How Campaign Finance Works

Barack Obama Image Gallery Hillary Clinton and Barack Obama have out-raised their Democratic competitors. See more Barack Obama pictures.
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­With the 2008 presidential election fast approaching, you've probably heard more about how much money candidates are raising than the issues they stand behind. This is because campaign finance is big business and one of the most important parts of modern elections in the United States, and increasingly, around the world.

In the 2004 U.S. presidential election, George W. Bush and John Kerry raised nearly half a billion dollars in private funding in their bids to win the White House. Total receipts for all candidates surpassed $850 million for the primary and general election. As of September 2007, the crop of hopefuls for the 2008 election has raised more than $420 million. Analysts expect that candidates will need to raise $500 million each in order to have a chance at winning the presidency [source: Open Secrets­].

Add to this that nearly two-thirds of all individual contributions are between $1,000 and the maximum of $2,300, and it's pretty clear that Americans are generous with their financial support of candidates [source: Open Secrets].

With this kind of money changing hands, it may leave you wondering where it goes and why it's necessary to raise that much. The fact is, getting the word out on a candidate's platform is becoming more and more expensive. Television and radio ads, billboards, mailers and signs are just a few of the places the money goes. The American public is inundated with messages from the political machine like never before.

Dealing with such huge sums of money also brings the potential for illegalities. Historically, elections around the world have been rife with scandal and corruption. In the United States, the Federal Elections Commis­sion (FEC) has the task of keeping elections as clean as possible by regulating donations, spending and public funding. In addition to the FEC, grassroots organizations like Open Secrets, Election Watchdog and Common Cause keep a close eye on how money is raised and spent. Congress and the Senate have debated campaign finance reform for decades, and the laws in place have been difficult to enforce because of loopholes and tricky bookkeeping.

In this article, we'll look at the history of campaign finance in the United States, how funds are raised and spent today, and what the government is doing about reform. We'll also learn about elections on the state level, and what role campaign finance plays in other countries.