PAC Total Hits $685M in 2002, May Soar in 2004

Posted March 28, 2003 at 4:25pm

PAC activity increased by 13 percent in the 2001-02 campaign cycle, according to a Federal Election Commission analysis released last week, and campaign finance experts are predicting PAC activity will soar to new levels in 2004 in the wake of the new campaign finance law.

In all, political action committees raised $685 million and spent $656 million during the past cycle.

Congressional candidates received $282 million from PACs — an 8 percent increase over the 2000 cycle — and the 4,594 PACs tracked by the FEC had $184 million in cash on hand as of Dec. 31, 2002.

Incumbents reaped most of the rewards, drawing 76 percent of all PAC contributions last cycle, while challengers garnered 10 percent. PACs also made $14 million in independent expenditures for and against candidates.

Since they were first legally recognized in the mid-1970s, PACs have blossomed into one of the most popular fundraising vehicles in modern-day campaigning, and experts expect PACs to explode in coming days.

“With soft money out of the picture, PAC dollars will become an increasingly important source of funding for candidates and parties,” Sheree Ann Kelly, the associate director for the Public Affairs Council, predicted in a Government Relations newsletter last year.

Larry Noble, former FEC general counsel and executive director of the Center for Responsive Politics, believes PAC activity will increase under the new law “because the cutting off of soft money makes the PACs more important and in some ways brings them back to the day when they were the only game in town.”

Although the Bipartisan Campaign Reform Act did not increase or index for inflation PAC contribution limits of $5,000 — unlike individual contribution limits — $5,000 PAC contributions still exceed individual contributions, which are limited to $2,000 per election.

In addition, Noble said he expects to see candidates and parties “hitting up individual executives” of companies for contributions, and those companies that don’t have PACs will have to reconsider their position.

Looking at early fundraising numbers for the current election cycle, PoliticalMoneyLine.com’s Kent Cooper, a former FEC employee whose business is tracking money in politics, said he believes the PAC community has “held back a little bit in January and February of this year.”

Michael Toner, a Republican who sits on the FEC, said that by the end of the year people should be able to “take measure” of the new law’s impact on PACs, but he noted that conventional wisdom has been that a soft-money ban might encourage more corporations to set up PACs “as a way to be politically active on the hard-dollar side.”

According to PoliticalMoneyLine.com, 78 PACs had receipts of more than $100,000 and close to 30 had $200,000 or more in cash on hand at the end of February.

The frontrunner among those PACs is EMILY’s List, which disclosed $2.7 million in cash on hand at the end of February.

A distant second, with $833,000 in its coffers at the end of February, was the National Association of Realtors PAC. It was closely followed by Service Employees International Union PAC, which had $794,800 on hand, and the Democrat Republican Independent Voter Education Fund, which registered $526,300 on hand as of Feb. 28.

Cooper is watching closely to see if PACs will significantly rev up their activity, but so far he’s observed caution in the field. Some of that, he said, relates to the pending decision from a three-judge federal panel reviewing the new law.

“I think there appears to be some sandbagging of receipts until it’s clear the best way to move the money,” Cooper said. “I think not having the court case come down, I think uncertainty about quasi-party groups and uncertainty about the rules for Members of Congress soliciting has caused a lot of PAC directors to pause a bit during January and February.”

That said, Cooper knows that reality dictates that PACs will likely come under increased pressure from lawmakers and party committees who will be looking for funding sources of money in the post-soft-money environment.

“I think assuming the court case comes down and doesn’t drastically change too much, I think you’re going to see federal PACs coming under extreme pressure because they are an easier target than individual donors,” he said.

Cooper explained that PACs are a known target and there is an advantage to the campaign committees and party committees, which can more cheaply and efficiently target PACs than they can individual donors, who are typically tapped through costly direct-mail solicitations.

“Your party people might see the soliciting of PACs to be the quickest and first target,” Cooper predicted.

Others noted that PACs are also attractive, because unlike other entities, corporate PACs can pay for all their overhead and administrative costs out of corporate funds.

Year-end totals for PAC activity in the 2001-02 cycle revealed that some corporations have already dramatically stepped up their PAC donations to candidates.

The BellSouth Corp. Employees’ Federal PAC demonstrated the largest increase in contributions to candidates last year. It gave $1.3 million to candidates in the 2001-02 cycle — a $1 million increase over the $334,200 it gave to candidates in 1999-2000.

Four other PACs also upped their giving by at least a half-million dollars.

The Wal-Mart Stores Inc. PAC for Responsible Government gave about $1 million to candidates — a $624,000 increase over the previous cycle — and the Airline Pilots Association PAC’s contributions increased by $578,000 to about $1.5 million.

The American Medical Association PAC gave $2.4 million in contributions last cycle — nearly a $509,000 increase over the previous cycle.

Rep. Bob Menendez’s (D-N.J.) leadership PAC, the New Millennium PAC, gave $689,000 to other candidates last year — a $503,000 increase over the previous campaign cycle.

Leadership PACs, however, may not be in the game much longer as the FEC is currently considering new rules which would essentially eliminate the fundraising devices.