30 March 2008
Most of us associate PACs -- political action committees -- with business, labor or ideology. However, federal politicians -- senators and representatives -- often form what is called a Leadership PAC to, among other things, raise money to help fund other candidate campaigns. Politicians often do this because they have their eye on a leadership position in Congress or a higher office.
In the midst of campaign finance reform debate, the NYT reported in 1999 that "Leadership PAC's are the fastest-growing segment of political fund-raising." At that time, more than 30 senators and 75 representatives had established a Leadership PAC.
Under Federal Election Commission (FEC) rules, a Leadership PAC is known as a "nonconnected PAC." In January 2008, the FEC reported 1,300 "non-connected" PACs. The FEC did not break out Leadership PACs from this category. [See a list of non-connected PACs that made contributions of at least $60,000 in the 2006 and 2008 election cycles. pdf]
PACs -- including Leadershp PACs -- may receive up to $5,000 from an individual, other PAC or party committee each calendar year. PACs set up by corporations, labor unions, membership organizations or trade associations "can only solicit contributions from individuals associated with connected or sponsoring organization" (FEC). These are "segregated funds" organizations.
Leadership PACs can solicit donations from anyone.
According to the FEC, Leadership PACs "must inform donors that their contributions will be used in connection with federal elections. How the contribution solicitation is worded determines how the resulting donations are categorized. If the solicitation refers only to "federal candidates" or to "federal canddidates and a party committee," then 100% of the donation is consider a "contribution." If the solicitation identifies a federal candidate, "at least 50% of those proceeds must be treated as contributions." Donations include money, goods and services (in-kind contributions) and loans.
PACs can give $5,000 to a candidate committee per election cycle (primary, general or special) which means for most candidates the limit is $10,000. PACs can also give up to $15,000 each year to any national party committee and up to $5,000 annually to any other PAC. Some states limit how much a PAC can give to a state or local candidate.
The FEC prohibits Leadership PACs from directly supporting the candidacy of the official who organized the PAC. However, Leadership PAC can provide indirect support of the sponsoring official's candidacy: it can pay for travel, political consulting fees, polling, and so forth.
For example, Open Secrets notes that in 1994 presidential candidate Bob Dole's Campaign America set up an ofice in Iowa and contributed $62,000 to state and local candidates. Iowa is a key battleground state in early primary campaigning. In 1988, Dole had engaged in similar activities; then the FEC fined the leadership PAC only $12,000 but assessed a "$100,000 penalty for misusing the leadership PAC's funds" against the presidential committee. In a multi-million-dollar campaign, that's not even peanuts.
Parties v PACs
National parties may receive up to $25,000 from an individual per year; state parties are limited to $10,000. Individuals are limited to giving $95,000 per two-year election cycle. Some states also impose limits on how much an individual can contribute to a state candidate. This money can only be used for expenditures related to specific candidate campaigns.
Since fall 2002, political parties have been forbidden to raise or spend soft money (Bipartisan Campaign Reform Act of 2002 (BCRA), Public Law No. 107-155, also known as McCain-Feingold). In 2003, the Supreme Court upheld the prohibition.
"Soft money" refers to funds once given to political parties to use for politicking unrelated to a specific candidate's campaign. Officially, it's called "non-Federal funds." In 1997, then-President Bush petitioned the FEC to ban soft money; five members of Congress asked, instead, that the FEC "modify its rules to help end or at least significantly lessen the influence of soft money."
Non-Federal (soft) money "may not be used for the purpose of influencing any election for Federal office" (FEC rule).
Penalties Are Minor
The current system has little penalty for organizations or PACs that skirt regulations. Penalties are relatively minor, in the scheme of election finance, and they come long after the infraction.
For example, in 1999 the National Republican Congressional Committee transferred $500,000 to a 501(c) -- the U.S. Family Network -- which then passed money to another 501(c) -- Americans for Economic Growth -- which placed radio ads critical of Democrats in 2000. The money transfer violated regulations. The penalty - $280,000 - was not levied until April 2004.
In 2004, a Leadership PAC (Team Majority) run by now Speaker of the House Nancy Pelosi (D-CA) was fined $21,000 for donations made in the 2002 election cycle (2001-2002). Pelosi had set up two Leadership PACs but FEC rules make it clear "that if multiple PACs are under the control of the same person, they're considered affiliated and must adhere to limits as if they were one."
In 2005, the FEC reported that a Leadership PAC (Americans for a Republican Majority) run by then-Rep. Tom DeLay (R-TX) "used more unregulated 'soft' money than was allowed for fund-raising and get-out-the-vote activities" in the 2002 election.