To amend the Internal Revenue Code of 1986 to reform the system of public financing for presidential elections, and for other purposes.

November 21, 2003

Mr. MEEHAN (for himself and Mr. SHAYS) introduced the following bill; which was referred to the Committee on House Administration, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Internal Revenue Code of 1986 to reform the system of public financing for presidential elections, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Presidential Funding Act of 2003'.

SEC. 2. REVISIONS TO SYSTEM OF PRESIDENTIAL PRIMARY MATCHING PAYMENTS.

(a) INCREASE IN MATCHING RATE FOR PAYMENTS- Section 9034(a) of the Internal Revenue Code of 1986 is amended by striking `an amount equal to the amount' and inserting `an amount equal to 400 percent of the amount'.

(b) ELIGIBILITY REQUIREMENTS-

(1) AMOUNT OF AGGREGATE CONTRIBUTIONS PER STATE- Section 9033(b)(3) of such Code is amended by striking `$5,000' and inserting `$15,000'.

(2) PARTICIPATION IN SYSTEM FOR PAYMENTS FOR GENERAL ELECTION- Section 9033(b) of such Code is amended--

(A) by striking `and' at the end of paragraph (3);

(B) by striking the period at the end of paragraph (4) and inserting `; and'; and

(C) by adding at the end the following new paragraph:

`(5) if the candidate is nominated by a political party for election to the office of President, the candidate will apply for and accept payments with respect to the general election for such office in accordance with chapter 95, including the requirement that the candidate and the candidate's authorized committees will not incur qualified campaign expenses in excess of the aggregate payments to which they will be entitled under section 9004. '.

(c) PERIOD OF AVAILABILITY OF PAYMENTS- Section 9032(6) of such Code is amended by striking `the beginning of the calendar year' and inserting `July 1 of the calendar year preceding the calendar year'.

(d) INCREASE IN LIMITATION ON TOTAL AMOUNT OF PAYMENTS- Section 9034(b) of such Code is amended by striking `50 percent' and inserting `80 percent'.

SEC. 3. REQUIRING PARTICIPATION IN PRIMARY PAYMENT SYSTEM AS CONDITION OF ELIGIBILITY FOR GENERAL ELECTION PAYMENTS.

(a) MAJOR PARTY CANDIDATES- Section 9003(b) of the Internal Revenue Code of 1986 is amended--

(1) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3); and

(2) by inserting before paragraph (2) (as so redesignated) the following new paragraph:

`(1) the candidate received payments under chapter 96 for the campaign for nomination;'.

(b) MINOR PARTY CANDIDATES- Section 9003(c) of such Code is amended--

(1) by redesignating paragraphs (1) and (2) as paragraphs (2) and (3); and

(2) by inserting before paragraph (2) (as so redesignated) the following new paragraph:

`(1) the candidate received payments under chapter 96 for the campaign for nomination;'.

SEC. 4. REVISIONS TO CANDIDATE EXPENDITURE LIMITS.

(a) INCREASE IN LIMIT ON COORDINATED PARTY EXPENDITURES- Section 315(d)(2) of the Federal Election Campaign Act of 1971 (2 U.S.C. 441a(d)(2)) is amended by striking `2 cents' and inserting `4 cents'.

(b) INCREASE IN EXPENDITURE LIMITS FOR PARTICIPATING CANDIDATES; ELIMINATION OF STATE-SPECIFIC LIMITS-

(1) IN GENERAL- Section 315(b)(1) of such Act (2 U.S.C. 441a(b)(1)) is amended by striking `in excess of X' and all that follows and inserting the following: `in excess of $75,000,000 with respect to a campaign for nomination for election or in excess of $75,000,000 with respect to a campaign for election to such office.'.

(2) CONFORMING AMENDMENT RELATING TO TIMING OF COST-OF-LIVING ADJUSTMENT- Section 315(c)(2)(B) of such Act (2 U.S.C. 441a(c)(2)(B) is amended--

(A) in clause (i), by striking `subsections (b) and (d)' and inserting `subsection (d)';

(B) in clause (i), by striking `and' at the end;

(C) in clause (ii), by striking the period at the end and inserting `; and'; and

(D) by adding at the end the following new clause:

`(iii) for purposes of subsection (b), calendar year 2004.'.

(3) OTHER CONFORMING AMENDMENTS- The Internal Revenue Code of 1986 is amended--

(A) in section 9004(a)(1), by striking `section 320(b)(1)(B) of the Federal Election Campaign Act of 1971' and inserting `section 315(b)(1) of the Federal Election Campaign Act of 1971'; and

(B) by striking `section 320(b)(1)(A) of the Federal Election Campaign Act of 1971' each place it appears in sections 9034(b) and 9035(a) and inserting `section 315(b)(1) of the Federal Election Campaign Act of 1971'.

(c) REPEAL OF EXCLUSION OF FUNDRAISING COSTS FROM TREATMENT AS EXPENDITURES- Section 301(9)(B)(vi) of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(9)(B)(vi)) is amended by striking `in excess of an amount equal to 20 percent of the expenditure limitation applicable to such candidate under section 315(b)' and inserting the following: `who is seeking nomination for election or election to the office of President or Vice President of the United States'.

(d) INCREASE IN EXPENDITURE LIMITS FOR PRIMARY CANDIDATES PARTICIPATING IN PRIMARY PAYMENT SYSTEM WHO FACE CERTAIN NONPARTICIPATING OPPONENTS-

(1) IN GENERAL- Section 315(b) of the Federal Election Campaign Act of 1971 (2 U.S.C. 441a(b)) is amended--

(A) in paragraph (1), by striking `No candidate' and inserting `Except as provided in paragraph (3), no candidate'; and

(B) by adding at the end the following new paragraph:

`(3)(A) In the case of a candidate described in paragraph (1) in a campaign for nomination for election for the office of President who faces a nonparticipating primary candidate of the same political party who receives contributions or makes expenditures with respect to the campaign in an aggregate amount greater than 133 percent of the expenditure limitation under paragraph (1), the limitation on expenditures applicable under such paragraph shall be increased by 100 percent.

`(B) Each nonparticipating primary candidate who receives contributions or makes expenditures with respect to the campaign in an aggregate amount greater than 133 percent of the expenditure limitation under paragraph (1) shall notify the Commission in writing not later than 24 hours after first receiving aggregate contributions or making aggregate expenditures in such an amount.

`(C) Not later than 24 hours after receiving a written notice from a nonparticipating primary candidate under subparagraph (B), the Commission shall notify each opponent of the candidate to whom the increased limitation on expenditures applies pursuant to subparagraph (A).

`(D) In this paragraph, a `nonparticipating primary candidate' means a candidate for nomination for election for the office of President who is not eligible under section 9033 of the Internal Revenue Code of 1986 to receive payments from the Secretary of the Treasury under chapter 96 of such Code.'.

(2) NO INCREASE PERMITTED IN MATCHING PAYMENTS AS A RESULT OF INCREASE IN EXPENDITURE LIMIT- Section 9034(b) of the Internal Revenue Code of 1986 is amended by striking the period at the end and inserting the following: `, except that a candidate shall not receive any additional payments under subsection (a) once such candidate has received a combination of payments under subsection (a) and contributions which, in the aggregate, exceed the expenditure limit applicable under section 315(b)(1) of the Act with respect to a campaign for nomination for election to the office of the President (notwithstanding any increase in such expenditure limitation pursuant to section 315(b)(3) of such Act).'.

SEC. 5. REVISIONS TO DESIGNATION OF INCOME TAX PAYMENTS BY INDIVIDUAL TAXPAYERS.

(a) INCREASE IN AMOUNT DESIGNATED- Section 6096(a) of the Internal Revenue Code of 1986 is amended--

(1) in the first sentence, by striking `$3' each place it appears and inserting `$6'; and

(2) in the second sentence--

(A) by striking `$6' and inserting `$12', and

(B) by striking `$3' and inserting `$6'.

(b) INDEXING- Section 6096 of such Code is amended by adding at the end the following new subsection:

`(d) INDEXING OF AMOUNT DESIGNATED-

`(1) IN GENERAL- With respect to each taxable year after 2004, each amount referred to in subsection (a) shall be increased by the percent difference described in paragraph (2), except that if any such amount after such an increase is not a multiple of $1, such amount shall be rounded to the nearest multiple of $1.

`(2) PERCENT DIFFERENCE DESCRIBED- The percent difference described in this paragraph with respect to a taxable year is the percent difference determined under section 315(c)(1)(A) of the Federal Election Campaign Act of 1971 with respect to the calendar year during which the taxable year begins, except that the base year involved shall be 2004.'.

(c) ENSURING TAX PREPARATION SOFTWARE DOES NOT PROVIDE AUTOMATIC RESPONSE TO DESIGNATION QUESTION- Section 6096 of such Code, as amended by subsection (b), is amended by adding at the end the following new subsection:

`(e) ENSURING TAX PREPARATION SOFTWARE DOES NOT PROVIDE AUTOMATIC RESPONSE TO DESIGNATION QUESTION- The Secretary shall promulgate regulations to ensure that electronic software used in the preparation or filing of individual income tax returns does not automatically accept or decline a designation of a payment under this section.'.

(d) PUBLIC INFORMATION PROGRAM ON DESIGNATION- Section 6096 of such Code, as amended by subsections (b) and (c), is amended by adding at the end the following new subsection:

`(f) PUBLIC INFORMATION PROGRAM-

`(1) IN GENERAL- The Federal Election Commission shall conduct a program to inform and educate the public regarding the purposes of the Presidential Election Campaign Fund, the procedures for the designation of payments under this section, and the effect of such a designation on the income tax liability of taxpayers.

`(2) USE OF FUNDS FOR PROGRAM- Amounts in the Presidential Election Campaign Fund shall be made available to the Commission to carry out the program under this subsection, except that the amount made available for this purpose may not exceed $10,000,000 with respect to any Presidential election cycle. In this paragraph, a `Presidential election cycle' is the 4-year period beginning with January of the year following a Presidential election.'.

SEC. 6. ADDITIONAL GENERAL ELECTION PAYMENTS TO PARTICIPATING CANDIDATES FACING CERTAIN NONPARTICIPATING OPPONENTS.

(a) IN GENERAL- Section 9004(a)(1) of the Internal Revenue Code of 1986 is amended--

(1) by striking `(1) The eligible candidates' and inserting `(1)(A) Except as provided in subparagraph (B), the eligible candidates'; and

(2) by adding at the end the following new subparagraph:

`(B) In addition to the payments described in subparagraph (A), each eligible candidate of a major party in a presidential election with an opponent in the election who is not eligible to receive payments under section 9006 and who receives contributions or makes expenditures with respect to the primary and general elections in an aggregate amount greater than 133 percent of the combined expenditure limitations applicable to eligible candidates under section 315(b)(1) of the Federal Election Campaign Act of 1971 shall be entitled to equal payments under section 9006 in an amount equal to 100 percent of the expenditure limitation applicable under such section with respect to a campaign for election to the office of President.'.

(b) SPECIAL RULE FOR MINOR PARTY CANDIDATES- Section 9004(a)(2)(A) of such Code is amended--

(1) by striking `(A) The eligible candidates' and inserting `(A)(i) Except as provided in clause (ii), the eligible candidates'; and

(2) by adding at the end the following new clause:

`(ii) In addition to the payments described in clause (ii), each eligible candidate of a minor party in a presidential election with an opponent in the election who is not eligible to receive payments under section 9006 and who receives contributions or makes expenditures with respect to the primary and general elections in an aggregate amount greater than 133 percent of the combined expenditure limitations applicable to eligible candidates under section 315(b)(1) of the Federal Election Campaign Act of 1971 shall be entitled to equal payments under section 9006 in an amount equal to 100 percent of the payments to which such candidate is entitled under clause (i).'.

(c) PROCESS FOR DETERMINATION OF ELIGIBILITY FOR ADDITIONAL PAYMENT-

(1) IN GENERAL- Section 9005 of such Code is amended--

(A) by redesignating subsection (b) as subsection (c); and

(B) by inserting after subsection (a) the following new subsection:

`(b) SPECIAL RULES FOR CERTIFICATION OF ELIGIBILITY FOR ADDITIONAL PAYMENTS-

`(1) REPORTS ON EXPENDITURES BY INELIGIBLE CANDIDATES- If a candidate in a presidential election who is not eligible to receive payments under section 9006 receives contributions or makes expenditures with respect to the primary and general elections in an aggregate amount greater than 133 percent of the combined expenditure limitations applicable to eligible candidates under section 315(b)(1) of the Federal Election Campaign Act of 1971, the candidate shall notify the Commission in writing that the candidate has made aggregate expenditures in such an amount not later than 24 hours after first receiving aggregate contributions or making aggregate expenditures in such an amount.

`(2) CERTIFICATION- Not later than 24 hours after receiving a written notice under paragraph (1), the Commission shall certify to the Secretary of the Treasury for payment to any eligible candidate who is entitled to an additional payment under section 9004(a)(1)(B) or section 9004(a)(2)(A)(ii) that the candidate is entitled to payment in full of the additional payment under such section.'.

(2) CONFORMING AMENDMENT- Section 9005(c) of such Code (as redesignated under paragraph (1)(A)) is amended by striking `subsection (a)' and inserting `this section'.

(d) EXCLUSION OF ADDITIONAL PAYMENT FROM DETERMINATION OF EXPENDITURE LIMITS- Section 315(b)(2) of the Federal Election Campaign Act of 1971 (2 U.S.C. 441a(b)(2)) is amended--

(1) by striking `and' at the end of subparagraph (A);

(2) by striking the period at the end of subparagraph (B) and inserting `; and'; and

(3) by adding at the end the following new subparagraph:

`(C) the amount of expenditures made by a candidate shall be reduced by the amount of any additional payment received by the candidate under section 9004(a)(1)(B) of the Internal Revenue Code of 1986.'.

SEC. 7. DETERMINATION OF AMOUNTS IN PRESIDENTIAL ELECTION CAMPAIGN FUND.

Section 9006(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: `In making a determination of whether there are insufficient moneys in the fund for purposes of the previous sentence, the Secretary shall take into account in determining the balance of the fund for a Presidential election year the Secretary's best estimate of the amount of moneys which will be deposited into the fund during the year, except that the amount of the estimate may not exceed the average of the annual amounts deposited in the fund during the previous 3 years.'.

SEC. 8. REPEAL OF PRIORITY IN USE OF FUNDS FOR POLITICAL CONVENTIONS.

(a) IN GENERAL- Section 9008(a) of the Internal Revenue Code of 1986 is amended by striking the period at the end of the second sentence and all that follows and inserting the following: `, except that the amount deposited may not exceed the amount available after the Secretary determines that amounts for payments under section 9006 and section 9037 are available for such payments.'.

(b) CONFORMING AMENDMENT- The second sentence of section 9037(a) of such Code is amended by striking `section 9006(c) and for payments under section 9008(b)(3)' and inserting `section 9006'.

SEC. 9. EFFECTIVE DATE.

The amendments made by this Act shall apply with respect to elections occurring after January 1, 2005.

END