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Politics and money.

Since 1944, when the Congress of Industrial Organizations set up the first political action committee (PAC) to help reelect President Franklin D. Roosevelt, PACs have raised billions of dollars for thousands of candidates and causes. Today the Federal Election Commission (FEC) administers and enforces the laws governing the more than 4,600 PACs that, according to the FEC, through June 30, 2006, raised $773.5 million in the 2005-2006 election cycle.

Some see these organizations and the money they inject into our elections as both a symbol and the cause of corruption. But I believe the opposite is true: I see a well-regulated process that successfully engages a broad range of Americans in our political system, while weeding out undue influence. PACs are a safe, mainstream way for citizens to meaningfully engage in politics.

PACs encourage political engagement

Put simply, political action committees allow corporations, trade unions, trade associations, groups of people with similar beliefs and others to raise money to make legal donations to candidates for federal office. This is important for the following two reasons:

* All Americans have a First Amendment right to support the candidates of their choice and to work with others who also support those candidates.

* It takes a lot of money to run for federal office in the modern era.

Corporations, trade unions and trade associations are prohibited from making direct contributions to federal candidates. The chief executive officer (CEO) of a corporation or a trade association cannot, for example, write a check from the general funds of the company to the candidate of his or her choice. But company employees or employees of trade association members can combine their individual donations, through a PAC, to increase the impact of their money and collectively promote the candidates who support their issues.

PACs have been around for several decades, but their influence is truly at its peak today, thanks to a series of 2002 legislative reforms that banned the use of so-called soft money. Officially, soft money is money that escapes FEC regulation because it is, allegedly, not used to "influence any election for federal office." However, it had effectively become a way for corporate CEOs to write a large check from general company funds to the candidates of their choice.

According to the Campaign Finance Institute (CFI), Washington, D.C., $495 million in soft money was raised by national parties in 2000.

The 2002 reforms have shut off the soft-money tap, but the cost of running for office has not decreased. So the importance of PACs will be even greater in this election cycle and in future years. And this is a good thing.

It is no longer an option for a union leader or CEO to cut a $100,000 check to the party. To successfully develop a PAC, leaders now have to put democracy into action. They have to reach out to individuals--members and employees--to make the case that political involvement is critical to each and every one of their jobs and to their communities. They have to politically engage a large group of people.

PACs are highly regulated

Yes, a large amount of money flows through PACs, but transparency accompanies these transactions. PACs must register with and file detailed financial reports of money raised and spent with the Federal Election Commission. And these are completely public records--you and I can check any of them online at any time.

PACs are also strictly limited in the amount of money they can contribute. PACs can only contribute $5,000 to a candidate committee per election (primary, general or special). They are also limited to $15,000 annually to any national party committee and $5,000 annually to any other PAC.

PACs bring many disparate voices to the political table

Contrary to popular belief, PACs do not exclusively represent the views of corporate America. Four types of PACS collected 99 percent of receipts in the most recent election cycle:

* 1,492 "non-connected" PACs that represent a group of people with a shared ideology (such as EMILY's List, the Pro-Life Campaign Committee and MoveOn PAC) made up almost one-third of total PAC receipts ($241.1 million.)

* 1,712 corporate PACs (such as UPS, Federal Express and Wal-Mart) represented a little more than one-fourth of the total PAC receipts ($205.5 million).

* 950 PACs that represent trade associations and other types of membership groups (such as the National Rifle Association [NRA], the National Association of Realtors[R] [NAR], the Association of Trial Lawyers of America [ATLA] and the American Medical Association [AMA]) made up a little more than one-fifth of receipts ($158.8 million).

* 299 labor-related PACs (such as the Service Employees International Union [SEIU] and the American Federation of State, County, and Municipal Employees [AFSCME]) made up one-fifth of receipts ($153.6 million).

Politics is a human endeavor, and will always reflect the best and worst of us. But we have, through the mechanism of PACs, hit upon a system that engages more citizens while effectively balancing our constitutional right to participate in the political process with the need to defend against secretive and undue influence.

Kurt Pfotenhauer is senior vice president of government affairs with the Mortgage Bankers Association (MBA) in Washington, D.C. He can be reached at


A look at the top 10 political action committees (PACs) by receipts collected between Jan. 1, 2003, and June 30, 2004, gives a good sense of the breadth of PAC representation.
 1. EMILY's List: $20,143,427
 2. Service Employees International Union Committee on Political
 Education (SEIU COPE): $9,978,864
 3. Public Employees Organized to Promote Legislative Equality
 (PEOPLE) -- the PAC of the American Federation of State, County, and
 Municipal Employees (AFSCME): $9,023,161
 4. Democrat, Republican, Independent Voter Education (DRIVE) -- the PAC
 of the International Brotherhood of Teamsters: $8,985,481
 5. National Rifle Association Political Victory Fund (NRA-PVF):
 6. United Auto Workers' (UAW's) Voluntary Community Action Program
 (UAW V-CAP): $7,665,063
 7. MoveOn PAC: $7,064,175
 8. National Association of Realtors[R] Political Action Committee
 (RPAC): $6,194,451
 9. Republican Issues Campaign: $6,028,807
10. American Federation of Teachers, AFL-CIO Committee on Political
 Education (COPE): $5,886,317

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Title Annotation:political action committees
Author:Pfotenhauer, Kurt
Publication:Mortgage Banking
Geographic Code:1USA
Date:Oct 1, 2006
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