Political action committee

In the United States, a political action committee, or PAC, is the name commonly given to a private group, regardless of size, organized to elect political candidates or to advance the outcome of a political issue or legislation. Legally, what constitutes a "PAC" for purposes of regulation is a matter of state and federal law. Under the Federal Election Campaign Act, an organization becomes a "political committee" by receiving contributions or making expenditures in excess of $1,000 for the purpose of influencing a federal election.

Use of PACs (before 2010)

When an interest group, union, or corporation wants to contribute to federal candidates or parties, it must do so through a PAC. 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 funds to candidates for federal office. Contributions from corporate or labor union treasuries are illegal, though they may sponsor a PAC and provide financial support for its administration and fundraising.

Contributions by individuals to federal PACs are limited to $5,000 per year. It is important to note, however, that as a result of the United States Court of Appeals for the District of Columbia Circuit decision in SpeechNow.org v. FEC, PACs which make only "independent expenditures" (that is, advertisements or other spending that calls for the election or defeat of a federal candidate but which is not coordinated with a federal candidate or political party) are not bound by this contribution limit.

Corporations and unions may not contribute directly to federal PACs, though they may pay 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, while union-affiliated PACs may only solicit contributions from members. "Independent" PACs not affiliated with a corporation, union, or trade or membership association may solicit contributions from the general public but must pay their operating costs from these regulated contributions.

Federal multi-candidate PACs are limited in the amount of money they can contribute to candidate campaigns or other organizations:

• at most $5,000 per candidate per election. Elections such as primaries, general elections and special elections are counted separately.
• at most $15,000 per political party per year.
• at most $5,000 per PAC per year.

Under federal law, PACs are not limited in their ability to spend money independently of a candidate campaign. This may include expenditures on activities in support of (or against) a candidate, as long as they are not coordinated with the candidate.

If two or more PACs share the same sponsoring organization, they are considered to be "affiliated" and their total donations are counted under aggregate limits, i.e. the total donations from all may not exceed $5,000 for a specific candidate in a given election.

PACs must report all of the financial activities, including direct donations and other expenses, to the Federal Election Commission (FEC), which makes the reports available to the public.

Citizens United ruling

Main article: Citizens United v. Federal Election Commission

In 2010, the landmark case filed by Citizens United changed the rules regarding corporate campaign expenditures. This ruling made it legal for corporations and unions to spend from their general treasuries to finance independent expenditures. Direct corporate and union contributions to federal campaigns, however are still prohibited. Thus corporations or unions 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.

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," and officially known as "independent-expenditure only committees," which can raise unlimited sums from corporations, unions and other groups, as well as individuals. The super PACs were made possible by two judicial decisions. First the U.S. Supreme Court held in Citizens United v. Federal Election Commission that government may not prohibit unions and corporations from making independent expenditures about politics. Soon after, 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, a candidate may "talk to his associated super PAC via the media. And the super PAC can listen, like everybody else," according to journalist Peter Grier, election law expert Rick Hasen and former chairman of the United States Federal Election Commission Trevor Potter (the lawyer of TV satirists Jon Stewart and Stephen Colbert).

Super PACs are required to disclose their donors, just like traditional PACs. However, many exploit a technicality in the filing requirements in order to postpone disclosure until well after the elections they participate in.

Even absent a formal connection to a campaign, Super PACs openly support particular candidacies. In the primary season before the 2012 presidential campaign, for example, the Restore Our Future Super PAC benefited Republican Mitt Romney while attacking rival Newt Gingrich. In the same election, the pro-Gingrich Winning Our Future Super PAC attacked Romney. Each Super PAC was run by former employees of the candidate it supported, and each attracted money from that candidate's associates.

During the 2012 presidential campaign season, comedians Stephen Colbert and Jon Stewart created the Colbert Super PAC, which they used on their satirical TV shows to illustrate the workings of election campaigns. After the January 31, 2012, disclosure deadline, Colbert said, "To all the worrywarts out there who said Super PACs were going to lead to a cabal of billionaires secretly buying democracy - Wrong - They are publicly buying democracy." He then announced the disclosed statistic that, "Half [47.9%] of the candidates' Super PAC money...came from just 22 individuals."

Leadership PAC

A leadership PAC in U.S. politics is a political action committee established by a member of Congress to support other candidates. Under the FEC rules, leadership PACs are non-connected PACs, and can accept donations from an individual or other PACs. While a leadership PAC cannot spend funds to directly support the campaign of its sponsor (through mail or ads), it may fund travel, administrative expenses, consultants, polling, and other non-campaign expenses. It can also contribute to the campaigns of other candidates.

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, Superior California Federal Leadership Fund, paid his wife's single-person company, Sierra Dominion Financial Solutions, 15 percent of all money raised ($68,630 in 2003 and 2004, $224,000 in 2005 and 2006). A campaign committee report in February said Doolittle's campaign still owed Julie Doolittle $137,000. The 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."

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.

Keeping donor lists hidden from voters

All states have election laws and require campaign finance disclosure. These laws are intended to help inform voters of the players paying to support candidates or trying to approve/defeat ballot measures. PACs have disclosure requirements both at the State and Federal level. However, voters still headed to the polls in the 2012 election cycle without knowing who paid for multimillion dollar negative ad campaigns. 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, or alternately donors may list an LLC instead of their personal name.

The names of donors or the firms making the donation eventual are disclosed to voters albeit in some cases after an election was held. The eventual disclosure often lends credibility to the argument that some PACs are not truly independent of a specific candidate. Reports have disclosed instances where PACs were managed by close associates, a candidates family member, and/or the donors were these same type of individuals. This in turn has led the press to describe some PACs in terms as being owned by the candidate or their campaign and the PAC is one in the same. 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 has helped one special interest organization keep the names of it's donors secret even years after the election was held. This route requires a two step procedure when setting the PAC up. Step one is to form a firm to receive the funds. The firm for that is usually a 501 (c) non-profit so the donation can be tax deductible. Step two is to establish the PAC and claim the funds in the PAC came from the 501 (c) non-profit that doesn't require disclosure. The clearest example of this is the National Organization for Marriage that operates two nonprofit arms that has received millions in donations from just a few donors. It in turn funds several different PACs that are legally separated. However, some disagree on the legality and fought for the names. Despite losing two court battles to comply with campaign laws of State of Maine, the organization still has kept secret the names of the individuals that helped finance a campaign to overturn the ability of gays to marry in Maine. Attorney James Bopp Jr, who helped the creation of PACs, promised to appeal on the organizations behalf to the U.S. Supreme Court to keep the names secret.

International campaign finance comparison

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.

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. Voter backlash, which many figure is high, has largely proven to be untrue, and the conventional wisdom is negative ads work and the more they are played the more effective they become.

PAC tactics to keep donor names hidden has spawned more than one legal challenge. James Bopp Jr argued for Family PAC versus McKenna (State of Washington) before the US Ninth Circuit Court of Appeals. Family PAC describes itself as "the leading pro-family, anti-tax political action committee" and claims to have spent $1,7 million in just the State of Illinois. The Court ruled on December 29th, 2011 that:

"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."

As of February 2012, Voters are still in the dark in Maine regarding who financed a 2009 campaign that reversed the rights of gays to marry. Despite two Federal Court decisions upholding Maine's disclosure laws, attorney Bopp on the behalf of National Organization for Marriage vowed to immediately appeal a January 31st, 2012 ruling against his client to the US Supreme Court so donors can remain anonymous.

Of the two US Circuit Court of Appeal rulings, it is the second one in Boston that perhaps contains the seeds of undoing for PACs that accepted big contributions. In National Organization For Marriage v. Walter McKee (Maine), the Court included an interesting topic:

"Funds that can reasonably be determined to have been provided by the contributor for the purpose of initiating or influencing a campaign when viewed in the context of the contribution and the recipient's activities regarding a campaign"

From this opinion, a reasonable person is now the standard to go by when making a determination if donations are independent or if they are earmarked towards a particular candidate or cause. The court said it could look at a wide range of information to make this determination including how a PAC describes itself, how it is described by a candidate, how it is generally know in the press, and the timing for requests for donations.

Each US state has a local election commission and at the national level there is the Federal Election Commission. Commissions have a mechanism that enables questions to be brought in front of it so they can issue an advisory opinion. These requests help individuals and groups from breaking the rules, for which the consequences vary. In Louisiana the consequence is relatively mild. "Anonymous contributions must be transmitted to the State.....Violations of the Campaign Finance Disclosure Act by a PAC can subject the chairman and treasurer of the PAC to civil penalties of up to $10,000." Whereas, in Hawaii, consequences carry a felony class C conviction and up to 5 years in prison.

During the 2012 election, a national gay rights group requested an advisory from the the Minnesota Campaign Finance and Public Disclosure regarding groups that were spending millions of dollars to promote a ballot initiative to amend the state constitution to ban same-sex marriage. The group stated: "This is part of (the National Organization for Marriage's) systematic attempt across the country to oppose public disclosure and hide its donors," Human Rights Campaign President Joe Solomonese said in a statement.

In February 2012 State of Hawaii Election Spending Commission officials received requests for an advisory opinion on the US Senate Race for Hawaii to determine if super PACs and 527 organization spending was affected by the two recent Federal rulings.[http://hawaii.gov/campaign/annual-report/annual-report-2010-2011

The time provided by law to a commission to respond to a request varies. In Hawaii it is 90 days after all information has been received, after which if the commission has not replied a decision is deemed rendered that the the facts and circumstances of that particular case do not constitute a violation of the campaign finance laws.

Current elections are the one edge of a double legal sword. The second edge of is the possibility that suits may be filed to contest prior elections when it can be shown that large sums of illegal monies were used to influence voters.

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.

Attorney James Bopp Jr

Much of the credit for the legal framework for PACs and 527 organization to accept unlimited amounts of money is given to Republican attorney James Bopp Jr. He has 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.”

Defending super PAC contributions

Presidential candidate, Milt 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.” Romney's railed against the power of the Judicial branch of government on February 7th, 2012 denouncing the court's “unelected judges”. This was in response to a ruling regarding same-sex marriage in California that struck down California Proposition 8. Romney stated this “underscores the vital importance of this election and the movement to preserve our values”.

Then President and 2012 candidate Obama, 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.

See also

• 527 group
• 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
• OpenSecrets.org
• PoliticalMoneyLine
• New 'Super Pacs' bringing millions into campaigns, Dan Eggen and T.W. Farnam, The Washington Post, September 28, 2010
• What Is a Super PAC?, Greg Houle, Yahoo! News, January 17, 2012
• Is US democracy being bought and sold?, Aljazeera, February 2, 2012