Political campaigns at all levels are expensive, and they have been getting more expensive. Adjusting for inflation, per-seat spending in the House nearly doubled from about $800,000 to $1.5 million from 1986 to 2016, and Senate campaign spending increased from $6.7 million to nearly $10.5 million in the same period. Given the large amounts of money needed for a congressional campaign, it is clear why lawmakers must devote somewhere between one-third to two-thirds of their time to fundraising. Wealthy candidates can fund their own campaigns. Candidates spend their campaign funds on traveling, advertisements, mass mailings, political consultants, office space, and salaries for campaign staff members. Televised advertisements are a major campaign expense.
Direct campaign funds come from many sources. Some funds are direct contributions from small contributors; other direct contributions come from wealthy donors who make larger donations. Federal law caps an individual's donations for any one candidate for any specific election cycle. That cap is indexed to inflation and rose from $2,000 in 2004 to $2,700 by the late 2010s. A political action committee (PAC), an organization established by an interest group to raise money and provide financial support to political candidates or parties, can also make direct donations to political campaigns.
In 1971 Congress passed the Federal Election Campaign Act (FECA), which required candidates for federal office to disclose the source of most of their campaign contributions. A 1974 amendment to FECA established the Federal Election Commission, the independent federal agency that oversees spending in congressional and presidential campaigns to ensure that campaign laws are followed. The amendments to FECA also created a system of public funding of presidential campaigns, set limits on how much candidates could spend on a campaign, and limited the amount of money that individuals and organizations could contribute. For the next several elections presidential candidates of both parties accepted the public funds and the spending limits that came with them. Public funding was essentially abandoned by presidential candidates starting in 2008, however, as the amount of money supplied and the limits were both judged to be far less than what candidates believed they needed to run an effective campaign. Presidential campaign spending has since exploded, with total spending on all presidential candidates reaching nearly $2.4 billion in 2016.
In 1976 the U.S. Supreme Court heard legal challenges to parts of the new campaign finance regulations. The result was a key ruling in Buckley v. Valeo, a 1976 Supreme Court decision that declared unconstitutional the part of a campaign finance law that limited how much federal candidates could spend because it violated their 1st Amendment right to free speech while upholding the law's limits on direct donations to particular campaigns. The court viewed campaign spending as a form of symbolic speech, which was why it was protected by the 1st Amendment. Under the ruling, the amount individuals could spend indirectly on a campaign was not limited as long as advertisements placed by noncandidates did not directly endorse the election of a particular candidate.
Campaign regulations do not cover all groups. For example, federal campaign regulations do not apply to a 527 committee, which is a nonprofit organization that advocates for a particular issue rather than campaigning specifically for or against a particular candidate. Because they are not part of any candidate's campaign or a political party, these groups are exempt from campaign laws.
Campaign spending laws led to a proliferation of issue ads paid for by PACs, 527 organizations, and others. These issue ads were thinly disguised advertisements against one candidate or for another. In response, Congress passed another campaign finance law, the Bipartisan Campaign Reform Act of 2002 (McCain-Feingold Act), which, among other provisions, prohibited the broadcasting of "electioneering communications" by all independent organizations in the 30 days before an election. This provision was challenged, resulting in Citizens United v. Federal Election Commission, a 2010 U.S. Supreme Court decision that declared unconstitutional the part of a campaign law that limited the amount corporations and labor unions could spend to promote the election of particular candidates for federal office because those limits violated the right to free speech. Four years later, in McCutcheon v. FEC, the court eliminated limits on an individual's total contributions in a given election cycle, though it upheld limits on individual's giving to one candidate.
Another court ruling in 2010, in Speechnow v FEC from the D.C. Circuit Court, allowed for the formation of a new form of campaign organization called the Super PAC. A Super PAC is an independent expenditure-only political action committee that can raise unlimited funds from corporations and labor unions. Super PACs can use their unlimited funds to make direct endorsements of candidates and direct attacks on other candidates. They cannot contribute directly to campaigns and cannot coordinate their efforts with campaigns, however. Because there are no spending limits for these groups, they have become very influential in elections, spending over $1 billion in 2016 alone.