Federal political action committees, PACs, raise "hard" money for the purpose of defeating or electing candidates to federal office: Senators, Representatives, Presidents. PACs must register with the Federal Election Commission.
PACs may receive up to $5,000 from an individual, another PAC or party committee each calendar year. PACs can give $5,000 to a candidate committee per election cycle (primary, general or special). They 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 have limits on how much a PAC can give to a state or local candidate.
Corporations (profit or nonprofit), labor organizations, and incorporated membership organizations cannot make direct contributions or expenditures in connection with any federal election. However, they may set up PACs that, according to FEC, "can only solicit contributions from individuals associated with [the] connected or sponsoring organization." The FEC calls these "segregated funds" organizations.
Most of us associate PACs with business, labor or ideology. But there is another class of PAC, the nonconnected political committee. This class includes what is called a Leadership PAC, where politicians raise money to -- among other things -- help fund other candidate campaigns. Leadership PACs can solicit donations from anyone. Politicians do this because they have their eye on a leadership position in Congress or a higher office; it's a way of currying favor with their peers. And the NYT reported in 1999 that "Leadership PAC's are the fastest-growing segment of political fund-raising."
Origin of PACsThe Congress of Industrial Organizations (CIO) created the first PAC during World War II, after Congress prohibited organized labor from influencing politics via direct monetary contributions. In response, the CIO created a separate political fund that it called the Political Action Committee. In 1955, after the CIO merged with the American Federation of Labor, the new organization created a new PAC, the Committee on Political Education (COPE). Also formed in the 1950s: the American Medical Political Action Committee (AMPAC) and the Business-Industry Political Action Committee (BIPAC).
The number of PACs peaked in 1988 at 4,268. At that time, corporations accounted for 43% of all PACs; non-connected PACs accounted for 26%. The FEC reported 4,234 PACs on 1 January 2008. Corporate PACs had dropped to 38% of the total; non-connected PACs had increased to 31%.
Although PACs are perceived to be a major force in elections, they account for less than 1% of the funding in presidential elections. In Congressional races they are more important, although that importance is on the decline.
In the preliminary data from the 2006 election cycle, contributions from individuals were the largest source of receipts (61%). PAC contributions accounted for only 28% of the total. Candidates themselves contributed or loaned a total of $86.8 million to their campaigns, which was 8% of all receipts. (The agency did not produce an end-of-the-year report in 2006.)
But how much money are we talking about? The FEC reported in October 2006 that Congressional candidates had raised $1.14 billion in that two-year election cycle. In comparison, the FEC reported in June 2005 that candidates spent $1.16 billion in the 2003-2004 cycle. PAC contributions represented only 27% of the total spent. The FEC did not report end-of cycle expenditures for the 2006 election.
Most PAC money is contributed to incumbents, not challengers. Here are FEC data on contributions to challengers:
- 2006 : $36.3 (10%)
- 2004 : $22.3 (7%)
- 2002 : $28.5 (10%)
- 2000 : $27.5 (11%)
- 1998 : $22.1 (10%)
- 1996 : $31.5% (15%)
- PAC Contributions to All Federal Candidates - 1972-2006
- The Campaign For President: Is It Worth The Cost?
- Top 10 Political Action Committees (PACs) - 2006
- What Is A Leadership PAC?
- Should Senators Operate PACs?
- Sen. Barack Obama & Sen. Hillary Clinton Leadership PAC Donations
- The Candidates: Obama Current King Of Leadership PACs
- Obama's Disingenuous PAC Statement
- Leadership PACs Help Politicians Help Themselves
- More 2002 Mis-spent PAC Money (Tom DeLay)
- Judge Rules in DeLay PAC Case
Legislative HistoryThe 1971 Federal Election Campaign Act (FECA) allowed corporations to establish PACs and also revised financial disclosure requirements for everyone: candidates, PACs, and party committees active in federal elections had to to file quarterly reports. Disclosure -- the name, occupation, address and business of each contributor or spender -- was required for all donations of $100 or more; in 1979, this sum was increased to $200.
The McCain-Feingold Bipartisan Reform Act of 2002 attempted to end the use of non-federal or "soft money" (money raised outside the limits and prohibitions of federal campaign finance law) to influence federal elections. In addition, "issue ads" which do not specifically advocate for the election or defeat of a candidate were defined as "electioneering communications." As such, corporations or labor organizations can no longer produce these ads.