Dirty Secrets: How Cash Powers Political PACs and Super PACs

Deep Pockets: How Cash Controls Political Agendas and PACs What You Need To Know. In the U.S. political fundraising landscape, PACs and Super PACs stand as two powerful bodies. With each playing a major role in shaping elections. Both bodies operate under a set of clear rules. More importantly, each serves a different purpose, these bodies each have unique contributions to the electoral process. This diversity in function and regulation is key to understanding their impact. Let’s explore the differences to gain a clearer understanding.

Political Action Committees (PAC) and Super Political Action Committees

Key Takeaways

1. Significant Influence: PACs and Super PACs have a profound impact on elections, shaping campaigns through substantial financial contributions and independent expenditures.
2. Transparency Issues: Despite reporting requirements, the presence of dark money complicates transparency and accountability in political financing.
3. Regulatory Changes: Legal decisions like Citizens United have transformed campaign finance, increasing the power and reach of Super PACs.

Difference Between Pacs and Super Pacs

In exploring how PACs and Super PACs money shape “American Politics” we’ll first need to define a few terms and concepts for those readers who are not familiar with what a PAC or Super PACs is. Unfortunately, this a complex topic I use complex language throughout. It requires staying as close to the explanations given from the resources and materials provided by The Federal Election Commission and Open Secrets. Otherwise, this article would be 10 pages long.

Pacs vs Super Pacs

Political Action Committees (PACs) encompass different types:

• Separate Segregated Funds (SSFs)
• Nonconnected Committees
• Super PACs
• Hybrid PACs
• Leadership PACs

With each category serving a different purpose.

Political Action Committee (PAC):

Over the years, Political Action Committee (PAC) have actively shaped the U.S. political scene, exerting an undeniable influence:

Definition and Purpose of PACs or Super PACs:

Organized groups set up to raise and allocate funds. Supporting or opposing political candidates, ballot initiatives, or legislation.

What are affiliations:

These organized groups actively enable their members to collectively support political causes or candidates that align with their interests. It is common practice for corporations, labor unions, trade groups, and other organizations to actively associate themselves with PACs.

Financial Rules:

Federal regulations oversee PACs, and there are strict contribution limits. Individuals can only donate up to $5,000 to a PAC per year, and in turn, PACs can only contribute $5,000 to a single candidate per election cycle and $15,000 annually to a national party. As we can see from the chart below campaign contributions can get a little tricky.

Contribution limits for 2023-2024 federal elections

Courtesy of the Federal Election Commission.

PACs Direct Influence:

Donating Money is different in a Regular PAC versus a Super PAC.

First, a regular PAC can donate directly to a politician’s campaign, influencing candidates directly. Secondly, Super PACs typically cannot make such direct donations. An exception to this rule is the ‘Hybrid’ Super PACs. Thanks to the Citizens United ruling, these Hybrid PACs have a different ability to get around this restriction, a topic we will explore more in a later section. The two National Political parties in the U.S..

• Democratic Party
• Republican Party

Independent PACs:

Importantly, independent PACs maintain no connection to any corporation or labor union. Instead, they operate independently of any specific organization. They can ask for and accept contributions from the general public, including individuals, corporations, and unions.

Independent PACs can engage in a broader range of political activities compared to Separate Segregated Funds (SSFs). They may give money to candidates, political parties, and other political committees, and they can also spend on independent expenditures such as political advertising that is not coordinated with any candidate or campaign.

Examples of modern independent political action committees are:

ActBlue – A prominent Democratic PAC that operates as a fundraising platform for Democratic candidates and progressive causes. Since 2004 ActBlue has raised online a whopping total of $12,667,764,444. – Yes, Folks that’s Billions.

WinRed – A major Republican PAC, similar to ActBlue, that serves as a fundraising platform for Republican candidates and conservative causes. Initially, raised a total of $2,240,123,104 during the 2019-2020 cycle.

EMILY’s List – A PAC that focuses on supporting female Democratic candidates who favor abortion rights, aiming to increase the number of women in political office. Raised over $500 million in its 31-year history to the 2016 election cycle​.

Separate Segregated Funds (SSFs)

They actively raise funds in compliance with the Act and use these funds to support federal candidates and other committees through giving money and spending. Contributions to SSFs require separate banking accounts from the companies or unions’ general fund.

Federal law typically bans corporations and labor organizations from directly giving money to federal elections. The Federal Election Campaign Act and related Commission regulations allow them to establish political committees. People commonly refer to these committees as Separate Segregated Funds (SSFs) more commonly known as Political Action Committees or (PACs).

The Role of the Connected Organization

Additionally, we refer to the Corporation, Union, Trade, or Membership organization that creates an SSF as the connected organization. This entity can actively use its general treasury funds to cover the SSF setup, administration, and fundraising expenses.

Furthermore, the connected organization often exercises control over the SSF. Corporations and unions frequently establish bylaws to steer their SSFs’ operations. While SSFs do create bylaws it’s not required by law and don’t need filing with the Federal Election Commission (FEC), the FEC may request them in specific cases. Here are some examples of SSF types.

Corporate SSFs:

For example Microsoft. Microsoft’s PAC would ask for money from its employees, executives, and potentially shareholders, and then use those funds to support political candidates or causes aligning with its business interests, A major technology company or a large retail chain might have an SSF.

Money raised by Microsoft’s PAC according to Opensecrets website:

Labor Union SSFs:

An example here could be the PAC of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). This PAC would gather money from its union members and use these funds to support political candidates or legislation that aligns with the interests of its members, typically focusing on labor and employment issues.

Money raised by AFL-CIO PAC according to Opensecrets website:

Trade Associations SSFs:

An example might be the National Association of Realtors PAC. This PAC would collect contributions from members of the National Association of Realtors, representing real estate professionals’ interests, and use these funds to support candidates and policies favorable to the real estate industry.

Money raised by the National Association of Realtors PAC according to Opensecrets website:

Membership Organizations’ SSFs:

An example could be the American Medical Association (AMA) PAC. This PAC, established by the AMA, would solicit contributions from its members, who are medical professionals, and use these funds to support healthcare-related policies and candidates.

Money raised by American Medical Assn PAC according to Opensecrets website:

Each of these examples represents how SSFs operate within their respective sectors, collecting funds from associated individuals and then channeling those funds into political activities that align with the interests of the sponsoring organization.

What are Super Pacs?

The introduction of Super PACs has, in many ways, revolutionized political financing in the U.S. allowing massive amounts of money to filter into the Political landscape. This should be a cause of concern as there are huge amounts of cash floating around. As always with access to vast amounts of money corruption and underhanded tactics will follow.

The Influence of Political Action Committees

Super PACs emerged from the court decisions in Citizens United v. FEC and SpeechNow.org v. FEC in 2010. These rulings changed the campaign financing landscape by allowing unlimited fundraising and spending.

We’ll need to define a term related to Super PACs.

What are Independent Expenditure-only Political Committees?

In a nutshell, independent expenditure refers to spending money on a communication ( like TV, Social Media Radio Ads, etc.. ) that explicitly supports or opposes a specific candidate, without any coordination with the candidate, their campaign, or political party. In other words, all those lovely attack ads we see during any election cycle.

Additionally, this can also be in lawsuits to oppose a State or Federal Law or in opposition or support of a bill. There is no limit on the amount of money that they can spend independently. Reporting money spent is part of the watchdog efforts of the Federal Election Committee. It’s important to note that the campaign benefiting from such an expenditure is not responsible for reporting it.

Super PACs: Shaping Political Campaigns

Have the power to receive unlimited money contributions from individuals, corporations, labor unions, and other PACs. These PACs are independent expenditure-only political committees. Their primary role is to finance independent expenditures and engage in other independent political activities. On the other hand, Hybrid PACs, which are political committees with non-contribution accounts, actively ask for and accept unlimited donations of money. These funds come from a diverse range of sources including individuals, corporations, labor organizations, and other political committees.

The PAC deposits funds into a separate bank account, specifically for financing independent spending, advertising referring to a federal candidate, and generic voter drives in federal elections.

Notably, Hybrid PACs also maintain a separate bank account, which sticks to all allowable money limitations and source restrictions. This account uniquely enables them to make direct contributions to federal candidates.

Lastly, a clear category of political committees is Leadership PACs. Where the candidate or individual holding federal office controls the PAC directly or indirectly and establishes, finances, and maintains the PAC. However, neither candidates nor officeholders authorize these committees as their official committees, nor do they affiliate them with a candidate’s or officeholder’s authorized committee.

Unlimited Funding:

Unlike regular PACs, Super PACs can amass vast amounts of money. They can ask for money from individuals, corporations, and other organizations without any financial ceiling.

Indirect Influence:

The significant catch with Super PACs is that they can’t donate money directly to political candidates or coordinate with their campaigns. Instead, they use their funds to independently advocate for or against candidates, typically through advertising campaigns.

This distinction ensures that while they wield significant influence, they don’t have a direct monetary link to candidates. Wait! There’s a dirty little secret we’ll detail that in the next example.

Example of Super PAC \ Carey Committee:

Priorities USA Action

This PAC stands out as both a Super PAC and a Hybrid PAC. The creators of Priorities USA Action established it to support Democratic candidates, and it played an active role during presidential elections, supporting candidates such as Barack Obama and Hillary Clinton. Additionally, this Super PAC functions as a Carey Committee.

Carey Committee Explained:

A Carey committee is a type of hybrid political action committee that operates independently of any candidate. It has a unique dual functionality. On one hand, it acts like a traditional PAC, allowing it to contribute money directly to a candidate’s committee. On the other, it functions similarly to a Super PAC, enabling it to make independent expenditures.

With a Carey committee, the requirement is to maintain separate bank accounts for each purpose either direct payments or independent spending. Additionally, the money raised for independent expenditure comes from a wide range of sources. Including individuals, corporations, labor organizations, and other political committees. More importantly, money donated for independent spending carries restrictions and cannot be used for traditional PAC contributions. Such as direct payments to candidates.

What Priorities USA Action spent in the 2022 general elections: $16,470,705.

Priorities USA Action spent a whopping 97.3% of that $16,470,705 directly on general elections. Just as a side note in the 2020 Federal Elections Priorities USA Action spent a staggering $127,513,342. Yes, again folks that’s Billions.

Discloses Donors? PARTIAL
Viewpoint: LIBERAL
Type of group: Carey committee, a hybrid PAC/super PAC.

Grand Total Spent on 2022 Federal Elections: $16,470,705

Total Independent Expenditures: $16,470,705

Example of a Hybrid PAC:

Club for Growth Action

Serves as a good example of a Hybrid PAC. With a focus on supporting conservative and libertarian policies and candidates. This PAC operates a segregated account to make direct contributions to candidates, in addition to engaging in independent political activities.

Discloses Donors? YES
Viewpoint: CONSERVATIVE
Type of group: SUPER PAC

Grand Total Spent on 2020 Federal Elections: $65,481,764.

Club for Growth Action only spent 63.7% of that $65,481,764 directly on that general election.

Money spent supporting 10 candidates who won	Money spent opposing 15 candidates who lost	Total spent in general election on 31 candidates
$986,884	$22,956,028	$41,741,166

As a side note, this is what Club for Growth Action spent on the 2022 Federal Elections: $69,864,090.

In 2022 Club for Growth Action spent $5,183,028 against republican J.D Vance in Ohio, who won his race. That’s 1/4 of their total spend on one race.

Example Leadership PAC:

PAC to the Future:

Is an example of a Leadership PAC. Established by Nancy Pelosi, a prominent member of the Democratic Party and former Speaker of the House. This PAC focuses on supporting Democratic candidates across various federal and non-federal offices.

Transparency in Political Action Committees

Super PACs:

Financial transparency, Super PACs require a high level of financial disclosure and regular reporting of donors to the Federal Election Commission (FEC). This transparency allows the public to see who is funding their campaigns and independent expenditures.

One drawback worth noting is that if donations are from a non-profit organization or other body that doesn’t disclose their donors. The source of these contributions might remain undisclosed. Leading to the often referred to as “dark money” in politics.

Hybrid PACs (Carey Committees):

Hybrid PACs, including Carey committees, also adhere to strict reporting requirements. They must disclose both their contributors and expenditures to the FEC. The unique structure of Hybrid PACs, with separate bank accounts for direct candidate contributions and independent expenditures, adds an extra layer of transparency, as it clearly distinguishes the source and use of funds. However, similar to Super PACs, Hybrid PACs can also face issues with “dark money” if they receive funds from entities that do not disclose their funding sources.

Leadership PACs:

The Federal Election Commission requires Leadership PACs to report their donors and money spent, much like other PACs. With this in mind, it is vital to actively report and scrutinize from who, where, and how the funds are used, ensuring critical public oversight.

Despite this reporting, critics express concerns about the potential to get around contribution limits and the reduced transparency, especially when controllers of PACs use funds for non-electoral purposes, such as their personal expenses

Pac vs Super Cac: What’s the Difference?:

While PACs provide a means for groups to make direct contributions to political candidates, Super PACs have ushered in an era of massive spending in U.S. elections. The debate over their impact and the ethics surrounding their involvement is ongoing, with concerns about the outsized influence of wealthy donors and organizations in the democratic process. Understanding the nuances between PACs and Super PACs and the dirty secrets of money shaping American politics is crucial for anyone wishing to grasp modern American politics.

Dirty Secrets: How Cash Powers Political PACs and Super PACs

Frequently Asked Questions