Political Action Committees: Their Role in Financing Congressional Elections

Political action committees, or PACs, are legal entities through which interest groups raise and spend money in elections. They constitute one of four major sources of funds contributed to congressional campaigns, along with individual citizens, political parties, and candidates. While PACs proliferated and became an issue in the 1970s and 1980s, interest groups have long played a major role in funding American elections.

Order Code 98-255 GOV Updated July 11, 2003 CRS Report for Congress Received through the CRS Web Political Action Committees: Their Role in Financing Congressional Elections -name- re dactedSpecialist in American National Government Government and Finance Division Summary Political action committees, or PACs, are legal entities through which interest groups raise and spend money in elections. They constitute one of four major sources of funds contributed to congressional campaigns, along with individual citizens, political parties, and candidates. While PACs proliferated and became an issue in the 1970s and 1980s, interest groups have long played a major role in funding American elections. The term political action committee is colloquial and does not appear in federal law, and corresponds with two legal expressions—separate segregated fund and political committee—depending on whether the PAC is affiliated with a sponsoring organization. Of the 4,027 PACs registered with the Federal Election Commission (FEC) at the end of 2002, 74% were separate segregated funds. Such a fund is essentially a bookkeeping arrangement, wherein an organization prohibited by law from making direct campaign donations from its treasury operates a separate entity (using treasury funds) that seeks voluntary contributions from its “members” for expressly political purposes. Organizations that maintain such funds include labor unions, corporations, trade and health associations, membership groups (e.g., National Rifle Association and National Organization for Women), cooperatives (e.g., dairy cooperatives), and corporations without capital stock (e.g.,some savings and loan or shareholder insurance companies). The remaining 26% of today's PACs are not sponsored by organizations and do not constitute separate segregated funds. These PACs, referred to as nonconnected by the FEC, are organized merely by meeting the law’s definition of political committee—a group that raises or spends $1,000 or more in a year. Unlike separate segregated funds, these PACs are not required to limit fundraising appeals to specified groups of persons; however, the nonconnected PACs must pay their own administrative and fundraising expenses out of contributions, not having sponsors to underwrite these costs. For the most part, the nonconnected PACs comprise ideological and single-issue groups. Congressional Research Service ˜ The Library of Congress CRS-2 Origin of PACs PACs had their origin in the 1940s, as a response by organized labor to the 1943 War Labor Disputes Act’s prohibition on contributions from union treasuries in connection with federal elections [57 Stat. 167]; this ban was made permanent by the 1947 Labor Management Relations Act [61 Stat. 159]. Unions began to establish separate segregated funds to conduct electioneering activities; and, for the next three decades, labor PACs dominated the field of interest group political activities. Corporations, prohibited since the 1907 Tillman Act [34 Stat. 864] from making contributions in federal elections, were reluctant to establish PACs, in part because of the relative lack of precedent for such endeavors and the concomitant absence of conclusive judicial rulings. A number of legislative, judicial, and administrative actions in the early and mid1970s helped pave the way for other groups to explore the PAC option by removing legal ambiguities and granting statutory authority to unions, corporations, trade associations, and others to set up separate segregated funds. In addition to the elimination of legal barriers, the growth of PACs was spurred by a perceived decline in the strength of political parties, by higher contribution limits than those for individuals, and as a response to increased government regulation and involvement in people's lives and livelihoods. Contribution Limits The law provides for different sets of limits for two types of PACs: political committee and multicandidate committee. The limits for a (basic) political committee are $2,000 per election to a federal candidate, $25,000 per year to a national political party committee, and $5,000 per year to another political committee [2 U.S.C. 431(4)]. In these limits, the law treats a political committee as it does an individual citizen, except that committees are not subject to an aggregate, annual limit on all political contributions. The law allows a political committee to contribute higher amounts by becoming a multicandidate committee, i.e., being registered with the FEC for at least six months, receiving contributions from more than 50 persons, and—except for a state party committee—contributing to at least five federal candidates [2 U.S.C. 441b(b)]. By so qualifying, as the vast majority of PACs do, a PAC is eligible for limits of $5,000 per election to a federal candidate (such a PAC may also give $5,000 per year to a political committee and $15,000 per year to a national party committee). PAC Statistics Table 1 shows aggregate PAC data in each election cycle since 1972 in current and constant 2002 dollars: receipts, expenditures, and donations to congressional candidates, which account for the great bulk of federal PAC giving. The gap between expenditures and contributions consists of donations to parties and to state, local, and presidential races, to congressional races in other years, nonconnected PACs’ fundraising and administrative costs (which, for separate segregated funds, are paid for by sponsors), and independent expenditures. CRS-3 As shown in table 1, PAC expenditures have increased greatly since 1972, from $19.2 million to $656.5 million in 2002—a nearly 700% increase, controlled for inflation. The data also reveal that the PAC explosion of the 1970s and early 1980s reached a high point in 1986, after which total PAC expenditures leveled off or even declined in constant dollars. Not until 2000 and again in 2002 did inflation-controlled PAC expenditures increase again, and notably so. A similar pattern is seen in contributions to congressional candidates, which rose from $8.5 million to $266.1 million in current dollars from 19722002. Controlled for inflation, this represented a more than 600% increase. After reaching the constant dollar high point in 1988, aggregate contributions were relatively level until the 2000 and 2002 elections, when significant increases occurred. Table 1. Financial Activity of PACs: 1972-2002a (millions of current and constant 2002 dollars) Year 1972 1974 b 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Adjusted receipts Current $ Constant $ n.a. -n.a. -$54.0 $170.7 $80.0 $220.7 $137.7 $300.6 $199.5 $371.9 $288.7 $499.9 $353.4 $580.1 $384.6 $584.9 $372.1 $512.2 $392.8 $503.7 $391.8 $475.6 $437.4 $501.5 $502.6 $554.7 $604.9 $632.0 $685.3 $685.3 Adjusted expenditures Current $ Constant $ $19.2 $82.6 $25.0 $91.2 $52.9 $167.3 $77.4 $213.6 $131.2 $286.4 $190.2 $354.6 $266.8 $462.0 $340.0 $558.1 $364.2 $553.8 $357.6 $492.2 $402.4 $516.0 $388.1 $471.1 $429.9 $493.0 $470.8 $519.6 $579.4 $605.3 $656.5 $656.5 Contributions in congressional races Current $ Constant $ $8.5 $36.6 $12.5 $45.6 $22.6 $71.5 $35.2 $97.1 $55.2 $120.5 $83.6 $155.9 $105.3 $182.3 $132.7 $217.8 $147.8 $224.8 $149.7 $206.1 $178.6 $229.0 $179.6 $218.0 $203.9 $233.8 $206.8 $228.2 $245.3 $256.3 $266.1 $266.1 Sources: For 1972: Herbert E. Alexander, Financing the 1972 Election (Lexington: D.C. Heath, 1976), pp. 93, 95; Common Cause, Campaign Finance Monitoring Project, 1972 Federal Campaign Finances: Interest Groups and Political Parties (Washington, 1974), vol. 1, p. vi. For 1974: [National Information Center on Political Finance] in “Interest Groups: Bigger Spenders on ’74 Races,” Congressional Quarterly Weekly Reports, vol. 32, Sept. 28, 1974, pp. 2583-2584; Common Cause, Campaign Finance Monitoring Project, 1974 Congressional Campaign Finances: Interest Groups and Political Parties (Washington, 1976), vol. 5, p. xii. For 1976: unpublished FEC data; [Common Cause] in “Interest Group Gifts to 1976 Congressional Campaigns,” Congressional Quarterly Weekly Reports, vol. 35, Apr. 16, 1977, p. 710. For 1978-2002: U.S. Federal Election Commission, FEC Reports on Financial Activity: Party and Non-Party Political Committees, Final Reports and press releases: Apr. 1980, Jan. 1982, Oct. 1983, Nov. 1985, Mar. 1988, Sept. 1989, Oct. 1991, Jan. 1994, Nov. 1995, Apr. 1997, Jun. 1999, May 2001, and Mar. 2003. a Data are for full election cycle (election year and previous year), except 1972 contributions data cover the period beginning on April 7, 1972. Contributions reflect only money to candidates running in that election cycle. Constant 2002 dollars, in shaded columns, are based on Consumer Price Index. b Adjusted expenditure for 1974 is estimated based on available data. Table 2 places PAC giving into perspective by showing contributions to congressional candidates in general elections since 1972 as a percentage of campaign receipts. In order to portray the level of receipts that are wholly or partly under candidates’ control, the table presents two types of data: total receipts reported by CRS-4 candidates and political party coordinated expenditures. The latter is a unique form of spending that allows parties to spend money on behalf of their candidates with their cooperation, but without any requirement to report the expenditures in candidates’ FEC filings [2 U.S.C. 441a(d)]. Thus, table 2 presents candidate receipts, party coordinated expenditures, PAC contributions to candidates, and the percentage of PAC money in total candidate receipts. The percentage was calculated by dividing the PAC contributions by the sum of candidate receipts and party expenditures. The data in table 2 show a consistently greater reliance on PAC money among House candidates than among Senate candidates. PACs accounted for between 30% and 40% of House candidate receipts and between 15% and 22% of Senate candidate receipts during most of the years covered. These data also show an increasing PAC role relative to other sources through 1988 among Senate candidates, when a high of 22.3% was reached, and through 1990 among House candidates, when a high of 40.4% of funds came from PACs. After those elections, however, the data show a notable decline followed by a leveling off in the relative PAC role in House elections, and a decline in the next three Senate elections, followed by an increase and then rather constant levels since 1996. Table 3 documents the PAC proliferation since the 1970s, indicating by category the number of PACs registered at the end of each two-year period. The data fall into six categories devised by the FEC in 1977: corporate; labor; trade, membership, and health; nonconnected; cooperatives; and corporations without capital stock. (The latter two, representing only a small share of contributions, are combined here.) From 1974 to 2002, the number of registered PACs rose from 608 to 4,027, reaching a high of 4,268 in 1988, followed by a general leveling off. While labor’s 201 PACs in 1974 made up one-third of all PACs, their 320 PACs in 2002 accounted for just 8% of the total. By contrast, the 89 corporate PACs in 1974 grew to a high of 1,816 in 1988—a more than 1,900% rise—and today constitute 38% of all PACs. The mostly ideological, nonconnected PACs grew from 162 in 1978 (the first year the FEC used this category) to a high of 1,145 in 1992; today 26% of PACs are nonconnected. The fourth major grouping—trade, membership, and health—grew from 318 in 1974 to a high of 975 in 2002. Table 3 also provides information on the aggregate level of contributions to congressional candidates for each of the FEC categories of PACs. The dollar figures amplify some of the trends shown by the other data in this table. The $3.6 million given by labor PACs in 1972 constituted 42% of all PAC contributions that year; the $51.9 million from labor PACs in 2002 accounted for just 20% of all PAC contributions. Some 34% of 2002 contributions were from corporate PACs—$91.6 million—making it the largest financial category among the six FEC groupings. The second highest level of contributions in 2002 was from the largely business-oriented trade, membership, and health PACs, whose $71.5 million made up 27% of all PAC donations. The fourth category—nonconnected PACs—accounts for the smallest share of contributions among the major groupings—$44.6 million in 2002—although it is the second most numerous category. These PACs typically give less in contributions than the others because a large portion of their receipts are spent on their substantial operating costs (often involving expensive direct-mail fundraising). CRS-5 Table 2. PAC Contributions as a Percentage of Congressional Candidate Receipts: 1972-2002a (millions of current dollars) Year House % given by Candidate Party coord. PAC PACsc receipts expenditures contributionsb n.a. $5.4 0.1% $23.3 n.a. $7.8 17.1% $28.2 $0.3 $14.7 22.3% $39.1 $1.6 $22.9 24.4% $66.0 $2.7 $36.0 28.3% $76.9 $6.3 $57.9 30.4% $116.0 $8.1 $72.9 35.7% $147.5 $6.2 $85.2 36.3% $192.0 $7.1 $99.1 38.7% $182.6 $6.3 $103.4 40.4% $178.2 $2.8 $118.1 36.7% $189.1 $16.2 $126.6 34.1% $270.2 $15.0 $150.6 32.7% $222.7 Senate House and Senate combined Party coord. PAC % given Candidate Party coord. PAC % given expenditures contributionsb by PACsc receipts expenditures contributionsb by PACsc n.a. $2.8 0.1% $62.2d n.a. $8.5 0.1% d n.a. $11.6 15.7% n.a. $3.1 11.0% $73.9 $0.1 $5.8 14.8% $104.8 $0.4 $20.5 19.5% $3.2 $8.9 12.9% $158.2 $4.8 $31.8 19.5% $6.7 $15.9 19.0% $201.6 $9.4 $51.9 24.6% $11.1 $21.8 17.2% $299.9 $17.4 $79.7 25.1% $11.2 $27.9 17.6% $343.6 $19.3 $100.8 27.8% $16.8 $44.6 21.4% $420.3 $23.0 $129.8 29.3% $16.9 $44.4 22.3% $425.1 $24.0 $143.5 32.0% $12.9 $40.8 21.4% $427.7 $19.2 $144.2 32.3% $28.4 $45.2 20.8% $508.2 $31.2 $163.3 30.3% $21.5 $43.0 14.7% $625.0 $37.7 $169.6 25.6% $19.4 $41.9 17.3% $668.7 $34.4 $192.5 27.4% 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 Candidate receipts $38.9 $45.7 $65.7 $92.2 $124.6 $183.9 $196.1 $228.4 $242.5 $249.5 $319.1 $354.8 $446.0 1998 2000 $425.7 $548.0 $10.4 $ 7.6 $153.5 $189.9 35.2% 34.2% $247.2 $373.9 $18.7 $16.0 $47.4 $50.4 17.8% 12.9% $672.9 $921.9 $29.1 $23.5 $200.9 $240.3 28.6% 25.4% 2002 $550.3 $ 8.1 $198.5 35.5% $289.2 $11.8 $56.2 18.7% $839.5 $19.9 $254.7 29.6% Sources: For 1972-1974—Gary C. Jacobson, “The Pattern of Campaign Contributions to Candidates for the U.S. House of Representatives, 1972-78,” in U.S. Congress, House Committee on House Administration, An Analysis of the Impact of the Federal Election Campaign Act, 1972-1978. Committee Print, 96th Cong., 1st sess. (Washington: GPO, 1979), pp. 20, 24; Michael J. Malbin, “Of Mountains and Molehills: PACs, Campaigns, and Public Policy,” in Parties, Interest Groups, and Campaign Finance Laws (Washington: AEI, 1980), pp. 154-155. For 1976—FEC Disclosure Series No. 6 and 9, p. 3 and p. 4; For 1978-86 candidate/PAC data and 1994-96 party data—FEC press releases: Jun. 1979, Jan. 1982, Oct. 1983, Nov. 1985, Mar. 1988, Nov. 1995, and Apr. 1997; For 1976-92 party data—FEC press releases: Apr. 1980, Jan. 1982, Oct. 1983, Nov. 1985, Mar. 1988, Sept. 1989, Oct. 1991, and Jan. 1994. For 1988-98 candidate and 1998 party data—FEC press release: Apr. 1999. For all 2000 data—FEC press release: May 2001. For all 2002 data—FEC press release: Jun. 2003. a Financial activity for candidates on the general election ballot only (covering their primary and general elections); primary losers are excluded. b These figures reflect only contributions to general election candidates and do not match figures in tables 1 or 3 (except for 1972, which only reflects general election candidate activity in all three tables). c Percentages derived by dividing PAC contributions by the sum of candidate receipts and party coordinated expenditures (to get a more accurate measure of relative funding sources, especially the parties). d The House and Senate data for 1972 and 1974 do not add up to the combined figures shown here, due to discrepancies among the sources consulted. CRS-6 Table 3. Number of PACs and Total Congressional Candidate Contributions by Type of PAC: 1972-2002a (millions of current dollars) Corporate Labor Year 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 No. n.a. 89 443 785 1,206 1,469 1,682 1,744 1,816 1,795 1,735 1,660 1,642 1,567 1,545 1,528 Contrib.b $1.7 $2.5 $7.1 $9.8 $19.2 $27.5 $35.5 $46.2 $50.4 $53.4 $64.1 $64.4 $71.3 $71.1 $84.2 $91.6 No. n.a. 201 224 217 297 380 394 384 354 346 347 333 332 321 317 320 Contrib.b $3.6 $6.3 $8.2 $10.3 $13.2 $20.3 $24.8 $29.9 $33.9 $33.6 $39.3 $40.7 $46.6 $43.4 $50.2 $51.9 Trade, membership, and health No.c n.a. 318 489 453 576 649 698 745 786 774 770 792 838 821 860 975 Contrib.b $1.0 $1.9 $2.9 $11.3 $15.9 $21.9 $26.7 $32.9 $38.9 $42.5 $51.3 $50.3 $56.5 $59.0 $68.3 $71.5 Nonconnected No. n.a. --162 374 723 1,053 1,077 1,115 1,062 1,145 980 1,103 935 1,026 1,055 Contrib.b $1.5 $1.4 $2.8 $2.8 $4.9 $10.7 $14.5 $18.8 $19.2 $14.3 $17.4 $17.5 $22.5 $27.1 $35.6 $44.6 Cooperative & corporation without capital stock No. Contrib.b n.a. $0.7 -$0.4 -$1.5 36 $1.0 98 $2.0 150 $3.2 182 $3.8 207 $4.9 197 $5.4 195 $5.8 198 $6.5 179 $6.7 164 $6.9 154 $6.2 159 $7.1 149 $6.5 Total No.d n.a. 608 1,146 1,653 2,551 3,371 4,009 4,157 4,268 4,172 4,195 3,954 4,079 3,798 3,907 4,027 Contrib. $8.5 $12.5 $22.6 $35.2 $55.2 $83.6 $105.3 $132.7 $147.8 $149.7 $178.6 $179.6 $203.9 $206.8 $245.3 $266.1 Sources: Number of PACs: U.S. FEC, FEC Semi-Annual PAC Count Shows Increase in 2002, FEC Record, Mar. 2003. Contributions: Common Cause 1972 and 1974 volumes, and “Interest Group Gifts to 1976 Congressional Campaigns;” FEC Reports on Financial Activity: Party and Non-Party Political Committees, Final Reports and press release series for 1978-1998. (Financial activity for 1972-76 was tabulated by Common Cause, based on different standards of categorization from those used by the FEC.) a Contributions are for two-year cycle (details may not add to total due to rounding), applicable to candidates running for election in that cycle. PAC numbers are as of Dec. 31 for all years. b Common Cause, the source of the 1972-1976 dollar figures, used a different method from the FEC to categorize PACs. For purposes of this table’s dollar values, Common Cause’s “business” PACs are listed as corporate; “labor,” as labor; “health/ lawyers,” as trade/membership/health; “misc.” and “ideological,” as nonconnected; and “agriculture,” as cooperatives. This distinction for 1972-1976 contributions is emphasized by showing the figures in italics. c Numbers include all non-corporate and non-labor PACs for 1974 and 1976. d Not all PACs reflected in these totals play an active role in any given election. In 2002, for example, only 3,093 of the 4,027 registered PACs contributed to federal candidates. EveryCRSReport.com The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the Library of Congress, charged with providing the United States Congress non-partisan advice on issues that may come before Congress. EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The reports are not classified, and Members of Congress routinely make individual reports available to the public. Prior to our republication, we redacted names, phone numbers and email addresses of analysts who produced the reports. We also added this page to the report. 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