsection (b)(3) beginning on July 1 of the calendar year 
immediately preceding the calendar year in which a presidential 
nominating convention of the political party involved is held.
  [(f) Transfer to the Fund.--If, after the close of a 
presidential nominating convention and after the national 
committee of the political party involved has been paid the 
amount which it is entitled to receive under this section, 
there are moneys remaining in the account of such national 
committee, the Secretary shall transfer the moneys so remaining 
to the fund.
  [(g) Certification by Commission.--Any major party or minor 
party may file a statement with the Commission in such form and 
manner and at such times as it may require, designating the 
national committee of such party. Such statement shall include 
the information required by section 303(b) of the Federal 
Election Campaign Act of 1971, together with such additional 
information as the Commission may require. Upon receipt of a 
statement filed under the preceding sentences, the Commission 
promptly shall verify such statement according to such 
procedures and criteria as it may establish and shall certify 
to the Secretary for payment in full to any such committee of 
amounts to which such committee may be entitled under 
subsection (b). Such certifications shall be subject to an 
examination and audit which the Commission shall conduct no 
later than December 31, of the calendar year in which the 
presidential nominating convention involved is held.
  [(h) Repayments.--The Commission shall have the same 
authority to require repayments from the national committee of 
a major party or a minor party as it has with respect to 
repayments from any eligible candidate under section 9007(b). 
The provisions of section 9007(c) and section 9007(d) shall 
apply with respect to any repayment required by the Commission 
under this subsection.]

SEC. 9009. REPORTS TO CONGRESS; REGULATIONS.

  (a) Reports.--The Commission shall, as soon as practicable 
after each presidential election, submit a full report to the 
Senate and House of Representatives setting forth--
          (1) * * *
          (2) the amounts certified by it under section 9005 
        for payment to the eligible candidates of each 
        political party; and
          (3) the amount of payments, if any, required from 
        such candidates under section 9007, and the reasons for 
        each payment required[; and].
          [(4) the expenses incurred by the national committee 
        of a major party or minor party with respect to a 
        presidential nominating convention;
          [(5) the amounts certified by it under section 
        9008(g) for payment to each such committee; and
          [(6) the amount of payments, if any, required from 
        such committees under section 9008(h), and the reasons 
        for each such payment.]
Each report submitted pursuant to this section shall be printed 
as a Senate document.

           *       *       *       *       *       *       *


SEC. 9012. CRIMINAL PENALTIES.

  (a) Excess Expenses.--
          (1) It shall be unlawful for an eligible candidate of 
        a political party for President and Vice President in a 
        presidential election or any of his authorized 
        committees knowingly and willfully to incur qualified 
        campaign expenses in excess of the aggregate payments 
        to which the eligible candidates of a major party are 
        entitled under section 9004 with respect to such 
        election. [It shall be unlawful for the national 
        committee of a major party or minor party knowingly and 
        willfully to incur expenses with respect to a 
        presidential nominating convention in excess of the 
        expenditure limitation applicable with respect to such 
        committee under section 9008(d), unless the incurring 
        of such expenses is authorized by the Commission under 
        section 9008(d)(3).]

           *       *       *       *       *       *       *

  (c) Unlawful Use of Payments.--
          (1) * * *
          [(2) It shall be unlawful for the national committee 
        of a major party or minor party which receives any 
        payment under section 9008(b)(3) to use, or authorize 
        the use of, such payment for any purpose other than a 
        purpose authorized by section 9008(c).]
          [(3)] (2) Any person who violates paragraph (1) shall 
        be fined not more than $10,000, or imprisoned not more 
        than five years, or both.

           *       *       *       *       *       *       *


CHAPTER 96--PRESIDENTIAL PRIMARY MATCHING PAYMENT ACCOUNT

           *       *       *       *       *       *       *


SEC. 9037. PAYMENTS TO ELIGIBLE CANDIDATES.

  (a) Establishment of Account.--The Secretary shall maintain 
in the Presidential Election Campaign Fund established by 
section 9006(a), in addition to any account which he maintains 
under such section, a separate account to be known as the 
Presidential Primary Matching Payment Account. The Secretary 
shall deposit into the matching payment account, for use by the 
candidate of any political party who is eligible to receive 
payments under section 9033, the amount available after the 
Secretary determines that amounts for payments under section 
9006(c) [and for payments under section 9008(b)(3)] are 
available for such payments.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    Starting in 1976, both major parties have used public 
funding to finance their nominating conventions since the 
creation of the Presidential Election Campaign Fund (PECF). In 
2012, the Democratic and Republican convention committees each 
received approximately $18 million of public funding for their 
respective nominating conventions.
    The money used for these grants is withdrawn from the 
Presidential Election Campaign Fund, which in turn is funded by 
taxpayers who voluntarily elect to contribute $3.00. Electing 
to make this contribution has no effect on either a taxpayer's 
tax liability or on their refund amount. The entirety of the 
PECF balance is donated voluntarily.
    I oppose H.R. 94 in its current form. I believe that using 
federal funds to underwrite nominating conventions is not the 
best use of this money but also recognize that taxpayers are 
fully aware of what it is they are subsidizing, as the system 
is voluntary. In keeping with the spirit of those that would 
still like to contribute to convention funding, I offered an 
amendment to this bill at the mark-up that would prohibit 
public funding of nominating conventions while creating a 
vehicle by which citizens can still contribute. The amendment 
also banned the use of so-called ``soft money'' contributions 
by special interests to convention committees.
    I withdrew the amendment at the request of the Chairman 
upon her offer to work out a legislative fix to accomplish the 
amendment's goal before the bill receives floor consideration.

                                                   Robert A. Brady.

                                  
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