Money, Politics and Advocacy

Where Does Money Come From?

For 527s, by far the biggest geographic donor, at $66,986,449, is the District of Columbia. New Yorkers have donated $33 million; Californians, $30 million; Ohio, $18 million. State contributions drop to single digit millions after that.

Most of the political advocacy 501(c) organizations reside in Virginia, on the DC border. There is no comprehensive list of the conservative and progressive organizations that fall in this category. Thus, there is currently no way to identify how much money is involved. And there is no way to determine where it originates.

PACs may receive up to $5,000 from an individual, other 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.

Most of us associate PACs with business, labor or ideology. However, politicians often form what is called a Leadership PAC to raise money to help fund other candidate campaigns. 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. The FEC has a graph showing the number of PACs by sector.

Since the fall of 2002, political parties have been forbidden to raise soft money. 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.

Who Are the Players?

President Bush has raised twice as much money as Senator Kerry. Historically, the GOP raises and spends millions of dollars more than the Democratic Party each presidential cycle.

There is no way to know what is happening with 501(c) fundraising, where the GOP has traditionally excelled. This cycle, 527 Democrats are raising significantly more money than 527 Republicans. The nod goes to Republicans from ideological/single-Issue PACs.

The Center for Responsive Politics has published a list of the top 100 donors based on contributions since 1989. The following data for this election cycle come from their online database:

Political Parties (8.2.2004 FEC data)

Democratic Party - $114,738,161
Top Sectors:

1. Finance/Insurance/Real Estate - $26,722,468
2. Lawyers/Lobbbyists - $19,706,494
3. Ideology/Single Issue - $16,380,423
4. Communication/Electronics - $10,368,695
5. Health - $5,345,028

Top Contributors:

1. National Education Assn - $2,680,933
2. Machinists/Aerospace Workers Union - $2,260,875
3. American Fedn of St/Cnty/Munic Employees - $2,194,274
4. Intl Brotherhood of Electrical Workers - $2,174,070
5. American Federation of Teachers - $2,037,758

Republican Party - $256,082,690
Top Sectors:

1. Finance/Insurance/Real Estate - $46,164,279
2. Construction - $10,542,250
3. Communication/Electronics - $8,999,570
4. Energy/Natural Resources - $7,309,975
5. Health - $13,730,495

Top Contributors:

1. Dick Armey Campaign Cmte - $1,999,000
2. Bill Thomas Campaign Cmte - $1,931,083
3. Christopher Cox for Congress - $1,483,400
4. Dreier for Congress Cmte - $1,410,500
5. Hastert for Congress Cmte - $1,185,758

Where it Stands

The GOP petitioned the FEC to shut down 527s in 2003. In early 2004, the FEC held a two-day hearing on the issue of money in politics. Instead of looking just at 527s, the FEC decided to also examine 501(c) organizations. GOP lawyers who had been invited to testify, declined, according to published reports.

The current system has little penalty for organizations that skirt regulations. 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.

The FEC should impose the same transparency requirements on 501(c) organizations as are currently required for PACs, 527s, political parties and candidates for office: make donor lists available and file financial reports in real time. Currently, 501(c) organizations are regulated almost solely by the IRS, which is not charged with monitoring money in politics.

Sources

• Bush's Secret Stash
• Congressional Leader Soft Money Accounts
• Election 2004: See How They Fund
• FEC Press Release, April 9, 2004
• IRS: Tax Information for Political Organizations
• McConnell v. Federal Election Commission
• NCSL Contribution Limits
• New Internal Revenue Service Political Website...
• Open Secrets
• Political Money Line
• Section 507 - Political Organizations