The only way someone without the financial clout of Ross Perot can go toe-to-toe with the "big boys" is by joining one of the two main parties: the Democrats and the Republicans. Without the reach, both financially and politically, of these two parties the odds are squarely against you. True, the occasional "independent" might win a seat on congress, but how many independents do you know that won a seat who weren't former members of one of the parties
Campaign finance is categorized in two ways: "hard money" and "soft money". Hard money is "donations made directly to political candidates." (Wikipedia: "Campaign Finance in the United States", paragraph 2) These direct donations come from organizations, individuals, and (you guessed it) the political parties. "Soft" money is money that isn't received or spent by the candidate's campaign but spent by individuals/organizations for political advertisements (often made by said individual/organization) for a favored candidate's position or attacks on his opponents. More or less, "hard" money is donated to a campaign for the candidate to spend while "soft" money isn't donated, just spent. There's a fine line between the two that has more to do with semantics than the action, itself. While there's a limit on how much "hard" money can be sent to a candidate, there is no limit on how much "soft" money his political allies can volunteer to spend on his behalf.
There is a limit on the type of "soft" money ads that can be legally put out. In short, the ads are "information only", positive or negative depending on which candidate the ad is attempting to support. This also includes ads that compare the different candidates. It is illegal for 527 ads to use the words "vote for", "don't vote for", "elect", "don't elect", etc. They can only suggest doing so in an indirect manner ("so-and-so is honorable, but this man isn't"). Beyond that, 527s are basically free to put whatever they want out even if it's a flat out lie (but I'm sure they can be sued for Slander if the lie can be proven to be a lie).
Hard Money on the Rise
All this obviously makes "hard" money easier to trace and regulate than "soft" money. But even with limits on "Hard" money donations, the amount of money that can be spent during an election is mind-boggling. In the 2004 Presidential Election (R) George W. Bush's campaign received $367,228,801, (D) John Kerry's $326,236,288, (I) Ralph Nader's $4,566,037, and (L) Michael Badnarik $1,093,013 ("2004 Presidential Election"). In total, $880.5 million dollars was donated in 2004 compared to $528.9 million in 2000. And the trend shows that the money for campaigns will only rise higher.
Obviously, corporations, unions, lobbyists and other special interest groups have a way around the donation limits, a legal "loop-hole" per se. These are called Party Activity Committees or PACs. "Under federal election law, an individual or group (such as a PAC) may make unlimited "independent expenditures" in connection with federal elections." (Wikipedia: "Campaign Finance in the United States", paragraph 10). This is how it works. Let's say a union wants to donate to the