Unregulated money continues to corrode US politics. Reforms are needed

It was 50 years ago – on 9 August 1974 – Richard Nixon resigned as president amid the “Watergate” scandal. In the American consciousness, Watergate typically means the botched break-in at the Democratic National Committee headquarters and the resulting illegal cover-up (facts that are newly relevant in the wake of the US supreme court’s much-criticized decision on presidential immunity last month). But there is an equally relevant part of the story that is often skipped. Watergate was not just about abuse of presidential power. It was also a major campaign finance scandal.
By the time Nixon resigned, Americans were outraged to learn that the Watergate break-in and cover-up and other “dirty tricks” had been financed from a secret slush fund made up of donations from corporations and wealthy individuals. In response, Congress passed historic reforms designed to increase transparency and curb the influence of big money in politics. This was a watershed moment that helped reshape the ethos of government in America. Today, however, our elections are once again dominated by big money and secret spending. The post-Watergate reforms are in dire need of repair.
Thanks to a combination of factors, campaign finance in 2024 looks much like it did before Watergate. Ultra-wealthy donors can pour unlimited amounts of money into key races using lightly regulated Super Pacs that are supposed to be independent from candidates but can actually work hand-in-glove with them. In the 2022 midterms, the top 100 federal individual donors together spent more than $1.2bn, mostly through Super Pacs, swamping contributions from the millions of Americans who gave $200 or less. Billionaires are also set to pour vast amounts of money into the 2024 presidential race, including a small group of tech oligarchs with anti-democratic views and vast amounts of business with the government.
More and more spending is also done in secret in the form of “dark money” from non-profit organizations and shell companies that don’t disclose their donors – often a favored vehicle for controversial industries like the cryptocurrency sector, which is working feverishly to secure favorable regulatory treatment.
All of this spending has helped drive a broad collapse of trust in democratic institutions. Recent polling shows that 80% of Americans think major political donors have too much influence over our politics. Nearly two-thirds – including majorities of Democrats, Republicans and independents – say Congress should do more to limit big money’s sway.
This mirrors the mood after Watergate, when the public’s faith in government plummeted and Congress listened. Lawmakers passed tougher disclosure requirements, tighter limits on campaign contributions and spending, and created a presidential public financing system.
These changes shaped national politics for decades. Running for re-election in 1984 under the post-Watergate system, Ronald Reagan won in a landslide without holding a single fundraiser.
This system was never perfect, but it held together relatively well, especially after Congress passed a bipartisan overhaul in 2002 that closed several major loopholes. But then it started to unravel.
In a series of highly ideological 5-4 decisions – most notably, Citizens United v FEC – the supreme court swept away key limits on big money, launching the era of Super Pacs and opening the door for dark money in our campaigns. Lawmakers have done nothing to respond to these rulings, repeatedly failing to update the law to limit the damage from the court’s decisions or respond to new developments in campaign fundraising, like using email, the web and other technologies for appeals and advertising.
And the agency charged with enforcing campaign finance law, the Federal Election Commission, has proved even more feckless. Evenly divided and often deadlocked, the FEC often fails to enforce even laws still on the books, like restrictions on candidate “coordination” with notionally independent Super Pacs.
So what can be done?
The next Congress can start by passing the Freedom to Vote Act – a broad democracy reform package that includes a variety of strong provisions to rein in Super Pacs, curb dark money and strengthen enforcement. Congress came within a few votes of passing this package in 2022. Congressional leaders have affirmed they will make it a top priority in 2025. They should renew that commitment at the first opportunity.
Over the longer term, it is also critical that governments at all levels explore alternative ways to fund campaigns – including through reviving and building on the long-term goal of effective public financing. The new system that went into effect this cycle in New York state, for instance, uses public funds to match small private contributions from candidates’ constituents – making it possible for them to rely less on wealthy donors outside of their districts and states. New York could be an excellent model for a revitalized federal public financing system.
Fifty years ago, Watergate sparked a national reckoning with the corrosive role of unregulated money in our political system. Another round of significant reforms is long overdue.