Political action committee

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In the United States, a political action committee (PAC) is a 527 organization that pools campaign contributions from members and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. [1] [2] The legal term PAC has been created in pursuit of campaign finance reform in the United States. This term is quite specific to all activities of campaign finance in the United States. Democracies of other countries use different terms for the units of campaign spending or spending on political competition (see political finance). At the U.S. federal level, an organization becomes a PAC when it receives or spends more than $1,000 for the purpose of influencing a federal election, and registers with the Federal Election Commission (FEC), according to the Federal Election Campaign Act as amended by the Bipartisan Campaign Reform Act of 2002 (also known as the McCain-Feingold Act). [3] At the state level, an organization becomes a PAC according to the state's election laws.

Contents

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 must pay their own costs from those funds. [4]

Overview

Federal multi-candidate PACs may contribute to candidates as follows:

In its 2010 case Citizens United v. FEC , the Supreme Court of the United States overturned sections of the Campaign Reform Act of 2002 (also known as the McCain-Feingold Act) that had prohibited corporate and union political independent expenditures in political campaigns. [5] Citizens United declared it was unconstitutional to prohibit that corporations and unions spend from their general treasuries to finance independent expenditures related to campaigns, but did not alter the prohibition on direct corporate or union contributions to federal campaigns. [6] [7] Organizations seeking to contribute directly to federal candidate campaigns must still rely on traditional PACs for that purpose. [8] [9]

History

The political action committee emerged from the labor movement of 1943. [10] The first PAC was the CIO-PAC, formed in July 1943 under CIO president Philip Murray and headed by Sidney Hillman. It was established after the U.S. Congress prohibited unions from giving direct contributions to political candidates. [10] This restriction was initially imposed in 1907 on corporations through the Tillman Act. [11] The Smith-Connally Act extended its coverage to labor unions in 1943. [10] A series of campaign reform laws enacted during the 1970s facilitated the growth of PACs after these laws allowed corporations, trade associations, and labor unions to form PACs. [12]

Categorization

Federal law formally allows for two types of PACs: connected and non-connected. Judicial decisions added a third classification, independent expenditure-only committees, which are colloquially known as "Super PACs".

Connected PACs

Most of the 4,600 active, registered PACs, named "connected PACs", sometimes also called "corporate PACs", are established by businesses, non-profits, 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 or members in the case of a non-profit organization, labor 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. [13]

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, connected PAC, or organization. As of January 2009, there were 1,594 non-connected PACs, the fastest-growing category. [13]

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. [14]

Under the FEC (Federal Election Commission) 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. [15] [16] [17]

In the 2018 election cycle, leadership PACs donated more than $67 million to federal candidates. [18]

Controversial use of leadership PACs

  • Former Rep. John Doolittle's (R) leadership PAC paid 15% to a firm that employed only 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 in 2007. [19] 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. [20]
  • Former Rep. Richard Pombo (R) used his leadership PAC to pay hotel bills ($22,896) and buy baseball tickets ($320) for donors. [21]
  • Speaker of the House Nancy Pelosi's (D) leadership PAC, Team Majority, was fined $21,000 by federal election officials "for improperly accepting donations over federal limits." [22]

Super PACs

Super PACs, officially known as "independent expenditure-only political action committees," may engage in unlimited political spending (on, for example, ads) independently of the campaigns, but are not allowed to either coordinate or make contributions to candidate campaigns or party coffers. Unlike traditional PACs, Super PACs can raise funds from individuals, corporations, unions, and other groups without any legal limit on donation size. [23]

Super PACs were made possible by two judicial decisions in 2010: the aforementioned Citizens United v. Federal Election Commission and, two months later, Speechnow.org v. FEC. In Speechnow.org, the federal Court of Appeals for the D.C. Circuit held that PACs that did not make contributions to candidates, parties, or other PACs could accept unlimited contributions from individuals, unions, and corporations (both for profit and not-for-profit) for the purpose of making independent expenditures.

The result of the Citizens United and SpeechNow.org decisions was the rise of a new type of political action committee in 2010, popularly dubbed the "super PAC". [24] In an open meeting on July 22, 2010, the FEC approved two Advisory Opinions to modify FEC policy in accordance with the legal decisions. [25] These Advisory Opinions were issued in response to requests from two existing PACs, the conservative Club for Growth, and the liberal Commonsense Ten (later renamed Senate Majority PAC). Their advisory opinions gave a sample wording letter which all Super PACs must submit to qualify for the deregulated status, and such letters continue to be used by Super PACs up to the present date. FEC Chairman Steven T. Walther dissented on both opinions and issued a statement giving his thoughts. In the statement, Walther stated "There are provisions of the Act and Commission regulations not addressed by the court in SpeechNow that continue to prohibit Commonsense Ten from soliciting or accepting contributions from political committees in excess of $5,000 annually or any contributions from corporations or labor organizations" (emphasis in original). [26]

The term "Super PAC" was coined by reporter Eliza Newlin Carney. [27] According to Politico, Carney, a staff writer covering lobbying and influence for CQ Roll Call , "made the first identifiable, published reference to 'super PAC' as it's known today while working at National Journal , writing on June 26, 2010, of a group called Workers' Voices, that it was a kind of "'super PAC' that could become increasingly popular in the post-Citizens United world." [28]

According to FEC advisories, Super PACs are not allowed to coordinate directly with candidates or political parties. This restriction is intended to prevent them from operating campaigns that complement or parallel those of the candidates they support or engaging in negotiations that could result in quid pro quo bargaining between donors to the PAC and the candidate or officeholder. However, it is legal for candidates and Super PAC managers to discuss campaign strategy and tactics through the media. [29] [30]

2012 presidential election

Super PACs may support particular candidacies. In the 2012 presidential election, Super PACs played a major role, spending more than the candidates' election campaigns in the Republican primaries. [31] As of early April 2012, Restore Our Future—a Super PAC usually described as having been created to help Mitt Romney's presidential campaign—had spent $40 million. Winning Our Future (a pro–Newt Gingrich group) spent $16 million. [32] Some Super PACs are run or advised by a candidate's former staff or associates. [33]

In the 2012 election campaign, most of the money given to super PACs came from wealthy individuals, not corporations. [31] According to data from the Center for Responsive Politics, the top 100 individual super PAC donors in 2011–2012 made up just 3.7% of contributors, but accounted for more than 80% of the total money raised, [34] while less than 0.5% of the money given to "the most active Super PACs" was donated by publicly traded corporations. [35]

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. [36]

Super PACs have been criticized for relying heavily on negative ads. [37]

The 2012 figures do not include funds raised by state level PACs.

2020 presidential election

In 2019, Bernie Sanders and Elizabeth Warren self-imposed fundraising restrictions, including "swearing off PAC money." [38] [39] While they do not accept direct financial contributions from either connected or non-connected PACs, both Sanders [40] and Warren [41] were supported by at least one Super PAC. [42]

Disclosure rules

By January 2010, at least 38 states and the federal government required disclosure for all or some independent expenditures or electioneering communications. [43] These disclosures were intended to deter potentially or seemingly corrupting donations. [44] [45] Contributions to, and expenditures by, Super PACs are tracked by the FEC [46] and by independent organizations such as the Center for Responsive Politics. [47]

Yet despite disclosure rules, it is possible to spend money without voters knowing the identities of donors before the election. [48] In federal elections, for example, political action committees have the option to choose to file reports on a "monthly" or "quarterly" basis. [49] [50] [51] This allows funds raised by PACs in the final days of the election to be spent and votes cast before the report is due.

In one high-profile case, a donor to a super PAC kept his name hidden by using an LLC formed for the purpose of hiding their personal name. [52] 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. [53] However, campaign finance experts have argued that this tactic is already illegal, since it would constitute a contribution in the name of another. [54]

Hybrid PAC

A hybrid PAC (sometimes called a Carey Committee) is similar to a Super PAC, but can give limited amounts of money directly to campaigns and committees, while still making independent expenditures in unlimited amounts. [55] [56]

Top PACs by election cycle

The Center for Responsive Politics maintains a list of the largest PACs by election cycle on its website OpenSecrets.org. [57] Their list can be filtered by receipts or different types of expenses, political party, and type of PAC.

2018 election

In the 2018 election, the top ten PACs donated a total of $29,349,895 (directly, and via their affiliates and subsidiaries) to federal candidates:

  1. National Association of Realtors PAC $3,444,276
  2. National Beer Wholesalers Association PAC $3,433,500
  3. AT&T PAC $3,433,500
  4. Northrop Grumman PAC $2,849,740
  5. National Air Traffic Controllers Association PAC $2,813,250
  6. International Association of Sheet Metal, Air, Rail and Transportation Workers PAC $2,797,450
  7. American Bankers Association PAC $2,768,330
  8. House Freedom Fund, a leadership PAC associated with Mark Meadows $2,733,340
  9. International Union of Operating Engineers PAC $2,726,909
  10. National Auto Dealers Association PAC $2,666,400

See also

Related Research Articles

Campaign finance laws in the United States have been a contentious political issue since the early days of the union. The Bipartisan Campaign Reform Act (BCRA) of 2002, also known as "McCain-Feingold" is the most recent major federal law affecting campaign finance, the key provisions of which prohibited unregulated contributions to national political parties and limited the use of corporate and union money to fund ads discussing political issues within 60 days of a general election or 30 days of a primary election, until BCRA's provisions limiting corporate and union expenditures for issue advertising were overturned in Federal Election Commission v. Wisconsin Right to Life.

Bipartisan Campaign Reform Act

The Bipartisan Campaign Reform Act of 2002 is a United States federal law that amended the Federal Election Campaign Act of 1971, which regulates the financing of political campaigns. Its chief sponsors were senators Russ Feingold (D-WI) and John McCain (R-AZ). The law became effective on 6 November 2002, and the new legal limits became effective on January 1, 2003.

Buckley v. Valeo, 424 U.S. 1 (1976), was a landmark decision of the US Supreme Court on campaign finance. A majority of justices held that limits on election spending in the Federal Election Campaign Act of 1971 § 608 are unconstitutional. In a per curiam opinion, they ruled that expenditure limits contravene the First Amendment provision on freedom of speech because a restriction on spending for political communication necessarily reduces the quantity of expression. It limited disclosure provisions and limited the Federal Election Commission's power. Justice Byron White dissented in part and wrote that Congress had legitimately recognized unlimited election spending "as a mortal danger against which effective preventive and curative steps must be taken".

A 527 organization or 527 group is a type of U.S. tax-exempt organization organized under Section 527 of the U.S. Internal Revenue Code. A 527 group is created primarily to influence the selection, nomination, election, appointment or defeat of candidates to federal, state or local public office.

Federal Election Campaign Act

The Federal Election Campaign Act of 1971 is the primary United States federal law regulating political campaign fundraising and spending. The law originally focused on increased disclosure of contributions for federal political campaigns. The Act was signed into law by President Richard Nixon on February 7, 1972.

An independent expenditure, in elections in the United States, is a political campaign communication that expressly advocates for the election or defeat of a clearly identified candidate that is not made in cooperation, consultation or concert with; or at the request or suggestion of a candidate, candidate's authorized committee or political party. If a candidate, his/her agent, his/her authorized committee, his/her party, or an "agent" for one of these groups becomes "materially involved", the expenditure is not independent.

Campaign finance in the United States is the financing of electoral campaigns at the federal, state, and local levels. At the federal level, campaign finance law is enacted by Congress and enforced by the Federal Election Commission (FEC), an independent federal agency. Although most campaign spending is privately financed, public financing is available for qualifying candidates for President of the United States during both the primaries and the general election. Eligibility requirements must be fulfilled to qualify for a government subsidy, and those that do accept government funding are usually subject to spending limits on money.

The American Leadership Project (ALP) is an unincorporated association organized under section 527 of the IRS code formed in February 2008 in order to highlight issues of importance to the American middle class, such the economy, jobs, the rising cost of health care, and the mortgage crisis. The ALP intended to communicate issue-specific messages during the 2008 Democratic presidential primary elections and presently for the general election. The ALP does not coordinate with any candidate or any candidate’s committee. The ALP's messages were used preceding primary elections in the states of Texas, Ohio, Pennsylvania, and Indiana. The ads had been pro-Hillary Clinton and anti-Barack Obama. Since the conclusion of the Primary season, with Barack Obama as the Democratic nominee and John McCain as the Republican candidate, the organization has run several ads against McCain.

Citizens United v. Federal Election Commission, 558 U.S. 310 (2010), was a landmark decision of the Supreme Court of the United States concerning campaign finance. It was argued in 2009 and decided in 2010. The Court held that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political communications by corporations, including nonprofit corporations, labor unions, and other associations.

American Crossroads is a Super PAC that raises funds from donors to advocate for certain candidates of the Republican Party. It has pioneered many of the new methods of fundraising opened up by the Supreme Court's ruling in Citizens United. Its president is Steven J. Law, a former United States Deputy Secretary of Labor for President George W. Bush and the Chairman of the Board of Directors is former Republican National Committee chairman Mike Duncan. Advisers to the group include Senior Advisor and former White House Deputy Chief of Staff Karl Rove and former Mississippi Governor Haley Barbour.

The Democracy Is Strengthened by Casting Light On Spending in Elections Act or DISCLOSE Act is a federal campaign finance reform bill that has been introduced in the United States Congress since 2010. The bill would amend the Federal Election Campaign Act of 1971 to provide for greater and faster public disclosure of campaign spending and to combat the use of "dark money" in U.S. elections.

Colbert Super PAC

Americans for a Better Tomorrow, Tomorrow was a United States political action committee (PAC) established by Stephen Colbert, who portrayed Dr. Stephen T. Colbert, a mock-conservative political pundit on Comedy Central's satirical television series The Colbert Report. As a super PAC the organization could raise unlimited sums of money from corporations, unions and other groups, as well as wealthy individuals. Speaking in character, Colbert said the money would be raised not only for political ads, but also "normal administrative expenses, including but not limited to, luxury hotel stays, private jet travel, and PAC mementos from Saks Fifth Avenue and Neiman Marcus."

Restore Our Future is a political action committee (PAC) created to support Mitt Romney in the 2012 U.S. Presidential election. A so-called Super PAC, Restore Our Future is permitted to raise and spend unlimited amounts of corporate, union, and individual campaign contributions under the terms of the Citizens United Supreme Court decision.

The term corporate donation refers to any financial contribution made by a corporation to another organization that furthers the contributor's own objectives. Two major kinds of such donations deserve specific consideration, charitable as well as political donations.

Dark money American political term for unlimited political contributions of 501(c) organizations

In the politics of the United States, dark money refers to political spending by nonprofit organizations — for example, 501(c)(4) 501(c)(5) (unions) and 501(c)(6) groups — that are not required to disclose their donors. Such organizations can receive unlimited donations from corporations, individuals and unions. In this way, their donors can spend funds to influence elections, without voters knowing where the money came from. Dark money first entered politics with Buckley v. Valeo (1976) when the United States Supreme Court laid out Eight Magic Words that define the difference between electioneering and issue advocacy.

<i>Moneyocracy</i>

Moneyocracy is a 2012 documentary film about Citizens United v. Federal Election Commission, 558 U.S. 310 (2010),which was a landmark United States Supreme Court case in which the Court held that the First Amendment prohibited the government from restricting independent political expenditures by corporations and unions. The film explores how the Citizens United v. Federal Election Commission decision has dramatically changed the U.S Campaign Finance Laws and lead to the most expensive Elections in the United States. The film describes the systemic corruption of the United States democracy and the consequences of that systemic corruption on the U.S democracy and the electorate.

Fundraising plays a central role in many presidential campaigns, and is a key factor in determining the viability of candidates. Money raised is applied for the salaries of non-volunteers in the campaign, transportation, campaign materials, media advertisements and other contingencies. Under United States law, officially declared candidates are required to file campaign finance details with the Federal Elections Commission (FEC) at the end of every calendar month or quarter. Summaries of these reports are made available to the public shortly thereafter, revealing the relative financial situations of all the campaigns.

<i>FEC v. National Conservative PAC</i> United States Supreme Court case

FEC v. National Conservative PAC, 470 U.S. 480 (1985), was a decision by the Supreme Court of the United States striking down expenditure prohibitions of the Federal Election Campaign Act of 1971 (FECA), which regulates the fundraising and spending in political campaigns. The FECA is the primary law that places regulations on campaign financing by limiting the amount that may be contributed. The Act established that no independent political action committee may contribute more than $1,000 to any given presidential candidate in support of a campaign.

Shadow campaigns in the United States

United States campaign finance law has been regulated by the Federal Election Commission since its creation in the wake of the Watergate Scandal in 1975. In years following Citizens United v. FEC there has been a rise in outside special interest groups spending money on political campaigns in the United States.

A hybrid PAC is a political committee classification in the United States. It is used by the Federal Election Commission to describe a committee with certain spending and contribution limitations.

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