Dear Mr.----------:
     The election of the President of the United States is the supreme expression of the free choice of the American people. By our free choice, we vote and in other ways participate in the politics of our democracy. One form of political participation is the contribution of money to support the candidates and party each of us prefers.
     For the citizens' free choice to be exercised meaningfully, they must be well-informed about opposing candidates, parties and issues. To achieve this, candidates and parties must have the financial means to carry their views to the voters. In a constituency as vast as the presidential, the costs of reaching the electorate are high, necessarily putting great financial burdens on the candidates and the parties they represent at the polls.
     In these days when the public interest demands basic decisions so essential to our security and survival, public policy should enable presidential candidates to free themselves of dependence on large contributions of those with special interests. Accordingly, it is essential to broaden the base of financial support for candidates and parties. To accomplish this, improvement of public understanding of campaign finance, coupled with a system of incentives for solicitation and giving, is necessary.
     In October, 1961, I appointed a distinguished, bipartisan Commission on Campaign Costs to take a fresh look at the problems of financing presidential campaigns. I am gratified at the enthusiastic bipartisan reception accorded the Commission's unanimous Report, and I am pleased to transmit herewith legislation designed to carry out five of its important recommendations. Other recommendations do not require legislation, and I intend to help carry them out through other means. I now ask you to join me in supporting in broad outline the constructive proposals of the Commission, which have received the approval of both majority party chairmen and of former Presidents Harry S. Truman and Dwight D. Eisenhower, and former presidential candidates Thomas E. Dewey, Adlai E. Stevenson, and Richard M. Nixon.
     Although the Commission devoted its attention to the problems of campaign costs for Presidential and Vice Presidential candidates only and its recommendations go only to such campaigns, it pointed out that ". . . it is our view that the measures we propose would have a desirable effect on all political fund raising." The Congress may therefore wish to consider the applicability of any of the recommended practices to campaigns other than Presidential or Vice Presidential.  It may also wish to explore the subject of campaign financing for elections other than Presidential and Vice Presidential either through standing Committees, a special committee, or by means of a specially constituted advisory commission of the type that has produced the report upon which the proposals I am recommending today rest.
     If the financial burdens of presidential campaigns are to be widely shared, then some system of incentives must be established to encourage broad solicitation and giving. The Commission recommended for an experimental period including two presidential elections, and I propose, a system of tax incentives for political contributions, which would include two alternatives available to the taxpayer, as follows: (1) a tax credit against federal income tax for 50 percent of contributions up to a maximum of $10 in credits a year; and (2) a tax deduction for political contributions for the full amount of the contribution up to a maximum of $750 per tax return per year (the Commission in its report recommended $1,000). The contributions eligible for tax benefits would include those made to the national committee of a political party and to one political committee designated by the national committee to receive such contributions in each state. The tax incentive program is an effort to encourage political giving as educational and charitable giving have been encouraged for many years by tax benefits. It is designed to give party solicitors an additional tool to help stimulate individuals to contribute money, in non-election as well as election years.
     The Commission stated that if the measures it recommended do not accomplish their purposes, alternative approaches would have to be examined, and it recommended that consideration be given to the matching incentive plan outlined in its report. I urge the Congress to study this plan, since it is an original and imaginative approach and would encourage concentrated party effort in broadening the financial base of Presidential campaigns. Under the matching incentive plan, contributions in amounts of $10 or less per person raised by designated political committees would be deposited by those committees with the U.S. Treasury, where the money would be matched by a like sum from government appropriations. The combined total would be used to pay authorized types of expenses, payments being made by government check direct to sellers of campaign goods and services. The total sum to be matched could be limited by statute.
     To increase public confidence in the ways campaigns are financed, I urge the repeal of present federal limits on receipts and expenditures of interstate political committees and on the amounts individuals can contribute to such committees for use in Presidential nominations and election campaigns. Since present ceilings have proven to be ineffective and existing practices violate the spirit, if not the letter of the law, an effective system of disclosure and publicity to reveal where money comes from and goes in such campaigns has been proposed. Full and effective disclosure is the best way to control both excessive contributions and unlimited expenditures.
     One bill I am submitting would require candidates for President and Vice President to report contributions and expenditures in nomination and election campaigns. As one who participated in a presidential campaign, I heartily endorse this recommendation. I also endorse the proposition that all political committees campaigning for candidates for President and Vice President and raising or spending as much as $2,500 in a year, should be required to file periodic campaign fund statements.
     Furthermore, reporting requirements should go beyond present law in two important respects. Reporting requirements should reach individuals and families contributing or spending, singly or in combination, $5,000 or more per year in the aggregate, in connection with the nomination or election campaign of one or more candidates for President or Vice President.  And for reasons inherent in the dramatic growth of bipartisan citizenship and public affairs programs undertaken in recent years by corporations, labor unions, trade associations, and other groups, the Commission has recommended that reports be required of both individuals and groups spending $5,000 or more for bipartisan or multipartisan political activities in any year.
     It is essential that all reports be submitted to a Registry of Election Finance, a central repository having responsibility to receive, examine, tabulate, summarize, publicize, and preserve the reported data. The proposed legislation would place the Registry under the Comptroller General, with a Registrar appointed by him, and with a bipartisan Board of Advisors providing guidance.
     Radio and television broadcasts are an essential but expensive means of reaching a vast electorate. To help reduce costs for presidential candidates, I propose the temporary suspension in 1964 of the "equal time" provision in Section 315 of the Communications Act with respect to presidential and vice presidential candidates. A similar suspension in 1960 worked well, and the broadcasting industry is eager to provide free time and facilities for such political uses. I believe temporary suspension, rather than permanent repeal, desirable, so that the Congress can periodically review broadcasting and campaigning practices that occur under ever-changing conditions.
     Traditionally, the political parties have had to pay the costs of the President-elect and Vice President-elect during the transition period between the election and the inauguration of a new Administration. It is entirely desirable and appropriate that the Federal government provide funds for paying the reasonable and necessary costs of installing a new Administration in office. There are important reasons, aside from costs, to institutionalize the change in party power from one Administration to another. An incoming President must select and assemble responsible public officials who must prepare themselves for their new responsibilities. Thus I recommend that the outgoing President be authorized to extend needed facilities and services of the Government to the President-elect and his associates. For this purpose, funds should be appropriated to be spent for specified activities through normal government channels, as the draft legislation provides.
     The political parties would be substantially assisted in the registration of voters if the Post Office Department were authorized to cooperate with them by making available change-of-address records. Post Offices already extend such cooperation to local election authorities.
     The problems of political finance are not limited to any political party, but are common to all, and all will benefit from action on the legislation herewith transmitted. Enactment of these proposals will go a long way to improve the political climate.
     Copies of the five draft bills are attached.
             Sincerely,