Political Action Committee

A POLITICAL ACTION COMMITTEE (PAC) is an organization that raises and contributes money to, or spends money in support of, candidates or political parties. The term PAC does not appear in federal law; rather, these organizations are officially known as “separate and segregated funds” because money raised and spent must be kept separate from the general treasury of the sponsoring organization, such as a union or corporation.

Labor unions pioneered the use of PACs, but individual corporations, professional and trade groups (such as the American Medical Association or National Association or Manufacturers), and ideological or single-issue interest groups, such as the National Rifle Association, have formed PACs. Also, in recent years, members of Congress with party leadership aspirations have begun to raise and distribute money to assist their fellow partisans in election campaigns using so-called leadership PACs. Despite some public concerns about PACs, these organizations play an important role in financing congressional candidates.

The regulation of political expenditures led to the creation of PACs, and PAC activities are themselves heavily regulated. Federal election codes govern PACs active in federal elections, and state election codes govern PACs active in state elections. States vary greatly in the extent to which they regulate PACs. At the federal level, limitations placed on the ability of labor unions to fund candidates directly out of their treasuries originated during World War II (the Smith Connally Act of 1943) and were reinforced in the Taft Hartley Act of 1947. These regulations led the Committee on Industrial Organization (CIO) to create the first PACs in the 1940s to support the election of Franklin Roosevelt in 1944. Until the 1970s, labor dominated the PAC system. Like unions, corporations were banned from making political contributions directly from their treasuries (since the passage of the Tillman Act in 1907), yet individual corporations did not use PACs widely until the 1970s, when laws limited the ability of wealthy individuals to contribute large amounts of money to candidates.

The legality of labor and corporate PACs was ambiguous until the passage of the Federal Election Campaign Act (FECA) in 1971, which established the right of these organizations and others to form PACs, and created the Federal Election Commission (FEC) to oversee the new campaign finance regulations. FECAs PAC provisions, its limitations on individual contributions, and FEC administrative decisions clarifying the process of corporate PAC formation, led to the increased use of PACs by corporations. In the mid-1970s, few corporations sponsored PACs, but by the late 1980s over 1,800 did.

The 1974 amendments to FECA placed financial limits on the amount of money that PACs can donate to different entitiesThese were not changed by the 2002 McCain-Feingold campaign finance reform legislation (that is, the Bipartisan Campaign Finance Reform Act or BCRA) and remained in effect as of 2007. The limitations are $5,000 per candidate per election cycle, $5,000 to state parties or other PACs, and $15,000 to national party committees per calendar year, with no limit on the total amount of contributions to all candidates, PACs, and parties.

PACs are an important source of money for congressional candidates, but are generally not as important for presidential candidates. According to the Center for Responsive Politics (CRP), in the 2006 election cycle, PACs contributed approximately $298 million to House and $71 million to Senate candidates, providing 34 percent and 13 percent for each chamber's candidates, respectively. Since McCain-Feingold outlawed organized interests' ability to contribute unregulated soft money to the parties, and placed stricter limitations on independent expenditures, PACs remain a very important means for organized interests to influence elections.

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