Political action committee

A political action committee, or PAC, is an organization in the United States that campaigns for or against political candidates, ballot initiatives or legislation. At the federal level, an organization becomes a PAC when it receives more than $1,000 according to the Federal Election Campaign Act. At the state level, an organization becomes a PAC according to the state's election laws.

History of PACs

In 1905, President Theodore Roosevelt called for campaign finance reform. This led to laws called Acts of Congress intended to:

• Limit the influence of wealthy individuals and special interest groups;
• Regulate campaign spending; and
• Deter abuses by mandating public disclosure.

In 1971, Congress passed the Federal Election Campaign Act (FECA). This Act further defined how a PAC could operate.

In the 1972 presidential election abuses still occurred. However, there was no regulatory group to enforce the Act. Congress in 1974 set limits on contributions to PACs and established the Federal Election Commission (FEC). In brief, FEC rules include:

• A limit for individuals to $5,000 per year for Federal PACs;
• Corporations and unions may not contribute directly to federal PACs, but can for the administrative costs of a PAC affiliated with the specific corporation or union;
• Corporate-affiliated PACs may only solicit contributions from executives, shareholders, and their families;
• Contributions from corporate or labor union treasuries are illegal, though they may sponsor a PAC and provide financial support for its administration and fundraising;
• Union-affiliated PACs may only solicit contributions from members;
• Independent PACs may solicit contributions from the general public and pay their own costs.

Federal multi-candidate PACs were limited as follows:

• $5,000 per candidate for each election and primary;
• $15,000 per political party per year; and
• $5,000 per PAC per year.

In 2000, nearly unlimited spending continued. The billionaire Wyly brothers of Texas "played an instrumental role" when helping their desired candidate Texas Republican George W. Bush via a $2.5-million advertising campaign they financed via a 527 organization.

In the 2004 presidential election, campaign donations were via a 527 organization. One organization, Swift Boat "torpedoed" Massachusetts Democrat John Kerry presidential campaign, 2004 and George W. Bush was elected to a second term. A reported $9.45 million came from three private individuals.

Swift Boat's was cited as a front group for Republican interests.

Details of the influence of wealthy individuals to control the course of elections became more clear in reports like one that documented the Wyly Brothers of Texas alone had made millions in campaign contributions to 200 Republican Candidates.

In the 2010 case Citizens United v. Federal Election Commission, the Supreme Court ruled PACs may accept unlimited contributions from individuals, unions, and corporations (both for profit and not-for-profit) for the purpose of making independent expenditures.

The 2010 ruling made it legal for corporations and unions to spend from their general treasuries to finance independent expenditures. Because direct corporate or union contributions to federal campaigns are still prohibited, such organizations seeking to contribute to federal candidate campaigns must still rely on traditional PACs for that purpose. However, they may spend money independently of campaigns without forming a PAC.

During the 2012 election cycle, the exact boundary that defines when a campaign contribution is truly independent versus a coordinated one was lampooned on comedy shows, debated publicly and became the subject of additional Federal Court cases.

See section Super PAC backlash

Categorization of PACs

Further information: List of political action committees

Federal law allows for two types of PACs, connected and non-connected.

Connected PACs

Most of the 4,600 active, registered PACs are "connected PACs" established by businesses, labor unions, trade groups, or health organizations. These PACs receive and raise money from a "restricted class," generally consisting of managers and shareholders in the case of a corporation and members in the case of a union or other interest group. As of January 2009, there were 1,598 registered corporate PACs, 272 related to labor unions and 995 to trade organizations.

Non-connected PACs

Groups with an ideological mission, single-issue groups, and members of Congress and other political leaders may form "non-connected PACs". These organizations may accept funds from any individual, business PAC or organization. As of January 2009, there were 1,594 non-connected PACs, the fastest-growing category.

Super PACs

The 2010 election marked the rise of a new political committee, dubbed the "super PAC". They are officially known as "independent-expenditure only committees". Provided they are operated correctly, they can raise unlimited sums from individuals, corporations, unions and other groups. The super PACs were made possible by two judicial decisions; decisions which currently practiced judicial opinion even the brightest constitutional academics would be forgiven for interpreting as judicial legislation. Firstly, the U.S. Supreme Court held in Citizens United v. Federal Election Commission that government may not prohibit unions and corporations from making independent expenditure for political purposes. Secondly, in Speechnow.org v. FEC, the Federal Court of Appeals for the D.C. Circuit held that contributions to groups that only make independent expenditures could not be limited.

Super PACs are not allowed to coordinate directly with candidates or political parties since they are independent. However, many people held a view early in the 2012 campaign that a candidate may "talk to his associated super PAC via the media. And the super PAC can listen, like everybody else." Individuals making claims like this included: journalist Peter Grier; Rick Hasen, an attorney and contributor to the Election Law Journal who was described as being an election law expert,; and Trevor Potter, a former chairman of the United States Federal Election Commission who acted as a consulting attorney for TV satirists Jon Stewart and Stephen Colbert.

Even absent a formal connection to a campaign, super PACs openly supported particular candidacies. Typically, they did so by financing negative ads costing tens of millions of dollars. In February 2012 the New York Times described several super PACs that were run or advised by a candidate's former staff or associates. Some PACs attracted large donations from a candidate's associates. For example, by January 2012, Romney's associates contributed nearly $5 million dollars for his 2008 and 2012 runs. In 2011, one Super PAC supporting President Barack Obama raised $4.4 million.

Leadership PACs

Elected officials and political parties cannot give more than the federal limit directly to candidates. However, they can set up a Leadership PAC that makes independent expenditures. Provided the expenditure is not coordinated with the other candidate, this type of spending is not limited.

Under the FEC rules, leadership PACs are non-connected PACs, and can accept donations from individuals and other PACs. Since current officeholders have an easier time attracting contributions, Leadership PACs are a way dominant parties can capture seats from other parties. A leadership PAC sponsored by an elected official cannot use funds to support that official's own campaign. However, it may fund travel, administrative expenses, consultants, polling, and other non-campaign expenses.

Between 2008 and 2009, leadership PACs raised and spent more than $47 million.

Controversial use of leadership PACs

• Former Rep. John Doolittle's (R) leadership PAC paid 15% to a firm that only employed his wife. Payouts to his wife's firm were $68,630 in 2003 and 2004, and $224,000 in 2005 and 2006. The Doolittle home was raided on 2007. After years of investigation the justice department dropped the case with no charges in June 2010.
• One Leadership PAC purchased $2,139 in gifts from Bose Corporation.
• Former Rep. Richard Pombo (R) used his leadership PAC to pay hotel bills ($22,896) and buy baseball tickets ($320) for donors.
• Former Speaker Nancy Pelosi's (D) leadership PAC, Team Majority, was fined $21,000 by federal election officials "for improperly accepting donations over federal limits."

Keeping donor lists hidden from voters

By January 2010, at least 38 states and the federal government required disclosure for all or some independent expenditures or electioneering communications, regardless of whether the speaker is a corporation. These disclosures were intended to deter potentially or seemingly corrupting donations, and alerted voters to be mindful that there may be obligations a candidate needed to fulfill in office.

During the 2012 election season, some news sources described money hidden from voters as "dark money". One vivid remark attributed to editors at Mother Jones magazine, described dark money as originating from a “secretive coterie” of donors that powers a "Lovecraftian monster that moves from State to State, dissolving the foundations of the Republic that originates." The Boston Globe repeated the same term "dark money" and described money flowing from tax-exempt non-profits in the form of interest advocacy groups as "social welfare". A related term, "dark election" appears to have first been used regarding the 2010 mid-term election season owing to the amount of "dark money" present.

According to US Supreme Court Justice John Paul Stevens "in a functioning democracy the public must have faith that its representatives owe their positions to the people, not to the corporations with the deepest pockets."

Yet despite disclosure rules, and importance of knowing who paid for multimillion dollar mostly negative ad campaigns, voters in the United States still went to the polls not knowing who paid. Critics of PACs claimed they on occasion may have intentionally exploited a technicality in the filing requirements to postpone disclosure. In federal elections, PACs have the option to choose to file reports on a "monthly" or "quarterly" filing schedule.This means monies may be collected and spent long before the required filing date of a disclosure. Alternately, donors may list an LLC instead of their personal name. One super PAC, that originally listed a $250,000 donation from an LLC that no one could find, led to a subsequent filing where the previously "secret donors" were revealed.

In the case of PACs, the source of donations is eventually disclosed, however, depending on timing of disclosure reports, disclosure in some cases didn't occur until after the election was held. When PACs eventually provided 2012 disclosures, some of which occurred after a primary vote, the reports often lent credibility to a debate that some PACs were not truly independent. Reports have disclosed during the 2012 election instances where PACs were managed by close associates, former staff, or a candidate's immediate family. This in turn has led the press to determine voter intent to support the efforts of a specific candidate according to which PAC a contribution is made. For example the press referred to a filing by Restore Our Future, Inc, that listed 3 large donations by coworkers of 2012 presidential candidate Mitt Romney, as being "Mitt Romney's FEC filing".

An alternate route to fund a PAC has helped some special interest organizations keep the names of its donors secret years after an election. This route involves forming one firm, that is usually a 501 (c) non-profit, or 527 organization so the donation can be tax deductible, and then the PAC to receive them. The scheme, commonly known as a "money loop" or "money trail", was detailed in the New York Times, and attracted the attention of the IRS in 2010, and the IRS subsequently advised big donors their tax deductions were questionable.

One organization, the National Organization for Marriage, operated two non-profiit arms that received millions in donations from just a few donors. It in turn funded several different PACs and contested the release of names that gave to the non-profit. One former 2012 Presidential candidate, Fred Karger, maintained that the National Organization for Marriage was set up by the The Church of Jesus Christ of Latter-day Saints (LDS) as a front group to funnel anonymous money to candidates that are against the legalization of same-sex marriage. In Washington State in February 2012, the organization vowed to follow through on a commitment to spend $250,000 to help defeat the Republican state senators who voted for a bill to give same-sex couples the right to marry should they seek office again.

The PAC backlash

In the wake of the 2010 landmark case filed by Citizens United that opened up the flood gates of money, Republican Senator John McCain, co-crafter of the 2002 Bipartisan Campaign Reform Act, said "there's going to be, over time, a backlash ... when you see the amounts of union and corporate money that's going to go into political campaigns". Attorney James Bopp Jr, who first stated “No one that matters cares”, has subsequently stated members of Congress may realize "they have cut their own throats."

World-wide news organizations began asking in February 2012 if US democracy itself was being bought and sold.

Voter backlash, legal backlash, and congressional backlash are all occurring. Contrary to many opinions that voter backlash would occur, research early in the 2012 campaign indicated most voters found negative advertising informative and candidates benefited from negative advertising sponsored by PACs.

Federal level backlash

Three Federal rulings defending State election laws were apparent setbacks for PACs trying to keep donor names secret. On December 29th, 2011 the Ninth Circuit Court of Appeals ruled against Family PAC, an organization that describes itself as "the leading pro-family, anti-tax" PAC. According to one scholarly article that reviewed the decision, the Court confirmed that PACs must conform with State of Washington election laws and were required to disclose the names and addresses for anyone contributing over $25. Within the ruling, the Court stated:

"The compelling State interest here is providing access to voters to information relevant to voting decision[s]....we do not agree with Family PAC’s contention that disclosure of small contributors does not provide information that enables the electorate to evaluate campaign messages and make informed decisions."

On January 31, 2012, the US First Circuit Court of Appeals rule against the National Organization for Marriage's attempts to continue to keep their donor list secret. The group had also previously lost a challenge to the state's political action committee laws and laws governing independent expenditures and advertising attribution and disclaimers. This court decision incorporated the "reasonable person in the circumstances," which is generally deemed an objective test. If a reasonable person receiving a solicitation would construe the funds they contributed to be for the purpose of funding a campaign to pass or defeat a ballot measure, then they clearly come within the reporting and disclosure requirements. Thus, the court found that the statute is not sufficiently ambiguous to raise constitutional concerns.

On May 16, 2011, the US Eighth Circuit Court of Appeals panel upheld Minnesota's disclosure laws and ban on corporate contributions.

Attorney James Bopp Jr. who argued on the behalf of all three groups against the state is attempting appeals in the US Supreme Court.

State level advisory requests pending

Despite losses such as these, PACs in some instances, were contesting previous rulings, and current state election law in the midst of the 2012 election. In Minnesota, Human Rights Campaign pressed for an advisory ruling regarding anonymous PAC spending from the Minnesota Campaign Finance and Public Disclosure Commission. The group claimed the National Organization for Marriage was systematically attempting across the country to oppose public disclosure.

Legal backlash at State level

The second legal front in the challenges to PAC spending was occurring largely at the State level where States like Hawaii were attempting to defend the limitations they had imposed on giving to candidates. In February 2012 a Federal Court took under advisement final motions.

State spending limits are also under attack in Montana, where James Bopp Jr stepped in January 2012 to press at a Federal level claims for a group fighting Montana's law that lost in Montana's Supreme Court. North Carolina Right to Life’s independent expenditures committees filed suit against the State of North Carolina in September 2011 claiming their spending limitations were unlawful with representation by James Bopp Jr. An October 2011 lawsuit challenged spending limitations in New Mexico.

Super PAC backlash

It was generally agreed in the 2012 campaign that the formation of a super PAC and the acceptance of large contributions was legal. However, a lingering question was are super PACs legal when examined on the basis of how they act. Two agreed upon illegal actions a super PAC could not make were to accept foreign funds and coordinate directly with a candidate. Super PACs were seen in the press as a ready vehicle to allow the easy disguise of illegal foreign donations from both individuals and overseas companies. The concept of actions being illegal, when coordinated with a candidate, came out, in part, after a super PAC named American Crossroads requested permission to communicate to their favored candidate on an above-board basis. Federal Election Commission Program Director Paul S. Ryan response was “The Supreme Court has long recognized the importance of contribution limits to preventing corruption, and that expenditures coordinated with candidates must be treated as contributions in order to prevent easy circumvention of the limits."

Long term, at least one analyst has interpreted court decisions, and in particular Speechnow.org versus FEC, to mean super PAC spending was legal "as long as they're not in cahoots with campaigns".

Congressional backlash

The third type of backlash is a congressional investigation. On February 2, 2012, U.S. Senator Chuck Schumer, Chairman of the Rules Committee, promised hearings on this issue and that "overwhelmingly" the bulk of contributions are going to support Republican candidates, owing in part to Democratic positions against continuing tax breaks to the wealthy.

Defending super PAC contributions

Presidential candidate Mitt Romney stated in August 2011 that his ability to benefit from large contributions via PACs from individual donors helps him to equalize the influence of corporations and unions that can pool small contributions from many employees or union members. Romney stated “My own view is I don’t like all the influence of money in politics, but I don’t have a solution that’s a lot better than saying let people contribute what they will, then report it, let people know who gave what to who.”

The President and 2012 candidate Obama, who stated in 2007: "I don’t take PAC money and I don’t take lobbyists’ money", came out with an endorsement of super PACs via his campaign manager Jim Messina in his statement: "With so much at stake, we can't allow for two sets of rules in this election whereby the Republican nominee is the beneficiary of unlimited spending and Democrats unilaterally disarm". According to press reports, in asking his top fundraisers to steer money to the main super PAC backing his reelection, Obama embraced a campaign vehicle he previously denounced.

James Bopp

Much of the credit for the legal framework for PACs and 527 organizations to accept unlimited amounts of money is given to Republican attorney James Bopp, Jr. He fought 30 years and filed 21 cases to eliminate limits on campaign spending, and to keep donor lists private. According to the Center for Responsive Politics. "It’s safe to say that groups on the left and right have Jim Bopp to thank for their new-found freedom."

International comparison and response

The leading democracies have different systems of campaign finance, and several have no institutions analogous to American PACs, in that there are no private contributions of large sums of money to individual candidates. This is true, for example in Germany, in France, and in Britain. In these countries, concerns about the influence of campaign contributions on political decisions are less prominent in public discussion.^{[citation needed]}

2008 Election

In the 2008 elections, the top nine PACs by money spent by themselves, a total of $25,794,807 via their affiliates and subsidiaries as follows:

1. International Brotherhood of Electrical Workers PAC $3,344,650
2. AT&T Federal PAC $3,108,200
3. American Bankers Association (BANK PAC) $2,918,140
4. National Beer Wholesalers Association PAC $2,869,000
5. Dealers Election Action Committee of the National Automobile Dealers Association $2,860,000
6. International Association of Fire Fighters $2,734,900
7. International Union of Operating Engineers PAC $2,704,067
8. American Association for Justice PAC $2,700,500
9. Laborers' International Union of North America PAC $2,555,350

2012 Election (estimates)

As of February 2012, according to Center for Responsive Politics, 313 groups organized as Super PACs had received $98,650,993 and spent $46,191,479. This means early in the 2012 election cycle, PACs had already greatly exceeded total receipts of 2008. The leading Super PAC on its own raised more money than the combined total spent by the top 9 PACS in the 2008 cycle.

The 2012 figures don't include funds raised by State level PACs nor funds raised by national level non-profit groups that pool "soft-funds". Spending by non-profits, also called 527 organizations, exceeded $500 million in the 2010 election cycle with the two largest organizations being the Republican Governors Association $131,873,954 and the Democratic Governors Association $64,708,253 Spending by the 527 organizations for the 2012 is expected to be double and much will be derived from donors kept hidden from voters.

See also

• 527 group
• Issue advocacy ads
• Lobbying in the United States
• Money loop
• Politics of the United States
• Soft money

External links

• Federal Election Commission
  • Campaign Guide for Corporations and Labor Organizations
  • Campaign Guide for Nonconnected Committees
• Federal Judicial Branch
  • Ruling National Organization for Marriage versus McKee (Maine), United States Court of Appeals For the First Circuit
  • Speechnow.org v. Federal Election Commission
• OpenSecrets.org
• PoliticalMoneyLine