Another Meaningless Political Virtue Signal
Congressional demagogues swearing off "corporate PAC money." It's time you learned how those evil "corporate PACs" really work, and how meaningless that pledge is.
Few things may be more sanctimonious than a newly elected Member of Congress. Especially those bent on “reform.” Virtue signaling comes quickly and easily.
I don’t mean to be harsh or cynical. Each worked hard to earn the title, “Member of Congress.” Winning elections, primary or general, is a tough business. Arriving in Washington for orientation sessions is a heady experience. I wish them well, having been through two of them as staff for House members and leading an orientation for 16 freshman US Senators after the 1996 election during my final days in the office of the Secretary of the US Senate.
“Vows to reject corporate PAC money on the rise for incoming Congress,” screamed the headline from Capitol Hill’s oldest newspaper, Roll Call. What do they mean by “corporate PAC money?”
As a former federally-registered corporate lobbyist who started and served as the Treasurer for a corporate PAC and helped run another for a food industry trade association, I’m happy to explain. It won’t take long, I promise.
First, let me outline what their “corporate PAC” money ban likely doesn’t include:
Independent, dark money “Super PACs” spent billions this election.
Union PACs, which give almost exclusively to Democrats.
Personal contributions from corporate lobbyists and officials.
Indirect corporate PAC contributions made via “Leadership PACs” (PACs set up by Members of Congress to raise money to make contributions to colleagues or their party’s campaign committee) or other entities
It may or may not include business-friendly PACs that are unaffiliated with a particular company or those run by non-profit trade associations, like the US Chamber of Commerce or the American Bakers Association.
US Senators Jon Ossoff (D-GA) and newly-reelected Mark Kelly (D-AZ), last January introduced the “Ban Corporate PACs Act.” Never mind that Kelly this election received at least $2 million from all PACs, plus an additional $227,000 from lobbyists. No hypocrisy there.
What are corporate PACs, where did they come from, and how do they operate?
Political Action Committees are a campaign finance reform provision of the 1974 post-Watergate scandal amendments to the Federal Election Campaign Act (FECA). In exchange for an outright ban on direct corporate and union campaign contributions to candidates for Congress, they allowed the creation of PACs, or “Separate Segregated Funds.” What does that mean? The financing of PACs by law must operate separately from that of the corporation - a separate bank account not controlled by the company.
Creating a PAC is easy; running one, especially as Treasurer, can be a little more challenging. The rules are highly prescriptive with no margin for error. Failing to file a periodic disclosure report with adequate detail on time (quarterly or monthly) can earn a stiff fine and plenty of embarrassment. FECA also created the Federal Election Commission (FEC), which implements and enforces the law (disclosure: I was nominated to the FEC as a Republican member in 1996. I withdrew my nomination to accept a private sector position, which included running a PAC).
There are roughly 1,700 federally-registered PACs in operation today.
Corporate PACs are among the most highly regulated and transparent, if not ethical, ways for individuals to engage in the political process. Yes, individual employees. Only company executives in an administrative, managerial or professional capacity can be routinely solicited. Contributions are strictly voluntary - the FEC frowns on even the mildest form of pressure beyond an invitation to contribute. Companies have a little leeway on who qualifies to be solicited, but not much. Regulations do allow companies to solicit all employees once annually, but they are so prescriptive that it’s not worthwhile.
Every solicitation I made for my company’s PAC included disclosures that employees were neither favored nor disfavored based on whether they contributed. And I never suggested a “minimum” contribution. Contributions are limited to $5,000 per person year calendar year. Since I was responsible for the PAC, I maxed out yearly to set an example. Expenditures from the PAC are limited to $5,000 to any one candidate or political committee (some PACs transfer dollars to other PACs). I can count on one finger, with a couple left over the times over 13 years that my company’s PAC “maxed out” to any one candidate. With competitive US House campaigns easily exceeding $1-2 million - Senate campaigns can be 30 times that or more - I wasn’t going to unduly influence any member of Congress with a $1,000 or $2,000 contribution.
My former Fortune 250 employer, which eliminated its PAC after I retired, reached about 125 contributors at one time, making contributions totaling about $100,000 per election cycle (two years). More frequently, it was less.
Do corporations “direct” PAC contributions? I supposed they could, but mine didn’t. I recommended to my CEO several company executives to serve on a governing board that approved everything my PAC did and participated in check presentations to candidates and other activities. They approved most of my recommendations but not all. It wasn’t required, but it was good governance. I know many PACs who operate this way. Smart.
With one exception, neither of the CEOs for whom I worked ever leaned on the PAC to direct a political contribution to a candidate, and even that was very mild and, frankly, a smart call. Having a PAC at my company elevated our employees' political awareness, knowledge, and sophistication, whether they contributed or not.
The FEC is always on the prowl for companies stupid enough to inflate certain employees’ salaries to make political contributions as directed by “the boss.” Those perpetrators can go to jail.
The corporate PAC world even has a couple of “trade associations,” including the National Association of Business Political Action Committees (NABPAC) and the Business-Industry Political Action Committee (BIPAC). They’re different - NABPAC is not a real PAC but provides legal and other advice, “best practices,” and services. BIPAC is about employer-employee engagement on public policy issues that impact jobs. BIPAC does have a PAC that makes contributions. I served on the board of BIPAC for several years.
Then why have a PAC at all? Candidates have campaigns to run, and, at the risk of sounding like a Boy Scout, we wanted to thank them, especially those with pro-business agendas. Seriously, that’s it. Especially when they took time out to seek our views and visit our facilities, most often in their states or districts. The idea of a quid pro quo over a $1,000 campaign contribution is laughable, at least from my experience. A quid pro quo for a campaign contribution is a bribe, which is illegal.
Yes, I remember what former US Senator John Breaux (D-LA), once said. Something to the effect that his vote wasn’t for sale, but it might be for rent. A thousand dollars is pretty cheap rent, especially in Washington, DC. And yes, I know all about “bundlers,” well-connected lobbyists with networks of contributors who can generate hundreds of thousands of dollars for candidates at all levels, often from their own clients. I know a few. You’ll find several on this list.
But as smarmy and swampy as this may seem, that’s not the fault of corporate PACs (maybe a few who run them). PACs remain among the most democratic, transparent, and ethical ways for employees to pool their money and voluntarily support candidates who advocate policies that promote and protect their employers and by extension, their jobs.
So when a politician proudly proclaims they are going to eschew those evil “corporate PACs,” ask them how much they’ve accepted from them. Ask them about other PACs, which are no less a “special interest” than a voluntary group of company employees. Ask them if they will accept personal contributions from company officials, especially lobbyists, and how much they took in the last election.
And watch them squirm and scurry. Sadly, we don’t have a press corps in DC willing to follow up that way.
I encourage people to contribute directly to candidates as much as they are comfortable. I strongly encourage workers to support their company PACs, if they have one since it has been assembled to help promote and protect you and your employer’s interests. Feel free to give to political parties and other non-affiliated PACs organized around your interests and passions, such as the National Rifle Association’s Political Victory Fund (PAC) if you’re a second amendment aficionado or passionate about the pro-life cause, the National Right to Life Victory Fund (PAC). Sorry, I’m not going to promote causes that I don’t support here—author’s privilege.
The good news is that it is all voluntary. It’s the kind of “virtue signal” I’m all for.