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It seems crazy to me too. The limits on spending for election campaigns are far smaller in some other countries, even after adjusting for population size.
Without passing judgment on whether it's wise or not (though... clearly the current paradigm is not), the legal rationale is that the free speech implications of the US Constitution's first amendment are extremely broad and permissive, even more so for explicitly political speech, and that money spent on political campaigns is effectively money spent to disseminate political speech. Restrictions therefore are very few, very light, and even where they exist they are very easy to effectively work around while remaining legal.