Why PACs, Super PACs Dominate the Political Landscape
Senior Editor, CNBC
Campaign spending and the amount of financial contributions to candidates and causes will likely set records this year.
The Center for Responsive Politics predicts that spending for the presidency, Congress and state governments combined could exceed $6 billion in 2012—double the figure from 2008.
While the flood of money into politics is hardly new, how it's collected and dispersed has undergone major changes due to the creation of political action committees, and more specifically this year, the so-called Super PACs.
Even as some politicians try to stay away from these fundraising arms, the fact is both parties are swept up in their grasp. A closer look at the power of these groups shows why.
What are PACs and Super PACs?
A political action committee is a private group set up to elect candidates or to advance a political issue or legislation. If the PAC receives or spends more than $1,000, it has to register with the Federal Election Committee (FEC).
The main reason there are PACs is because direct corporate and union contributions to political campaigns are prohibited by a 1907 law. As a result, PACs started showing up in the 1940s.
The registration rule went into effect in 1974. As of this year, some 4,600 groups have been registered as PACs — most set up by corporations.
There's another type of PAC called a Leadership PAC. This is a group established by a member of Congress to support other candidates — and not themselves.
Super PACs came directly out of two 2010 court rulings —the U.S. Supreme Court's Citizen's United decision and an equally important decision by the federal appeals court in Washington.
Both courts ruled that funds not being spent in coordination of a campaign "did not give rise to corruption or the appearance of corruption." Critics claimed the courts gave corporations the same rights as citizens. Supporters hailed the decisions as a protection of free speech anda way to open up political dialogue.
The rulings said the government may not prohibit unions and corporations from making "independent expenditures" about politics. What that means is they can pour as much money as they want into PACs — and turn them into Super PACs — as long as the groups don't directly support a candidate or political party.
PAC and Super PAC records of donations and spending must be made public and are checked by the FEC.Where does the money come from?
Anyone can contribute to a PAC or Super PAC. Contributions by individuals to PACs are limited to $5,000.
PACS don't have limits. According to a February report by the Sunlight Foundation, almost half the contributions to the nine-largest Super PACs have come from just 22 donors, who each gave more than $500,000.
Records released in January show that the Super PAC backing Mitt Romney'sGOP presidential candidacy, Restore our Future, raised $30 million in 2011. American Crossroads, a Super PAC headed by former President George W. Bush's chief of staff Karl Rove took in $18.4 million.
Democrats haven't raised as much cash. Priorities USA Action, a Super PAC backing PresidentBarack Obama's re-election, raised $4.4 million. House Majority, a PAC that backs Democratic candidates, pulled in little more than $3 million in 2011. A Senate-related PAC for Democrats also raised some $3 million. A Super PAC affiliated with the AFL-CIO has raised $3.7 million.
How do PACs and Super PACs Work?
PACs can contribute money directly to the parties in support of a candidate. Super PACs cannot.
The amount a single PAC can contribute to a national party or candidate is limited to $15,000.
Where the money goes, from either PAC, is usually to major media campaigns — condemning or supporting a candidate (PACs) or an issue or cause (Super PACs).
For example, a PAC supporting then-President George H.W. Bush for re-election in 1988 spent $8.5 million on the infamous "Willie Horton campaign." The ad asserted that Democratic nominee Michael Dukakis, as governor of Massachusetts, furloughed a prisoner only to have the man kill again. Analysts say the ad campaign helped sway the election for Bush.
More recently, the Romney-backed Restore Our Future Super Pac aired 13,000 TV commercials to fewer than 300 by his then-surging rival, Newt Gingrich, in the Florida primary. Romney won with Gingrich coming in second. The man who helps direct the Romney Super PAC, Larry McCarthy, is also the person who created the Horton ad.
Democrats, too, have used Super PAC spending. Priorities USA Action spent millions for ads saying Romney would leave "Medicare dismantled and Social Security privatized," both accusations off the mark, according to reports.
Because so much money is spent on advertising, some of the biggest beneficiaries of PAC spending are media outlets.
Estimates are that candidates, political parties and independent groups will spend up to $3.3 billion to buy TV ads during the 2012 election season. That's a 57 percent increase over the estimated $2.1 billion that was spent on local ads during the 2008 election cycle.
Are PACs bad for politics?
Do PACs corrupt the political system?
"It's making politics even dirtier," says Robert Barrows, who runs his own advertising and public relations firm and is a former candidate for the Democratic nomination for Congress in California.
"We know there's a quid pro quo and all the does is make it harder to know who's paying how much money. It's absurd to say that any of these PACs can't have any contract with the candidate," Barrows argues.
PACs also create an economic divide in the political system, says Don Peebles, a fundraiser for the Democratic party and currently raising money for Obama.
"Super PACs serve as a vehicle of free speech that is being exercised by the wealthy," Peebles says. "This causes political harm because it gives the impression to many, that wealthy people are essentially buying influence."
Others say money has less influence in elections than believed.
"PACs and Super PACs are not going to be a deciding factor in an election," says James Lee, founder of the Lee Strategy Group communications firm and a former spokesman for the re-election campaigns of the elder George Bush, Sen. Bob Dole, and former California Gov. Pete Wilson.
"They help create buzz and exploit an issue but people need to remember money flowing into campaigns is not new," Lee says. "It really comes down to the candidate and their positions."
Lee's point about the flow of money — as well as attempts to stop it — has historical precedence. One can look to the 1800s when taverns were closed on Election Day to stop candidates from buying voters drinks, to the ban on corporate spending in federal elections in 1907, to keep money out.
And in some cases after major misdeeds — like the Watergate scandal of 1974 — brought on campaign reform laws to limit corruption. But nearly every time, as in a 1976 case brought by Senate Republicans, a court ruling has struck down the newer limits on campaign spending.
Such is the case with the much publicized McCain-Feingold campaign reform act of 2002 — which sought to limit the amount of money taken from unions and corporations.
The bill actually had its birth in 1995, but only after major criticism about spending in the 2000 presidential election did it survive a congressional vote and get signed into law.