Campaign contributions are closely regulated. According to the Federal Elections Commission, an individual is limited to $2,600 per candidate or candidate committee per election. The limit on contributions to a national party in a year is $32,400 and only $10,000 to any state, district, or local party in a year.
National political parties are limited to $5,000 to any candidate or candidate committee per year. There is no limit on contributions to local parties and committees. National parties can also give up to $45,400 to a Senate campaign.
In 2008, the U.S. Supreme Court, in a constitutional law case, held that the federal government could not restrict labor unions, corporations, and associations from spending money to advance political causes. The case, Citizens United v. FEC, opened the door for uncontrolled spending by non-affiliated groups to produce political ads. The decision did not, however, change the laws prohibiting contributions by corporations to individual campaigns.
These groups, sometimes known as Super PACs or officially as Independent Expenditure Committees, can spend unlimited money as long as they do not make contributions to campaigns or political parties. According to a poll conducted by the Washington Post and Pew Research, only 40% of Americans understand what a Super PAC is or that they are allowed to accept unlimited contributions. There are currently 593 registered Super PACs. OpenSecrets.org reported 1,310 registered PACs have raised $828,224,595 as of July 2013.
The Priorities USA Super PAC, a supporter of President Obama, is founded and operated by Bill Burton, a former White House press secretary. Restore Our Future, which supported Mitt Romney, was run by his close associate Carl Forti, a former Romney political director. These two groups raised well over $300 million for the presidential candidates.
Super PACs must however report who their contributors are to the FEC on a monthly or quarterly basis. The problem is that Super PACs sometimes go to great efforts to conceal who and where they get their money. This practice seems odd since we live in a nation of free speech and political associations. However, both Democrat and Republican Super PACs seem to practice secret fund raising.
A recent report on MotherJones.com revealed the efforts of the Koch brothers, long time conservative fund raisers. The brothers have strong connections and a vast network of big money contributors as revealed by a secret document found in a hotel room where their first meeting of 2014 was held. The Koch Brothers Super PAC has created a byzantine network to hide the sources of the money they bring in as revealed by a Washington Post report.
Money donated to these Super PACs is sometimes called dark money. The term is defined as money contributed to a campaign without disclosing who donated the money. The money is often spent on behalf of a candidate or to influence the outcome of a ballot initiative. This money is carefully filtered through charitable 501(c) or social welfare organizations. These groups are not required by law to reveal their donors and they cannot coordinate efforts with a candidate.
In contrast, groups designated as 527 must reveal their contributors. The result is that some PACs may masquerade as charitable or social welfare groups. For example, a look at the Washington Post document shows that Super PAC money is funneled through a group calling itself the Center to Protect Patient Rights. The group recently admitted to failing to properly report more than $15 million it funneled into California campaigns.
Priority USA Action Fund, a Super PAC that ranked third during the 2012 elections, has 31 members that contributed at least $1 million. These donors are individuals and organizations. Of that number, as many as 15 may have business before the federal government that affected their business or industry. For example, Mark Pinkus, founder of Zynga, contributed $1 million to President Obama’s campaign. His online gaming interest benefited from the Obama administration’s decision not to make online gambling a federal crime.
But, the funny thing about money is that it is fickle at heart. Money follows power and vice versa. In 2010, when the House control went to the Republicans, money that had been going to powerful Democrats dried up and suddenly moved to the Republican side of the aisle, according to a report by the Citizens for Responsible Ethics in Washington (CREW).
Politicians don’t wait for upcoming elections to begin fundraising. Most are year round fundraisers. Fundraising for the mid-term and 2016 presidential elections has already begun and the president is expected to make appearances whenever possible at fundraisers for party members. In the coming weeks, the president, first lady, and vice president will begin a fundraising blitz to help fellow Democrats.
Every politician knows that running an election is costly. And, the basic strategy to win an election to federal office is to outspend your opponent. During 2012, considered by some to be the most expensive election cycle in history, incumbents outraised and outspent their challengers. In the House of Representatives, incumbents outraised challengers $1.7 million to $319,000, while senators raised $7 million to the challengers $1.69 million. A lot of this money comes from PACs. In the House, 40% of the money came from PACs and 15% comes that way in the Senate.
Why is this money so vital? Because an elected representative’s career path may hinge on his ability to raise money for himself and his party. In a 2012 report from U.S News and World Report, campaign finance expert Anthony Corrado of Colby University stated that members of Congress “…are given informal quotas, requirements and rewards for raising money.”
According to Corrado success bringing in money means success on the Hill.
“A member’s ability to raise money is an important consideration, specifically when it comes to receiving the more important assignments in Congress,” Corrado says, “There have been some cases that the candidate who raised the most money for the party earned key chairman positions.”
Candidates can lend money to their own campaign. This is not illegal. But the candidates often charge very high interest rates for these loans. Democratic congresswoman Grace Napolitano charged her campaign an interest rate of 18 percent on a loan of $150,000 in 1998. The loan was outstanding for over a decade and netted Napolitano $294,245.
In 1989, Congress passed the Ethics Reform Act. The act clearly stated that “no member shall convert campaign funds for personal use.” Later, congressional leaders quietly created a loophole in the law and called it Leadership PACs.
A CBS 60 Minutes report revealed the money in these PACs is not considered campaign funds, making them exempt from the law. Almost all senators and congressman have a Leadership PAC and they are the second largest source of revenue for members of Congress. Money in these Leadership PACs comes from friends, supporters, special interest groups and lobbyist. Since this money is unregulated, it can be used for almost anything and that is exactly what is being done.
Senator Saxby Chambliss (R-GA) spent hundreds of thousands of dollars on golfing excursions all over the world. New York congressman Gregory Meeks (D-NY) spent $35,000 on professional football games. Other money was spent to employ family members or nepotism. But, since the family members are not paid from campaign funds, it is perfectly legal. According to Peter Schweizer of Stanford University’s Hoover Institution the money is used for numerous purposes including enhancing the lifestyle of the elected official.
Schweizer is the author of “How Politicians Extract Your Money, Buy Votes and Line Their Own Pockets.” In a New York Times Op-Ed column Schweizer went so far as to call it an extortion racket. He believes that many bills introduced in congress is actually a method to extort money from people.
Trevor Potter, former chairman of the Federal Election Commission call the Leadership PACs a political slush funds and says “they can be used for literally anything.” Schweizer says that Leadership PAC meetings are held “at the premier golfing and resorts in the U.S and sometimes around the world.”
Member of Congress can take the Leadership PAC money with them when they leave office and this can sometimes amount to hundreds of thousands of dollars. Even if the senator or congressman dies in office, the money is still available for whatever use deemed necessary. The staff of U.S. Representative Paul Gillmor of Ohio died while in office. His staff decided to use the money in his Leadership PAC for parties, dinners, and other events claiming it as part of the grieving process.
The FEC has repeatedly recommended to lawmakers outlawing the personal use of Leadership PACs. The FEC has been consistently ignored.
Money is a powerful force in politics and it can and has corrupted officials on nearly all levels. As of January 14, several members of the Senate and House are under investigation for campaign violations, including Speaker of the House John Boehner for allegedly accepting illegal contributions from coal, energy, and gambling interests.
No politician is going to admit to doing favors for political donors. That would be a crime. But, neither will a politician ignore the interests of those donors.