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The Longest Campaign — Part Three

The Watergate scandal ushers in the most sweeping campaign-finance reforms in history

Politics abounds with irony. Only four months before the Watergate break-in that would set off the greatest political scandal of the 20th century and lead to his resignation in disgrace, President Nixon finally signed the Federal Election Campaign Act—but it did nothing to stem the flow of big contributions to his reelection campaign.

Nixon’s secretary of commerce and fundraiser-in-chief, Maurice Stans, openly boasted that his candidate, unlike others, didn’t have to waste a moment of his time soliciting contributions; the money, he said, just rolled in. “My approach as finance chairman was to free the candidate from any money worries whatsoever,” Stans once said. “Ours was by far the most expensive campaign ever, and I never once had to go to him to ask him to do anything to raise money.”

One major donor, Chicago insurance executive W. Clement Stone, personally gave $2 million to Nixon’s Committee for the Re-Election of the President, making him the poster boy of a new campaign-finance reform group called Common Cause. The self-styled citizens’ lobby, founded in 1970 by John Gardner, asked all 1972 presidential candidates to voluntarily disclose the contributions they had received prior to the April signing of the new law, but Nixon declined to do so. In September 1972 Common Cause sued Nixon’s reelection committee. Under this pressure, “CREEP,” as it was known, turned loose more than 1,500 names of contributors who together had given more than $5 million, with Stone preeminent among them. 

When the five Watergate burglars were caught red-handed by police at the Democratic National Committee’s headquarters on the night of June 17, 1972, documents seized with them tied them to the Nixon campaign. Extraordinary investigative reporting—including groundbreaking stories by Bob Woodward and Carl Bernstein, two young reporters at The Washington Post—uncovered a secret fund from which the burglars were to be paid hush money for their silence in court. Further investigations led to convictions in the break-in of all five burglars and two prominent figures in the Nixon campaign. When one of the burglars, James W. McCord, Jr., wrote a letter to the judge, John Sirica, informing him that a greater conspiracy was involved, the ensuing revelations of a White House cover-up led to the departures of Attorney General Richard Kleindienst and three key presidential aides: H.R. Haldeman, Nixon’s chief of staff; John Ehrlichman, his domestic adviser; and John Dean, the White House counsel. A special Senate committee, known as the Watergate committee, investigated and aired the whole matter in dramatic televised hearings. Ultimately this led to Nixon’s resignation on August 8, 1974, after the disclosure of White House tapes that established his duplicity and involvement in the cover-up.

Even before Nixon resigned, the scandal had set the Senate to reworking the Federal Election Campaign Act, beginning little more than a year after Nixon had signed it into law. A bipartisan group of lawmakers led by Democratic Senator Edward M. Kennedy of Massachusetts and Republican Senator Hugh Scott of Pennsylvania pushed for the public financing of presidential and congressional elections. Nixon had threatened a veto, but he was gone from office by the time Congress completed the legislation; his successor, President Gerald R. Ford, himself an opponent of public financing, reluctantly signed it into law in October as the Federal Election Campaign Act Amendments of 1974.

The new law—the most sweeping campaign-finance reform ever enacted by Congress—retained the ban on corporate and labor union contributions and the limits passed in 1971 on what candidates (and members of their families) could give to their own campaigns. It established a Federal Election Commission to oversee federal elections and enforce the limits: $1,000 for an individual in a primary, runoff, or general election and no more than an annual total of $25,000 for all federal candidates and political committees. No PAC could give more than $5,000 to any candidate in an election; a ceiling of $1,000 was placed on any independent expenditure made on a candidate’s behalf; presidential candidates were limited to spending $10 million in pursuit of the party nomination, and $20 million for the general election. Candidates for Congress and the national party committees were also assigned spending limits based on each constituency’s voting-age population in a presidential election year, with federal funds set aside for party conventions.

Most innovative of all was a provision whereby a qualified presidential candidate (but not congressional candidates) could receive matching public funds in primary elections provided he or she could demonstrate a minimum level of private financial support and would abide by limits imposed on spending. Under the system, to qualify for public matching funds a candidate needed to raise at least $100,000: $5,000 in individual contributions of $250 or less in a least 20 states in the year before the election year or during it. Then the first $250 of each individual contribution would be matched by grants from the federal treasury—an effort to reduce the fundraising burden on candidates as well as the influence of special interests in the process. For the general election, the two major-party nominees would receive grants covering the full cost. The subsidy was to be publicly financed through Americans’ voluntary $1 checkoff on federal income-tax returns. 

Almost immediately, however, the new version of the FECA came under challenge as unconstitutional. In January 1975, one day after the law took effect, Senator James Buckley of New York, a member of his state’s Conservative Party, and former Democratic Senator Eugene McCarthy of Minnesota, joined by an unusual coalition of liberal and conservative groups, went to court to challenge the law, arguing that the spending limits violated the First Amendment guarantee of freedom of speech. McCarthy also specifically charged, at a press conference prior to the lawsuit, that public financing discriminated in favor of the two major parties and was “the same as saying the country is going to have two established religions.”

These and other objections brought the case—Buckley v. Valeo (the latter, Francis R. Valeo, the secretary of the Senate )—to the Supreme Court. In January 1976, it generally upheld the contribution limits but ruled that limits on spending were constitutional only if agreed to voluntarily by candidates. It also said that expenditures by independent groups could not be limited.  At oral argument, Justice Potter Stewart had summed up the principle by stating, “Money is speech, and speech is money, whether it is buying television or radio time or newspaper advertising, or even buying pencils and paper and microphones.”

Congress responded to Buckley v. Valeo by amending FECA in time for the 1976 election. Certain contribution ceilings also were revised or added, and stronger reporting requirements were instituted. And candidates receiving the federal subsidy had to win at least 10 percent of the vote in two consecutive primaries to remain eligible for the matching funds, a provision that would winnow down the field as the primaries progressed. The Buckley decision also caused a revision in how members of the Federal Election Commission were chosen. Originally selected jointly by the president and congressional leaders, the method was rejected by the Court as invalid because the congressional appointees would be exerting executive powers. Congress then changed the law to have all six commissioners appointed by the president.

The changes came to be known as the Watergate reforms. The federal subsidy particularly was instrumental in encouraging a large field of Democrats to enter the 1976 state caucuses and primaries. Twelve of them, and the two major Republican candidates as well—President Ford, elevated from the vice presidency to the Oval Office by Richard Nixon’s resignation, and former California Governor Ronald Reagan—qualified for the matching funds, and were happy to accept the spending limits. Indeed, the subsidy enabled a long-shot Democratic candidate, former Governor Jimmy Carter of Georgia, to win his party’s nomination and the election that year.

The reforms placed heavy obligations on the candidates, their campaigns, and on other political committees to report their financial activities to the FEC. Accordingly, in 1979 the campaign-finance amendments were revised to make them less burdensome.

And quickly, political operatives started finding ways to open the back door and let the money flow freely once again.