Are there campaign finance rules that could avoid the hydraulic "money-shift" tendencies that go along with campaign finance regulation?Can...

After the Bipartisan Campaign Reform Act of 2002 (also known as McCain-Feingold) was passed, which banned soft money donations to political parties, many critics felt that it only succeeded in shifting money through what is often figuratively called a hydraulic process to other cracks. According to Raymond J. La Raja and Brian F. Schaffner, authors of Campaign Finance and Political Polarization: When Purists Prevail (please see the link below), there is no way to stop this flow of money. The authors state,

When well-intentioned reformers pass laws that limit contributions, the amount of money in politics does not change significantly, but its flow migrates. In other words, the rules do not necessarily create effective 'dams' that block money from entering politics, but instead expand or carve new 'canals' that channel its flow in other directions."

Therefore, experts often feel there is no way to stop the hydraulic "money-shift" tendencies that accompany campaign finance rules. 

As of now, individual contributions to a candidate can be limited under Federal Election Commission (FEC) rules. For example, an individual can only give $2,700 to a federal candidate per election. Several cases have put the question of whether individual campaign contributions are protected by the First Amendment before the Supreme Court. In 2010, the court ruled in Citizens United v. FEC that nonprofit corporations should not be subject to individual campaign contribution limits. These same rights also apply to for-profit corporations, unions, and other types of associations. 

As it is difficult to stop the flow of money into campaigns, many people believe campaign finance rules should be dropped entirely. In addition, many people believe that it is a First Amendment right to be able to donate as much money as one wants to a campaign or issue. I believe full disclosure of who is giving how much to which campaign would end a lot of corruption in campaigns. For example, the blog Open Secrets, in partnership with the Boston Globe's Spotlight Team, recently found out that Boston lawyers gave thousands of dollars to a Montana Senator and then received "bonuses" for these amounts from their law firm (see the story in the link below). Cases like this show rules that make it mandatory to reveal who is contributing to what (and where the money really comes from) would make the political process more transparent. 

PACs and 527s have also been criticized for being destructive to the democratic process. PACs, or political action committees, can channel money to political candidates. While corporations can't contribute directly to PACs, they can sponsor a PAC and ask for employee donations. 527s can receive unlimited donations from individuals and corporations and can run political ads. They are also tax exempt. An example of a 527 was Swift Boat Veterans for Truth, which was against Kerry's Presidential campaign in 2004. These entities still allow a lot of corporate and individual money to be channeled into political campaigns, and it's not always clear where the money is really coming from.