PACs

1. PACs Political Action Committees

2. PACs This lecture is about traditional political action committees, or PACs. In the past few years, organizations have been formed that are known as Super PACs. These Super PACs will be discussed in a future lecture about political contributions. Lecture 3 The Business of Politics in the U.S.

3. Outline • What is a PAC? • Origins of PACs • Types of PACs • Business PACs • What do PACs do? • Do PACs Buy Votes? Lecture 3 The Business of Politics in the U.S.

4. What is a PAC? • Political Action Committee • The name commonly given to a private group, regardless of size, organized to elect or defeat government officials in order to promote legislation that supports the group's special interests. Lecture 3 The Business of Politics in the U.S.

5. Origins of PACs • Pre-1970s PACs • Post-1970s PACs Lecture 3 The Business of Politics in the U.S.

6. Pre-1970s PACs • The first PACs were created by labor unions to match the money that rich individuals and large corporations could contribute. • In July 1943, the CIO (Congress of Industrial Organizations – a union of labor unions) formed the first PAC, called CIO-PAC. • Collected and distributed union members’ political contributions. Lecture 3 The Business of Politics in the U.S.

7. Pre-1970s PACs • 1955: CIO merges with the AFL (American Federation of Labor) to form the AFL-CIO. • 1955: AFL-CIO form COPE (Committee on Political Education), possibly the most famous and effective PAC in American history. Lecture 3 The Business of Politics in the U.S.

8. Pre-1970s PACs • The first business PACs were created by business (trade) associations. • 1962: American Medical Political Action Committee (AMPAC) formed by the American Medical Association (AMA). • 1963: Business-Industry Political Action Committee (BIPAC) formed by the National Association of Manufacturers. Lecture 3 The Business of Politics in the U.S.

9. Pre-1970s PACs • By 1964 there were 11 business PACs. • The number of business PACs grew to 33 in 1968. Lecture 3 The Business of Politics in the U.S.

10. Post-1970s PACs • Political Action Committees became more important in the 1970s because of the passage by Congress of the Federal Election Campaign Act (FECA) in 1971, and subsequent changes in this law that were passed by Congress throughout the 1970s. • Many of these changes in the law were in response to the Watergate scandal. Lecture 3 The Business of Politics in the U.S.

11. Post-1970s PACs • What did FECA do? • Made PACs legitimate by allowing labor unions and corporations the right to create PACs, administer PACs, and raise money for those PACs. • Severely restricted the amount that individuals could contribute to candidates. PACs were allowed to contribute 5X as much. • Placed no limit on the total amount that PACs could contribute to all candidates • Allowed companies and unions with government contracts to establish PACs. Lecture 3 The Business of Politics in the U.S.

12. Post-1970s PACs • Because of these reforms, the total number of PACs grew from 608 in 1974, to 1,653 in 1978, and to 4,009 in 1984. • The number of corporate PACs grew from 89 in 1974, to 784 in 1978, and to 1,682 in 1984. • Thus, corporate PACs were only 15% of the total number of PACs in 1974, but 42% by 1984. Lecture 3 The Business of Politics in the U.S.

13. Types of PACs • Corporate • Labor • Trade/Membership/Health Organization • Nonconnected • Cooperative • Corporation without Stock Lecture 3 The Business of Politics in the U.S.

14. Corporate PACs • Political Action Committees established by corporations: businesses that issue stock • Examples: • Outback Steakhouse PAC • ExxonMobil PAC • Goodyear Tire PAC • Ford Motor Company PAC • 3M Company PAC Lecture 3 The Business of Politics in the U.S.

15. Labor PACs • Political Action Committees established by labor unions • Examples: • Service Employee’s International Union PAC • American Federation of Teachers PAC • Teamsters Union PAC • International Brotherhood of Electrical Workers PAC • American Federation of State, County, and Municipal Workers PAC Lecture 3 The Business of Politics in the U.S.

16. Trade/Membership/Health Organization PACs • Political Action Committees established by trade organizations (such as industry groups) or other organizations with a membership • Examples: • Realtors PAC (R-PAC) • American Bankers Association PAC (BANKPAC) • League of Conservation Voters PAC • American Medical Association PAC (AMPAC) • NRA Political Victory Fund Lecture 3 The Business of Politics in the U.S.

17. Nonconnected PACs • Political Action Committees that are independent, and that were not created and are not administered by another organization • Examples: • National Conservative Political Action Committee (NCPAC) • Fund for a Democratic Majority • Republican Majority Fund • National Committee for an Effective Congress (NCEC) – liberal • Committee for the Survival of a Free Congress (CSFC)- conservative Lecture 3 The Business of Politics in the U.S.

18. Cooperative PACs • Political Action Committees that are tied to (mainly agricultural) cooperatives • Examples: • Farmland Industries PAC • Mid-America Dairymen Inc. Agricultural and Dairy Education Political Trust (ADEPT) Lecture 3 The Business of Politics in the U.S.

19. Corporation Without Stock PACs • Political Action Committees of private corporations • Examples: • Commodity Futures Political Fund of the Chicago Mercantile Exchange • Akin, Gump, Strauss, Hauer & Feld Civic Action Committee Lecture 3 The Business of Politics in the U.S.

20. Business PACs • Business PACs include all of the following: • Corporate PACs • Trade PACs • Cooperative PACs • The largest number of PACs are Corporate PACs, although some individual TradePACs raise and contribute more money than individual Corporate PACs. • Corporate PACs are important because corporations (and labor unions) cannot contribute money to political campaigns, but their PACs can. Lecture 3 The Business of Politics in the U.S.

21. Growth in Business PACs: 1974-2010Number of PACs Lecture 3 The Business of Politics in the U.S.

22. Growth in Business PACs: 1974-2010% Corp. & Trade PACs Lecture 3 The Business of Politics in the U.S.

23. What do PACs do? • Raise Money • Contribute Money to Candidates • Make Post-Election Contributions • Make In-Kind Contributions • Spend Money Independently Lecture 3 The Business of Politics in the U.S.

24. Raising Money • Corporate PACs • May solicit the parent corporation's administrative, executive, and professional employees at any time and as frequently as it wishes • May solicit the corporation’s rank-and-file twice a year by mail. • Trade PACs • Must get prior approval from member corporations to solicit that company’s administrative, professional, and executive employees, and its stockholders. • Can solicit non-corporate members at any time, and as frequently as it wishes. Lecture 3 The Business of Politics in the U.S.

25. Raising Money • Are PAC Contributions Coerced? • Psychological: Higher management certainly may feel psychological pressure if their bosses enthusiastically ask for contributions. • Actual: • Phone calls to executives who have not contributed (Dart & Kraft) • Bonuses with notes attached strongly recommending a PAC contribution (Winn-Dixie) Lecture 3 The Business of Politics in the U.S.

26. Contributing Money • Corporate and Trade PACs give 67%-75% of their contributions to incumbents and 60% to 67% to Republican candidates. • (Labor gives about 60% of its contributions to incumbents, and 95% to Democrats) Lecture 3 The Business of Politics in the U.S.

27. Raising Money • Methods • Direct mail • Videotape • Television • Telephoning Lecture 3 The Business of Politics in the U.S.

28. Contributing Money • Who Gets the Money? • Friendly incumbents in a close race (max. contribution) • A challenger facing an unfriendly incumbent in a close race (max. contribution) • An open seat with a friendly candidate in a good position to win (max. contribution) • A friendly incumbent who is safe (less than max. contribution) • An open seat with a friendly candidate who cannot win (token gift or nothing) • A friendly challenger facing an unfriendly incumbent, but with little chance of winning (token gift or nothing) • Uncertain political situation (delayed contribution) Lecture 3 The Business of Politics in the U.S.

29. PAC Contributions in the 2004 Election Cycle(in $millions) Lecture 3 The Business of Politics in the U.S.

30. PAC Contributions in the 2006 Election Cycle(in $millions) Lecture 3 The Business of Politics in the U.S.

31. PAC Contributions in the 2008 Election Cycle(in $millions) Lecture 3 The Business of Politics in the U.S.

32. PAC Contributions in the 2010 Election Cycle(in $millions) Lecture 3 The Business of Politics in the U.S.

33. PAC Contributions in the 2012 Election Cycle(in $millions) Lecture 3 The Business of Politics in the U.S.

34. Making Post-Election Contributions • Many candidates, especially successful challengers, have huge debts after the campaign is over. • Post-election contributions are quite welcome. • Generally made to winners only • Betting on a sure thing Lecture 3 The Business of Politics in the U.S.

35. Making In-Kind Contributions • Get out the vote operations • Survey sharing • Sharing mailing lists • Supplying volunteers Lecture 3 The Business of Politics in the U.S.

36. Making In-Kind Contributions • About 20% of all PACs make in-kind contributions. • Trade and Labor PACs are the most likely to use this form of contribution (22%). • Corporate PACs are the least likely to use this form of contribution (only 9%). Lecture 3 The Business of Politics in the U.S.

37. Spending Money Independently • An independent expenditure is one made without consultation with, or the cooperation of, any candidate or campaign. • There is no limit to the amount a PAC can spend if the expenditure is independent. • However, independent spending seems to be no more than 10% of total PAC spending, and is done more by Nonconnected PACs than any other group. Lecture 3 The Business of Politics in the U.S.

38. Do PACs Buy Votes? • It is unlikely that congressmen or senators vote simply because of PAC contributions. • Congressmen vote for many reasons • Position of political party • Affect on constituents • Ideological beliefs • PAC contributions (or potential contributions) • Remember that PACs typically give money to candidates who are likely to vote for them anyway. Lecture 3 The Business of Politics in the U.S.

39. Do PACs Buy Votes? • Studies by political scientists show only a weak correlation, if any, between contributions and votes. • However, what PAC money does buy is access. Contributions mean that the PAC representative will be able to talk to the congressman and his staff when they want to. Lecture 3 The Business of Politics in the U.S.

40. Do PACs Buy Votes? • When might PAC money help decide a vote? • The more invisible an issue, the more likely PAC money might influence a vote. • The more specialized and narrow the issue, and the less it is opposed by other interests, the more likely PAC money might influence a vote. • The addition of grass-roots help, will enhance the power of PAC contributions. • Concentrated PAC contributions (money from not just a single PAC, but from all the PACs in an industry) will also have more influence than money from a single PAC. Lecture 3 The Business of Politics in the U.S.

41. Discussion Questions • What is a PAC? • How did FECA cause the number of PACs to grow? • What are the five things that PACs do? • How do PACs raise money? • Which candidates are most likely to get PAC money? • What is an in-kind contribution? • Do PACs buy votes? Lecture 3 The Business of Politics in the U.S.