# Political Action Committees: Their Evolution, Growth and Implications for the Political System

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## Record

- **Collection:** Congressional research report
- **Document type:** CRS Report
- **Published:** April 30, 1984
- **Citation:** 84-78GOV

## Text

Report No. 84-78 GOV

POLITICAL ACTION COMMITTEES: THEIR EVOLUTION, GROWTH AND,
IMPLICATIONS FOR THE POLITICAL SYSTEM

Joseph E. Cantor
Analyst in American National Government
Government Division

GENERAL LIBRARIES
DEPOSlTORY

November 6, 1981
Updated April 30, 1984

The Congressional Research Service works exclusively for
the Congress, conducting research, analyzing legislation, and
providing information at the request of committees, Members. and their staffs.
The Service makes such research available, without partisan bias, in many forms including studies, reports, compilations, digests, and background briefings. Upon request, CRS
assists committees in analyzing legislative proposals and
issues, and in assessing the possible effects of these proposals
and their alternatives. The Service's senior specialists and
subject analysts are also available for personal consultations
in their respective fields of expertise.

ABSTRACT

T h i s r e p o r t examines t h e campaign f u n d r a i s i n g v e h i c l e s commonly r e f e r r e d
t o a s p o l i t i c a l a c t i o n committees.

It t r a c e s t h e i r e v o l u t i o n and t h e i r growth,

b o t h i n number and i n l e v e l of f i n a n c i a l a c t i v i t y , and it a n a l y z e s t h e impact
t h e y a r e having on t h e p o l i t i c a l system today.

INTRODUCTION

P o l i t i c a l a c t i o n c o m m i t t e e s (PACs) a r e t h e v e h i c l e s t h r o u g h which i n t e r e s t
g r o u p s r a i s e and c o n t r i b u t e money t o p o l i t i c a l c a n d i d a t e s .

Although o r i g i n a l l y

t h e a l m o s t e x c l u s i v e domain of o r g a n i z e d l a b o r , t h e i r a p p e a l h a s e x t e n d e d s i n c e
t h e e a r l y 1970s t o b u s i n e s s e s , t r a d e a s s o c i a t i o n s , and a wide r a n g e o f o t h e r
i n t e r e s t groups.

T h e i r p r o l i f e r a t i o n i n number and t h e i r growth i n l e v e l o f

f i n a n c i a l a c t i v i t y d u r i n g t h i s period has occurred a t a r a p i d pace.

I n 1982,

t h e 3,371 PACs had r e c e i p t s i n e x c e s s of $199 m i l l i o n and c o n t r i b u t e d more
t h a n $83 m i l l i o n t o c a n d i d a t e s f o r t h e U n i t e d S t a t e s C o n g r e s s .

PACs h a v e t h u s

become a major s o u r c e of campaign f i n a n c i n g i n modern c o n g r e s s i o n a l campaigns.
The amount o f money PACs a r e p r o v i d i n g t o campaigns h a s r a i s e d q u e s t i o n s

__

a8 t o whether t h e s e contributio_pssssare e n a b l i n x s p e c i a- l - i n t e r e s -t s- t o- - - g- a_i n -

-

d i s p r o p o r t i o n a t e i n f l u e n c e i n t h e l e g i s l a t -i -v- e p r o c e s s , by
o b l i g a t i o n by t h e r e c i p i e n t s o f t h -e--i r p o l i t i c a l d o n a t i o n s .
----

These c o n c e r n s a r e

c h a l l e n g e d by t h o s e who i n s i s t t h a t PAC money i s g e n e r a l l y g i v e n t o reward p u b l i c

- .-.

- .

o f f i c i a l s who a r e b a s i c a l l y s y m p a t h e t i c w i t h t h e i s s u e g o a l s o f t h e i n t e r e s t
-

g r o u p , r a t h e r t h a n t o promote s h i f t s i n v o t i n g p a t t e r n s which a r e i n c o n s i s t e n t
with t h e general philosophical o r constituency-based

views of t h e l e g i s l a t o r .

F u r t h e r m o r e , PACs a r e viewed by t h e s e i n d i v i d u a l s a s s i m p l y a n o t h e r m a n i f e s t a t i o n
o f t h e p--l u- r a l i s m r e f l e c t e d i n i n t e r e s t g r o u p a c t i v i t y s i n c e t h e f o u n d i n g o f t h e
Nation.

T h i s d e b a t e r e v e a l s s i g n i f i c a n t d i f f e r e n c e s i n outlook a s t o t h e r o l e of
i n t e r e s t g r o u p s i n p u b l i c p o l i c y - m a k i n g and t h e most d e s i r e d method f o r
t h e f i n a n c i n g o f e l e c t i o n campaigns.
T h i s r e p o r t examines t h e growth o f PACs i n r e c e n t y e a r s and a n a l y z e s
t h e r e a s o n s f o r t h e i n c r e a s e d r e l i a n c e upon them i n c o n g r e s s i o n a l campaigns.
It f o c u s e s on t h e r o l e o f PACs i n campaigns f o r t h e U.S. C o n g r e s s , e s s e n t i a l l y

b e c a u s e i t i s t h e r e t h a t PAC a c t i v i t y h a s been most pronounced.

Only a s m a l l

f r a c t i o n o f PAC c o n t r i b u t i o n s t o F e d e r a l c a n d i d a t e s h a s been g i v e n t o
P r e s i d e n t i a l c a n d i d a t e s ( l a r g e l y b e c a u s e of p u b l i c f u n d i n g of s u c h e l e c t i o n s ) ,
and knowledge o f PAC a c t i v i t y a t t h e S t a t e and l o c a l l e v e l i s q u i t e l i m i t e d .
I n any c a s e , t h e i s s u e s r a i s e d by PAC a c t i v i t y a t t h e c o n g r e s s i o n a l l e v e l
h a v e a pronounced e f f e c t on t h e p o l i t i c a l s y s t e m a s a whole.

This study

d i s c u s s e s t h e r e a s o n s f o r t h e c o n t i n u i n g c o n t r o v e r s y s u r r o u n d i n g PACs and
t h e i r i m p l i c a t i o n s f o r t h e p o l i t i c a l system.
C h a p t e r One d i s c u s s e s what i s meant by t h e term " p o l i t i c a l a c t i o n c o w i t t e e "
and g i v e s a rough i d e a o f how i t f u n c t i o n s .

Chapter Two p l a c e s PACs i n p e r s p e c t i v e

by examining how b u s i n e s s and l a b o r were i n v o l v e d i n campaign f i n a n c i n g b e f o r e
t h e modern PAC e r a and t r a c e s t h e l e g i s l a t i v e , e x e c u t i v e , and j u d i c i a l d e c i s i o n s
which gave impetus t o t h e i r growth and development.

Chapter Three p r e s e n t s t h e

d a t a on t h e i r growth and ~ r o l i f e r a t i o n , i n t e r m s o f b o t h numbers and d o l l a r s ,
and r e v i e w s t h e most w i d e l y h e l d t h e o r i e s e x p l a i n i n g t h e i r growth.

C h a p t e r Four

a n a l y z e s t h e i s s u e s r a i s e d by PACs i n t e r m s of t h e i r impact on t h e p o l i t i c a l
system.

C h a p t e r F i v e r e v i e w s r e c e n t c o n g r e s s i o n a l a t t e m p t s t o c u r t a i l PAC

i n f l u e n c e , a n a l y z e s some of t h e c u r r e n t p r o p o s a l s t o l i m i t them, and d i s c u s s e s
t h e p r o g n o s i s f o r t h e f u t u r e o f PACs i n o u r p o l i t i c a l system.
b i b l i o g r a p h y and a p p e n d i x a r e i n c l u d e d f o r f u r t h e r r e f e r e n c e .

Finally, a

Two e x p l a n a t i o n s r e g a r d i n g terminology used i n t h i s r e p o r t b e a r mentioning.
F i r s t , t h e term " i n t e r e s t group" i s used t o r e f e r t o o r g a n i z a t i o n s which pursue
p a r t i c u l a r p o l i c y g o a l s t h r o u g h t h e p o l i t i c a l a r e n a , and i t encompasses
c o r p o r a t i o n s , l a b o r u n i o n s , and t r a d e a s s o c i a t i o n s , a s w e l l a s t h e v a r i o u s
i d e o l o g i c a l o r i s s u e groups.
Second, because o f t h e a c t i v i t y o f and t h e p u b l i c i n t e r e s t i n t h o s e PACs
which a r e i d e o l o g i c a l l y homogenous i n n a t u r e , t h i s r e p o r t makes r e f e r e n c e t o
" l i b e r a l " and " c o n s e r v a t i v e " PACs.

In v i r t u a l l y a l l instances, these labels

r e f l e c t t h e s e l f - a s c r i p t i o n o f t h e groups themselves; a t t h e v e r y l e a s t , t h e y
r e f l e c t t h e widespread and u n c o n t e s t e d c h a r a c t e r i z a t i o n s a p p e a r i n g i n t h e media
and i n academic w r i t i n g s .
F i n a l l y , s e v e r a l i n d i v i d u a l s deserve a note of thanks f o r t h e i r a s s i s t a n c e
i n the preparation of t h i s report.

I n p a r t i c u l a r , Kent Cooper, Chief o f t h e

F e d e r a l E l e c t i o n Commission's P u b l i c Records D i v i s i o n , provided i n v a l u a b l e and
p a t i e n t h e l p i n t h e c o m p i l a t i o n o f d a t a f o r Chapter Three.

He a l s o reviewed t h a t

c h a p t e r , a s d i d P r o f e s s o r Herbert Alexander o f t h e C i t i z e n s v Research Foundation.
S h e r r y S h a p i r o and Edkth S u t t e r l i n , C o n g r e s s i o n a l Research S e r v i c e b i b l i o g r a p h e r s ,
a s s i s t e d i n t h e p r e p a r a t i o n o f t h e b i b l i o g r a p h y a t t h e end of t h i s r e p o r t .

CONTENTS

............................................................... iii
INTRODUCTION ..............................................................
v

ABSTRACT

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CHAPTER TWO: EVOLUTION OF POLITICAL ACTION COMMITTEES ....................
I . Group Involvement P r i o r t o t h e 1970s .............................
19
A . Legal R e s t r i c t i o n s ........................................ 1 9
B . How I n t e r e s t Groups Made P o l i t i c a l C o n t r i b u t i o n s ..............
22
1. Labor ....................................................
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2 . Business ................................................... 28
35
3 . Conclusion .................................................
I1. S t i m u l i t o PAC Growth i n t h e 1970s Provided by L e g i s l a t i v e .
35
J u d i c i a l . and A d m i n i s t r a t i v e D e c i s i o n s .........................
A . The F e d e r a l E l e c t i o n Campaign Act o f 1971 ..................... 36
B . P i p e f i t t e r s Local 562 v . United S t a t e s ........................
39
C . The F e d e r a l E l e c t i o n Campatgn Act Amendments o f 1974 ..........
41
D . The FEC's SUN PAC Advisory Opinion ............................ 43
E . The Supreme C o u r t ' s Buckley v . Valeo D e c i s i o n .................
45
F . The F e d e r a l E l e c t i o n Campaign Act Amendments o f 1976 .......... 47
G . Conclusion .................................................... 54

WHAT I S A POLITICAL ACTION COMMITTEE AND HOW DOES I T WORK?
CHAPTER ONE:
I
What i s a P o l i t i c a l Action Committee?
11 How a PAC O p e r a t e s
A Organization
B Records and Reports
C S o l i c i t a t i o n of C o n t r i b u t i o n s
D The Decision-Making P r o c e s s
E R e g u l a t i o n of PACs

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CHAPTER THREE: GROWTH OF PACS SINCE 1972: TiIE NUMBERS.
THE DOLLARS. AND THE REASONS
I
PAC Growth S i n c e 1974
I1
PAC Growth From 1972
1982: t h e D o l l a r s
A PAC Spending Since 1972: t h e Aqgregate Data
1 The Overview from t h e PAC P e r s p e c t i v e
2 The Overview from t h e C a n d i d a t e s ' P e r s p e c t i v e
B PAC Spending S i n c e 1972: Where Has t h e Money Come From?
1 E x p e n d i t u r e s and C o n t r i b u t i o n s by PAC Groupings
S i n c e 1972
2 The L a r g e s t PAC C o n t r i b u t o r s and Spenders
a Top 20 c o n t r i b u t o r s from 1972-1982
b Top 20 PAC s p e n d e r s from 1976-1982
c Comparison o f t h e l a r g e s t s p e n d e r s and c o n t r i b u t o r s
among PACs
C PAC Spending S i n c e 1972: Where t h e Money Has Gone
1 Candidate P r e f e r e n c e s from t h e PAC P e r s p e c t i v e
2 PAC C o n t r i b u t i o n s from t h e C a n d i d a t e s ' P e r s p e c t i v e
D Summary O b s e r v a t i o n s on PAC Growth
I11 Reasons f o r PAC Growth S i n c e t h e 1370s

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CHAPTER FOUR: ISSUES SURROUNDING THE PAC ROLE IN THE POLITICAL SYSTEM
I
The Role of Special Interests
I1 PAC Impact on the Political Parties
I11 The Role of Individuals in the Political Process
Impact of PACs on the Congress
IV
A Paralysis of the Policy-Making Process
B Linkage Between PAC Money and Legislative Votes
C PACs as Protectors of Incumbents
The Business-Labor Balance of Power
V
PACs and Political Accountability
VI
VII The Level of Money in Politics

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CHAPTER FIVE: CONGRESS' RESPONSE TO PACs AND THE PROGNOSIS FOR THE
FUTURE
Legislation to Limit PACs in the 95th through 97th Congresses
I
A 95th Congress Legislation
B 96th Congress Legislation
C 97th Congress Legislation
D 98th Congress Legislation
Current Proposals to Limit PAC Influence
I1
A Reduce PAC Contribution Limits
B Reducing Candidate Dependence on PACs
C Enhancing the Role of Other Participants in the
Political Process
D Public Funding of Congressional Elections
I11 Prognosis for the Future of PACs

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APPENDIX ................................................................
BIBLIOGRAPHY ............................................................
General ............................................................
Historical Accounts ................................................
Congressional Documents ............................................
1971 Federal Election Campaign Act (FECA) .....................
1974 FECA Amendments ..........................................
1976 FECA Amendments ..........................................
Miscellaneous ................................................
Trends and Statistics on PAC Activity by Election Cycle ............
Pre-1970 .....................................................
1972 ..........................................................
1974 ..........................................................
1976 .......................................................
1978 ..........................................................
1980 ..........................................................
1982 ..........................................................
Profiles on Specific PACs or Groupings of PACs .....................
How PACs Work ......................................................
The Impact of PAC Contributions ....................................
Independent Expenditures ...........................................

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CHAPTER ONE:

WHAT IS A POLITICAL ACTION COMMITTEE AND HOW DOES IT WORK?

In s e t t i n g t h e s t a g e f o r t h e d i s c u s s i o n t o f o l l o w , t h i s c h a p t e r d e f i n e s
t h e term " p o l i t i c a l a c t i o n committee" and s k e t c h e s t h e e s s e n t i a l o u t l i n e of
how a PAC o p e r a t e s .

T h i s i s not intended t o be an e x p l i c i t , d e t a i l e d g u i d e

t o t h e f o r m a t i o n of a PAC; such g u i d e s do e x i s t and, i n f a c t , provided

-

c o n s i d e r a b l e a s s i s t a n c e i n t h e p r e p a r a t i o n of t h i s o u t l i n e . 1/

Those

c o n s i d e r i n g s e t t i n g up a PAC would be w e l l a d v i s e d t o o b t a i n c o p i e s of t h e
F e d e r a l E l e c t i o n Campaign Act, T i t l e 11 of t h e Code of F e d e r a l R e g u l a t i o n s
( p e r t a i n i n g t o F e d e r a l ~ l e c t i o n s ) ,and t h e F e d e r a l E l e c t i o n Commission's
Campaign Guide f o r Nonconnected Committees o r Campaign Guide f o r C o r p o r a t i o n s
and Labor O r g a n i z a t i o n s .

T h i s c h a p t e r i s c o n f i n e d t o conveying some i d e a

of what i s involved i n t h e mechanics of s e t t i n g up and o p e r a t i n g a PAC, s o
a s t o a p p r e c i a t e t h e r o l e t h e s e v e h i c l e s p l a y i n American p o l i t i c s and t h e
i s s u e s t h e y r a i s e f o r t h e p o l i t i c a l system.

I.

WHAT I S A POLITICAL ACTION COMMITTEE
The term " p o l i t i c a l a c t i o n committee" i s w i d e l y used t o d e n o t e a l e g a l

e n t i t y which i s e s t a b l i s h e d by an i n t e r e s t group t o r a i s e and spend money
i n an a t t e m p t t o i n f l u e n c e e l e c t i o n s .

In s p i t e of i t s common usage, t h e term

1/ Sudow, William E. O r g a n i z a t i o n and A d m i n i s t r a t i o n : PAC Legal
~ o n s i z e r a t i o n s . I n P o l i t i c a l Action f o r Business: The PAC Handbook.
Washington, F r a s e r A s s o c i a t e s , 1981. p. 192-218.
S p r o u l , C u r t i s C.
C o r p o r a t i o n s and Unions i n F e d e r a l P o l i t i c s : A P r a c t i c a l Approach t o
F e d e r a l E l e c t i o n Law Compliance. In P o l i t i c a l Action Committees and
Campaign Finance: Symposium. Arizona Law Review, v . 2 2 , 1980: 465-518.

i s , i n f a c t , a c o l l o q u i a l e x p r e s s i o n which does not a p p e a r i n F e d e r a l s t a t u t e s .
I n o r d e r t o u n d e r s t a n d t h e l e g a l framework i n which a PAC o p e r a t e s , one must
e x p l o r e t h e d e f i n i t i o n s o f t h r e e r e l a t e d , b u t not e q u i v a l e n t , l e g a l t e r m s :
11

p o l i t i c a l committee," " s e p a r a t e s e g r e g a t e d fund," and " m u l t i c a n d i d a t e p o l i t i c a l

V i r t u a l l y a l l PACs, a s we w i l l r e f e r t o them t h r o u g h o u t t h i s r e p o r t , a r e
" p o l i t i c a l committees."

Under t h e d e f i n i t i o n i n 2 U.S.C.

431 of t h e F e d e r a l

E l e c t i o n Campaign Act (FECA):

( 4 ) The term " p o l i t i c a l committee" means-(A) any c o m m i t t e e , c l u b , a s s o c i a t i o n , o r o t h e r g r o u p o f
p e r s o n s which r e c e i v e s c o n t r i b u t i o n s a g g r e g a t i n g i n e x c e s s
of $1,000 d u r i n g a c a l e n d a r y e a r o r which makes e x p e n d i t u r e s
a g g r e g a t i n g i n excess of $1,000 d u r i n g a calendar year; o r
(B) any s e p a r a t e s e g r e g a t e d fund e s t a b l i s h e d under t h e
p r o v i s i o n s of s e c t i o n 441b(b) of t h i s t i t l e ; o r
(C) any l o c a l committee o f a p o l i t i c a l p a r t y which
r e c e i v e s c o n t r i b u t i o n s a g g r e g a t i n g in excess of $5,000 d u r i n g a
c a l e n d a r y e a r , o r makes payments exempted from t h e d e f i n i t i o n o f
c o n t r i b u t i o n o r e x p e n d i t u r e a s d e f i n e d i n p a r a g r a p h s ( 8 ) and
( 9 ) o f t h i s s e c t i o n a g g r e g a t i n g i n e x c e s s of $5,000 d u r i n z a
c a l e n d a r y e a r , o r makes c o n t r i b u t i o n s a g g r e g a t i n g i n e x c e s s
of $1,000 d u r i n g a c a l e n d a r y e a r o r makes e x p e n d i t u r e s
aggregating i n excess of $1,000 during a calendar y e a r .
For p u r p o s e s o f t h i s r e p o r t , t h e t h i r d t y p e of p o l i t i c a l cormnittee--ones
a r e a f f i l i a t e d with a p o l i t i c a l party--will

that

not b e c o n s i d e r e d ; t h e s e a r e n o t

what i s g e n e r a l l y meant a s p o l i t i c a l a c t i o n committees.

Instead, t h i s report

i s c o n c e r n e d w i t h what t h e F e d e r a l E l e c t i o n Commission r e f e r s t o a s "nonparty"
p o l i t i c a l c o m m i t t e e s , which can t a k e t h e form of e i t h e r d e f i n i t i o n (A) o r ( B ) .
The e s s e n t i a l d i s t i n c t i o n between p o l i t i c a l committee ( A ) and p o l i t i c a l
committee (B) i s t h e l a t t e r ' s a f f i l i a t i o n w i t h an e x i s t i n g , s p o n s o r i n g
o r g a n i z a t i o n , i n c o n t r a s t with t h e former's o s t e n s i b l y independent s t a t u s .
It i s p o l i t i c a l committee (B), t h e s e p a r a t e s e g r e g a t e d f u n d , which h a s

c o n s t i t u t e d t h e f o r e r u n n e r a n d , i n a s e n s e , t h e moving f o r c e behind t h e

p r o l i f e r a t i o n o f PACs.

U n t i l r e c e n t l y , t h e t e r m " s e p a r a t e s e g r e g a t e d fund"

was v i r t u a l l y synonymous w i t h t h e t e r m " p o l i t i c a l a c t i o n committee ," a n d , even
t o d a y , w i t h t h e i n c r e a s i n g growth o f and a t t e n t i o n f o c u s e d on t h e u n a f f i l i a t e d ,
i n d e p e n d e n t PACs, s e p a r a t e s e g r e g a t e d f u n d s a c c o u n t f o r n e a r l y 80 p e r c e n t o f
PAC s

.
A s e p a r a t e s e g r e g a t e d fund i s " l i t t l e more t h a n a bookkeeping c o n c e p t ,"

which i s n o t d e f i n e d i n t h e F e d e r a l e l e c t i o n l a w s . 21

As w i l l b e e x p l o r e d

i n C h a p t e r Two, i t d e v e l o p e d o u t of t h e l e g a l p r o h i b i t i o n s on t h e s p e n d i n g of
g e n e r a l t r e a s u r y f u n d s f o r p o l i t i c a l c o n t r i b u t i o n s by u n i o n s and c o r p o r a t i o n s .
Such p r o h i b i t i o n s l e d l a b o r u n i o n s ( a n d u l t i m a t e l y o t h e r s ) t o e s t a b l i s h and
u n d e r w r i t e t h e o p e r a t i n g e x p e n s e s of d i s t i n c t c o m m i t t e e s ( m a i n t a i n i n g a c c o u n t s
s e p a r a t e from t h e u n i o n s ' ) t o c o l l e c t and d i s t r i b u t e v o l u n t a r y p o l i t i c a l
c o n t r i b u t i o n s from t h e i r members, w i t h o u t i n v o l v i n g d i r e c t union c o n t r i b u t i o n s
t o candidates.

I n such a manner, t h e c o n c e p t of a s e p a r a t e s e g r e g a t e d fund

came i n t o b e i n g .
The law a u t h o r i z e s t h r e e s p e c i f i c p o l i t i c a l a c t i v i t i e s which can b e
c o n d u c t e d w i t h g e n e r a l t r e a s u r y f u n d s of u n i o n s and c o r p o r a t i o n s .
2 U.S.C.

While

441b(a) p r o h i b i t s c o n t r i b u t i o n s t o Federal candidates by n a t i o n a l

b a n k s , c o r p o r a t i o n s , and l a b o r o r g a n i z a t i o n s , S e c t i o n 4 4 1 b ( b ) ( 2 ) s t a t e s t h a t
t h i s p r o h i b i t i o n s h a l l not include-(A) communications by a c o r p o r a t i o n t o i t s s t o c k h o l d e r s
and e x e c u t i v e o r a d m i n i s t r a t i v e p e r s o n n e l and t h e i r f a m i l i e s
o r by a l a b o r o r g a n i z a t i o n t o i t s members and t h e i r f a m i l i e s
on any s u b j e c t ;
(B) n o n p a r t i s a n r e g i s t r a t i o n and g e t - o u t - t h e - v o t e
campaigns
by a c o r p o r a t i o n aimed a t i t s s t o c k h o l d e r s and e x e c u t i v e o r
a d m i n i s t r a t i v e p e r s o n n e l and t h e i r f a m i l i e s , o r by a l a b o r
o r g a n i z a t i o n aimed a t i t s members and t h e i r f a m i l i e s ; and

-21

S p r o u l , C o r p o r a t i o n s and Unions i n F e d e r a l P o l i t i c s , p. 4 9 3 .

( c ) t h e e s t a b l i s h m e n t , a d m i n i s t r a t i o n , and s o l i c i t a t i o n
o f c o n t r i b u t i o n s t o a s e p a r a t e s e g r e g a t e d fund t o be u t i l i z e d
f o r p o l i t i c a l p u r p o s e s by a c o r p o r a t i o n , l a b o r o r g a n i z a t i o n ,
membership o r g a n i z a t i o n , c o o p e r a t i v e , o r c o r p o r a t i o n w i t h o u t
c a p i t a l stock.
P a r t C t h u s s a n c t i o n s t h e e s t a b l i s h m e n t o f s e p a r a t e s e g r e g a t e d f u n d s by
c o r p o r a t i o n s , u n i o n s , membership o r g a n i z a t i o n s , c o o p e r a t i v e s , and c o r p o r a t i o n s
w i t h o u t c a p i t a l s t o c k ; i n a d d i t i o n , t r a d e a s s o c i a t i o n s a r e g r a n t e d t h e same
r i g h t i n 2 U.S.C.

4 4 1 b ( b ) ( 4 ) ( ~ ) . These e n t i t i e s r e p r e s e n t s i x of t h e s e v e n

t y p e s o f PACs r e c o g n i z e d under law, and t h e y w i l l be d i s c u s s e d a t l e n g t h i n
C h a p t e r T h r e e , which p r e s e n t s d a t a on s p e n d i n g by t h e v a r i o u s t y p e s o f PACs.
A key f e a t u r e o f a l l t h r e e s a n c t i o n e d a c t i v i t i e s ( p a r t s A, B, and C o f s e c t i o n
4 4 1 b ( b ) ( 2 ) ) i s t h a t t h e y must b e c o n f i n e d t o t h e a u d i e n c e s s p e c i f i e d i n t h e
law; t h i s h a s an i m p o r t a n t b e a r i n g on t h e o p e r a t i o n s o f PACs and t h e i r
i m p l i c a t i o n s f o r t h e e l e c t o r a l process.
The k i n d s o f e x p e n s e s which may be p a i d o u t o f t h e g e n e r a l t r e a s u r i e s o f
t h e s p o n s o r i n g o r g a n i z a t i o n s a r e e l a b o r a t e d upon i n t h e r e g u l a t i o n s promulgated

by t h e F e d e r a l E l e c t i o n Commmission.

11 C.F.R.

114.l(b) s t a t e s :

" E s t a b l i s h m e n t , a d m i n i s t r a t i o n , and s o l i c i t a t i o n c o s t s ' ' means
t h e c o s t s o f o f f i c e s p a c e , phones, s a l a r i e s , u t i l i t i e s , s u p p l i e s ,
l e g a l and a c c o u n t i n g f e e s , f u n d r a i s i n g and o t h e r e x p e n s e s
i n c u r r e d i n and r u n n i n g a s e p a r a t e s e g r e g a t e d fund

....

These c o s t s need n o t b e r e p o r t e d t o t h e F e d e r a l E l e c t i o n Commmission.
Having d e s c r i b e d t h e p r i n c i p a l c h a r a c t e r i s t i c s o f PACs which a r e s e p a r a t e
s e g r e g a t e d f u n d s , o n e must t a k e n o t e o f o t h e r p o l i t i c a l c o m m i t t e e s which a r e
e s t a b l i s h e d a s i n d e p e n d e n t , p o l i t i c a l f u n d r a i s i n g and s p e n d i n g v e h i c l e s .

These

c o m m i t t e e s must s i m p l y meet t h e c r i t e r i a o f r a i s i n g o r s p e n d i n g o v e r $1,000
i n a c a l e n d a r y e a r and t h e n f i l e t h e a p p r o p r i a t e forms w i t h t h e F e d e r a l
E l e c t i o n Commission.

These u n a f f i l i a t e d PACs a r e not governed by t h e

r e s t r i c t i o n s a p p l i c a b l e t o t h e s e p a r a t e s e g r e g a t e d f u n d s , i n t e r m s o f whom

t h e y may s o l i c i t f o r c o n t r i b u t i o n s , nor a r e t h e y a b l e t o r e l y upon a s p o n s o r i n g
o r g a n i z a t i o n t o b e a r t h e i r a d m i n i s t r a t i v e and f u n d r a i s i n g c o s t s ; such c o s t s
must b e p a i d o u t o f t h e v o l u n t a r y c o n t r i b u t i o n s t h e y r a i s e .

Therein l i e s the

paramount a d v a n t a g e and d i s a d v a n t a g e a c c r u i n g t o what t h e FEC d e s c r i b e s a s t h e
"non-connected"

PACs, t h e s e v e n t h and f i n a l PAC c a t e g o r y .

As w i l l b e d i s c u s s e d

l a t e r i n t h i s r e p o r t , t h e u n a f f i l i a t e d ( o r non-connected) g r o u p i n g i s l a r g e l y
comprised o f i d e o l o g i c a l and i s s u e - o r i e n t e d

i n t e r e s t groups.

One a d d i t i o n a l b i t o f l e g a l t e r m i n o l o g y - - t h e
p o l i t i c a l commit tee1'--needs

term "multicandidate

t o b e e x p l a i n e d i n o r d e r t o round o u t o n e ' s

f u n d a m e n t a l u n d e r s t a n d i n g o f what a PAC i s and why i t i s such a much-discussed
vehicle.

T h i s t e r m a r i s e s from t h e l i m i t a t i o n s p l a c e d on p o l i t i c a l

c o n t r i b u t i o n s by i n d i v i d u a l s and g r o u p s under S e c t i o n 441a of t h e FECA.
S u b s e c t i o n ( a ) ( 1 ) l i m i t s " p e r s o n s " t o c o n t r i b u t i o n s o f $1,000 per e l e c t i o n
t o any F e d e r a l c a n d i d a t e o r h i s a u t h o r i z e d c o m m i t t e e s , $20,000 p e r y e a r t o
n a t i o n a l p o l i t i c a l p a r t y c o m m i t t e e s , and $5,000 a y e a r t o o t h e r p o l i t i c a l
committees.

As d e f i n e d i n 2 U.S.C.

4 3 1 ( 1 1 ) , t h e t e r m "person"

includes:

an i n d i v i d u a l , p a r t n e r s h i p , committee, a s s o c i a t i o n , c o r p o r a t i o n ,
l a b o r o r g a n i z a t i o n , o r any o t h e r o r g a n i z a t i o n o r g r o u p of p e r s o n s ,
b u t s u c h t e r m d o e s n o t i n c l u d e t h e F e d e r a l Government o r any
a u t h o r i t y o f t h e F e d e r a l Government.
Thus, t h e l i m i t s above a p p l y t o a n i n d i v i d u a l c i t i z e n a s w e l l a s t o an
o r g a n i z a t i o n o r group.
The law makes p r o v i s i o n , however, f o r a s p e c i a l t y p e o f p o l i t i c a l
c o m m i t t e e , t o which d i f f e r e n t c o n t r i b u t i o n l i m i t s a p p l y ; t h i s t y p e o f PAC

i s t h e " m u l t i c a n d i d a t e p o l i t i c a l committee," which i s d e f i n e d i n S e c t i o n
441(a)(4) as:
a p o l i t i c a l committee which h a s been r e g i s t e r e d under s e c t i o n 433
o f t h i s t i t l e f o r a p e r i o d o f n o t l e s s t h a n 6 months, which h a s
r e c e i v e d c o n t r i b u t i o n s from more t h a n 50 p e r s o n s , a n d , e x c e p t f o r
any S t a t e p o l i t i c a l p a r t y o r g a n i z a t i o n , h a s made c o n t r i b u t i o n s t o
5 o r more c a n d i d a t e s f o r F e d e r a l o f f i c e .

By meeting these three additional criteria, the multicandidate PAC may, under

2 U.S.C. 441a(2),

contribute $5,000 per election to a Federal candidate,

$15,000 to a national political party cornittee, and $5,000 to any other
political committee.
Whereas the last limitation is the same as for the basic political
committee and the second is actually lower, the $5,000 limit on contributions
to candidates, in contrast with the $1,000 limit applicable to basic political
committees and individuals, provides greater opportunities for influence and,
hence, greater incentive for a political committee to attempt to meet the
three additional criteria for multicandidate status.

With these criteria

being relatively easy to meet, it is hardly surprising that most nonparty
committees today are multicandidate committees.

What this means is that,

for all intents and purposes, most PACs may contribute more money to Federal
candidates than can individual citizens (this difference is accentuated by
the imposition of a $25,000 aggregate limit on political contributions by
individuals, with no such limit on political committees).

This distinction

has had a significant bearing on the growth of PACs, as well as on the debate
surrounding their influence on American politics.
In summary, virtually all PACs are political committees, most, but not
all, are separate segregated funds, and most, but not all, are multicandidate
political committees.

Because of the implications for public policy and in

the interests of greatest consistency with common usage, the term "PAC," for
purposes of this report, will generally refer to nonparty, multicandidate
political committees which may be either separate segregated funds or
unaffiliated entities.

The sections which follow in this chapter will have

particular applicability to separate segregated funds, although they will
be broadly relevant to all types of PACs.

11.

HOW A PAC OPERATES

A.

Organization

A PAC is required to file a statement of organization with the Federal
Election Commission within ten days after its establishment. 3/

For a

separate segregated fund, the regulations suggest several alternative events
which can be considered to constitute "establishment":
a vote by the board of directors or comparable governing body
of an organization to create a separate segregated fund to be
used wholly or in part for federal elections; selection of
initial officers to administer such a fund; or payment of the
41
initial operating expenses of such a fund. For an unaffiliated PAC, "establishment" is considered to have occurred when
it meets the requirements of a political committee (i.e., when an organization

-

or group raises or spends more than $1,000 in a year). 51
In order to register with the FEC, the newly-formed PAC must file a
Statement of Organization, FEC Form 1 [a copy is provided in Appendix A ] ,
which contains the following information:
(1) name, address, and type of committee;
(2) name, address, relationship, and type of connected
organization;
(3) name, address, and committee position of custodian
of records (may be the treasurer);
( 4 ) name and address of treasurer;

-3/
4/
-5 /

11 C.F.R. 102.1
11 C.F.R. 102.l(c)
11 C.F.R. 100.5(a);

102.l(d)

( 5 ) listing of depositories used by committee (at least

61;
one must be designated) -

The one officer required by law in a PAC is the treasurer, who plays a pivotal
role in the committee. As stated in 2 U.S.C. 432(a):
Every political committee shall have a treasurer.
No contribution or expenditure shall be accepted or
made by or on behalf of a political committee during
any period in which the office of treasurer is vacant.
In selecting the name, a separate segregated fund must include the name of its
connected organization in its Statement of Organization, on all reports filed,
and in all advertisements and communications. 7/
Beyond the requirements above, there are virtually no other steps required
for the establishment of a PAC.

Those in charge of the PAC may or may not

decide to incorporate. By-laws which set forth the goals, organizational
structure, and guidelines for PAC operations are recommended by many
authorities, but they are not required by law. 81
Regarding the tax status of a PAC, the law states that political
organizations are not entirely exempt from income taxation and are required to
91 However, a PAC qualifies for a limited tax-exempt status
file tax returns. "as long as it is organized and operated primarily for the purpose of receiving

-

contributions and making expenditures within the meaning of the Act." 101

61
-

11 C.F.R.

102.2(a)

-7/ 11 C.F.R. 102.14
-8/ Sudow, Organization and Administration, p. 199-200.
-9/ 26 U.S.C. 6012(a)(6)
lo/ Sudow, Organization and Administration, p. 207. Although money
raiserfrom contributions for political expenditures is tax-exempt, political
organizations must pay taxes on income from investments.

B.

Records and R e p o r t s

Under 2 U.S.C.

432, t h e t r e a s u r e r i s r e q u i r e d t o keep an account

of t h e PAC's f i n a n c i a l t r a n s a c t i o n s and t o s t o r e t h e s e r e c o r d s f o r t h r e e
years a f t e r the relevant reports a r e f i l e d .

I n terms of r e c e i p t s , t h e s e

r e c o r d s must i n c l u d e :
( 1 ) an account of a l l c o n t r i b u t i o n s r e c e i v e d ;
( 2 ) t h e name and a d d r e s s of persons who c o n t r i b u t e more t h a n $50;
( 3 ) employment s t a t u s of persons c o n t r i b u t i n g over $200 i n a y e a r ;
( 4 ) i d e n t i f i c a t i o n of any c o n t r i b u t i o n by a p o l i t i c a l c o r n i t t e e .
For i t e m s 2-4,
well.

t h e d a t e and amount of c o n t r i b u t i o n must be i n c l u d e d , a s

For a l l PAC d i s b u r s e m e n t s , t h e r e c o r d s must provide:
( 1 ) name and a d d r e s s of e v e r y r e c i p i e n t ;
( 2 ) d a t e , amount, and purpose;
( 3 ) name of c a n d i d a t e (and o f f i c e s o u g h t ) on whose b e h a l f
disbursement was made.

A r e c e i p t , i n v o i c e , o r c a n c e l l e d check i s r e q u i r e d t o be kept f o r d i s b u r s e m e n t s
exceeding $200.
S e c t i o n 434 of t h e FECA r e q u i r e s PACs t o r e p o r t i n f o r m a t i o n on t h e i r
f i n a n c i a l a c t i v i t y t o t h e F e d e r a l E l e c t i o n Commission a t r e g u l a r i n t e r v a l s ;

2 U.S.C.

439 a l s o r e q u i r e s r e l e v a n t s e c t i o n s of r e p o r t s t o be f i l e d w i t h t h e

S e c r e t a r y of S t a t e i n t h o s e S t a t e s where c a n d i d a t e s have r e c e i v e d PAC
contributions.
Appendix B)

C u r r e n t r e g u l a t i o n s r e q u i r e them t o use FEC Form 3-X.

(See

.

These r e p o r t s e l i c i t i n f o r m a t i o n on PAC r e c e i p t s through two methods.
The f i r s t , c a t e g o r i e s of r e c e i p t s , r e q u i r e s t h e r e p o r t i n g of t o t a l amounts
i n c o n t r i b u t i o n s from i n d i v i d u a l s , p a r t y committees, o t h e r p o l i t i c a l committees,

and a l l t h e s e s o u r c e s combined; i n a d d i t i o n , t o t a l amounts o f t r a n s f e r s from
a f f i l i a t e d c o m m i t t e e s , l o a n s , o f f s e t s t o o p e r a t i n g e x p e n s e s , and o t h e r r e c e i p t s
must be r e p o r t e d i n t h e c a t e g o r i e s s e c t i o n .

The second s e c t i o n of t h e r e c e i p t s

r e p o r t p r o v i d e s a n i t e m i z e d a c c o u n t ( w i t h d a t e s and amounts) of c o n t r i b u t i o n s
from i n d i v i d u a l s who c o n t r i b u t e more t h a n $200 i n a y e a r and from a l l c o m m i t t e e s
( p o l i t i c a l and o t h e r w i s e ) ; i n a d d i t i o n , i t e m i z e d a c c o u n t i n g i s r e q u i r e d f o r
t r a n s f e r s from a f f i l i a t e d c o m m i t t e e s , a l l l o a n s t o t h e PAC, a l l r e b a t e s t o
o f f s e t o p e r a t i n g c o s t s i n e x c e s s o f $200, and d i v i d e n d s o r i n t e r e s t i n amounts
o v e r $200. E/
With r e g a r d t o PAC d i s b u r s e m e n t s , t h e same two methods a r e u s e d .

The

c a t e g o r i e s o f d i s b u r s e m e n t s p r o v i d e t h e t o t a l amounts s p e n t on o p e r a t i n g
expenses, t r a n s f e r s t o a f f i l i a t e d committees, l o a n repayments, o f f s e t s ,
c o n t r i b u t i o n s t o o t h e r p o l i t i c a l c o m m i t t e e s , l o a n s made by t h e PAC, i n d e p e n d e n t
e x p e n d i t u r e s , and o t h e r e x p e n s e s .

An i t e m i z e d a c c o u n t i n g ( w i t h d a t e s and

amounts) i s r e q u i r e d f o r e a c h d i s b u r s e m e n t of more t h a n $200 i n a y e a r ( s t a t i n g
t h e purpose o f t h e e x p e n d i t u r e ) , e a c h t r a n s f e r t o an a f f i l i a t e d c o m m i t t e e ,
e a c h l o a n repayment, each r e f u n d o r o f f s e t , e a c h c o n t r i b u t i o n t o a p o l i t i c a l
committee ( w i t h name and o f f i c e s o u g h t , i f t o a c a n d i d a t e ' s a u t h o r i z e d
c o m m i t t e e ) , e a c h l o a n , and e a c h i n d e p e n d e n t e x p e n d i t u r e of more t h a n $200. 12/
F i n a l l y , t h e r e p o r t s f i l e d must a l s o d i s c l o s e such i n f o r m a t i o n a s c a s h
on hand, o u t s t a n d i n g d e b t s and o b l i g a t i o n s , and summaries o f c o n t r i b u t i o n s

-

and o p e r a t i n g e x p e n d i t u r e s . 1 3 1

11/
12/
13/
-

11 C.F.R.

1 0 4 . 3 ( a ) ( 2 ) and ( 4 )

11 C.F.R.

1 0 4 . 3 ( b ) ( l ) and ( 3 )

11 C.F.R.

104.3(a)(l),

( c ) , and ( d )

PACs may choose one of two s c h e d u l e s f o r f i l i n g t h e i r d i s c l o s u r e r e p o r t s .
The f i r s t o p t i o n r e q u i r e s e l e c t i o n - y e a r r e p o r t s on a q u a r t e r l y b a s i s (due
J a n u a r y 31, A p r i l 15, J u l y 1 5 , and October 1 5 ) , a p r e - e l e c t i o n

r e p o r t (due

12 days b e f o r e a primary o r g e n e r a l e l e c t i o n ) , and a p o s t - e l e c t i o n r e p o r t
(due 30 days a f t e r a g e n e r a l e l e c t i o n ) ; i n n o n - e l e c t i o n y e a r s , two semi-annual
r e p o r t s a r e r e q u i r e d under t h i s system (due J u l y 31 and J a n u a r y 31).

The

second r e p o r t i n g o p t i o n r e q u i r e s monthly r e p o r t s (due by t h e 20th day of t h e
f o l l o w i n g month) i n b o t h e l e c t i o n and n o n - e l e c t i o n y e a r s ; d u r i n g e l e c t i o n
y e a r s , however, pre- and p o s t - e l e c t i o n r e p o r t s and a year-end

r e p o r t (due

J a n u a r y 31) a r e r e q u i r e d i n l i e u of t h e November and December monthly
reports.

141

S o l i c i t a t i o n of Contributions
A t t h e c o r e of a PAC's e x i s t e n c e is i t s a b i l i t y t o r a i s e money.

The FECA

and i t s i n t e r p r e t a t i v e r e g u l a t i o n s o f f e r d e t a i l e d g u i d e l i n e s which must be
followed by t h e v a r i o u s t y p e s of s e p a r a t e s e g r e g a t e d funds i n t h e i r a p p e a l s
for voluntary contributions.

One o v e r r i d i n g r u l e , a t l e a s t w i t h r e s p e c t t o

union o r c o r p o r a t e employers who s o l i c i t t h e i r s u b o r d i n a t e s , i s t h a t a l l
s o l i c i t a t i o n s must inform t h e employee of t h e p o l i t i c a l purposes of t h e PAC

-

and of h i s r i g h t t o r e f u s e t o c o n t r i b u t e without f e a r of r e p r i s a l . 151
C o r p o r a t i o n s may s o l i c i t c o n t r i b u t i o n s t o t h e i r PACs o n l y from t h e i r

-

s t o c k h o l d e r s , a d m i n i s t r a t i v e o r e x e c u t i v e p e r s o n n e l , and f a m i l i e s . 161

141 11 C.F.R.
-

104.5(c)

151 2 U.S.C. 4 4 1 b ( b ) ( 3 ) ( ~ ) and ( c )
161 2 U.S.C. 4 4 1 b ( b ) ( 4 ) ( A ) ( i )
-

The

law defines "executive or administrative personnel" as:
individuals employed by a corporation who are paid on a
salary, rather than hourly, basis and who have policymaking,
managerial, professional, or supervisory responsibilities. 171

-

Labor unions may only solicit contributions from their members and their
families. 181 Such solicitations by unions and corporations may be in written
or oral form and may occur at any time, with no 1imitatioh.on the number of
times per year.
In addition to the above guidelines, the law permits corporations and
unions to solicit each other's solicitation pools twice a year.

This type

of solicitation must be in writing and be sent to the residence of the
191 The regulations further require that these written
prospective donor. solicitations inform the reader that a custodial arrangement exists to protect
the anonymity of those who do not contribute, those who make a single
contribution of $50 or less, and those whose aggregate contributions in a year
do not exceed $200; the corporation or union may not be informed of those who
fail to contribute, and those who contribute less than $50 at a time or $200

-

in the aggregate may send their contributions to the custodian. 201
The law requires that whatever methods a corporation uses in its
fundraising efforts must be made available at cost to a labor union which
represents its employees. 2 1 The regulations suggest that such methods of

171 2 U.S.C. 441b(7)
181 2 U.S.C. 441b(b)(4)(A)(ii)
191 2 U.S.C. 441b(b)(4)(B)
201 11 C.F.R. 114.6(c) and (d)
211 2 U.S.C. 441b(b)(6)
-

s o l i c i t a t i o n i n c l u d e b u t a r e n o t l i m i t e d t o a p a y r o l l d e d u c t i o n o r check-off
s y s t e m , c o m p u t e r s f o r a d d r e s s i n g e n v e l o p e s f o r home s o l i c i t a t i o n s , and t h e u s e
of c o r p o r a t e f a c i l i t i e s f o r f u n d r a i s i n g e v e n t s . 221
The r u l e s g o v e r n i n g s o l i c i t a t i o n by membership o r g a n i z a t i o n s ( o t h e r t h a n
t r a d e a s s o c i a t i o n s ) , c o o p e r a t i v e s , and c o r p o r a t i o n s w i t h o u t c a p i t a l s t o c k a r e
much s i m p l e r t h a n t h o s e f o r c o r p o r a t i o n s and u n i o n s .

Any o f t h e t h r e e former

t y p e s o f o r g a n i z a t i o n s may s o l i c i t i t s members a t any t i m e and i n any manner,

-

w i t h o u t any r e s t r i c t i o n on number o f s o l i c i t a t i o n s per y e a r . 231
The g u i d e l i n e s g o v e r n i n g a t r a d e a s s o c i a t i o n p e r m i t i t t o s o l i c i t t h e
s t o c k h o l d e r s and a d m i n i s t r a t i v e o r e x e c u t i v e p e r s o n n e l (and f a m i l i e s ) o f member
c o r p o r a t i o n s , p r o v i d e d t h a t t h e c o r p o r a t i o n g r a n t s s p e c i f i c , p r i o r a p p r o v a l and
t h a t i t n o t p e r m i t such s o l i c i t a t i o n s by any o t h e r a s s o c i a t i o n t h a t y e a r .
The c o r p o r a t i o n i s f r e e t o l i m i t t h e number o f s o l i c i t a t i o n s d u r i n g t h e y e a r
b y t h e a u t h o r i z e d t r a d e a s s o c i a t i o n and t o f u r t h e r r e s t r i c t t h e s o l i c i t a t i o n

-

p o o l . 241
The law h a s l i t t l e t o s a y r e g a r d i n g s o l i c i t a t i o n s by non-connected

PACs,

e x c e p t t h a t t h e y must i d e n t i f y any communications a s b e i n g p a i d f o r by

-

them. 2 5 1

Beyond t h a t , a s p r e v i o u s l y s t a t e d , t h e y may s o l i c i t anyone f o r

c o n t r i b u t i o n s , t h r o u g h any v e h i c l e , any number o f t i m e s .
One f i n a l comment r e g a r d i n g PAC s o l i c i t a t i o n of c o n t r i b u t i o n s d e s e r v e s
mention h e r e .

C o n t r i b u t i o n s t o a PAC a r e g e n e r a l l y e l i g i b l e f o r t h e 50 p e r c e n t

221 11 C.F.R. 1 1 4 . 5 ( k )
231 2 U.S.C. 4 4 1 b ( b ) ( 4 ) ( C ) ; 11 C.F.R. 114.7
241 2 U.S.C. 4 4 1 b ( b ) ( 4 ) (Dl; 11 C.F.R. 1 1 4 . 8
251 11 C.F.R. 110.11
-

t a x c r e d i t a p p l i c a b l e t o a l l p o l i t i c a l c o n t r i b u t i o n s ; a maximum c r e d i t of
$50 may b e t a k e n by a s i n g l e t a x p a y e r and $100 by t h o s e f i l i n g a j o i n t r e t u r n .
T h i s p r o v i s i o n i s commonly mentioned by PACs i n t h e i r f u n d r a i s i n g a p p e a l s .

D . The Decision-Making P r o c e s s

Of a l l t h e a s p e c t s o f p o l i t i c a l a c t i o n c o m m i t t e e s , t h e i r o p e r a t i o n and
t h e i r r o l e i n o u r p o l i t i c a l s y s t e m , t h e one which i s p r o b a b l y t h e l e a s t
u n d e r s t o o d i s t h e PAC decision-making

process.

T h e r e i s a d e a r t h of l i t e r a t u r e

on how PACs a r r i v e a t d e c i s i o n s on which c a n d i d a t e s t o s u p p o r t , and t h e r e i s
no s y s t e m a t i c , comprehensive e x a m i n a t i o n of t h i s q u e s t i o n .

What l i t e r a t u r e

d o e s e x i s t i s l a r g e l y c o n f i n e d t o examples of s e l e c t e d PACs and i s h e a v i l y
anecdotal i n nature.

Furthermore, t h e i n s i g h t s i n t o t h e inner workings of

PACs f o c u s e s p e c i a l l y on c o r p o r a t e PACs.

This i s perhaps a t t r i b u t a b l e t o t h e

e f f o r t s o f c o r p o r a t e spokesmen t o p u b l i c i z e t h e i r o p e r a t i o n s , i n o r d e r t o
h e l p s h a p e a s y m p a t h e t i c p u b l i c p e r c e p t i o n o f them.

Thus, n o t o n l y a r e t h e

e x i s t i n g a c c o u n t s o r i e n t e d t o t h e c o r p o r a t e s e c t o r b u t t h e y may be l a c k i n g
i n objectivity, as well.

Although t h i s s e c t i o n a t t e m p t s t o p r o v i d e some u s e f u l

g e n e r a l i z a t i o n s on t h e PAC d e c i s i o n - m a k i n g p r o c e s s , i t i s n e c e s s a r i l y l i m i t e d
by t h e a f o r e m e n t i o n e d c o n s t r a i n t s .
The fundamental r e a s o n f o r t h e g e n e r a l l y vague p e r c e p t i o n of PAC i n t e r n a l
workings i s t h e a b s e n c e of d e t a i l e d l e g a l g u i d e l i n e s and d i s c l o s u r e r e q u i r e m e n t s ,
s u c h a s t h o s e t h a t a p p l y t o t h e PAC's f i n a n c i a l o p e r a t i o n s .

I n t h e c a s e of

t h e v a s t m a j o r i t y o f PACs which a r e a f f i l i a t e d , i t i s known t h a t t h e l e a d e r s h i p
o f t h e s p o n s o r i n g o r g a n i z a t i o n h a s broad a u t h o r i t y t o c o n t r o l t h e s p e n d i n g
d e c i s i o n s o f t h e i r PACs.

A board o f d i r e c t o r s i s u s u a l l y e s t a b l i s h e d a s t h e

u l t i m a t e d e c i s i o n - m a k i n g body of t h e PAC, and management-level

o f f i c e r s of t h e

company or union typically serve on the PAC board.

The day-to-day operations

of the PAC are generally handled by a designated manager, who may serve only
part-time in that capacity and whose principal occupation might be government
affairs specialist of the connected organization. 261

The PAC board may also

rely on standing comrnittees to assist with such specific tasks as fundraising,
monitoring legislators' votes, or voter education. 271
The number of people actually involved in the decision-making process will
also vary.

It appears that some actively encourage input from the contributors,

which may involve an earmarking system, while others reserve the decisions on
whom to support to the PAC board of directors or a subgroup thereof.

Some may

place particular emphasis on the advice of Washington representatives of the
connected organization; others may solicit input from local affiliates before
making decisions for the national body. 281
Most of the literature stresses the wide number of options open to PAC
decision-makers.

Some of these options are summarized below as a means of

illustrating how varied the operations and foci of PACs are likely to be.
Through these choices, a PAC assumes its own identity:
(1) to limit contributions to local races or to support
candidates across the Nation;
(2) to pursue an incumbent-oriented approach or to take
more risks on challengers;

261 Cohen, Richard E. Congressional Democrats Beware--Here Come the
corpo=te PACs. National Journal, v. 12, August 9, 1980: 1306.
271 Sudow, Organization and Administration, p. 197.
281 Budde, Bernadette. Business Political Action Committees. In
J. Malbin (ed. )
~ichax
Parties, Interest Groups, and Campaign Finance
Laws. Washington, American Enterprise Institute for Public Policy Research,
1980. p. 22-23.

.

( 3 ) t o c o n c e n t r a t e c o n t r i b u t i o n s on incumbents i n
l e g i s l a t i v e l y s t r a t e g i c p l a c e s , such a s key committee
posit ions;

( 4 ) t o c o n t r i b u t e e a r l y i n t h e e l e c t i o n c y c l e (perhaps
t a k i n g more r i s k s ) o r w a i t u n t i l l a t e r i n t h e campaign
( p e r h a p s t o a s s e s s who i s most l i k e l y t o w i n ) ;

(5) t o c o n t r i b u t e i n primaries o r only i n general e l e c t i o n s ;
( 6 ) t o c o o r d i n a t e g i v i n g w i t h o t h e r PACs o r t o work a l o n e ;
( 7 ) t o g i v e a s m a l l number of l a r g e d o n a t i o n s o r t o g i v e a
l a r g e r number of t o k e n c o n t r i b u t i o n s ;
(8) t o contribute t o Presidential candidates, t o parties, t o
o t h e r PACs, a s w e l l a s t o c o n g r e s s i o n a l c a n d i d a t e s ;
( 9 ) t o g i v e t o S t a t e and l o c a l o r o n l y F e d e r a l c a n d i d a t e s ;
( 1 0 ) t o a l l o w c o n t r i b u t o r s t o earmark c o n t r i b u t i o n s t o
designated candidates;
( 1 1 ) t o make p o s t - e l e c t i o n d o n a t i o n s t o h e l p e a s e a
c a n d i d a t e ' s campaign d e f i c i t ;
( 1 2 ) t o make in-kind d o n a t i o n s t o c a n d i d a t e s ( s u c h a s
p r o v i d i n g goods and s e r v i c e s ) o r o n l y f i n a n c i a l
contributions ;
( 1 3 ) t o make i n d e p e n d e n t e x p e n d i t u r e s o r l i m i t s p e n d i n g t o
d i r e c t c a n d i d a t e c o n t r i b u t i o n s . 291

-

One f i n a l p o i n t might b e made h e r e r e g a r d i n g PAC d e c i s i o n - m a k i n g .

Often,

i f n o t most of t h e t i m e , t h e i n i t i a l s u g g e s t i o n f o r c o n t r i b u t i n g t o a p a r t i c u l a r

C o r p o r a t e PACs: Step-by-step Formation and
291 K e n d a l l , Don R.
~ r o u b z f r e eO p e r a t i o n . Campaigns and E l e c t i o n s , v . 1, S p r i n g 1980: 18;
Kayden, Xanda. The Impact o f t h e FECA o n t h e Growth and E v o l u t i o n o f
P o l i t i c a l A c t i o n Committees. I n U.S. Congress.
House o f R e p r e s e n t a t i v e s .
Committee on House A d m i n i s t r a t i o n .
An A n a l y s i s of t h e Impact o f t h e F e d e r a l
E l e c t i o n Campaign A c t , 1972-1978.
From t h e I n s t i t u t e of P o l i t i c s .
J o h n F.
Kennedy School of Government. Harvard U n i v e r s i t y .
Committee P r i n t , 9 6 t h Cong.,
1 s t S e s s . Washington, U.S. Govt. P r i n t . O f f . , 1979. p. 101. w ere after c i t e d
a s U.S. Congress. An A n a l y s i s o f t h e Impact of t h e FECA)

c a n d i d a t e e m a n a t e s from t h e c a n d i d a t e h i m s e l f .

301 The p r a c t i c e o f c a n d i d a t e s

- making a p p e a l s f o r PAC money h a s become s o w i d e s p r e a d t h a t a d v i c e on how t o
maximize t h e i r c h a n c e s f o r o b t a i n i n g PAC c o n t r i b u t i o n s a p p e a r s t o have become

-

a s t a n d a r d p a r t o f t h e t r a i n i n g f o r modern-day c a n d i d a t e s . 31/

E.

R e g u l a t i o n o f PACs

PACS a r e F e d e r a l l y r e g u l a t e d by t h r e e p r i m a r y s o u r c e s .

The f i r s t i s t h e

F e d e r a l E l e c t i o n Campaign Act o f 1971 and i t s 1974, 1976, and 1979 Amendments:
P u b l i c Laws 92-225,

93-443,

c o d i f i e d i n law a s 2 U.S.C.

94-283,

and 96-187,

431 e t s e q .

respectively.

The FECA i s

S e c o n d l y , T i t l e 11 of t h e Code o f

F e d e r a l R e g u l a t i o n s i n c l u d e s r e g u l a t i o n s promulgated by t h e F e d e r a l E l e c t i o n
Commission which a r e b a s e d on t h e s t a t u t e s and which s e r v e a s more d e t a i l e d
g u i d e l i n e s f o r p a r t i c i p a n t s i n t h e campaign f i n a n c e p r o c e s s ; t h e s e a l s o have
t h e advantage of being w r i t t e n with t h e i n t e n t of e a s i e r comprehensibility
than s t a t u t o r y language.

F i n a l l y , t h e FEC i s a u t h o r i z e d under 2 U.S.C.

437f

t o i s s u e a d v i s o r y o p i n i o n s , a t t h e r e q u e s t of i n d i v i d u a l s , c a n d i d a t e s , o r
c o m m i t t e e s , which a r e i n t e n d e d t o c l a r i f y q u e s t i o n s o r p e r c e i v e d a m b i g u i t i e s
a b o u t t h e law.

These a d v i s o r y o p i n i o n s a r e compiled and indexed by t h e FEC;

t h e i n d e x i s updated p e r i o d i c a l l y and i s a v a i l a b l e from t h e Commission.

PACs.

7-9.

3 0 1 Kayden, Xanda.
I n U.S. Congress.
31/
-

Campaign F i n a n c e : The Impact on P a r t i e s and
An A n a l y s i s of t h e Impact o f t h e FECA, p. 86.

How t o S o l i c i t PACs.

Campaigning R e p o r t s , v . 1, J u l y 26, 1979:

CHAPTER TWO:

EVOLUTION OF POLITICAL ACTION COMMITTEES

Although t h e y have o n l y r e c e n t l y become a major s o u r c e o f campaign f u n d i n g
i n t h e U n i t e d S t a t e s , p o l i t i c a l a c t i o n c o m m i t t e e s a r e not a r e c e n t phenomenon.
F u r t h e r m o r e , i n t e r e s t g r o u p involvement i n t h e e l e c t o r a l p r o c e s s i s n o t a new
development.

Groups have a l w a y s s o u g h t - - l e g a l l y

and i l l e g a l l y , d i r e c t l y and

indirectly--to

maximize t h e i r i n f l u e n c e o v e r t h e s e l e c t i o n o f p u b l i c o f f i c i a l s .

The f i r s t s e c t i o n o f t h i s c h a p t e r o u t l i n e s t h e laws g o v e r n i n g g r o u p involvement
i n F e d e r a l e l e c t i o n s p r i o r t o t h e F e d e r a l E l e c t i o n Campaign Act of 1971 and
d i s c u s s e s t h e t y p e s of a c t i v i t i e s i n which t h e g r o u p s were engaged.

The second

s e c t i o n t r a c e s t h e key laws and a d m i n i s t r a t i v e and j u d i c i a l r u l i n g s o f t h e 1 9 7 0 ' s
which s e r v e d t o f a c i l i t a t e t h e e s t a b l i s h m e n t o f PACs a s t h a t d e c a d e advanced.

GROUP INVOLVEMENT PRIOR TO THE 1970s

A.

Legal R e s t r i c t i o n s

D i r e c t p a r t i c i p a t i o n i n e l e c t i o n s by c o r p o r a t i o n s and l a b o r u n i o n s , t h e
foremost t y p e s o f i n t e r e s t g r o u p s , h a s been c i r c u m s c r i b e d f o r much of t h i s
century.

-

The T i l l m a n Act o f 1907 321 p r o h i b i t e d a l l c o r p o r a t i o n s and n a t i o n a l

banks from making "money c o n t r i b u t i o n [ s l " i n c o n n e c t i o n w i t h F e d e r a l e l e c t i o n s .
It was e n a c t e d a t t h e s u g g e s t i o n o f P r e s i d e n t Theodore R o o s e v e l t i n t h e wake

of c h a r g e s d u r i n g h i s 1904 campaign t h a t he had r e c e i v e d l a r g e c o r p o r a t e

321
-

34 S t a t . 864 ( 1 9 0 7 )

contributions from prospective government contractors and in light of increased

-

public cynicism over the role of large corporations in the electoral process. 33/

-

This prohibition was extended by the Corrupt Practices Act of 1925 34/ to all
contributions (not just monetary ones).

That law, however, excluded primary

elections and nominating conventions from its restrictions, in accordance with
the prevailing interpretations of the Supreme Court's decision in Newberry
v. United States. 351
The role of labor unions in election campaigns was not circumscribed until

-

1943, with the enactment of the War Labor Disputes (or Smith-Connally) Act. 36/
Prior to that, most labor campaign contributions had come from union dues of
members.

What had prompted the move to curtail labor's political giving was

the marked upsurge of such activity in and following the 1936 elections, as
described in the following account:
The 1936 elections saw an eruption of political activity by
organized labor. Reported political expenditures by interstate
labor organizations ran to over $750,000. This exceeded by
eight times the sum raised by the American Federation of Labor
for political purposes during the previous 30 years. Labor dove
into active campaigning and into campaign contributing on behalf
of Democratic candidates. The move provoked a fierce howl that
clearly marked 1936 as a watershed year,in the political
371
alignment of social and economic interests. -

331 Epstein, Edwin M. Corporations, Contributions, and Political
campaZns: Federal Regulation in Perspective. Berkeley, Institute of
Governmental Studies, May 1968. p. 11-12.
341 43 Stat. 1074 (1925)
351 256 U.S. 232 (1921); the Newberry decision was seen as placing
limitson the Federal Government ' s authority to control party primaries
and conventions.
361
-

57 Stat. 167 (1943)

371 Heard, Alexander. The Costs of Democracy.
university of North Carolina Press, 1960. p. 169.

Chapel Hill, The

In addition to the concern over the growing power of unions among opponents
of labor's political philosophy, there developed a desire to protect the rights
of union members from having their dues monies given to candidates with whom
381
they differed politically. -

Consequently, the 1943 Act prohibited unions

from making contributions in connection with elections for Federal office.

An

important distinction to note is that although unions were barred from using
their treasuries for campaign contributions, they interpreted the law as not
applying to their separate segregated funds.
The 1943 Act was in effect only until six months after the end of World
War 11, and, in 1947, Congress passed the Labor Management Relations (or TaftHartley) Act which made permanent the restrictions on labor's political
activities. 391 Furthermore, it extended the ban for both corporations and
labor unions to expenditures as well as contributions, in light of efforts by
the CIO's Political Action Committee in 1944 to circumvent the Smith-Connally
prohibition on union contributions. 401 The 1947 Act also extended coverage
(for corporations and unions) to primaries and conventions. This appeared to
41/
be consistent with the Supreme Court's ruling in United States v. Classic, which was interpreted as overruling the Newberry decision by sanctioning Federal
421
regulation of the nominating process. -

381 Ibid., p. 190.
391 61 Stat. 159 (1947)
-

401 Epstein, Corporations, Contributions, and Political Campaigns,
p. 147
411 313 U.S. 299 (1941)
421 Epstein, Corporations, Contributions, and Political Campaigns,
p. 15r152 [fn. 431

The 1925 C o r r u p t P r a c t i c e s A c t , a s amended by t h e 1947 T a f t - H a r t l e y Act
and c o d i f i e d a t 18 U.S.C.

610, was t h e p r i n c i p a l law g o v e r n i n g t h e p o l i t i c a l

a c t i v i t i e s o f c o r p o r a t i o n s and l a b o r u n i o n s u n t i l t h e F e d e r a l E l e c t i o n Campaign
The 1925 law, however, was w i d e l y c o n s i d e r e d t o b e

Act t o o k e f f e c t i n 1972.

vague, w h i l e t h e j u d i c i a l i n t e r p r e t a t i o n s were s e e n t o b e i n s u f f i c i e n t l y p r e c i s e
t o o f f e r a c l e a r " l i n e o f d e m a r c a t i o n " between p e r m i s s i b l e and i m p e r m i s s i b l e

-

c o r p o r a t e and l a b o r a c t i v i t i e s . 4 3 1

F u r t h e r m o r e , r u l i n g s by t h e Supreme C o u r t

and lower c o u r t s i n s i x c a s e s d u r i n g t h e 25-year
d o u b t on t h e c o n s t i t u t i o n a l i t y o f 18 U.S.C.

p e r i o d had c a s t s u f f i c i e n t

610 t h a t t h e J u s t i c e Department was

-

r e l u c t a n t t o p r o s e c u t e presumed o f f e n d e r s o f t h e law. 441

A s d e p i c t e d by o n e

observer :
V i r t u a l l y no c o r p o r a t i o n o r l a b o r union t h a t wished t o d o s o
was d e t e r r e d d e f a c t o from making campaign c o n t r i b u t i o n s and
e x p e n d i t u r e s . 451

-

B.

How I n t e r e s t Groups Made P o l i t i c a l C o n t r i b u t i o n s

1.

Labor
--

Labor u n i o n s had been engaged i n p o l i t i c a l a c t i v i t y f o r q u i t e some
t i m e , b u t u n t i l 1936, u n i o n s had c o n t r i b u t e d o n l y s m a l l amounts d i r e c t l y
t o p o l i t i c a l campaigns.

The American F e d e r a t i o n o f Labor (AFL), t h e

major u m b r e l l a l a b o r o r g a n i z a t i o n a t t h a t t i m e , m a i n t a i n e d a p r a c t i c e o f

------431
-

Ibid.,

p. 56-57.

441 E p s t e i n , Edwin. C o r p o r a t i o n s and Labor Unions i n E l e c t o r a l
~ o l i t z s . I n A l e x a n d e r , H e r b e r t ( e d . ) . P o l i t i c a l F i n a n c e : Refonn and
R e a l i t y . P h i l a d e l p h i a , The Annals of t h e American Academy o f P o l i t i c a l
and S o c i a l S c i e n c e , v . 425, May 1976. p. 37.
451
-

Ibid.,

p. 39.

not using its general funds for political purposes. 461 The enormous increase
in union contributions in 1936 (noted earlier) emanated almost exclusively
fr&

unions affiliated with the more politically aggressive Committee for

Industrial Organization (CIO), established in 1935. The preponderance of
contributions by the CIO affiliated unions were made from union funds, as
authorized by convention votes. 471
1

,

In response to the Smith-Connally Act's prohibition on labor contributions
in 1943, the Congress of Industrial Organization--as the CIO was later called-made the first foray into the field of political action committees, as we now
know them.

Labor unions had operated political committees in the past (most

notably Labor's Non-Partisan League, which began a brief existence in 19361,
but the CIO-PAC, established in July 1943, constituted the earliest effort at
successfully maintaining what is today known in law as a "separate segregated
fundH--a separate account for transfering voluntary contributions from members
to political candidates. In addition to the CIO-PAC, the CIO, under the direction
of Sidney Hillman, established the National Citizen's Political Action Cornittee
(NC-PAC) in 1944, in order to collect political funds from progressive individuals
481
outside of labor's ranks. The CIO-PAC entered the political arena during the election of 1944.

Prior

to the Democratic Convention, it raised $647,903 from the general funds of its
affiliated unions, of which it spent $478,499 on primary campaigns and "political
education" of its members on issues.

Given that the 1943 law did not cover

461 Overacker, Louise. Presidential Campaign Funds.
~ o s t o n ~ n i v e r s iPress,
t~
1946. p. 50.
Ibid., p. 50-51.

481 Ibid., p. 57-58.
-

Boston,

primary elections, it was an allowable expenditure for CIO-PAC.

But once the

convention was held and the general election campaign was considered to have
begun, the existing PAC funds were frozen.

Thereafter, the CIO-PAC launched

its "A Buck for Roosevelt" drive to collect one dollar in voluntary contributions
from its five million members; half of the money was to be used by the PAC and
the other half was to be channeled to the union's State or local political action
committees.

The PAC raised $470,852 in this manner. 491

It is important to bear in mind that the CIO-PAC's activities were
controversial at the time (indeed the primary contributions led to the tighter
restrictions in the 1947 Act), but they played a major role in establishing
precedents for later--and modern--modes of political activity by labor unions
(and other groups).

As the following passage reveals, the principal focus was,

from the outset, on the maintenance of separate and distinct accounts for
channeling political contributions:
The status of the PAC committees also posed some legal
conundrums. Union officials argued that these were not
"labor organizations" within the meaning of the Smith-Connally
Act as they were separately organized, under different sets of
officers, and maintained independent treasuries. Nevertheless,
the connection between the PAC and the CIO was very close on
every level of organization. Sidney Hillman, President of the
Amalgamated Clothing Workers of America, an important CIO
affiliate, was chairman of both the CIO-PAC and the NC-PAC;
the State political action committees frequently utilized the
existing mechanism of CIO State councils; and local political
action committees were similarly set up as cormnittees of CIO
locals. At the national level, and in most of the States,
financial separation was strictly observed, and at the local
level union personnel assigned to full-time PAC work were
transferred to the PAC payroll. But when CIO personnel were
assigned to the PAC on a part-time basis it was frequently
impossible to distinguish the services which were political
and which should be charged to the PAC. In California the
separation between CIO and CIO-PAC was never very clearly
defined. The State PAC was set up as a subcommittee of the

49/ Ibid., p. 57-59.
-

CIO, funds were not separate, and no separate records were kept.
After the trade union fund was "frozen," the financial support
of the CIO-PAC came from individual trade union members. CIO
membership lists were, of course, used in soliciting contributions,
and in some instances the "voluntary" character of these gifts
was questioned. However, the modest size of the funds would seem
to indicate that if compulsion was used, it was surprisingly
ineffective. 50/

-

With the CIO breaking ground in establishing and operating separate political
funds in order to comply with Federal law, other labor unions followed suit.
The AFL, the other major labor organization, set up its Labor's League for
Political Education in 1947. 51/

In 1955, these two umbrella organizations merged

to become the AFL-CIO, and their PACs were united as the Committee on Political
Education (COPE).

COPE quickly established itself as the foremost source of

labor-oriented political giving, although other national unions added considerably
to the overall political war chest of the American labor movement.
In 1956, seventeen national labor political committees made disbursements
of some $2.1 million; in addition, 155 State and local union affiliates had
political committees in operation that year, although much of the local groups'
52/ By 1968, there
funds constituted transfers from the national committees. were 37 national labor political committees making disbursements of $7.1

-

million. 531
The most visible manifestation of labor's political giving took the form
of "free fundsu--direct contributions to candidates from voluntary donations

501 Ibid., p. 60-61.
511 Heard, The Costs of Democracy, p. 192 (fn).
52/ Ibid., p. 189.
531 Alexander, Herbert.
Financing the 1976 Election.
~ o n ~ r z s i o n aQuarterly
l
Press, 1979. p. 559.

Washington,

by union members.

C o n t r i b u t i o n s t o c a n d i d a t e s f o r F e d e r a l o f f i c e by i n t e r s t a t e

committees ( l i m i t e d t o amounts o f $5000) were r e q u i r e d t o b e r e p o r t e d under
t h e F e d e r a l C o r r u p t P r a c t i c e s A c t , t h u s making i t p o s s i b l e t o gauge (however
i n e f f e c t i v e l y ) t h e l e v e l of c o n t r i b u t i o n s by such g r o u p s a s l a b o r u n i o n s .
But f r e e f u n d s a l o n e d i d n o t r e f l e c t t h e t r u e l e v e l of l a b o r ' s p o l i t i c a l
g i v i n g , and t h r e e o t h e r major avenues were w i d e l y u s e d - - a l l

of which were funded

from t h e g e n e r a l t r e a s u r i e s of u n i o n s :
( 1 ) C o n t r i b u t i o n s t o c a n d i d a t e s f o r S t a t e and l o c a l o f f i c e s c o u l d be
made from union t r e a s u r i e s i n t h o s e S t a t e s which d i d not p r o h i b i t such p r a c t i c e s
(few d i d ) .

I n some S t a t e s , Democratic c a n d i d a t e s c o u l d e x p e c t t o r e c e i v e 10-20

p e r c e n t of t h e i r campaign f u n d s from u n i o n s .
( 2 ) Union t r e a s u r i e s were used f o r " e d u c a t i o n a l "
technically non-political

e x p e n d i t u r e s , which were

( t h u s not s u b j e c t t o F e d e r a l laws p r o h i b i t i n g union

d u e s money f o r p o l i t i c a l p u r p o s e s ) b u t which t y p i c a l l y i n v o l v e d such a c t i v i t i e s
a s get-out-the-vote

d r i v e s , v o t e r r e g i s t r a t i o n d r i v e s , and d i s t r i b u t i o n of v o t i n g

records of elected o f f i c i a l s .

The f o l l o w i n g p a s s a g e i n d i c a t e s t h e s i g n i f i c a n c e

of t h i s c a t e g o r y of l a b o r a s s i s t a n c e t o c a n d i d a t e s :
O r g a n i z e d l a b o r ' s r e g i s t r a t i o n d r i v e s may be o f more v a l u e t o
t h e Democrats t h a n d i r e c t money c o n t r i b u t i o n s .
I n 1968 COPE
s p e n t more t h a n $1 m i l l i o n on r e g i s t r a t i o n a l o n e , c o n c e n t r a t i n g
on m a r g i n a l C o n g r e s s i o n a l d i s t r i c t s . L o c a l and s t a t e l a b o r
o r g a n i z a t i o n s t r i e d t o match t h i s n a t i o n a l o u t l a y . L a b o r ' s
r e g i s t r a t i o n drives, naturally, are carried out selectively in
541
h e a v i l y Democratic p r e c i n c t s . -

( 3 ) P u b l i c s e r v i c e a c t i v i t i e s , such a s union newspapers and r a d i o
programs, c o u l d be funded from t h e union t r e a s u r i e s , and t h e y were a b l e

541 A l e x a n d e r , H e r b e r t E .
~ f f a i Pz r e s s , 1972. p. 170.

Money i n P o l i t i c s .

Washington, P u b l i c

t o d i s s e m i n a t e i n f o r m a t i o n and views s u p p o r t i v e of t h e i r p o l i t i c a l
philosophy.

551

I n a d d i t i o n t o t h e c h a n n e l s of a c t i v i t y open t o l a b o r unions d i s c u s s e d
above, t h e unions enjoyed wide l a t i t u d e i n p o l i t i c a l a c t i v i t y a s a r e s u l t of
v a r i o u s Supreme Court d e c i s i o n s .

Common p r a c t i c e s i n c l u d e d union employees'

r e c e i v i n g compensation w h i l e p r o v i d i n g s e r v i c e s t o c a n d i d a t e s and a d v o c a t i n g

-

c a n d i d a t e s ' e l e c t i o n o r d e f e a t i n TV o r r a d i o time paid from union funds. 561
The above d i s c u s s i o n r e v e a l s t h e range of o p t i o n s open t o l a b o r unions
which sought t o i n f l u e n c e t h e p o l i t i c a l p r o c e s s p r i o r t o t h e campaign f i n a n c e
laws e n a c t e d d u r i n g t h e 1970s.

While p i o n e e r i n g i n t h e f i e l d of s e p a r a t e

s e g r e g a t e d funds and p o l i t i c a l a c t i o n committees f o r d i r e c t c a n d i d a t e
c o n t r i b u t i o n s , t h e unions found many o t h e r v a l u a b l e means of making t h e i r
influence f e l t .

A s t h e c o s t s of many of t h e s e a c t i v i t i e s were n o t r e q u i r e d

t o be r e p o r t e d under t h e f i n a n c i a l d i s c l o s u r e laws i n e x i s t e n c e through 1972,

i t was e x c e e d i n g l y d i f f i c u l t t o o b t a i n a c c u r a t e d a t a on t h e d e g r e e of l a b o r
u n i o n s ' f i n a n c i a l a c t i v i t y i n F e d e r a l e l e c t i o n s . T h i s d i f f i c u l t y was compounded
by t h e e a s e with which t h e d i s c l o s u r e laws could be l e g a l l y circumvented,
a s r e f l e c t e d i n t h e p r a c t i c e by n a t i o n a l l a b o r committees of t r a n s f e r r i n g funds

-

t o S t a t e a f f i l i a t e s , not s u b j e c t t o F e d e r a l r e p o r t i n g r e q u i r e m e n t s . 571

However

u n c e r t a i n one may be a s t o t h e e x t e n t of l a b o r spending i n t h e y e a r s l e a d i n g
up t o t h e FECA o f 1971, one may s a f e l y conclude t h a t t h e unions were p l a y i n g
a v i t a l r o l e i n t h e f i n a n c i n g of e l e c t i o n campaigns.

5 5 1 I b i d . , p. 170-171; and Heard, The C o s t s of Democracy, p. 177-178.
-

561 Alexander, Money i n P o l i t i c s , p. 171.
5 7 1 I b i d . , p. 172.
-

2.

Business

The c h a n n e l s f o r p o l i t i c a l a c t i v i t y by t h e b u s i n e s s s e c t o r p r i o r t o t h e
1970s were a l s o w e l l - e s t a b l i s h e d ,
t h e l e v e l of b u s i n e s s - o r i e n t e d

a l t h o u g h i t i s even more d i f f i c u l t t o gauge

a c t i v i t y than it is f o r labor a c t i v i t y .

Corporate

i n t e r e s t s d i d n o t e n t e r t h e p o l i t i c a l a c t i o n committee f i e l d u n t i l t h e 1 9 6 0 s ,
h a v i n g i n s t e a d become accustomed t o d o n a t i n g l a r g e amounts o f money t o campaigns
t h r o u g h c o r p o r a t e e x e c u t i v e s and o t h e r w e a l t h y i n d i v i d u a l s a s s o c i a t e d w i t h

-

l a r g e c o r p o r a t i o n s . 581

While t h i s was p e r h a p s t h e most v i s i b l e way o f s p e n d i n g

p o l i t i c a l money i n t h e i n t e r e s t s of b u s i n e s s , i t was by no means t h e o n l y way.
C o r p o r a t i o n s t h e m s e l v e s were p r o h i b i t e d from s p e n d i n g t r e a s u r y money
on c o n t r i b u t i o n s t o F e d e r a l c a n d i d a t e s , b u t , a s w i t h l a b o r u n i o n s , t h e r e was
a wide r a n g e of a c t i v i t i e s r e l a t i n g t o t h e p o l i t i c a l p r o c e s s on which g e n e r a l
funds could be s p e n t .

Here a g a i n , t h e l i n e between p a r t i s a n and b i p a r t i s a n ,

p e r m i s s i b l e and i m p e r m i s s i b l e , was o f t e n b l u r r e d enough t o f a c i l i t a t e t h e
u n d e r t a k i n g o f a c t i v i t i e s by a c o r p o r a t i o n which had a d i s t i n c t s l a n t toward
an i n t e n d e d b e n e f i c i a r y o r p o i n t of view.

Such e l e c t i o n - r e l a t e d a c t i v i t i e s

a s v o t e r r e g i s t r a t i o n and g e t - o u t - t h e - v o t e

d r i v e s among employees, p r o v i s i o n

o f employee and s t o c k h o l d e r l i s t s t o p o l i t i c a l p a r t i e s , p a y r o l l d e d u c t i o n
systems f o r p o l i t i c a l c o n t r i b u t i o n s , and campaign f u n d - r a i s i n g d r i v e s among
employees were conducted by v a r i o u s c o r p o r a t i o n s , a p p a r e n t l y n o t i n v i o l a t i o n
of 18 U.S.C.

-

610. 591

A s i d e from t h e above-mentioned

"educational" a c t i v i t i e s , corporations

had some leeway i n e n g a g i n g i n more p a r t i s a n e n d e a v o r s , such a s t o :

581 E p s t e i n , Edwin M.
~ a ~ / ~ 1979.
= e
p. 35.

An I r o n y of E l e c t o r a l Reform.

Regulation, v. 3 ,

591 E p s t e i n , C o r p o r a t i o n s , C o n t r i b u t i o n s , and P o l i t i c a l Campaigns, p. 45.
-

( 1 ) s u p p o r t o r oppose c a n d i d a t e s , p a r t i e s and i s s u e s i n t h e i r r e g u
p u b l i c a t i o n s , c i r c u l a t e d t o t h e i r employees, s t o c k h o l d e r s , s u p p l i e r s and
customers;

( 2 ) d i s t r i b u t e i n f o r m a t i o n a l l i t e r a t u r e t o t h e g e n e r a l p u b l i c which
s t a t e d t h e i s s u e s and c a n d i d a t e s ' r e c o r d s , b u t which d i d n o t a d v o c a t e t h e
e l e c t i o n o r d e f e a t of c a n d i d a t e s ;

( 3 ) engage i n p u b l i c s e r v i c e a d v e r t i s i n g on p u b l i c i s s u e s ;
( 4 ) wage a d v e r t i s i n g campaigns w i t h r e g a r d t o p u b l i c p o l i c y i s s u e s n o t
on t h e b a l l o t a s r e f e r e n d a o r i n i t i a t i v e s ;
( 5 ) a d v e r t i s e i n program books of n a t i o n a l p a r t y c o n v e n t i o n s - - a

popular

p r a c t i c e f o r which c o r p o r a t i o n s c o u l d r e c e i v e a t a x d e d u c t i o n ; and
( 6 ) u s e c o r p o r a t e f a c i l i t i e s and p e r s o n n e l t o s e e k v o l u n t a r y c o n t r i b u t i o n s

-

t o an a f f i l i a t e d p o l i t i c a l a c t i o n committee ( d i s c u s s e d f u r t h e r b e l o w ) . 601
The d i s c u s s i o n u n t i l t h i s p o i n t h a s been c o n f i n e d t o c o r p o r a t e p o l i t i c a l
a c t i v i t i e s a p a r t from d i r e c t c o n t r i b u t i o n s t o c a n d i d a t e s .

But t h i s a s p e c t was

n o t n e g l e c t e d by t h o s e s e e k i n g t o i n j e c t b u s i n e s s ' p o i n t o f view i n t o t h e
p o l i t i c a l process.

T h e r e were b o t h d i r e c t (and l e g a l ) and i n d i r e c t ( a n d e x t r a -

l e g a l ) methods f o r c o n t r i b u t i n g t o c a n d i d a t e s .
A s u r v e y o f t h e N a t i o n ' s businessmen i n 1959 found t h a t h a l f o f t h o s e

i n t e r v i e w e d c l a i m e d t o have c o n t r i b u t e d t o e l e c t i o n campaigns i n 1958--a

high

f i g u r e f o r a n o n - P r e s i d e n t i a l y e a r and markedly h i g h e r t h a n t h a t of t h e o v e r a l l

-

p o p u l a t i o n i n any y e a r . 6 1 1

C o r p o r a t e o f f i c i a l s gave c o n s i d e r a b l y t o e l e c t i o n

campaigns, w i t h t h e u n d e r s t a n d i n g t h a t t h e c o r p o r a t i o n would r e c e i v e t h e c r e d i t
i n t h e e y e s o f t h e campaign o f f i c i a l s .
practice:

--6 0 1 I b i d . , pp. 46-55.
6 1 1 I b i d . , p. 6 9 .
-

The f o l l o w i n g p a s s a g e d i s c u s s e s t h i s

S i n c e , o b v i o u s l y , t h e r e i s no o f f i c i a l r e c o r d of " c o r p o r a t e
g i v i n g , " an i n d e x OF company c o n t r i b u t i o n s i s u s u a l l y compiled
by a g g r e g a t i n g t h e " i n d i v i d u a l " d o n a t i o n s o f c o r p o r a t e o f f i c e r s
and d i r e c t o r s . The u n d e r l y i n g a s s u m p t i o n o f such c o m p i l a t i o n s
i s t h a t c o r p o r a t e o f f i c i a l s a c t a s c o n d u i t s f o r company
c o n t r i b u t i o n s t o p a r t i e s o r c a n d i d a t e s . 621

-

I n 1956, f o r example, 199 o f f i c i a l s of some o f t h e 225 l a r g e s t c o r p o r a t i o n s

-

c o n t r i b u t e d $1.9 m i l l i o n i n amounts o f $500 o r more t o i n t e r s t a t e c o m m i t t e e s . 6 3 1
Both p o l i t i c a l p a r t i e s made an e f f o r t t o a t t r a c t w e a l t h y ( o f t e n c o r p o r a t e a f f i l i a t e d ) d o n o r s , by c r e a t i n g such p r e s t i g i o u s c o n d u i t s a s t h e Democrats'
P r e s i d e n t ' s Club--which

r a i s e d around $3.8 m i l l i o n i n 1964--and

t h e Republican

-

C o n g r e s s i o n a l B o o s t e r s Club. 641
A s i m p r e s s i v e a s t h e s e and o t h e r d a t a may b e , t h e y r e f l e c t o n l y a s h a r e

o f t h e c o n t r i b u t i o n s from c o r p o r a t i o n - a s s o c i a t e d

individuals.

By g i v i n g c a s h

c o n t r i b u t i o n s o r g i v i n g t o i n t r a s t a t e c o m m i t t e e s , d o n o r s c o u l d and d i d a v o i d
Federal r e p o r t i n g requirements.

By g i v i n g t o i n t r a s t a t e c o m m i t t e e s , w e a l t h y

d o n o r s c o u l d a l s o c i r c u m v e n t t h e F e d e r a l c o n t r i b u t i o n l i m i t of $5000.

This

l i m i t was a l s o c i r c u m v e n t e d t h r o u g h t h e p r a c t i c e of g i v i n g c o n t r i b u t i o n s

t h r o u g h members o f o n e ' s own f a m i l y .

An example o f t h i s p r a c t i c e can be found

i n 1956, when 12 f a m i l i e s commonly a s s o c i a t e d w i t h p a r t i c u l a r c o r p o r a t i o n s
gave o v e r $ 1 . 1 m i l l i o n t o i n t e r s t a t e p o l i t i c a l c o m m i t t e e s .

(The f a m i l i e s were

DuPont, F i e l d , F o r d , Harriman, Lehman, M e l l o n , O l i n , Pew, Reynolds, R o c k e f e l l e r ,

-

V a n d e r b i l t , and Whitney.) 651

Hence, l a r g e amounts of money c o u l d be g i v e n

l e g a l l y , d e s p i t e t h e l i m i t s , and l a r g e amounts c o u l d go u n r e p o r t e d l e g a l l y ,
d e s p i t e the disclosure requirements.

621
-

Ibid.,

p. 61.

631
-

Ibid.,

p. 64.

641
-

I b i d . , p. 67.

651

Ibid.,

7

p. 68.

The i n d i r e c t c o r p o r a t e c o n t r i b u t i o n s , t h o s e made i l l e g a l l y with c o r p o r a t e
t r e a s u r y f u n d s , a r e , not s u r p r i s i n g l y , more d i f f i c u l t t o gauge.
Such d o n a t i o n s d i d n o t appear on any l i s t s f i l e d w i t h governmental
a g e n c i e s , nor were t h e y mentioned i n annual r e p o r t s t o s t o c k h o l d e r s .
Most businessmen were u n d e r s t a n d a b l y d i s i n c l i n e d t o d i s c u s s t h e i r
campaign a c t i v i t i e s . 661
I n 1960, Alexander Heard wrote:
It i s n o t unusual f o r c o r p o r a t e funds t o make up 10 p e r c e n t of t h e
campaign fund of a c a n d i d a t e f o r s t a t e o r l o c a l o f f i c e , and t h e
p e r c e n t a g e has gone h i g h e r . In a l l , i n a p r e s i d e n t i a l e l e c t i o n
y e a r , s e v e r a l m i l l i o n d o l l a r s of c o r p o r a t e money f i n d s i t s way by
one p r o c e s s o r a n o t h e r i n t o p o l i t i c a l campaigning. 671

-

When read i n t h e wake of t h e e x p e r i e n c e s of t h e 1972 Nixon r e - e l e c t i o n

campaign,

t h i s passage u n d e r s t a t e s t h e p o t e n t i a l f o r c h a n n e l l i n g c o r p o r a t e money i n t o
p o l i t i c a l campaigns.

According t o Edwin E p s t e i n , an e s t i m a t e d $30 m i l l i o n was

c o n t r i b u t e d t o t h a t campaign from t h e b u s i n e s s sector--through
i l l e g a l channels.

both l e g a l and

There were widespread a l l e g a t i o n s of s t r o n g p r e s s u r e t a c t i c s

a p p l i e d t o c o r p o r a t e o f f i c i a l s , and some 20 c o r p o r a t i o n s and o f f i c i a l s were
i n d i c t e d ( w i t h most p l e a d i n g g u i l t y o r nolo c o n t e n d e r e ) on c h a r g e s o f making
i l l e g a l corporate p o l i t i c a l contributions.

Thus, t h e 1972 campaign i l l u s t r a t e d

t h a t t h e c o r p o r a t e s e c t o r c o u l d b e a l u c r a t i v e s o u r c e of campaign funds g i v e n

-

a s y s t e m a t i c s o l i c i t a t i o n e f f o r t by a campaign. 681

S i g n i f i c a n t l y , t h e 1972

e x p e r i e n c e s were a major impetus i n t h e amending of t h e campaign f i n a n c e law

661 I b i d . , p. 69.
671 Heard, The C o s t s of Democracy, p. 130.
6 8 / E p s t e i n , Edwin M.
Labor and F e d e r a l E l e c t i o n s : The New Legal
~ r a m e K r k . I n d u s t r i a l R e l a t i o n s , v . 15, October 1976. p. 262.

According t o Heard, t h e v a r i o u s , commonly-used methods o f i n d i r e c t
c o r p o r a t e c o n t r i b u t i o n s s t r e s s e d concealment o f c o r p o r a t e f u n d s :
( 1 ) e x p e n s e a c c o u n t s were used t o r e i m b u r s e c o r p o r a t e o f f i c i a l s f o r
campaign-related

e n t e r t a i n i n g and t r a v e l i n g ;

(2) c o n t r i b u t i o n s "in-kind,"

whereby goods and s e r v i c e s were l o a n e d

o r d o n a t e d by a b u s i n e s s t o a campaign ( e . g . ,

o f f i c e equipment, company

airplanes, etc. );

( 3 ) a d v e r t i s e m e n t s i n p o l i t i c a l j o u r n a l s , p a i d f o r from c o r p o r a t e
funds but with t h e source concealed;

( 4 ) c o r p o r a t e money " l a u n d e r e d " t h r o u g h p u b l i c r e l a t i o n s f i r m on
r e t a i n e r , w i t h money t h e n f u n n e l e d i n t o campaigns;

( 5 ) f e e s t o lawyers re-routed

t o campaigns;

( 6 ) s a l a r i e s and bonuses t o employees, g i v e n w i t h t h e e x p e c t a t i o n
t h a t t h e y , i n t u r n , w i l l make p o l i t i c a l d o n a t i o n s ( s a i d t o be a p a r t i c u l a r l y
notorious practice);

( 7 ) c o n t r i b u t i o n s c h a n n e l e d t h r o u g h o t h e r o r g a n i z a t i o n s , such a s
t r a d e a s s o c i a t i o n s ; and

(8) d i r e c t c o r p o r a t e payments, e . g . ,

-

from p e t t y c a s h . 691

One p r a c t i c e o m i t t e d i n H e a r d ' s l i s t was t h a t o f c o r p o r a t e o f f i c i a l s ' r e c e i v i n g
r e m u n e r a t i o n w h i l e d o i n g campaign work, a widespread o c c u r r e n c e a c c o r d i n g t o
most a c c o u n t s . The p i c t u r e t h a t emerges i s of c o r p o r a t e a c t i v i t i e s r e s e m b l i n g
t h o s e o f l a b o r u n i o n s i n e x p l o r i n g avenues f o r p o l i t i c a l i n v o l v e m e n t .
The f i n a l avenue o f b u s i n e s s a c t i v i t y d u r i n g t h e pre-1970's
p o l i t i c a l a c t i o n committee.

e r a was t h e

The f i r s t major PAC i n t h e b u s i n e s s (and

p r o f e s s i o n a l ) s e c t o r was t h e American Medical P o l i t c a l A c t i o n Committee (AMPAC),

6 9 1 Heard, The C o s t s o f Democracy, p. 133-134
-

founded in 1961 by the American Medical Association to further the goal of
"minimizing government control over the medical profession." 701

It was

followed in August 1963, by the Business-Industry Political Action Comnittce
(BIPAC), which was established by the National Association of Manufacturers
"to provide financial support to Congressional candidates who support the
principles of constitutional government." 711
Both of these PACs followed the lead of COPE and created two separate
accounts--one for administrative costs for which corporate funds could be used
and the other for the contributions themselves for which only voluntary funds
could be sought. The system was described by the then-President of BIPAC,
Robert Humphrey, before House hearings in the 89th Congress:
[ ~ l ehave two distinct funds. We have two distinct divisions
of operation. One is political education, and the other is
political action. We maintain separate bank accounts. The
political education funds are used for our administrative
overhead. We do not intermingle the funds. We have a small
political education budget and the money in our education account
comes from corporate contributions and from subscriptions to our
publication. 72/

-

During the 1964 elections, BIPAC spent $203,283 and AMPAC spent $402,052 (compared

-

with the $988,810 spent that year by COPE). 731 In 1968, B1PAC's spending jumped

-

to $519,700 and AMPAC1s to $682,000 (COPE spent $1,207,000 that year). 74/ BIPAC

701 Alexander, Herbert E.
Financing the 1968 Election.
~ e a t h y n dCompany, 1971. p. 202.

Lexington, D.C.

711 Ibid., p. 201.
721 U .S. Congress. House. Committee on House Administration.
~ubcoGitteeon Elections. Election Reform Act of 1966. Hearings, 89th Cong.,
2nd Sess., July 21, Aug. 17, 22, and 25, 1966. Washington, U.S. Govt. Print.
Off., 1966. p. 120.
731 Alexander, Herbert E.
Financing the 1964 Election. Princeton,
citiz=s1 Research Foundation, 1966 [study number 91. p. 64-65.
741 Alexander, Financing the 1968 ~lection,p. 195, 201-202.
-

and AMPAC together accounted for 61 percent of total expenditures by the 33
national business and professional committees then in existence. 751
Those 33 represented a three-fold increase in the number of business and
761 and by 1972, there were some
professional committees registered in 1964, 771 Furthermore, as more business-oriented groups were
200 such committees. formed, the enormous gap between reported business and labor spending (nationally)
was narrowed significantly. Gross disbursements by the 37 national-level labor
committees totaled $7.1 million in 1968; a little over $2 million was spent by
the 33 business and professional committees that year--a gap of around three
and one-half in labor's favor. 781 By 1972, the national labor committees spent
$8.5 million, while the business/professiona1 committees spent $6.8 million--an
791 Of course, the labor totals do
advantage by labor of around 33 percent. not reflect the substantial value in additional services which unions have
traditionally provided, as indicated in this 1972 account:

. . . it would be difficult to exaggerate the political value of

labor's enormous manpower pool, particularly for voter registration
and get-out-the-vote activities on election day. The AFL-CIO
Industrial Union Department and affiliates may put as much as $4
to $5 million into citizenship activities, including registration
drives. 801

-

By the same token, the spending data do not reflect the additional resources
of the business sector which was channeled into political campaigns through
-

751 Ibid., p. 200-201.
761 Ibid., p. 200.
771 Alexander, Herbert E.
Financing the 1972 Election.
D.C. Heath and Company, 1976. p. 461.
781 Alexander, Financing the 1968 Election, p. 194, 201.
791 Alexander, Financing the 1972 Election, p. 504, 461.
801 Ibid., p. 506.
-

Lexington,

t h e many avenues d e s c r i b e d above.

The d a t a i s i n d i c a t i v e , however, of t h e

growing, open r o l e of c o r p o r a t i o n s i n t h e p o l i t i c a l p r o c e s s d u r i n g t h e decade
preceding t h e F e d e r a l E l e c t i o n Campaign Act.

3 . Conclusion
B u s i n e s s and l a b o r h a v e , a s n o t e d , long sought t o i n f l u e n c e t h e e l e c t o r a l
process.

I n examining t h e p r o l i f e r a t i o n of PACs i n t h e 1970s and beyond, i t

i s important t o b e a r i n mind t h a t t h e i r u n d e r l y i n g r a i s o n d ' e t r e - - t h e

furthering

of t h e g r o u p ' s p o l i c y g o a l s and t h e maximizing of i t s i n f l u e n c e through t h e
e l e c t i o n of s y m p a t h e t i c p u b l i c o f f i c i a l s - - h a s
b e f o r e t h e modern-day e r a of PACs.

been a g u i d i n g p r i n c i p l e long

Groups sought i n f l u e n c e and s p e n t money i n

l a r g e q u a n t i t i e s , through l e g a l and e x t r a - l e g a l

channels.

The PAC evolved a s

a means of l e g a l l y circumventing t h e p r o h i b i t i o n on c o r p o r a t e and, l a t e r , union
contributions t o candidates.

Once l a b o r unions were f o r c e d t o t u r n t o t h i s

method, t h e y q u i c k l y developed a p a t t e r n of e f f e c t i v e o p e r a t i o n s through t h e
use of s e p a r a t e s e g r e g a t e d funds.

It was o n l y a m a t t e r of time b e f o r e t h e

b u s i n e s s c o r n u n i t y began t o emulate l a b o r ' s s u c c e s s e s .

The fundamental p o i n t

i s t h a t i n t e r e s t group involvement g e n e r a l l y and p o l i t i c a l a c t i o n committee
a c t i v i t y s p e c i f i c a l l y pre-dated

t h e campaign f i n a n c e reforms of t h e 1 9 7 0 ' s .

Indeed, t h e y s e t t h e p r e c e d e n t s f o r t o d a y ' s PACs.

11.

STIMULI TO PAC GROWTH I N THE 1970s PROVIDED BY LEGISLATIVE, JUDICIAL,
AND ADMINISTRATIVE DECISIONS

A number of a c t i o n s by t h e t h r e e b r a n c h e s of t h e F e d e r a l Government s e t

t h e s t a g e f o r t h e p r o l i f e r a t i o n of p o l i t i c a l a c t i o n committees d u r i n g t h e 1970's.

E s s e n t i a l l y , t h i s s e c t i o n p r o v i d e s a l e g i s l a t i v e h i s t o r y o f t h e i m p o r t a n t PAC
p r o v i s i o n s , s p e c i f i c a l l y f o c u s i n g on t h e F e d e r a l E l e c t i o n Campaign Act of 1971
and i t s 1974 and 1976 Amendments.

I n a d d i t i o n , t h e Supreme C o u r t ' s 1971 d e c i s i o n

i n P i p e f i t t e r s L o c a l 562 v. U n i t e d S t a t e s , i t s 1976 d e c i s i o n i n Buckley v . V a l e o ,
and t h e F e d e r a l E l e c t i o n Commission's 1975 a d v i s o r y o p i n i o n i n t h e Sun O i l Company
c a s e w i l l be examined, f o r t h e i r r e l e v a n c e t o t h e l e g i s l a t i v e h i s t o r y and t h e i r
r o l e i n PAC growth o f t h e 1970s.
These a c t i o n s o c c u r r e d a g a i n s t a b a c k d r o p i n which PACs had e x i s t e d and
were growing i n number b u t i n which u n c e r t a i n t y e x i s t e d o v e r what t y p e s o f
p o l i t i c a l a c t i v i t y were p e r m i s s i b l e .

Such c o n c e r n s were h e i g h t e n e d by i n c o n c l u s i v e

j u d i c i a l r u l i n g s and i n t e r p r e t a t i o n s of t h e law ( 1 8 U.S.C.

6 1 0 ) , and t h e y s e r v e d

t o hamper i n t e r e s t g r o u p s i n e x p l o r i n g t h e f u l l p o t e n t i a l o f t h e PAC v e h i c l e .
By c l a r i f y i n g t h e a m b i g u i t i e s i n t h e law and by i n s t i t u t i o n a l i z i n g t h e PAC a s
a r e c o g n i z e d v e h i c l e under t h e law, t h e s e l e g i s l a t i v e and o t h e r a c t i o n s c r e a t e d
t h e c l i m a t e i n which p o l i t i c a l a c t i o n conunittees c o u l d f l o u r i s h .

A.

The F e d e r a l E l e c t i o n Campaign Act o f 1971

-

The F e d e r a l E l e c t i o n Campaign Act of 1971 ( P u b l i c Law 92-225) 811 marked
t h e f i r s t t i m e t h e c o n c e p t o f t h e p o l i t i c a l a c t i o n committee was c o d i f i e d i n t o
F e d e r a l law.

S e c t i o n 205 of t h a t Act amended 18 U.S.C.

610 t o e x c l u d e t h r e e

s p e c i f i c a c t i v i t i e s from t h e l e g a l r e s t r a i n t s on c o r p o r a t e and union p o l i t i c a l
expenditures.

A s s t a t e d i n t h e amended v e r s i o n o f S e c t i o n 610, t h e f o l l o w i n g

a c t i v i t i e s c o u l d b e funded from c o r p o r a t e o r union g e n e r a l t r e a s u r i e s :

811
-

86 S t a t . 3 .

communications by a corporation to its stockholders and
their families or by a labor organization to its members and
their families on any subject;
nonpartisan registration and get-out-the-vote campaigns
by a corporation aimed at its stockholders and their families,
or by a labor organization aimed at its members and their
families; [and]
the establishment, administration, and solicitation of
contributions to a separate segregated fund to be utilized for
political purposes by a corporation or labor organization

....

While thus opening the door for the political action committee, the amended
section added the following language to ensure that only truly voluntary
contributions be made to the PAC:

....

Provided, that it shall be unlawful for such a fund
to make a contribution or expenditure by utilizing money or
anything of value secured by physical force, job discrimination,
or financial reprisal; or by dues, fees, or other monies required
as a condition of membership in a labor organization or as a
condition of employment, or by monies obtained in any commercial
transaction.
The above amendments to 18 U.S.C. 610 were initially offered as an
amendment to H.R. 11060 (the House version of the FECA) by Representative
Orval Hansen.

The Hansen amendment passed the House by a 233-147 vote, 821

replacing a section of the House Administration Committee's bill which also
sanctioned the separate segregated fund but which was seen as prohibiting the
use of union (and corporate) funds in registration and get-out-the-vote drives.
Supporters of the Hansen amendment argued that its intended effect was

-

to codify in law what 18 U.S.C. 610 had been interpreted to mean. 831 Describing
his amendment as consistent with the then-existing statute, Hansen stated:
For the underlying theory of section 610 is that substantial
general purpose treasuries should not be diverted to political

821 Federal Election Reform. [Vote in the House]
~ e c o r Kv. 117, November 30, 1971. p. 43391.
~ouse:

Congressional

831 Steiger, William.
Federal Election Reform. Remarks in the
Congressional Record, v. 117, November 30, 1971. p. 43388.

p u r p o s e s , b o t h because of t h e e f f e c t on t h e p o l i t i c a l p r o c e s s
o f such aggregated w e a l t h and o u t of concern f o r t h e d i s s e n t i n g
member o r s t o c k h o l d e r . Obviously, n e i t h e r of t h e s e c o n s i d e r a t i o n s c u t s a g a i n s t a l l o w i n g v o l u n t a r y p o l i t i c a l funds. For no
one who o b j e c t s t o t h e o r g a n i z a t i o n ' s p o l i t i c s has t o lend h i s
s u p p o r t , and t h e money c o l l e c t e d i s t h a t i n t e n d e d by t h o s e who
c o n t r i b u t e t o be used f o r p o l i t i c a l purposes and not money
d i v e r t e d from a n o t h e r s o u r c e . 841

-

The S e n a t e ' s v e r s i o n of t h e FECA--S.

382--had

c o n t a i n e d no p r o v i s i o n

comparable t o t h e Hansen amendment, and t h e c o n f e r e e s on t h e l e g i s l a t i o n
accepted t h e House-passed

-

language. 851

Thus t h e Hansen amendment became law.

S e c t i o n 206 of t h e FECA amended 18 U.S.C.

611, which p r o h i b i t e d p o l i t i c a l

c o n t r i b u t i o n s by Government c o n t r a c t o r s , t o extend t h e ban t o i n d i r e c t , a s w e l l

-

a s d i r e c t , c o n t r i b u t i o n s . 861

Because PAC c o n t r i b u t i o n s could be viewed a s

i n d i r e c t l y emanating from t h e o r g a n i z a t i o n ' s t r e a s u r y f u n d s , t h i s s e c t i o n
a p p a r e n t l y had a c h i l l i n g e f f e c t on Government c o n t r a c t o r s i n t e r e s t e d i n
e s t a b l i s h i n g PACs.

Furthermore, t h e f a c t t h a t many of t h e most i m p o r t a n t

c o r p o r a t i o n s and unions were engaged i n some form of Government c o n t r a c t i n g
meant t h a t t h e new p r o v i s i o n s of 18 U.S.C.

-

wide range of i n t e r e s t groups. 871

611 would c o n c e i v a b l y a f f e c t a

It was i r o n i c t h a t , w h i l e one s e c t i o n

of t h e new campaign f i n a n c e law provided t h e l e g a l f o u n d a t i o n f o r p o l i t i c a l
a c t i o n committees, t h e n e x t s e c t i o n may have caused s u f f i c i e n t c o n f u s i o n s o
a s t o i n h i b i t many p o t e n t i a l s p o n s o r s of PACs from e s t a b l i s h i n g them.

841 Hansen, O r v a l .
F e d e r a l E l e c t i o n Reform. Remarks i n t h e House.
~ o n ~ r z s i o n Record,
al
v . 117, November 30, 1971. p. 43381.
851 U.S. Congress. House. Conference Committee.
Federal Election
c a m p a Z n Act of 1971. Conference Report t o accompany S. 382. House Report
No. 92-752, 92nd Cong., 1st S e s s . Washington, U.S. Govt. P r i n t . O f f . , 1971.
p. 30-31.
861 E p s t e i n , C o r p o r a t i o n s and Labor Unions, p. 40-41.
871 Alexander, F i n a n c i n g t h e 1976 E l e c t i o n , p. 560.
-

B.

P i p e f i t t e r s L o c a l 562 v . U n i t e d S t a t e s

The Supreme C o u r t ' s J u n e 1972 r u l i n g i n t h e c a s e o f
v. United S t a t e s
18 U.S.C.

8 8 1 p r o v i d e d t h e f i r s t l e g a l i n t e r p r e t a t i o n of t h e r e v i s e d

6 1 0 , and i t v a l i d a t e d t h e c o n c e p t of u n i o n s ' and c o r p o r a t i o n s '

maintaining s e p a r a t e voluntary funds f o r p o l i t i c a l c o n t r i b u t i o n s .

The c a s e

i n v o l v e d t h e c o n v i c t i o n o f t h e union and t h r e e o f f i c e r s f o r t h e i r m a i n t a i n i n g
c o n t r o l o v e r a s e p a r a t e s e g r e g a t e d fund f o r which s o l i c i t a t i o n s were
s y s t e m a t i c a l l y made a t job s i t e s .

The C o u r t of A p p e a l s had upheld t h e i r

-

c o n v i c t i o n 891 on t h e grounds t h a t t h e fund was compulsory and u n i o n - f i n a n c e d
r a t h e r t h a n v o l u n t a r y and member-financed.

901

The Supreme C o u r t ' s 6-2 r e v e r s a l of t h e Court of Appeals r u l i n g c o i n c i d e d
w i t h t h e a s p i r a t i o n s of o r g a n i z e d l a b o r , which had played a key r o l e i n t h e
p a s s a g e of t h e Hansen amendment, a p p a r e n t l y w i t h t h e pending Supreme Court
r u l i n g i n mind.

According t o one a c c o u n t :

U n c e r t a i n a s t o what d i r e c t i o n t h e Supreme C o u r t would t a k e , t h e
AFL-CIO s o u g h t l e g i s l a t i v e l e g i t i m i z a t i o n of t h e key a s p e c t s o f
i t s e l e c t o r a l r o l e s i n c e t h e 1940s: u t i l i z a t i o n of t h e p o l i t i c a l
a c t i o n committee d e v i c e t o r a i s e and d i s t r i b u t e p o l i t i c a l monies;
communicating p o l i t i c a l l y w i t h i t s members; and, f i n a l l y , membero r i e n t e d r e g i s t r a t i o n and g e t - o u t - t h e - v o t e
a c t i v i t i e s . 911

-

Thus, t h e P i p e f i t t e r s c a s e s e r v e d , w h i l e i t was s t i l l p e n d i n g , a s t h e c a t a l y s t
f o r t h e p a s s a g e o f t h e Hansen amendment a n d , l a t e r , a s t h e f i r s t j u d i c i a l
d e c i s i o n t h a t o b s e r v e r s saw a s l e g i t i m i z i n g t h e t h r u s t o f t h e Hansen amendment.

881 407 U.S. 385 ( 1 9 7 2 ) .
891 434 F. 2d 1127 (CCA 8 t h , 1 9 7 0 ) .
901 E p s t e i n , Labor and F e d e r a l E l e c t i o n s , p. 261.
9 1 1 E p s t e i n , Edwin M.
The Emergence o f P o l i t i c a l A c t i o n Committees. I n
P o l i t i c a l F i n a n c e . B e v e r l y H i l l s , Sage P u b l i c a t i o n s ,
~ l e x a z e ,r H e r b e r t ( e d . )
1979. p. 265.

.

The Supreme Court h e l d t h a t no v i o l a t i o n of t h e (amended) law had o c c u r r e d ,
i n view o f t h e f a c t t h a t c o n t r i b u t i o n s were s o u g h t f o r t h e PAC on a v o l u n t a r y
b a s i s ( w i t h no r e p r i s a l s t h r e a t e n e d 1, t h a t t h e i n t e n d e d p o l i t i c a l purpose
o f t h e d o n a t i o n s was c l e a r l y i n d i c a t e d , and t h a t t h e money was k e p t s e g r e g a t e d
from t h e union t r e a s u r y ( d u e s money).

That t h e union o f f i c i a l s were i n v o l v e d

i n c o l l e c t i n g t h e f u n d s and r e t a i n e d c o n t r o l o v e r t h e i r d i s p o s i t i o n was not
viewed by t h e C o u r t a s a v i o l a t i o n of t h e law.
Nowhere, however, h a s Congress r e q u i r e d t h a t t h e p o l i t i c a l
o r g a n i z a t i o n s be f o r m a l l y o r f u n c t i o n a l l y i n d e p e n d e n t of
union c o n t r o l o r t h a t union o f f i c i a l s b e b a r r e d from
s o l i c i t i n g c o n t r i b u t i o n s o r even p r e c l u d e d from d e t e r m i n i n g
how t h e monies r a i s e d w i l l be s p e n t
921
-

....

By g i v i n g i t s s a n c t i o n t o t h e v o l u n t a r y , s e p a r a t e s e g r e g a t e d f u n d , t h e C o u r t
a c c o r d e d primacy t o t h e p r o t e c t i o n o f t h e i n d i v i d u a l s t o c k h o l d e r o r union
member from h a v i n g t o c o n t r i b u t e t o c a n d i d a t e s opposed t o t h e i r p e r s o n a l
p h i l o s o p h i e s o v e r t h e sometimes c o n f l i c t i n g g o a l of l i m i t i n g t h e i n f l u e n c e o f

-

u n i o n s and c o r p o r a t i o n s i n e l e c t i o n s t h r o u g h t h e i r a g g r e g a t e d w e a l t h . 931
Court s t a t e d :
When Congress p r o h i b i t e d l a b o r o r g a n i z a t i o n s from making
c o n t r i b u t i o n s o r expenditures i n connection with f e d e r a l
e l e c t i o n s , i t was, of c o u r s e , concerned n o t o n l y t o
p r o t e c t m i n o r i t y i n t e r e s t s w i t h i n t h e union b u t t o e l i m i n a t e
t h e e f f e c t of a g g r e g a t e d w e a l t h on e l e c t i o n s . But t h e
a g g r e g a t e d w e a l t h i t p l a i n l y had i n mind was t h e g e n e r a l
u n i o n t r e a s u r y - - n o t t h e f u n d s d o n a t e d by union members of
t h e i r own f r e e and knowing c h o i c e . 941

-

-

Although i t r e f u s e d t o d e a l w i t h c o n s t i t u t i o n a l i s s u e s , 951 t h e C o u r t ' s

921 407 U.S., a t 415.
931 E p s t e i n , C o r p o r a t i o n s and Labor Unions, p. 4 2 .
941 407 U.S., a t 415-416.
9 5 1 407 U.S., a t 407.
-

The

ruling in the Pipefitters case nonetheless offered a sense of legitimacy to
the operation and concept of the separate segregated fund--the essence of
the PAC--and particularly to the practice of union (or corporate) control
over the disposition of the funds. Without the right to involve themselves
in this aspect of the process, the political influence of business and labor
would be sharply curtailed.

C.

The Federal Election Campaign Act Amendments of 1974
96/
The Federal Election Campaign Act Amendments of 1974 (public Law 93-443) -

constituted a response of Congress to the Watergate scandal and is principally
remembered for its imposition of limitations on campaign contributions and
expenditures, and the establishment of the Federal Election Commission.

With

regard to PACs, the FECA Amendments of 1974 made three changes, relating to
penalties, contribution limits, and Government contractors; the basic intent
of 18 U.S.C. 610, as amended by the 1971 Act, was not affected by the 1974
legislation.
Section 101(a) of Public Law 93-443 amended 18 U.S.C. 608 to impose a
limitation of $5000 on the amount a "political committee" (other than a
candidate's principal campaign committee) could donate per election to a
candidate for Federal office, while any other "person" was limited to giving
$1000. As defined in the amended section (b)(2),

a "political committee" met

the criteria of what the 1976 Amendments later defined as a "multicandidate
committee"--one that is registered for at least six months with the FEC,
receives contributions from more than 50 persons, and makes contributions to

96/ 88 Stat. 1263 (1974).
-

five or more Federal candidates. Hence, the term "political committee" under the
1974 Amendments can be read as "multicandidate committee" or "political action
committee ," the terms used today; the term "person" under the 1974 Amendments
would today refer to both an "individual" or a (non-multicandidate) "political
committee."

Thus, the 1974 Amendments made the critical distinction for

purposes of the contribution limit between the political action committee and
the individual. The opportunity for greater leverage accorded the PAC has had
a definite impact on the financing of congressional elections, as will be
discussed later.
The second PAC-related provision in the 1974 Amendments was in Section 101(e)
which amended 18 U.S.C. 610 to impose higher penalties for violations of the ban
on corporate and union contributions. The penalty for organizations convicted
of violating the ban was raised from $5000 to $25,000 and from $10,000 to $50,000
for officers of those organizations who were found guilty of such violations.
The third provision, and the one which may well have had the biggest impact
on PAC development in the 1970s, was the authorization for Government contractors
to set up PACs.

The confusion over this question steming from the 1971 Act was

exacerbated by a 1972 law suit by Common Cause against TRW, Inc., which alleged
that the company, a major Government contractor, violated the law by setting

-

up a PAC. 971 Both the House Administration Committee, in its report on H.R.
16090, 981 and the Senate Rules and Administration Committee, in its report on

------971
-

Epstein, Corporations and Labor Unions, p. 49.

981 U.S. Congress. House. Committee on House Administration.
~ e d e r xElection Campaign Act Amendments of 1974. Report to accompany
H.R. 16090. House Report no. 93-1239, 93rd Cong., 2nd Sess. Washington,
U.S. Govt. Print. Off., 1974. p. 20-21.

-

S. 3044, 991 recommended amending 18 U.S.C. 611 to allow Government contractors
to establish separate segregated funds.

These provisions were passed by the

respective chambers, and the following language was reported by the conference

-

committee 1001 and was written into Public Law 93-443 as Section 103, amending
18 U.S.C. 611 to read:
This section does not prohibit or make unlawful the
establishment or administration of, or the solicitation of
contributions to, any separate segregated fund by any corporation
or labor organization for the purpose of influencing the
nomination for election, or election, of any person to Federal
office, unless the provisions of section 610 of this title
or make unlawful the establishment or administration
of, or the solicitation of contributions to, such fund.
This provision removed a major stumbling block to the establishment of PACs
by those companies and unions doing business with the Federal Government.

The FEC's SUN PAC Advisory Opinion
On November 18, 1975, the newly-created Federal Election Commission issued
an advisory opinion in response to a request from the Sun Oil Company which
had a dramatic effect on the rise of the corporate political action committee.
Sun Oil had requested permission from the FEC to expend corporate funds in seeking
employee and stockholder contributions to two separate political programs:

a

trustee payroll deduction plan (SUN EPA), which would act as a conduit for
political contributions to candidates designated by the donor, and a political

991 U.S. Congress. Senate. Committee on Rules and Administration.
~ e d e r a r ~ l e ion
c t Campaign Act Amendments of 1974. Report to accompany S
3044. Senate Report no. 93-689, 93rd Cong., 2nd Sess. Washington, U.S. Govt.
Print. Off., 1974. p. 17.

.

1001 U.S. Congress. House. Conference Committee.
Federal Election
Campaign Act Amendments of 1974. Conference Report to accompany S. 3044.
House Report no. 93-1438, 93rd Cong., 2nd Sess. Washington, U.S. Govt. Print.
Off., 1974. p. 67-69.
7

a c t i o n committee (SUN PAC), t h r o u g h which c o n t r i b u t i o n s would be g i v e n t o
c a n d i d a t e s a t t h e d i s c r e t i o n of company o f f i c i a l s .
I n A d v i s o r y O p i n i o n 1975-23,

t h e FEC approved t h e proposed Sun O i l Company

programs a n d , i n s o d o i n g , e s t a b l i s h e d s e v e r a l i m p o r t a n t p r e c e d e n t s :
( 1 ) t h a t g e n e r a l t r e a s u r y f u n d s c o u l d b e used t o e s t a b l i s h , a d m i n i s t e r ,
and s o l i c i t c o n t r i b u t i o n s t o b o t h SUN PAC and SUN EPA;
( 2 ) t h a t Sun c o u l d s o l i c i t c o n t r i b u t i o n s t o SUN PAC from employees, a s
well a s stockholders;
( 3 ) t h a t Sun c o u l d e s t a b l i s h m u l t i p l e PACs w i t h s e p a r a t e c o n t r i b u t i o n
and e x p e n d i t u r e l i m i t s ( a s long a s t h e f u n d s came s o l e l y from v o l u n t a r y

-

c o n t r i b u t i o n s ) ; 1011 and
( 4 ) t h a t t h e p a y r o l l deduction (automatic check-off)

p l a n was a

l e g i t i m a t e v e h i c l e w i t h which t h e company c o u l d s e e k c o n t r i b u t i o n s , i n c o n t r a s t
w i t h t h e p r o h i b i t i o n on such a p l a n f o r l a b o r u n i o n s engendered i n t h e 1947

-

T a f t - H a r t l e y A c t . 1021
C l e a r l y , t h e major ground broken by' t h e SUN PAC r u l i n g was t h e p e r m i s s i o n
g r a n t e d f o r c o r p o r a t i o n s t o s o l i c i t employees, i n a d d i t i o n t o s t o c k h o l d e r s ( a s
s p e c i f i c a l l y p e r m i t t e d i n 1 8 U.S.C.

610).

T h i s was s e e n by l a b o r u n i o n s and

t h e two d i s s e n t i n g FEC Commissioners a s u p s e t t i n g t h e p o l i t i c a l b a l a n c e Congress
had sought t o e s t a b l i s h between c o r p o r a t i o n s and u n i o n s .

Sun O i l , f o r example,

had 126,555 s t o c k h o l d e r s and 27,707 employees, few of whom were u n i o n i z e d ; t h u s ,
w h i l e t h e company c o u l d s o l i c i t o v e r 150,000 p e r s o n s , t h e union c o u l d s o l i c i t

-

j u s t a s m a l l f r a c t i o n o f t h a t . 1031

The FEC d i d s e e k t o a l l e v i a t e some o f t h e

1011 E p s t e i n , The Emergence of P o l i t i c a l A c t i o n Committees, p. 167.
1021 E p s t e i n , Labor and F e d e r a l E l e c t i o n s , p. 268.
-

L03/ E p s t e i n , The Emergence of P o l i t i c a l A c t i o n Committees, p. 168.
-

CRS -4 5

p o t e n t i a l problems c a u s e d by a l l o w i n g employees t o be s o l i c i t e d by t h e
c o r p o r a t i o n , and i t recommended t h e f o l l o w i n g g u i d e l i n e s i n i t s o p i n i n r l :
F i r s t , no s u p e r i o r s h o u l d s o l i c i t a s u b o r d i n a t e . Second, t h e
s o l i c i t o r s h o u l d i n f o r m t h e s o l i c i t e d employee of t h e p o l i t i c a l .
p u r p o s e of t h e fund f o r which t h e c o n t r i b u t i o n i s s o l i c i t e d .
T h i r d , t h e s o l i c i t o r s h o u l d i n f o r m t h e employee of t h e employee '
r i g h t t o r e f u s e t o c o n t r i b u t e w i t h o u t r e p r i s a l of any k i n d . -104/
--- ~ .
The g u i d e l i n e s a p p a r e n t l y d i d l i t t l e t o a s s u a g e t h e c o n c e r n s of organized l n b n r
t h a t employees would b e p r e s s u r e d , however s u b t l y by t h e i r e m p l o y e r s ,

111

g ~ r l sc L~,

u n i o n s were d i s t r e s s e d by t h e SUN PAC (and SUN EPA) r u l i n g , w h i l e t h e b L ~ s i ~ l c ~ c s
sector hailed it.
I n i t s d e t a i l e d p r e s c r i p t i o n s f o r t h e e s t a b l i s h m e n t and o p e r a t i o n o f
c o r p o r a t e PACs, t h e FEC h e l p e d c r e a t e a c l i m a t e more c o n d u c i v e t o t h e i r
establishment.

As one a c c o u n t s t a t e d :

While i t was t h e 1971 and 1974 amendments t h a t provided t h e leg?.l
a u t h o r i t y f o r b u s i n e s s PACs, i t was SUN PAC t h a t provided t h e
imprimatur f o r t h e e x p l o s i o n i n t h e i r s i z e and numbers. 105/

E. The Supreme C o u r t ' s Buckley v . V a l e o D e c i s i o n

On J a n u a r y 3 0 , 1976, t h e Supreme C o u r t i s s u e d i t s d e c i s i o n i n t h e c a s e

--

of Buckley v . V a l e o , 106/ i n which t h e c o n s t i t u t i o n a l i t y of many cE t h e c ~ ~ r r ~ p a i g n
f i n a n c e r e f o r m s of 1974 were a t i s s u e .

Most n o t a b l y , t h e C o u r t upheld t h e 1;mlr.s

on c o n t r i b u t i o n s , while n u l l i f y i n g t h e expenditure l i m i t s .

Although 18 IT.!;

I:,

610 and 6 1 1 were n o t d i r e c t l y a t i s s u e , t h e Buckley d e c i s i o n d i d h a v e a b e n t i v g
on p o l i t i c a l a c t i o n c o m m i t t e e s i n t h r e e a r e a s .

-

1041 F e d e r a l E l e c t i o n Commission. A d v i s o r y O p i n i o n 1.975-23.
R e g i s t e r , v . 4 0 , no. 233, Dec. 3 , 1975. p. 56584-56588.
1051 E p s t e i n , An I r o n y o f E l e c t o r a l Reform, p. 36.
106/
-

424 U. S. 1 (1976)

F'ede~a~

I n two i n s t a n c e s , t h e C o u r t r e l i e d upon, and i t s d e c i s i o n c o i n c i d e d w i t h ,
t h e FEC's r u l i n g i n t h e SUN PAC c a s e .

I n i t s d e f e n s e o f t h e l i m i t a t i o n on

c o n t r i b u t i o n s , t h e Court argued t h a t ample o p p o r t u n i t i e s remained f o r i n d i v i d u a l s
and g r o u p s t o h a v e an impact on t h e e l e c t o r a l p r o c e s s .

The PAC was h e l d up

a s an example i n t h e f o l l o w i n g f o o t n o t e , i n which t h e Court made r e f e r e n c e t o
t h e a b i l i t y o f c o r p o r a t i o n s t o s o l i c i t employees ( t h e prime c o n t r i b u t i o n o f
t h e SUN PAC d e c i s i o n i n t h e view of many c o m m e n t a t o r s ) :
While p r o v i d i n g s i g n i f i c a n t l i m i t a t i o n s on t h e a b i l i t y of
a l l i n d i v i d u a l s and g r o u p s t o c o n t r i b u t e l a r g e amounts o f money
t o c a n d i d a t e s , t h e A c t ' s c o n t r i b u t i o n c e i l i n g s do not f o r e c l o s e
t h e making of s u b s t a n t i a l c o n t r i b u t i o n s t o c a n d i d a t e s by some
major s p e c i a l i n t e r e s t g r o u p s t h r o u g h t h e combined e f f e c t o f
i n d i v i d u a l c o n t r i b u t i o n s from a d h e r e n t s o r t h e p r o l i f e r a t i o n
of p o l i t i c a l f u n d s e a c h a u t h o r i z e d under t h e Act t o c o n t r i b u t e
t o c a n d i d a t e s . As a prime example, 5610 p e r m i t s c o r p o r a t i o n s
and l a b o r u n i o n s t o e s t a b l i s h s e g r e g a t e d f u n d s t o s o l i c i t
v o l u n t a r y c o n t r i b u t i o n s t o be u t i l i z e d f o r p o l i t i c a l p u r p o s e s .
C o r p o r a t e and union r e s o u r c e s w i t h o u t l i m i t a t i o n may b e employed
t o a d m i n i s t e r t h e s e f u n d s and t o s o l i c i t c o n t r i b u t i o n s from
employees, s t o c k h o l d e r s , and union members. Each s e p a r a t e fund
may c o n t r i b u t e up t o $5,000 per c a n d i d a t e per e l e c t i o n s o l o n g
a s t h e fund q u a l i f i e s a s a p o l i t i c a l committee under 5 6 0 8 ( b ) ( 2 )
1071
-

...

A s t h e f o o t n o t e c o n t i n u e d , t h e C o u r t a p p e a r e d t o adopt a n o t h e r a s p e c t of t h e
SUN PAC r u l i n g - - c o n c e r n i n g

t h e q u e s t i o n of p r o l i f e r a t i o n , t h e e s t a b l i s h m e n t of

m u l t i p l e PACs w i t h i n an o r g a n i z a t i o n :
The Act p l a c e s no l i m i t on t h e number of f u n d s t h a t may
be formed t h r o u g h t h e u s e of s u b s

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3A84-78GOV. Public record. Not legal advice.