Report No. 84-78 GOV POLITICAL ACTION COMMITTEES: THEIR EVOLUTION, GROWTH AND, IMPLICATIONS FOR THE POLITICAL SYSTEM Joseph E. Cantor Analyst in American National Government Government Division GENERAL LIBRARIES DEPOSlTORY November 6, 1981 Updated April 30, 1984 The Congressional Research Service works exclusively for the Congress, conducting research, analyzing legislation, and providing information at the request of committees, Mem- bers. and their staffs. The Service makes such research available, without parti- san bias, in many forms including studies, reports, compila- tions, digests, and background briefings. Upon request, CRS assists committees in analyzing legislative proposals and issues, and in assessing the possible effects of these proposals and their alternatives. The Service's senior specialists and subject analysts are also available for personal consultations in their respective fields of expertise. ABSTRACT This report examines the campaign fundraising vehicles commonly referred to as political action committees. It traces their evolution and their growth, both in number and in level of financial activity, and it analyzes the impact they are having on the political system today. INTRODUCTION Political action committees (PACs) are the vehicles through which interest groups raise and contribute money to political candidates. Although originally the almost exclusive domain of organized labor, their appeal has extended since the early 1970s to businesses, trade associations, and a wide range of other interest groups. Their proliferation in number and their growth in level of financial activity during this period has occurred at a rapid pace. In 1982, the 3,371 PACs had receipts in excess of $199 million and contributed more than $83 million to candidates for the United States Congress. PACs have thus become a major source of campaign financing in modern congressional campaigns. The amount of money PACs are providing to campaigns has raised questions a8 to whether these contributio_pssssare enablinx special- - interests- - to gain --- -___ - disproportionate influence in the legislative- -- process,- by obligation by the recipients of their political donations. These concerns are ---- - -- challenged by those who insist that PAC money is generally given to reward public - .-. -. officials who are basically sympathetic with the issue goals of the interest - group, rather than to promote shifts in voting patterns which are inconsistent with the general philosophical or constituency-based views of the legislator. Furthermore, PACs are viewed by these individuals as simply another manifestation of the pluralism reflected in interest group activity since the founding of the -- - Nation. This debate reveals significant differences in outlook as to the role of interest groups in public policy-making and the most desired method for the financing of election campaigns. This report examines the growth of PACs in recent years and analyzes the reasons for the increased reliance upon them in congressional campaigns. It focuses on the role of PACs in campaigns for the U.S. Congress, essentially because it is there that PAC activity has been most pronounced. Only a small fraction of PAC contributions to Federal candidates has been given to Presidential candidates (largely because of public funding of such elections), and knowledge of PAC activity at the State and local level is quite limited. In any case, the issues raised by PAC activity at the congressional level have a pronounced effect on the political system as a whole. This study discusses the reasons for the continuing controversy surrounding PACs and their implications for the political system. Chapter One discusses what is meant by the term "political action cowittee" and gives a rough idea of how it functions. Chapter Two places PACs in perspective by examining how business and labor were involved in campaign financing before the modern PAC era and traces the legislative, executive, and judicial decisions which gave impetus to their growth and development. Chapter Three presents the data on their growth and ~roliferation,in terms of both numbers and dollars, and reviews the most widely held theories explaining their growth. Chapter Four analyzes the issues raised by PACs in terms of their impact on the political system. Chapter Five reviews recent congressional attempts to curtail PAC influence, analyzes some of the current proposals to limit them, and discusses the prognosis for the future of PACs in our political system. Finally, a bibliography and appendix are included for further reference. Two explanations regarding terminology used in this report bear mentioning. First, the term "interest group" is used to refer to organizations which pursue particular policy goals through the political arena, and it encompasses corporations, labor unions, and trade associations, as well as the various ideological or issue groups. Second, because of the activity of and the public interest in those PACs which are ideologically homogenous in nature, this report makes reference to "liberal" and "conservative" PACs. In virtually all instances, these labels reflect the self-ascription of the groups themselves; at the very least, they reflect the widespread and uncontested characterizations appearing in the media and in academic writings. Finally, several individuals deserve a note of thanks for their assistance in the preparation of this report. In particular, Kent Cooper, Chief of the Federal Election Commission's Public Records Division, provided invaluable and patient help in the compilation of data for Chapter Three. He also reviewed that chapter, as did Professor Herbert Alexander of the Citizensv Research Foundation. Sherry Shapiro and Edkth Sutterlin, Congressional Research Service bibliographers, assisted in the preparation of the bibliography at the end of this report. CONTENTS ABSTRACT ............................................................... iii INTRODUCTION .............................................................. v CHAPTER ONE: WHAT IS A POLITICAL ACTION COMMITTEE AND HOW DOES IT WORK? .. 1 I . What is a Political Action Committee? ............................ 1 11 . How a PAC Operates ............................................... 7 A . Organization .................................................. 7 B . Records and Reports ........................................... 9 C . Solicitation of Contributions ................................. 11 D . The Decision-Making Process ................................... 14 E . Regulation of PACs ............................................ 17 CHAPTER TWO: EVOLUTION OF POLITICAL ACTION COMMITTEES .................... 19 I . Group Involvement Prior to the 1970s ............................. 19 A . Legal Restrictions ........................................ 19 B . How Interest Groups Made Political Contributions .............. 22 1. Labor .................................................... 22 2 . Business ................................................... 28 3. Conclusion ................................................. 35 I1 . Stimuli to PAC Growth in the 1970s Provided by Legislative. Judicial. and Administrative Decisions ......................... 35 A . The Federal Election Campaign. Act of 1971 ..................... 36 B . Pipefitters Local 562 v . United States ........................ 39 C . The Federal Election Campatgn Act Amendments of 1974 .......... 41 D . The FEC's SUN PAC Advisory Opinion ............................ 43 E . The Supreme Court's Buckley v . Valeo Decision ................. 45 F . The Federal Election Campaign. Act Amendments of 1976 .......... 47 G . Conclusion .................................................... 54 CHAPTER THREE: GROWTH OF PACS SINCE 1972: TiIE NUMBERS. THE DOLLARS. AND THE REASONS ........................................... 55 I . PAC Growth Since 1974 ........................................... 55 I1 . PAC Growth From 1972 - 1982: the Dollars ........................ 63 A . PAC Spending Since 1972: the Aqgregate Data .................. 65 1. The Overview from the PAC Perspective ..................... 66 2 . The Overview from the Candidates' Perspective ............. 73 B . PAC Spending Since 1972: Where Has the Money Come From? ...... 82 1. Expenditures and Contributions by PAC Groupings Since 1972 .............................................. 82 2 . The Largest PAC Contributors and Spenders ................. 90 a . Top 20 contributors from 1972-1982 ..................... 91 b . Top 20 PAC spenders from 1976-1982 ..................... 102 c . Comparison of the largest spenders and contributors among PACs ........................................... 111 C . PAC Spending Since 1972: Where the Money Has Gone ............ 118 1. Candidate Preferences from the PAC Perspective ............ 118 2 . PAC Contributions from the Candidates' Perspective ........ 130 D . Summary Observations on PAC Growth ........................... 135 I11 . Reasons for PAC Growth Since the 1370s .......................... 139 CHAPTER FOUR: ISSUES SURROUNDING THE PAC ROLE IN THE POLITICAL SYSTEM . 149 I . The Role of Special Interests .................................. 150 I1 . PAC Impact on the Political Parties ............................ 154 I11 . The Role of Individuals in the Political Process ............... 158 IV . Impact of PACs on the Congress ................................. 165 A . Paralysis of the Policy-Making Process ...................... 165 B . Linkage Between PAC Money and