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An analysis of the impact that political action committees have on the American democratic system

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An analysis of the impact that political action committees have on the American democratic system
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Bunch, Troy Daniel
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v, 81 leaves : ; 29 cm

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Political action committees -- United States ( lcsh )
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bibliography ( marcgt )
theses ( marcgt )
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Includes bibliographical references (leaves 80-81).
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Submitted in partial fulfillment of the requirements for the degree of Master of Arts, Department of Political Science, 1987.
Statement of Responsibility:
by Troy Daniel Bunch.

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University of Florida
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Full Text
AN ANALYSIS OF THE IMPACT
THAT POLITICAL ACTION
COMMITTEES HAVE ON THE
AMERICAN DEMOCRATIC SYSTEM
BY
TROY DANIEL BUNCH
A. A., Tarrant County Jr. College, 1978
B. A., Metropolitan State College, 1984
A thesis submitted to
the faculty of the Graduate School of
the University of Colorado in partial fulfillment
of the requirements for the degree of
Master of Arts
Department of Political Science
1987


This thesis for the Master of Arts degree by
Troy Daniel Bunch
has been approved for the
Department of
Political Science
by
Date____


Ill
Bunch, Troy Daniel (M.A., Political Science)
An Analysis of the Impact that Political Action
Committees have on the American Democratic System
Thesis directed by Assistant Professor Larry Mosqueda
This thesis analyzes the increased growth and
influence that political action committees (PACs) have on the
American democratic system. An examination of the history,
emergence, and operation of PACs is undertaken. Included will
be a close examination of the evolution of PACs during the
1970s, when numerous campaign laws were passed which greatly
increased incentives for business to create PACs, and a look
at the present, in which corporate political action committees
are buying votes in Congress and are generally abusing
America's electoral system. Information is examined which
demonstrates the public's increased awareness of and concern
about this important issue, and recommendations are forwarded
which offer roadmaps toward PAC reform.


CONTENTS
CHAPTER
I. INTRODUCTION ............................................. 1
The American Democratic System ......................... 1
Statement of Problem ................................... 9
Purpose and Scope of Study.............................19
II. LITERATURE REVIEW.........................................23
PACs Before the 1970s.................................. 23
PACs During the 1970s...................................25
PAC Creation and Organization...........................35
Networking..............................................39
Running a PAC: The Price Tag...........................42
Fundraising.............................................43
PAC Money: How Much? To Whom?..........................51
Vote Buying.............................................56
III. PAC REFORM................................................66
IV. CONCLUSION............................................. . 78
BIBLIOGRAPHY ................................................ 80


V
TABLES
Table
1. Number of PACs, 1981-1985 .......................... 14
2. PAC Contributions to Congressional
Candidates, 1974-1982 ............................ 15
3. Making PAC Decisions on Which
Candidates to Support............................ 38
4. How PACs Raise Money.................................45
5. PAC Solicitation.....................................50
6. Top PAC Contributors to the 1984
Colorado Legislative Campaigns ..................... 55
7. Public Perceptions of PACs...........................67


CHAPTER I
INTRODUCTION
The American Democratic System
How are political action committees impacting the
American democratic system? Before this question can be
answered a definition of the term "American democratic system"
needs to be established in order to form the foundation for
discussing the significance of such an impact.
First, consider the term democratic system, or simply,
democracy. Like most value-laden words, democracy has been
defined in numerous ways. It has been used indiscriminately to
denote different political systems; the communist regime in East
Germany, for example, is officially called the German Democratic
Republic. The word comes from two Greek rootsdemos. the
people, and kvatis. authorityand used by the Athenians to mean
government by the many (i.e. people rule). Here democracy is
defined as both ultimate end and instrumental means, both as
goals basic to humans and as a method to reach those human goals
Democrats recognize the fundamental importance of the
individual. This emphasis on the supreme worth of the
individual runs throughout democratic thought. This doctrine of


2
individualism makes the person, rich or poor, brown, black or
white, male or female, the central measure of value. The state,
the union, and the corporation are measured in terms of their
usefulness to individuals.
The democratic system recognizes the right of each
individual to be treated as a unique and inviolable person, and
that liberty is desirable in itself, that freedom is good in
itself. Liberty means that every individual must have full
opportunity to choose his or her own goals in life and the means
to reach these goals. Liberty is self-determination, not simply
the absence of external restraint on a person; it means the
individual's power to act positively to reach goals.
These basic values of democracy do not necessarily
co-exist with one another perfectly in any given society. The
concept of the economically motivated, private, even "selfish"
kind of individualism may conflict with the collective welfare
of the citizen as a participant in the general welfare. Freedom
as the liberation of the individual may conflict with freedom as
the alienation of individuals from other people or from their
communities. The concept of individual self-determination may
conflict with that of collective decision-making for the
national welfare or the public good. For example, the right of
a corporation to run as it pleases, as compared to the right of
the worker to join a union, or share in the running of the
company, illustrates this type of conflict in everyday life.


3
During most of the nineteenth century liberty as
"freedom1 from" something interlocked with the dominant economic
and social doctrine of laissez faire. Under this doctrine
"economic man" must be freed of government impediments that
might thwart him (her) in reaching maximum efficiency and
productivity. The state, it was urged, must intervene no more
than was absolutely necessary to protect life, liberty, and
property; further intervention was improper. The philosophy was
simplethe less governmental power, the more individual freedom.
But what was the meaning of liberty when other
individuals, not governments, deprived persons of their
freedoms. Slavery forced Americans to rethink their idea of
liberty. And with the advent of industrialization,
urbanization, agrarian and labor discontent, unions and
corporations, liberty became invested with far more positive
meanings. To abolish one type of restraints, such as legal
slavery, might mean increasing another type of restraint such as
wage slavery. To cut down on governmental restraint of liberty
might mean increasing private economic and social power. The
question was not simply one of liberating people from
government, but of how to use government to free people from
nongovernmental curbs on liberty as well.
What has happened is that two concepts once seen as
opposites have found a meeting point in a philosophy that calls


4
for government both to help broaden people's social and economic
liberties, and to prevent other institutions from constricting
peoples freedoms.
Some favor democracy not only because they believe it
stands for human goals such as liberty and equality, but also
because they see a democratic system as the best process
available for governing a complex society like America. The
procedures of democracy do not guarantee that "justice will be
done", but the chances are better under "government by the
people than any other known procedures.*
A crucial democratic procedure in all genuinely popular
governments is a system of free, fair, and open elections.
First, all citizens should possess equal voting powerone
person, one vote. Second, voters should have the right of
access to facts, to criticism, to competing ideas, to the views
of all candidates, including extremists. Third, citizens must
be free to organize for political purposes. Individuals can be
more effective in most situations when they join with others in
a party, interest group, demonstrationin whatever activity
that does not abridge the constitutional rights of others. And
last, elections must be decided by majorities, or pluralities.
Those who get the most votes win.
Therefore, defined within the scope of this thesis, the
term "American democratic system" represents the mechanism and
process by which Americansindividuals and people coalesced


5
into diverse groups of competing interestsmake decisions
concerning the social, political, and economic environment they
live in. These decisions are made within the framework of
democracyone person, one vote. Citizens elect officials who
represent their cumulative interests. These officials formulate
policies, select people to occupy important positions in the
government, and make and enforce rules, regulations and laws.
The outcome of this process is what governs the
composition of the political-governmental fabric of the
countryan outcome which should reflect the wishes and
aspirations of its citizens. This complex apparatus, very
simplified here, is the American democratic system. A system
which many people feel works well and represents their interests
as well as any other political doctrine might be able too. A
system which, in order to function properly, must embrace, and
depends upon another concept which needs to be
examinedpluralism.
The view of what the American democratic system is, and
how it functions, is based largely on the concept of pluralism.
Pluralist theory begins with the recognition that there
exist numerous sources of power and control in American
society. These sources of power may be the state, labor,
business or any number of other interests. Since there are so
many well organized interests, there is in pluralist theory, no
possibility that a unitary society, stratified in two or three


6
simple homogenized classes, could persist. Unfortunately, if
one particular interest or interest group, were allowed to exert
a disproportionate amount of control and power, in relation to the
relative number of individuals it represents, the pluralist
model of how the system operates begins to deteriorate. In this
case the nation would be moving away from a more-or-less
equitable distribution of power toward a state of elitism, a
situation where the American system would not be "government by
the people" but actually government by the elite; and government
by the elite may possess some inherently undesirable
characteristics.
For example, the elitist model comes into play when a
small number of people exert a tremendous amount of economic,
social, and political power. The elite may be wise or stupid,
benign or cruel, concerned about the problems of the masses or
blind to them, representative of the people as a whole or
concerned only about themselves, responsible before the "bar of
history" or frivolous and heedless; whatever their character or
virtue or lack of it, the members of the elite would make the
great decisions while the people as a whole remain essentially
impotent. Elites could dominate organized interest groups, the
courts, legislatures, and bureaucracies. Elites would be
powerful enough to keep the great "popular" instrumentalities
such as elections, political parties, and the presidency from
having much control over the system.


7
Also, elites tend to perpetuate themselves. While there
may be a slow circulation of persons out of the mass population
and into the elite, and out of the elite back into the masses,
the elite largely comes from the upper socioeconomic levels of
society and sees to it that new members of the elite do
likewise. In the relatively few cases when others are admitted
to the charmed circle, the price of admission is acceptance of
the basic values of the elite. Hence elitism means conservatism
and even stagnation.^
This does not mean that pluralism is at the opposite end
of the political spectrum from elitismor that this thesis is
asserting that pluralism is the best possible model and elitism
is the worst. In fact, pluralists generally do not contend that
American government can be run or should be run by the great
mass of people. Few favor government by public opinion, for
example. Pluralists may favor full citizen participation, but
they do not believe that the masses should take part in actual
decision-making over foreign affairs or monetary policy. Like
elites, they see great differences in political power between
the people at the top and at the bottom of the class system.
They see that there is no free and easy access to the elites on
the part of the masses.
Pluralists see a variety of shifting elites in politics,
government, business, labor, and education, along with other
elitist groups that operate through antimainstream publications,


8
through demonstrations and other forms of protest, or even
through violence. Host elite groups are closed to the masses,
pluralists grant, but some elites are open to newcomers to gain
in vigor and influence through the infusion of new blood.
Generally elites are conservative and unresponsive to the people
as a whole, but some are "public regarding." Different elites,
moreover, compete with one another for status and influence, and
in doing so they draw more and more participation from the
masses. This is especially valuable in a system where elections
determine who will take formal authority, and where elites
should be constantly tested by their capacity to appeal to
popular favor and to support popular leaders.
The pluralists concede that the American democratic
system has not adequately taken into account the views and needs
of certain groups who have been denied the right to participate
in the political process. Until recently, blacks have been so
oppressed that their aspirations and needs could be and were
ignored by those who governed. The poor have often been
underrepresented, and consumer needs have not been adequately
presented. But the pluralists contend that these are not faults
of the system but iii the system, faults that can and should be
corrected. What is needed is more interest group activity and
more pluralism, so that the interests of all people are
recognized in the political process. What is not needed are
policies which perpetuate unfair distributions of power in the
political process resulting in more elitism and less pluralism.


9
Statement of Problem
Political Action Committees (PACs) are organizations that
solicit, raise, and spend tremendous sums of money on behalf of
special interest groups in American elections. PACs have become
one of the most sought after entities operating in the arena of
American politicsthey are aggressively solicited by numerous
contribution-hungry candidates and various political parties.
Unfortunately, the money that these PACs pour into the electoral
process, in the form of contribution money, rarely (if ever)
comes without strings attached. These PAC gifts are directly
buying votes in the Congress of the United States. A "Special,
Special Interest Nation" is being created in which interest
groups with sufficient organization and financing secure favored
pieces of legislation in exchange for contributions to
influential congressmen at campaign time. Moreover, PACs
undermine the democratic system by coordinating their gifts to
maximize their electoral influence, organizing internally in an
undemocratic and unaccountable fashion. Corporate PACs
generally encourage the growth of conservative politics which
tends to benefit only a handful of Americans. PACs solicit
contributions by coercing employees, and are becoming
increasingly dominate in the electoral process at all levels of
government.


10
An example of the undemocratic nature of PAC
organization is clearly demonstrated by the fact that PACs are
usually created by a corporations CEO. Additionally, the CEO
may appoint whomever he/she wishes to the PAC's governing
board. He/she can set criteria for picking candidates for
contributions and outline the PAC scope and fundraising
methods. The CEO may even direct donations to specific
4
individuals.
In 1984 political action committees spent nearly $16
million on the 1984 election, much of which was disbursed by
conservative groups for Ronald Reagans re-election."*
The creation of political action committees has become a
method by which corporate America can safely avoid the Federal
ban on the use of corporate assets as campaign contributions.
The campaign reform laws passed between 1971 and 1976 gave much
increased vitality to the utilization of political action
committees. Under the current status of election campaign
legislation, political action committees may be established by
unions, corporations, or any special interest group. A
political action committee is always established under the
authority of a parent body.
A corporation not only may use corporate funds to create
its own PAC but is also allowed to employ these funds to
administer the committee and to solicit funds for the PAC.


11
Corporate political action committees may at any time
solicit "voluntary contributions from company officers,
management personnel and shareholders. In addition, twice each
year PACs may request "voluntary" contributions from all
employees of a company.
Individual contributions to a political action committee
are held to a $1,000 limitation per yearhowever, a person may
contribute this maximum dollar amount to several PACs provided
he/she remains within the $25,000 limitation in total annual
contributions.^ The implication here does not necessarily
concern the total allowable annual contribution an individual
may make, but more importantly, the "concentration" of those
contributions. An individual giving $1,000 to twenty five
different candidates is markedly different from one giving
$1,000 to twenty five different PACs; especially when one
considers the implications of numerous political action
committees supporting a single candidate!
A key provision in these funding regulations is the
requirement that all contributions to a political action
committee must be given on a voluntary basis. This voluntary
contribution requirement could be subject to abuse.
Until 1975, the labor unions utilization of political
action committees far exceeded that of business (see Tables 1
and 2). The primary reason for this situation was that while
both business and labor unions were authorized by law to create
PACs, this law barred any labor union or corporation from


12
establishing a PAC if that union or corporation held any type of
federal government contract. This provision effectively limited
PAC creation by the majority of major corporations. However,
beginning in the early 1970s numerous labor unions received
substantial federal manpower contracts which, of course,
curtailed their ability to establish and use political action
committees. In order to continue to be able to make political
contribution through PACs, labor unions mounted a lobbying
campaign in Congress in an attempt to have the regulation
barring government contractors from creating and administering
PACs removed. By 1974 their efforts paid off and Congress
responded by placing a provision in the 1974 amendments to the
Federal Election Campaign Act eliminating this restriction.
While this change, of course, pleased labor, it also had
the impact of paving the way for the full utilization of
political action committees by corporations. However, in that
corporate America still remained a bit suspicious about the full
legality of creating and using PACs as a tool to influence
Congress, corporations waited a bit before embracing the full
potential of the PAC mechanism. Then, in November of 1975, the
Federal Election Commission handed down a lengthy opinion
reaffirming the right of corporations to create, administer and
fully utilize PACs in the manner they wanted to. This ruling,
known as the Sun Oil Company Decision, provided full notice to
the business community that it could freely engage in these
election-related activities.^


13
As a direct result of the 1974 amendment and the Sun Oil
Company Decision, the number of corporate PACs began growing at
an alarming rate. By 1985, they outnumbered union PACs by more
than four to one.
Contributions from corporate political action committees
have increased dramatically since 1974; in 1980 and 1982 they
constituted the single largest source of PAC funds. Labor PAC
contributions have dropped from one-half to less than
one-quarter compared to corporate PAC contributions in recent
8
years.
In the 1984 presidential election, the National
Conservative Political Action Committee (NCPAC) spent $9.8
million re-electing Ronald Reagan alone. NCPAC spent another
$289,995 against Democratic challenger Walter Mondale and
$116,000 against fourteen other Democrats and Senator Lowell
Weicker of Connecticut, a liberal Republican.
All told, conservative PACs spent $15.8 million
promoting Reagan's re-election, while liberal PACs spent only
$803,923 trying to elect Walter Mondale.
PAC independent expenditures in Congressional races more
than doubled from the $2.3 million spent on House and Senate
races in 1980, to $5.3 million spent in 1984. (A campaign
expenditure is considered independent if the activity it
finances is not organized or coordinated with a candidate's
x 9
campaign).


14
Table 1
Number of PACs, 1981 1985
Year Total Corp. corns. Unions Trade organ. Other
1981 2,903 1,329 318 616 640
1982 3,373 1,469 380 651 873
1983 3,527 1,538 378 645 966
1984 4,009 1,682 394 698 1,235
1985 3,992 1,710 388 695 1,199
Source: Denver Post (Denver: January 26, 1986), p. 5A.
Candidates quickly realized that the new PAC legislation
provided them the means to acquire PAC contributions without
having to wait for the business PACs to push the money their
waythey could form their own political action committees!
The formation of PACs by the candidate has been
especially prevalent at the presidential level. In recent years
most White House hopefuls have created political action
committees as a major financial source to help propel them to
the highest office in this country.
Creation of a PAC by a candidate has some very important
political as well as financial advantages. First, it enables a
candidate to travel widely, establish important political
contacts, and make speeches before formally announcing his/her
candidacy. This can be done without charge to the eventual
presidential campaign committee or against the overall or state
spending limits imposed by the Federal Election Campaign Act.


15
Table 2
PAC Contributions to Congressional Candidates, 1974-82
(in Millions)
Type of PAC Contribution 1974 1976 1978 1980 1982
Labor $6.3 $8.2 $10.3 $13.; 7 $20.2
Corporate 2.5 7.1 9.8 19.2 27.4
Trade/ membership/ health 2.3 4.5 11.5 15.9 21.7
Other 1.4 2.8 3.5 6.9 13.9
TOTAL 12.5 22.6 35.1 55.2 83.1
adjusted for inflation
(1980 = 1.00) 20.9 32.7 44.3 55.2 70.4
Percentage Change (adjusted for inflation)
Type of PAC Contribution 1974-76 1976-78 1978-80 1980 >-82 1074- -82
Labor 13 7 2 30 62
Corporate 146 17 55 20 450
Trade/ membership/ health 169 117 12 16 381
Other 73 6 56 70 502
TOTAL 57 32 25 28 235
Adapted from Larry J. Sabato, PAC Power: Inside the World of
Political Action Committees (New York: W. W. Norton and
Company, 1984) , P- 15.


16
Second, a candidate PAC can afford to get a head start on
organizing and funding the campaign by training potential staff
members and by developing an extensive file of contributors by
utilizing direct mailings to contribution prospects.
Additionally, the money raised by the candidate PAC can be used
not only as a fund for the candidate and his/her entire staff,
but also as a source of contributions to state and local
candidates which create "debts" which are naturally expected to
be repaid at the presidential nomination convention.
The candidate PAC allows greatly increased financial
"latitude" as well. As an individual the White House hopeful
can give his/her favored state and local level candidates $1,000
each, while his/her PAC can give each one an additional $5,000
each. This, of course, applies equally to contributions to the
presidential candidate; his/her supporters can contribute $1,000
apiece but can quintuple that contribution from their political
.. ... 10
action committee.
The enormity of the impact can be seen by examining just
a few cases. For instance, the first presidential PAC, which
belonged to Ronald Reagan, was formed in 1977 (called the
Citizens for the Republic (CFTR)) and was specifically designed
to replace his 1976 nomination committee. The CFTR PAC
>
therefore inherited the 1976 nomination committee's existing
11
balance of well over $1 million.


17
In the 1977-1978 election campaigns the CFTR PAC
expended $4.5 million, including almost $600,000 on
contributions to 400 candidates and numerous local parties.
With a staff consisting of thirty personnel (including a staff
cartoonist) the CFTR political action committee was able to
expand Reagan's direct-mail contributor list from 100,000 to
over 300,000. It also held political workshops, published a
bimonthly newsletter showcasing Reagan's conservative views and
opinions, and even sponsored Reagan's speaking tours. After
Reagan announced his intention to run for the presidency, and
even after he was elected and took office, the CFTR PAC
continued to operate separately from both the campaign committee
and the White House. Reagan's PAC raised nearly $2 million for
the 1980 elections and another $2.4 million for the 1982 midterm
elections. Just over that relatively short period of time GOP
coffers raked in approximately $575,000 of CFTR's PAC money
alone.
Reagan's PAC was not operating alone on the side of the
GOP. The John Connally Citizens Forum, George Bush's Fund for
Limited Government, Senator Robert Doles Campaign America, and
Senator Howard Bakers and Robert Dole's political action
committees continued to solicit and raise money after their 1980
defeats in anticipation of future presidential bids.
The Dole PAC raised in excess of $270,000 during
1981-1982. Bakers PAC raised nearly $2 million during this
same periodcontributing $578,000 to various GOP candidates


18
while saving the rest for a rainy day. Another PAC, Campaign
for Prosperity, formed by U.S. Representative Jack Kemp of New
York, raised almost $250,000 and contributed $106,000 to 111 GOP
12
House and Senate candidates in 1982.
The public recognizes the impact that political action
committees have on the electoral process. According to an
ABC/Harris survey, 71% agreed that PACs are pouring too much
money into the whole political process and 62% see campaign
spending as a very serious problem. By a margin of 41% to 23%
the respondents called political action committees a "bad
thing".13
In fact, it has been this obvious public negativism
toward PACs which has caused some legislative proposals to be
made to restrict a congressional candidate's PAC total to a
fixed dollar amount or percentage of his/her total receipts.
The Oben-Railsback bill, which passed the House in 1979,
14
proposed a limit of $70,000 per candidate. A measure
sponsored in 1985 by Senators David Boren, Democrat from
Oklahoma, and Barry Goldwater, a Republican from Arizona, would
have set a $100,000 limit on PAC contributions to House
candidates and limits ranging from $175,000 to $750,000 on
Senate candidates based upon the size of their state.13
An ABC/Harris survey showed the public in favor of PAC
16
limitations by 68% to 29%.


19
Purpose and Scope of Study
The purpose of this study is to analyze what influence
political action committees have on the American democratic
system, and in particular, what impact corporate PACs have on
the system. This thesis will show that, because of existing
campaign and electoral legislation, corporate PACs possess
certain advantageous influential capabilities when compared to
other organized interests. Namely, data will be presented which
support the assertion that political action committees have a
disproportionate amount of influence over America's democratic
system of government. Through the examination of statistics,
surveys, and statements made by congressional members, business
leaders, and PAC officials, evidence will correlate to what
degree corporate PACs actually control the electoral process.
This study will show that our elected officials are
moved to vote for or against issues based upon PAC
contributions, rather than being based upon the desire and need
of their constituency.
Evidence is presented which demonstrates the overall
public awareness and concern over this issue.
It is anticipated that once a greater number of citizens
are made fully aware of the PAC process an effort will be made
to correct the situation; with an interim goal being to have new


20
legislative restrictions placed on PAC activities, and an
ultimate goal of eliminating PAC campaign contributions and
independent expenditures entirely; thereby returning the
electoral process to the people that our elected officials
represent, and taking it out of the hands of a few financially
dominant special interests.
Since PACs are a relatively new phenomenon, statistical
and other references will generally cover the period from the
early 1970s to the present. However, there exist some
historical data which date from the turn of the century to the
1970s which will be examined briefly.
The scope of this study will generally be limited to a
look at the effects that PAC contributions and independent
expenditures have on the electoral process at the federal level.


NOTES-CHAPTER I
1. Government by the People. James Burns, J.W. Peltason and
Thomas E. Cronin. New Jersey: Prentice-Hall, Inc.,
1975. pp. 9-18.
2. The End of Liberalism. Theodore J. Lowi. New York:
W.W. Norton and Company, 1979. p. 31.
3. Government by the People. James Burns, J.W. Peltason and
Thomas E. Cronin.- New Jersey: Prentice-Hall, Inc.,
1975. p. 538.
A. Political Action Committees: Their Evolution and Growth
and their Implications for the Political System. Joseph
E. Cantor. Washington D.C.: Library of Congress
Congressional Research Service Report No. 82-92GOV,
November 6, 1981. pp. 108-11.
5. Denver Post, August 9, 1985. p. 3.
6. Political Parties, Interest Groups, and Public Policy:
Group Influence in American Politics. Dennis S. Ippolito
and Thomas G. Walker. New Jersey: Prentice-Hall, Inc.,
1980. p. 3A9.
7. Political Parties, Interest Groups, and Public Policy:
Group Influence in American Politics. Dennis S. Ippolito
and Thomas G. Walker. New Jersey: Prentice-Hall, Inc.,
1980. p. 350.
8. Money and Politics in the United States. Michael J.
Malbin. New Jersey: Chatham House Publishers, Inc.,
198A. pp. A2-A3.
9. Denver Post. August 9, 1985. p. 3.
10. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W.W. Norton and
Company, 198A. p. 114.


22
11. Financing the 1980 Election. Herbert Alexander.
Lexington, Mass, and Toronto: D.C. Heath and Company,
1980. pp. 146-148.
12. PAG Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W.W. Norton
and Company, 1984. pp. 114-116.
13. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W.W. Norton
and Company, 1984. pp. 160-163.
14. "The PAC Phenomenom in American Politics," in The Arizona
Law Review 22, No. 2. Fred Wertheiner, 1980. pp.
611-612.
15. Denver Post. December 1, 1985. p. 5-A.
16. "The PAC Phenomenom in American Politics. in The Arizona
Law Review 22, No. 2. Fred Wertheiner, 1980. p. 612.


CHAPTER II
LITERATURE REVIEW
PACs Before the 1970s
As corporations became heavily involved in the electoral
process, individuals began to feel extremely disadvantaged with
regards to being capable of bringing financial resources into
the electoral process. Corporate America had the ability to
dump huge sums of money into the electoral process, which
individuals of course, could not. As a result of this obvious
and overwhelming disparity between big business and the average
citizen's ability to affect election results, corporations were
the first to be subjected to government regulations of their
campaign activities.
In 1907 Congress passed the Tillman Act. This act made
it illegal for any corporation to contribute any money in a
federal election. The Tillman Act was later to be amended to
include all types of contributions extending to primary
conventions and nominating conventions. With the exception of
these amendments, which broadened the scope of this Act, the
Tillman Act was to remain virtually unchanged for the next
sixty-five years.


24
Corporations, feeling the pendulum of electoral power
swing away from them, mounted a campaign to have labor unions'
utilization of campaign contributions restricted also. This
effort culminated during the Second World War when laws
affecting both strike actions and campaign activities were
passed in 1943.
The resulting legislation, called the Smith Connally
Anti-Strike Act, made it illegal for labor unions to make
campaign contributions. This provision, however, was supposed
to extend only until the end of the war. But with renewed
pressure being applied by corporate America, legislation was
passed at the close of World War II which was to further
restrict labors access to the electoral process. This
legislation was known as the Taft-Hartley Act.
The Taft-Hartley Act prohibited union contributions to
federal, primary, general elections and nominating conventions.
Congress said that it was its intent, by earlier passage of the
Tillman Act and then the Taft-Hartley Act, to have labor and
business subjected to uniform standards with regard to their
financial involvement in campaign activities.-*"
In 1955, an event took place which caused big business
to take even more interest in direct political involvement. The
AFL and the CIO merged. This resulted in the subsequent
increased capacity by labor for greater political activity.


25
Business saw this, and the fact that government was taking a
larger role in business activities since WWII, as a threat to
its own standing in the arena of political influence.
This concern over falling behind labor in its ability to
!
influence the electoral outcome in elections culminated in the
creation of the first corporate political action committee in
1963. Corporate America was still, nonetheless, restricted by
legislation enacted some fifty-six years earlier (Tillman Act)
with regards to contribution prohibitions. This PAC was called
the Business-Industry Political Action Committee (BIPAC). It
was formed by officials of the National Association of
Manufacturers.
BIPAC was modeled largely after the AFL-CIO's Committee
on Political Education (COPE). Since BIPAC and COPE were
prohibited from making campaign contributions, their functions
primarily involved political education advocating the attributes
of the organization(s) they represented. BIPAC, of course,
disseminated propaganda concerning the manufacturing industries,
while COPE did the same in support of labor. BIPAC was intended
as a direct counter to COPE at the national level. Since its
founding, BIPAC has supported only business-oriented
congressional candidates.
PACs PurinR the 1970s
It was not until the 1970s that changes in campaign
legislation occurred which made political action committees a


26
much more formidable tool for corporations to yield. During
this period changes occurred which enhanced the importance of
PACs to business with regard to campaign financing. These
changes included the passage of the Federal Election Campaign
Act of 1971, amendments to this Act in 1974 and 1976, a U.S.
Supreme Court decision known as Buckley v. Valeo (1976), and
rulings by the Federal Election Commission in the SUN-PAC,
2
SUN-EPA (1975) advisory opinion.
It was the passage of the Federal Election Campaign Act
that provided the catalyst which initiated the real growth of
political action committees. The FECA provided legislation
which allowed PACs to make campaign contributions. It allowed
corporations to communicate with stockholders and their families
on any issueincluding, of course, political and campaign
related issues. This act provided the groundwork and guidelines
for conducting nonpartisan registration and vote-getting
campaigns among its stockholders and their families. And
probably most significant, the Federal Election Campaign Act of
1971 allowed corporations to establish and administer a separate
fund to be used for political purposesbig business was now
free to utilize the vast financial resources of its corporate
machine to tilt the electoral process in its direction! The
intent of Congress (by passing the Taft-Hartley Act nearly a
quarter century earlier), of having corporations and labor on
equal ground in the electoral arena, had now been swept aside.


27
Labor could see the obvious implications that the FECA
would have. Therefore, the AFL-CIO pushed for passage of an
amendment to the Federal Election Campaign Act which would allow
labor the same campaign freedoms that business now had. This
amendment, drafted by the AFL-CIO, was known as the Hansen
Amendment.
This law provided that labor unions be given identical
rights as corporations with regard to electoral activities. The
Hansen Amendment delineated the right of corporations and unions
to communicate with their shareholders and members
(respectively) on political issues; their right to pursue
registration and vote-getting campaigns; and the right to
utilize corporate funds and union funds in the creation and
administration of PACS. Even though it was obvious to labor
that the FECA and the subsequent Hansen amendment, which was
passed in April 1972, gave business the clear authority to
engage in fundraising activities with regards to all its
members, including stockholders, the results were a bit
unexpected.
Nearly ninety individual corporate-related PACs were
involved in the 1972 elections, eighty of which were established
after the 1971 FECA went into effect in April of 1972. Big
business exploited its authorization to solicit funds from its
shareholders with tremendous results.


28
Eighty-seven corporate committees reported income of
$1.37 million and expenditures of $1.41 millionslightly over
20% of the total business expenditures of $6.12 million. In
1972 all business-related PACs gave $1.7 million to
congressional races and over $400,000 to presidential
candidates.^
Corporate America, being far superior in financial
resources and having the added benefit of being able to solicit
its vast number of shareholders, would soon gain an advantage in
direct political involvement that would be difficult for labor
to overcome.
Following the 1972 elections and the Watergate scandal,
pressures for campaign reform developed new momentum and labor
once again grasped the opportunity. Unions convinced Congress
that big business was once more wielding too much influence in
the electoral arena and pressured it for new legislation which
would swing the pendulum back in labor's direction." Then, in
1974 Congress passed another amendment to the Federal Election
Campaign Act.
This amendment was designed to strengthen disclosure
requirements, create a federal agency to administer federal
election laws (the Federal Election Commission) and most
importantly, to remove the provision barring unions and
corporations with government contracts from entering the
electoral process. The most important element of this


29
legislation was the affirmation of the right of government
contractors to establish, administer and maintain political
action committees, and the right to solicit contributions from
its members.
Although a number of unions held government contracts,
and would therefore benefit directly from this provision, the
majority of government contracts were actually held by
corporations. If the FECA was what initially unlocked the door
to the abuse of the PAC mechanism by corporate America, then the
197A amendment was what pushed the door open.
Only three months after the Federal Election Commission
(FEC) began functioning in 1975, as provided by the 1974
amendment to the FECA, the Sun Oil Company requested a ruling on
the propriety of its proposed PAC (SUN-PAC) and on the propriety
of its proposed political giving program (SUN-EPA).
The Sun Oil Company had proposed spending general
corporate funds to establish, administer, and solicit
contributions to its political action committee (SUN-PAC)it
also requested a judgement on its right to utilize company money
to create a trustee payroll deduction plan (SUN-EPA), which
would be kept separate from SUN-PAC.
The Federal Election Commission ruled that not only
could Sun Oil expend treasury funds in order to establish,
administer and solicit contributions to both SUN-PAC and


30
SUN-EPA, it would also be allowed to solicit contributions from
employees as well as stockholders, and could establish multiple
4
PACseach with separate contribution and expenditure limits.
This opinion caused outrage by its dissenters. It was
argued that the 1971 FECA clearly prohibited corporations from
soliciting funds for its PAC from anyone but stockholders,
management level personnel and their families. In this decision
the Federal Election Commission was clearly disregarding the
language contained in the Federal Election Campaign Act. The
commission was about to permit a corporation to solicit
contributions from both stockholders and employees while
continuing to restrict unions to solicitation from their members
only. Labor viewed this as being destructive to the entire
political balance which Congress had established between
business and labor in earlier legislative actions. For example,
The Sun Oil Company had 126,555 shareholders and 27,707
employees. Sun Oil could therefore solicit a combined total of
154,262 peopleshareholders plus employees. However, the labor
PAC was confined to soliciting just its membersonly 27,707
people; many, many fewer than the corporate PAC was allowed to
solicit.
While it was in fact the Federal Election Campaign Act
of 1971, and the amendment to this Act in 1974 that actually
unlocked and opened the door toward large-scale exploitation of
the PAC mechanism by big business, it was indeed the SUN-PAC,


31
SUN-EPA decisions that truly liberated the corporation's
development and use of political action committees. Not
surprisingly, labor denounced the Sun Oil Company decision,
attacking it on the grounds that it virtually destroyed the
congressionally established political balance between labor and
corporate America. Once again labor went to Congress in an
attempt to convince it to pass new legislation that would
re-establish the balance in electoral involvement lost in this
decision.
Meanwhile, the Supreme Court handed down another
important decision dealing with constitutionality of the 1971
Federal Election Campaign Act, as amended in 1974. This ruling
was known as the Buckley v. Valeo (1976) decision.
In reviewing the constitutionality for the FECA, the
Supreme Court admitted that there existed the potential for the
proliferation of political action committees; with the result
being the opportunity for some "major special interest groups"
to achieve a political advantage. However, the court went on to
say that the 1974 Act did not limit the number of PACs that
corporations could establish. Additionally, the court
reaffirmed the right of corporate PACs to solicit from
shareholders and employees. Lastly, this decision authorized
political action committees to make unlimited independent
expenditures, subject only to the PAC's resources and its
ability to prove the independence of such expenditures.


32
The Buckley v. Valeo (1976) decision also provided
authority for a PAC to sponsor television, radio and/or printed
. 6
ads to support or_ oppose specific federal candidates.
This decision, needless to say, was another victory for
corporate political supporters and a great disappointment for
its dissenters. However, labor had not been idle while this
decision was being reviewed and handed down. Indeed, from the
time the equally disappointing SUN-PAC, SUN-EPA (1975) opinion
was announced, through the Supreme Court's announcement of its
decision on Buckley v. Valeo (1976), labor had been vigorously
petitioning Congress for legislation which would help to
reestablish the balance in direct political involvement. Then,
that same year, with lobbists representing the AFL-CIO and the
UAW working feverously, a new amendment to the Federal Election
Campaign Act was passed.
The 1976 amendment to the Federal Election Campaign Act
provided new guidelines for PAC solicitation.
This amendment provided both labor and business the
mechanism to "cross-over" and solicit the other's constituency.
Twice each year, both union and corporate PACs were allowed to
crossover and solicit the other's constituency by maillabor
PACs could solicit the corporations personnel, shareholders and
their families, while business PACs could solicit the union's
membership and their families. ~~


33
Other "balancing" measures contained within the 1976
amendment were obviously included to satisfy labor, and to end
the pressure it had continually put upon Congress in an effort
to make the Federal Election Campaign Act more equitable.
One of these measures addressed labor's concern over the
proliferation of corporate PACs. This part of the amendment
stated that even though a corporation could establish an
unlimited number of PACs, it was still to be subject to a single
$5,000 per-candidate, per-election contribution limit. In
addition, it was also to be prohibited from making transfers in
excess of $5,000 to an affiliated PAC. This, of course, was
intended to restrict the PACs ability to pool tremendously large
sums of cash to be contributed to a single candidate. In the
absence of any restrictions on the number of PACs a corporation
was allowed to establish, this part of the amendment was really
no more than a whitewash to help satisfy labor and the general
public. A corporation could easily avoid these limitations by
simply establishing several separate PACs, each of which could
contribute the maximum dollar amount to the same candidate.
This act also gave the authority to unions to utilize a
payroll deduction planor check-offto help raise money for
its PAC, provided the company PAC utilized the same method among
its own stockholders and executive/administrative personnel.^


3A
Because of the Federal Election Campaign Act of 1971, as
amended in 1974 and 1976, corporate America now has a legal
mechanism by which to funnel its enormous financial resources
into the electoral process. Unfortunately for labor and the
average citizen, the fact that corporate and union PACs are
uniformly unrestricted (with regard to making contributions to
federal elections) does not have the same impact as when they
were uniformly restricted, because of the financial superiority
of big business. It will be shown later that the public has
witnessed on numerous occasions how well money speaks with
regards to our representatives in Congress. The sad fact is
that in many cases Congressional members seem to represent the
needs of those with lots of money to contribute, rather than the
needs of those individuals that he/she represents.
"The only reason it isn't considered bribery is that
Congress gets to define bribery."Representative Andrew Jacobs
of Indiana.**
The point is, as a direct result of legislation passed
during the 1970s, corporate America possesses much greater
latitude in this area than many critics of business electoral
involvementand its impacts on the democratic systemfind
9
tolerable.


35
PAC Creation and Organization
A political action committee must be created under the
authority of a parent body. A parent body may be a corporation,
a union, or any special interest group, (including a
candidate). Aside from this stipulation a PAC needs to follow
only two other simple rules in order to exist, first, a PAC must
have a treasurer, and second, a PAC must file a statement of
organization with the Federal Election Commission within ten
days of its creation. It's that easy.
Generally, political action committees exhibit a wide
variety of organizational structures and modes of operation.
Corporate PACs are usually tied very closely with the company's
chief executive officer (CEO). In the majority of cases it is
actually the CEO who decides to establish a PAC and authorizes
its creation. In addition, it is usually the CEO who controls
the make-up of the PACthis includes the personnel who sit on
the PAC's governing board or committee.
Board or committee members are selected according to
specific criteria dependent on the personal preference of the
CEO. The CEO determines the selection criteria for determining
candidates for contributions by the corporate PAC. The CEO
outlines the scope of the PAC and the general fundraising
techniques to be utilized. In some cases the CEO may even
direct donations be contributed to specific candidates and/or
officeholders.


36
Even though it is usually the CEO who is fundamental in
the creation and formation of the PAC, the actual day to day
operation is most often delegated to the public affairs, or
governmental affairs officer within the corporate hierarchy.
The public/governmental affairs executive, who is in
most cases an executive vice-president within the company, is
given the task of PAC operation generally because of his/her
existing responsibilities within the organization. This
individual is usually already in charge of all lobbying
activities and all governmental relation activities within the
business. In the majority of instances the public/governmental
affairs executive was originally recruited from the political
arenagenerally from a major party, a political analysis or
consulting firm, congressional staffs, and even from elected
positions from federal, state and city levels. In most cases
this position is held by a Republican.
Corporate PACs are governed by a committee or board
which is in most instances chaired by the public/governmental
affairs executive. Committee members are shareholders and the
corporate executive and administrative personnel. This
membership usually includes a representative from the company's
financial division, a representative from the Washington staff
(if applicable), and generally a core group of mid-management
contributors. This means that there exists a board~~seat for


37
each division within the corporate hierarchy, a seat for each
regional office, at least one seat for each plant facility and
oftentimes a seat for each level of management.
A relatively recent trend among several corporations is
to establish a PAC for each separate region, division, or plant,
with each individual PAC having its own governing board. This,
of course, gives the corporation certain distinct advantages
over the typical single PAC operation. The decentralized nature
of multiple PACs gives its members and contributors an
opportunity to "feel" more closely involved with their political
action committee. This has the effect of greatly enhancing the
solicitation process by creating a sense of having more control
over the money raised by their PAC. But most important,
multiple PACs can easily hide the degree of electoral
involvement the corporation is really engaged in.
American Telephone and Telegraph (AT&T), for example,
appeared on no one's list of top PACs, but in fact the
twenty three individual AT&T committees, if aggregated,
would have placed the company as the tenth-largest
contributor to federal candidates with more than $650,000
disbursed. Dow Chemical, with eight PACs, also has used
the multiple PAC system to great advantage.
Approximately three-fourths of all multicandidate PACs depend
upon the governing board or committee to decide the recipients
of money contributed. In only a few cases does the CEO exercise
his authority for total control of this decision. However, in
that the CEO is the person who selects members to the committee,
it is likely that those decisions made by the committee are


38
congruent with the CEO's wishes; if they were not, it is
probable that new committee members would be appointed. This
selection process takes place at the committee meeting. Table 3
shows the methods by which PAC committees select recipients of
contributions.
To help make a selection decision the PAC committee
gathers information from various sources. These sources include
the actual PAC staff and members, campaign managers, political
parties, candidates and shareholders. Even though the PAC
Table 3
Making PAC Decisions on Which Candidates
to Support
Category of Multicandidate PAC
Decision-maker All PACS Corporate Labor Trade
Washington Office Staff Chief Executive Officer(s) 6% 2% 6% 14%
of company, union or
association 4 2 12 3
PAC Board or committee 74 84 60 61
Joint Decision of PAC 10 11 0 16
Board and Washington Office Staff
Other 7 2 23 7
Source: Lary J. Sabato, PAC Power : Inside the World of
Political Action Committees (New York: W. W. Norton and
Company, 1984), p. 38.


39
intelligence network is quite extensive, rarely is a formal
survey of PAC contributors undertaken in order to determine
their opinions concerning prospective recipients.
Networking
Political action committees share information among
themselves. This allows PACs to coordinate their contributions
in order to achieve the maximum electoral influence. PACs
"team-up exchanging information with one another at organized
meetings.
Don't lie, exaggerate, or obfuscate. PAC people talk
with one another and have a very effective communications
network. Pull a fast one with one PAC and the word will
get around to others in no time at all.^
The Business-Industry Political Action Committee (BIPAC)
is at the forefront in this field. As mentioned earlier, BIPAC
was established in 1963 by the National Association of
Manufacturers. BIPAC currently has a membership in excess of
1,500. When originally founded, this PAC, because of existing
legislation in 1963, was restricted from making any direct
candidate contribution. However, under current campaign law BIPAC
now contributes directly to candidates. In addition, BIPAC holds
monthly briefings during election years to inform more than two
hundred PAC managers concerning political campaign issues
pertinent to business. These meetings are held in various


-40
locations throughout the country, including of course, the
Washington D.C. area. BIPAC also operates a unique telephone
service which it calls "DIAL*'. When someone telephones "DIAL"
they will receive daily updates on various Congressional races.
In the corporate PAC community a BIPAC endorsement is
generally viewed as an asset to the candidate'. This endorsement
sends a signal to other political action committees that the
selected candidate has at least a reasonably good change of
winning his/her race.
With its extensive field staff and nationwide
communication/ information network, BIPAC is in a position to
alert its members to information on close races by means of its
own publication. In addition, because of its financial strength,
BIPAC is in a position to contribute money to selected candidates
many months before the general election campaign officially begins.
The Free Congress Foundation, affiliated with the
Committee for the Survival of a Free Congress, also publishes a
report which gives important data on Congressional races which
includes its ratings of conservative and liberal candidates.
Another organization, called the National Chamber Alliance
for Politics, which is the United States Chamber of Commerce's
political action committee, publishes a list of preferred
candidates in close Congressional races. And, according to its
director, just being in this publication tends to carry a
significant signal as to the potential of the mentioned candidate.


41
Congressman Tony Coelho has stated that our endorsement
is worth $100,000 to a candidate. We know that one U.S.
Senator (Jennings Randolph of West Virginia), because we
had endorsed his opponent went out and borrowed
$80,000.12
The National Chamber Alliance for Politics PAC (NCAPPAC),
ran a four-hour, closed circuit teleconference in which
several key Congressional races were reviewed and handicapped,
thus allowing a PAC to place its money on those with the best
chance of winning. This teleconference was viewed by almost
two hundred managers located throughout the United States. At
the time that this closed circuit program was being utilized
there were plans on the drawing board to begin a weekly
teleconference "show". These shows, utilizing
personalized two-way teleconferencing interaction, would.be
designed to further broaden NCAPPACs information disemination
capabilities.
The Public Affairs Council, chartered in 1954, which is a
conservative organization dedicated to supporting conservative
ideology, has in excess of four hundred and thirty corporate
members. Of these members more than 50% are Fortune 500
companies with their own PACs. As far back as 1975, after the
Federal Election Commission's SUN-PAC, SUN-EPA decision, which
caused the proliferation of corporate PACs, the Public Affairs
Council began sponsoring seminars on organizing and
administering PACs. They currently produce films and


42
newsletters in an effort to help alert PAC leaders to new
material that might help spread the word about how the PAC
mechanism may be successfully utilized by corporate
, . 13
America.
Besides the numerous professional groups, of which only a
few have been mentioned above, there are several other
conservative groups and individuals who act as go-betweens in
the PAC information arena.
The American's for Constitutional Action (ACA) sponsors
fundraising events which are specifically designed to bring
conservative Congressmen and PAC officials together.
Running a PAC: The Pricetag
It requires considerable sums of money just to
administer a successful PAC. In the 1980 elections nearly $57
million of the $131 million spent by various political action
committees went directly to administrative expenses. This means
that of every dollar contributed to a PAC, nearly half (43.54),
never even reaches the candidate. Additionally, it was
estimated that another $30 million went to other administrative
costs not required to be reported by the Federal Election
Commission or Federal Election Campaign Act legislation. This
amounts to a total of $87 million spent on PAC operating
14
expenses alone for the 1980 elections!


43
Therefore, it is easy to see that PACs aren't
necessarily a very efficient manner in which to get ones
contribution dollars to the candidate. With a look a little
further into the issue, it becomes apparent that some money
meant for contributions could quite easily end up serving some
other need of the corporation. This becomes apparent when one
learns of a certain advantage that corporations possess with
regard to paying their administrative expenses.
Corporate PACs are permitted to pay their operating
costs, such as staff salaries, per diem, travel,
legal/accounting services, equipment, printing/postage and
various consulting fees directly from their general treasury
funds; that is, all the company's monies are available to run
the PAC, thereby circumventing the intent behind restricting
campaign contributions in the first place.
Fundraising
Before a PAC can contribute money to a favored.candidate
it must first get the contribution from someone else.
Fundraising, utilizing state-of-the-art technology, has rapidly
become a science with political action committees. PAC managers
are using direct mail, television, videotape and telephone banks
in an ever increasing effort to enlarge their PACs bank
accounts.


44
According to current campaign legislation, corporate
PACs may solicit the parent corporations administrative,
executive and professional employees, all stockholders, and
family members of all those listed. They may solicit at any
time and as frequently as they desire. Additionally, a
corporate PAC is allowed to solicit the corporation's
rank-and-file employees twice a year by mail.
Even though labor union PACs are also allowed to
"cross-over" and solicit the corporations executive, managerial
and professional personnel twice a year, they may not do it
whenever or as frequently as they wish. They must first secure
prior approval each year from their member corporation.
The member corporation is free to restrict the
solicitation of its personnel by labor to a single PACeven
though numerous unions and their PACs may exist within the
corporation. The member corporation may also restrict the
solicitation pool and the number of solicitations to be
accomplished by the chosen PAC. However, labor PACs cannot make
these restrictions apply to member corporate PACs.
As can be seen, even though the Federal Election
Campaign Act allowed corporate PACs and labor PACs to
"cross-over" in their fundraising efforts, the restrictions put
on each are far from being equitable or balanced.
The regulatory framework that fundraising must be
carried out in seems far from balanced. Unfortunately, this is


45
the status of current campaign legislation, and until other
interests begin to pressure Congress, this is the framework that
corporate PACs will continue to utilize to its fullest.
Table 4 shows just how various political action
committees go about asking for money.
. Table 4
How PACs Raise Money
Category of Multicandidate PAC
Solicitation Method All PACs Corpo- rate Labor Trade Noncon- nected
Personal, face-to-face 54% 4 5% 79% 65% 56%
Direct mail/ letters 67 82 36 73 56
Group seminars 37 40 36 27 22
Telephone 10 7 0 46 44
Other 20 12 46 19 11
Source: Larry J. Sabato, PAC Power: Inside the World of
Political Action Committees (New York: W.W. Norton and
Company, 1984), p. 54.
As can be seen, direct mail solicitation seems to be
the most effective method utilized. Personal, face-to-face
solicitation is the second most popular method, with group
seminars coming in third. The PACs with the highest response


46
rates utilized repeated follow-ups; they simply bugged the
hell out of the prospective donor. Their philosophy wasif
at first you don't succeed try, try again.
In the majority of cases the modern corporate PAC will
center its solicitation pitch around some sort of video
presentation. This presentation usually depicts leading
politicians praising the PAC and begging everyone to get
involved. Getting involved, of course, doesn't really mean
getting involvedthis simply means give money.
Many times these political bull sessions become pep
rallies; often followed by a speech from the appropriate chief
executive officer encouraging the audience to "join up". It
has been witnessed that these types of video seminars can be
quite effective in the PAC's solicitation efforts.
After a presentation by the Baltimore Gas and Electric
PAC a random mail survey of participants indicated substantial
gains in the awareness of this political action committee and
showed a willingness on the part of the viewers to contribute
to it. This particular PAC registered an 82% increase in
29
contributions during the succeeding month.
PACs also utilize all sorts of fundraising gimmicks.
They have used casino nights, rummage sales, Hawaiian luaus,
outings, and various sorts of sports tournaments; all in an
attempt to raise campaign contributions.


47
NEA-PAC and SMAPAC have raffled automobiles in money
raising campaigns; the Pennsylvania Dental PAC hired a model
to help "entice potential contributors into its booth at the
groups annual association meeting; and the National Committee
for an Effective Congress hired political comic Mark Russell
for a concert designed to benefit its political action
committee!
Many corporate PACs have created "high-donor" clubs
and awards. A "high-donor" is a special title reserved for
contributors who give a certain minimum amount to the
corporations PAC. The Mortgage Bankers Association PAC has,
what they call, a Capital Club for those people who give
$250. They also have a Chairman's Clubthis club is reserved
for those important individuals who contribute $500. This was
probably designed to make those donors feel like a part of top
management by associating their group with the corporate CEO.
The Workover and Well Servicing Political Action
Committee has a Wildcatter Club with an admission price of
$1000 (or, if one prefers, $100 for each oil rig owned by the
donor).
The National Association of Broadcasters Television
and Radio PAC (TARPAC) gives contributors special colored
pins, their size corresponding to the size of their donation.


48
At first glance these donors clubs may seem a bit
juvenile and ineffectivehowever, they are anything but
ineffective.
"Most PACs attempt to increase the size of each
person's donation at renewal timeand donor's clubs can be a
16
special inducement."
Even though corporate PACs usually center their
fundraising pitch around some sort of a video extravaganza,
direct-mail solicitation tends to be the most effective means
of garnering contribution dollars. These direct-mail mailings
range all the way from crude xeroxed copies to sophisticated,
personalized letters with high-quality, multi-color, glossy
enclosures.
Some PACs have prominent political consultants on
their staff. These consultants usually have considerable
direct-mail experience and utilize this knowledge in order to
conduct highly profitable solicitation campaigns. The AMAs
AMPAC, for example, utilizes Republican consultant Robert
O'dell to oversee their direct-mail activities.
Some PACs solicit not only individual contributors but
also other PACs. PACs are permitted, under FECA legislation,
to give up to $5,000 to one another.
Even some very well established corporate PACs with
large inventories of direct-mail donators spend a considerable
portion of new funds on both mailing costs and direct-mail


49
consultants, the National Congressional Club (associated with
Jesse Helms) spends a minimum of 30% of its total annual
budget on direct-mail solicitation alone.
Most corporate PACs consider direct-mail not only an
effective method by which to help raise contribution dollars,
but also a very persuasive form of advertisingand therefore
consider it an investment with some important secondary
rewards; such as the increased exposure and name
identification for the corporation, and the exposure received
by the candidate or candidates who are recipients of PAC
contribution dollars.
Political action committees establish contribution
guidelines. These guidelines are utilized to suggest to those
solicited how much they are expected to give. In general,
corporate PACs strive for donations of between .02 and 1.5% of
an individual's gross salary.
Utilizing direct-mail solicitation techniques, in
order to merely break-even, a PAC must receive this 0.2 to
1.5% of gross salary from at least 1 to 2% of those
solicited. In addition, an average donation of ten to fifteen
dollars must be received from those respondents.
Overall, PACs raise about 41% of their funds in the
first year of an election cycle and the remaining 59% during
17
the second year.


50
PACs solicit fairly frequently. Around 38% try to
raise funds at least twice a year, while less than half
solicit only one time per year. The average amount
contributed by each individual is one hundred dollars
contributors giving an average of one hundred and sixty
dollars to corporate PACs, while labor PACs receive a meager
fourteen dollars per individual contributor. See Table 5.
Table 5
PAC Solicitions
Category of Multicandidate PAC
Solicitation Method All PACs Corpo rate Labor Trade Noncon- neted
Average donation to PAC
(1981-82) Frequency of solicitation $100 $160 $ 14 $ 81 $ 65
More than twice
a year 16% 5% 21% 18% 33%
Twice a year 22% 24% 0% 30% 22%
Once a year Once every two 47% 56% 50% 48% 22%
years 10% 12% 0% 4% 22%
Other 5% 2% 29% 0% 0%
Adapted from Larry J. Sabato , PAC Power: Inside the World of
Political Action Committees Company, 1984), p. 59. (New York: W.W. Norton and
A total of 7% of all adult Americans report
contributing to one : or more PACs as many as donate to all
18
other candidate organizations put together.


51
PAC Money: How Much? To Whom?
The National Conservative Political Action Committee,
on March 17, 1985, won a Supreme Court decision over the
Federal Election Commission ensuring its right to spend
unlimited amounts of money, independently, on a candidate's
campaign.
By a 7-2 vote, the justices said that post-Watergate
legislation which limited the spending by political action
committees violated constitutionally protected freedom of
speech. The Federal Election Commission and the Democratic
Party had challenged a lower courts decision which had
initially invalidated this spending limit (the Presidential
Campaign Fund Act barred PACs from spending over $1,000 each
on behalf of presidential nominees). The high court agreed
that the law impermissibly restricts "clearly protected
19
conduct.
This decision, of course, reaffirmed the right of
corporate PACs to continue to spend enormous sums of money on
the campaign process.
The Federal Election Commission said that of the $113
million in contributions by political action committees to
federal office seekers in 1984, $80.6 million (707o) went to
Congressional incumbents.
About $75 million of these PAC dollars went to
incumbents up for reelection in 1984. Incumbent Senate


52
Republicans received $14.1 million, while incumbent Senate
Democrats got only $8.1 million.
PAC contributions increased by 29 percent over the
nearly $88 million contributed in the 1982 election campaign.
There were a total of 3,046 PACs that solicited and
contributed money to federal candidates in the 1984
, 20
elections.
Immediately after Reagan took office the nations
biggest defense contractors doubled their political
donations. The top 20 firms contributed $3.6 million to the
1984 congressional and presidential campaigns.
Of the 20 House members who received more than $15,000
from defense industry political action committees, 17 voted to
approve the presidents request for $1.5 billion to build 21
more MX missiles. Thirteen of the 14 senators who received in
excess of $30,000 from these same PACs also backed Reagans
SDI project. Senator John Warner, a Republican from Virginia,
and the top recipient of PAC money, stated that these
contributions gain the firms no special attention.
Through its own PAC, Rockwell International
Corporation increased campaign contributions from $59,625 in
1980 to $328,440 in 1984an increase of 450 percent.
Over the four year period from 1980 to 1984 Rockwells
defense contracts increased from $1 billion to $8.4 billion.
This moved Rockwell from 14th place on the Pentagon's annual
list of major contractors to number 1.


53
This dramatic increase in PAC contributions was easily
explained by Rockwell spokesman Dan O'Neal. He stated that
the firm's higher PAC spending came from new employees hired
to work on bigger defense contracts and from larger donations
by more senior employees who have an "increased awareness of
21
the value" of political contributions.
In 1984 Colorado PACs contributed a record $700,000 to
Congressional races. Of these contributions nearly two-thirds
went to Republican candidates. The majority of this money
came from business aligned political action committees.
Republicans running for legislative seats in Colorado
received $460,767 while Democrats received only $236,995.
The Colorado Association of Realtors was Colorados
top PAC contributor. It donated $95,736 to mostly Republican
candidates.
Of the PAC contributions that were received by
republican Representatives Mike Strang and Ken Kramer from
Colorado most were donated by conservative organizations.
Strang's PAC contributors included numerous energy
companies and financial institutions. Strang received $6,000
from the National Association of Homebuilders and $5,000 from
the American Medical Association. Kramer received
contributions from General Dynamics, Lockheed, Northrop,


54
United Technologies, Grumman, Martin Marietta and the
McDonnell Douglas Corporation. His largest donations came
from the Realtors PAC ($3,400), and the Associated General
Contractor's PAC ($2,250), both located in Washington
22
D.C.. See Table 6.
Most of the PAC money goes to candidates that support
business and conservative issues, thereby creating a nation of
single-issue politics.
The Supreme Court decision of March, 1985, which
reaffirmed the right of political action committees to
contribute up to $5,000 per candidate, and to make independent
expenditures in any amount, has left open the possibility that
Congress may pass a new, less restrictive campaign spending
law.
Colorado Democratic Senator Gary Hart, who does not
accept any PAC money, said that this decision
...demonstrates the inadequacies of laws that govern
campaign spending and the immediate need for reform. The
explosive growth of political action committees and their
ever-increasing influence must be controlled if we care
about preserving the integrity of our political
process.


55
Table 6
Top PAC Contributors to the 1984
Colorado Legislative Campaigns
Republican Democrats Total
Colorado Association of Realtors 82.5% 17.5% ' $95,736
Colorado Education Association 00.003% 99.097% $89,076
Adolph Coors Co. 98.53% 2.47% $42,468
Mountain Bell 89% 11% $35,537
Colorado Assoc. Commerce & Industry 88.73% 11.27% $33,700
Colorado Energy Resources Political Action Committee 95.2% 4.8% $22,550
Colorado AFL-CIO 0% 100% $21,305
Colorado Committee of Automotive Retailers 92.5% 7.5% $20,505
Public Service Company of Colorado 93.9% 6.1% $19,378
Colorado Apartment Association 96.3% 3.7% $17,500
TOTAL 64% 36% $697,762
Source: Denver Post (Denver: February 18, 1985), p. 18A.


56
Vote BuyinK
Justin Dart, who happens to be a close personal friend
of Ronald Reagan, and head of Dart Industries, once said that
talking to politicians "...is a fine thing but with a little
24
money they hear you better".
As seen in previous chapters, political action
committees contribute enormous sums of money to mostly
Republican congressional incumbents. They provide these
legislators with vast sums of financial resources which help
to intimidate potential contenders. Many times PAC money is
donated after an election. This allows a large campaign debt
to be retired.
PACs give money to those congressional members who sit
on committees that have some influence on the corporation or
profession that the political action committee represents.
Members on committees without PAC constituencies are often
ignored. PACs are directly associated with organizations that
lobby for legislative favors on a regular basis.
The California Medical Association PAC in a
solicitation brochure, said:
Unless your presence is felt in congressional
campaigns, your voice may not be heard in the legislative
deliberations that follow. Medicine's involvement in
campaign politics is intended to influence public
policy. 39


57
Having public policy influenced because a majority of
citizens want it influenced is one thing: Influencing public
policy because one category of special interest have
disportionately vast sums of money to contribute is another.
Representative John Bryant of Texas said:
Anytime someone, whether a person or a PAC, gives you
a large sum of money, you cant help but feel the need to
give them extra attention, whether it is access to your
time or, subconsciously, the obligation to vote with
them.26
Representative Barney Frank of Massachusetts stated:
We are the only human beings in the world who are
expected to take thousands of dollars from perfect
strangers on important matters and not be affected by
it.27
Some members of Congress will openly admit that PAC
money does affect their voting behavior. Other legislators
and PAC officials insist that the only thing that political
action committee donations buy is access.
Whether one actually calls it vote buying or simply
buying access makes little difference in the end. If one is
given special access to the lawmaker as a result of
contribution money, then it is logical to assume, especially
when looking at instances from previous chapters and examples
still to be examined in this chapter, that this access will
eventually result in a positive vote for them. Having access
to a legislator's time is therefore practically as valuable as
a vote.


58
Members of Congress have their time carefully
merchandised by party officials. A great deal of their time
is provided to meet with the officials of PACs which have
contributed money to the party committees. Lawmakers will
even go so far as to personally make the connection between
their open door policy and money contributed by PACs.
One PAC manager described his success in arranging a
private meeting with a powerful House committee chairman.
This access to this particular legislator's time was acquired
only after the PAC purchased very expensive tickets for a
28
fundraising dinner to be held in the chairmans honor.
This type of activity may be considered an exercise in
purchasing accessbut few could argue about the advantage
gained by the PACs acquisition of this access, or that a large
sum of money would have no effect on this chairmans voting
behavior. Then, a legislator's vote for or against a bill is
based on PAC contribution dollars, rather than being based
upon what his/her constituentcy desires and/or by long held
beliefs which might normally predispose him/her to vote one
way or another.
Some top people in government will not only admit that
this situation does exist, but will go on to justify this type
of vote-buying activity.
Justice William Rehnquist said:


59
The fact that candidates and elected officials may
alter or reaffirm their own positions on issues in
response to political messages paid for by the PACs can
hardly be called corruption, for one of the essential
features of democracy is the presentation to the
2 Q
electorate of varying points of view.
Unfortunately, when a lawmaker or candidate bends to
the will of corporate political action committees, he/she
is bending to the will of a narrow, monetarily over
represented segment of special interest, and therefore not
representing the people in a democratic manner.
In recent years political scientists have been able to
better control specific variables (i.e. party affiliation,
ideology and his/her voting record) in order to determine
what independent effects PAC money have on legislator's voting
behavior.
John Fendreis and Richard Waterman, for example,
investigated a U.S. Senate vote on deregulation of the
trucking industry in 1980. The American Trucking Association
PAC contributed to 54 senators and 319 representatives in 1979
and 1980. The results showed a very strong connection between
votes and PAC money. This connection was strongest for
30
senators up for reelection.
A study was undertaken that was designed to determine
the relationship between legislators' votes and money
contributed by dairy PACs. Votes in favor of dairy price
supports were clearly related to contributions made to the


60
legislators by dairy PACs in the next election. In other
J
words, these PACs gave rewards (campaign contributions) to
31
those congressmen who voted in their favor.
In 1982 Kirk Brown examined bills that were passed by
the House that had a direct effect on the National Automobile
Dealers Association (NADA) and the American Medical
Association (AMA). Both of these organizations maintain very
large political action committees.
First, the House approved a veto of the Federal Trade
Commission's (FTC) "lemon rule". The "lemon rule" would have
forced automobile dealers to provide a list of defects that a
car had for the prospective buyer to look at. Of the 286
House members who supported this veto, 242 had previously
received contributions from NADAs PAC. Furthermore,
lawmakers who voted in favor of the NADA received
substantially more generous PAC donations for their 1982
re-election campaigns. Of the 251 members who supported the
veto and ran again, 89 percent received contributions from the
NADA PAC which averaged over $2,300 per legislator. Only 22
percent of the 125 lawmakers who voted against NADA received
contributions from them in 1982these donations averaged only
$1,000 each. Assuming two legislators held basically the same
ideological views, served on the same committees, and were
facing about equally costly reelection campaigns, the one who
voted with NADA could expect to receive $1,050 more-than the


61
one who voted against them. Additionally, the NADA PAC
rewarded members who had sponsored the veto resolution by
32
giving them an extra $400 each in 1982.
Just six months after the NADA decision was made the
House voted to exempt professionals from regulation by the
Federal Trade Commission. The AMA and the American Dental
Association (ADA) were the primary backers of this bill. In
this case a favorable vote was worth about $1,000 per lawmaker
and about $1,800 per sponsor from the AMA and ADA PACs.
Since only seven votes would have had to be changed
for the professional's exemption to have been defeated in
the House, it is not difficult to conclude that the AMA's
and ADA's campaign contributions of over $1.5 million to
House members during the 1982 election provided the margin
of victory.^3
PACs affect legislative proceedings to a decisive
degree. When particular conditions exist this effect can be
greatly enhanced.
First, the more invisible the issue, the more likely
it is that PAC contribution dollars can change a lawmaker's
vote in their favor. In the case of the FTC exemption for
professionals the bill had little visibility when it was on
the House side. However, once it went to the Senate the bill
gained considerable publicity in the press. Once the public
was aware of the acute unfairness of this measure the medical
and dental PACs, even with their huge contributions, could not


62
quite save the bill. The Senate rejected the measure in a 59
to 37 vote. Therefore, PACs tend to yield their greatest
influence in the earlier stages of the legislative process.
This usually means that PACs exercise greatest power during
agenda setting and at subcommittee meetings rather than during
the more public floor deliberations. Unfortunately, the
press, public and even "watchdog" groups are not nearly as
34
attentive to initial legislative hearings as PACs are. Of
course, if the bill is defeated early out in the process it
will never become a highly visible public issue for the press
and public to contend with anyway! This provides even more
reason why "sunshine" legislation should be passed.
Political action committees can expect to garner more
congressional votes when large PACs or groups of PACs are
allied. According to Democratic Representative Dave Obey from
Wisconsin, "The pressure generated from these aggregate
contributions is enormous and warps the process. It is as if
35
they made a single, extremely large contribution."
PACs do coordinate their gifts in order to maximize
their electoral influence. Big business with its
extraordinary financial resources, is purchasing favored
pieces of legislation with huge campaign contributions. PACs
do buy votes.
"I fear we have become a coin-operated Congress.
Instead of two bits, you put in $2,500 and pull out a vote."
36
Representative Barbara Mikulski of Maryland.


"NOTES CHAPTER II"
1. Political Finance. Herbert E. Alexander. Beverly Hills
and Landon: Sage Publications, Inc., 197.9. pp. 159-160.
2. Political Money. David W. Adamany and George E. Agree.
Baltimore and Landon: The John Hopkins University Press,
1975. pp. 4-5.
3. Political Finance. Herbert E. Alexander. Beverly Hills
and Landon: Sage Publications, Inc., 1979. pp. 162-164.
4. Political Finance. Herbert E. Alexander. Beverly Hills
and Landon: Sage Publications, Inc., 1979. pp. 166-168.
5. Political Finance. Herbert E. Alexander. Beverly Hills
and Landon: Sage Publications, Inc., 1979. pp. 166-168.
6. Business and Labor Under Federal Election Campaign Act of
1971. In Parties, Interest Groups, and Campaign Finance
Laws. Edited by Michael J. Malbin. Washington, D.C.:
American Enterprise Institute, 1980. pp. 12-26.
7. Business and Labor Under Federal Election Campaign Act of
1971. In Parties. Interest Groups, and Campaign Finance
Laws. Edited by Michael J. Malbin. Washington, D.C.:
American Enterprise Institute, 1980.
8. WashinRton Post. August 2, 1983. p. A-9.
9. Business and Labor Under Federal Election Campaign Act of
1971. In Parties. Interest Groups, and Campaign Finance
Laws. Edited by Michael J. Malbin. Washington, D.C.:
American Enterprise Institute, 1980. pp. 56-75.
10. Political Action Committees: Their Evolution and Growth
and Their Implications for the Political System. Joseph
E. Cantor. Washington, D.C.: Library of Congress
Congressional Research Service Report No. 82-92 Gov,
November 6, 1981. pp. 108-111.
11. Working With PACs.~ National Republican Congressional
Committee, 1982.


64
12. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W. W. Norton
and Company, 1984. pp. 48-49.
13. IMPACT. Public Affairs Council, May 1983. p. I.
14. Political Finance/Lobby Reporter. October 28, 1981.
p. 276.
15. Washington Post. April 5, 1983. p. C3.
16. Business in Politics. Handler and Mulkern, 1982.
pp. 45-46.
17. The Twentieth Century Fund Task Force on PACs, in What
Price PACs? Frank I. Sorauf. New York: Twentieth
Century Fund, 1984. p. 79.
18. The Twentietyh Century Fund Task Force on PACs, In What
Price PACs? Frank J. Sorauf. New York: Twentieth
Century Fund, 1984. pp. 81-82.
19. Denver Post. March 18, 1985. p. 1A.
20. Denver Post. December 1, 1985. p. 5A.
21. Denver Post. April 1, 1985. p. 1A.
22. Denver Post. April 20, 1985. p. 4A.
23. Denver Post. March 18, 1985. p. 1A.
24. Wall Street Journal. August 15, 1978. p. I.
25. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato, New York: W. W. Norton and
Company, 1984. p. 123
26. Washington Post. August 21, 1983. p. A-16.
27. Congressional Quarterly Weekly 41. March 12, 1983. p. 505.
28. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato, New York: W. W. Norton and
Company, 1984. pp. 127-128.
29. Denver Post. March 18, 1985. p. A1.


65
30. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato, New York: W. W. Norton and
Company, 1984. pp. 133-134.
31. Campaign Contributions and Legislative Voting: Milk Maney
and Dairy Price Support. in Western Political Quarterly
35, December, 1982. pp. 478-495.
32. Campaign Contributions and Congressional Voting.
Kirk F. Brown, prepared for the American Political
Science Association, Chicago, Illinois, September 1,
1983. p. 134.
33. Campaign Contributions and Congressional Voting.
Kirk F. Brown, prepared for the American Political
Science Association, Chicago, Illinois, September 1,
1983. p. 135.
34. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W. W. Norton and
Company, 1984. p. 135.
35. Political Action Committees: Their Evolution and Growth
and Their Implications for the Political System.
Joseph E. Cantor. Washington, D.C.: Library of Congress
Congressional Research Science Report No. 82-90 Gov,
November 6, 1981. p. 168.
36. Washington Post. August 21, 1983. p. A-16.


CHAPTER III
PAC REFORM
According to an ABC News/Harris survey, 71% of the
people feel that PACs are "pouring too much money into the
whole political process". By a margin of 41% to 23% the
respondents called PACs a "bad thing".^ See Table 7.
Political action committees are making it more and
more expensive to run for office. The increase in campaign
costs between 1980 and 1982 was more than double the usual
2
average. In 1982 all the general election congressional
candidates spent a combined total of $318 millionthe
3
campaign expense for the average House nominee was $228,000.
With the cost of running an election campaign so high,
unless the individual is rich, he/she must accept PAC money
just to stand a chance of winning. Look at Gary Hart, for
example, he accepted no PAC money in his 1984 bid for the
White House and he is still in debt.
As Will Rogers said in 1931: "Politics has got so
expensive that it takes lots of money to even get beat with."


67
Public Table 7 Perceptions of PACs
PAC/Political Contributor Good Influence Bad Influence Not Sure
Conservative PACs 40 46 14
Labor unions 34 60 6
Labor unions PACs 27 64 9
Big companies 26 67 7
Big company PACs 20 71 9
Firms that do business with the government 23 69 8
Rich people who want to protect their interests 16 77 6
Adopted from Harris Survey, release 1983 No. 1,
January 3, 1983.
PACs are incumbent biased. They pour money into
campaign coffers of incumbents to such an extent that
challengers rarely stand a chance.
The undemocratic character of political action
committees' candidate selection process totally severs the
link between contributor and candidate. Many PACs are
accountable to no one and respond only to their own whims.
For example, candidates who receive contributions from the
Conservative National Congressional Club were recommended by
Republican Senators Jesse Helms and the late John East


68
In some corporate PACs it is the CEOs who have either
total control, or an inordinate amount of influence over PAC
decisions. Many corporate PAC officers will admit that they
don't encourage suggestions about candidates from their donors
4
at all! The use of coercion, covert and implied, is always
a potential threat when subordinate employees are solicited to
give to a CEO-endorsed program. Additionally, the supervision
of the PAC's activities rarely extends to the corporations
stockholders, the company's real owners in the first place,
because management wishes to avoid accountability.^
The point is, as stated by Democratic representative
Dan Glickman of Kansas: "The sum of all the PAC interests is
6
not equal to the whole public interest."
It's time for PAC reform: "My own thought on
electoral law can be summed up in five little words; its time
for a change."Senator Roger Jepsen (R-Iowa).^
A number of legislative proposals have been made to
restrict a congressional candidate's PAC total to a fixed
amount or a fixed percentage of the candidate's total
receipts. An ABC New/Harris poll showed the public in favor
9
of a PAC limit by 68 percent to 29 percent. However, if
PAC limitations are established there will have to be
restrictions placed on PAC independent expenditures also.


69
According to the late Terry Dolan, head of NCPAC,
If Congress passes a limit on what a PAC can give
directly to candidates, it will automatically encourage
more independent expenditures. In fact it will probably
encourage an exponential growth of independent
expenditures. I can assure you that I will look forward to
conducting seminars for other political action committees
telling them how to set up independent campaigns.
Unfortunately, independent expenditures are the least
accountable of political spending because there is no
affiliation or coordination with candidates or parties, and
fewer reporting requirements than with all other PAC spending.
The FEC estimates that $22.8 million in independent
expenditures were spent in the 1984 election by various PACs.
Independent expenditures are also utilized to wage dirty,
viciously negative campaign battles.
In June, 1986, one of this countrys wealthiest PACs,
the National Conservative Political Action Committee, unveiled
$53,000 worth of negative, anti-Wirth television commercials
($53,000 worth of independent expenditures). At least two
Colorado stations refused to broadcast these negative .
commercials about Democratic Senate candidate Tim Wirth.
In one 30-second spot, phone numbers are listed and
viewers are urged to call Wirths campaign headquarters in an
attempt to jam his phone lines. Another commercial featured a
very unflattering portrait of a grimacing Wirth with stacks of
dollar bills next to him. The commercial went on to state that


70
more than 80% of Tim Wirth's itemized contributions came from
outside Colorado, and indeed came from liberal anti-Reagan
special interest groups like big labor. Wirths press
secretary said that the ad was a series of half-truths, a
'10
campaign of misinformation and dis-mformation.
NCPAC officials spent $250,000 on negative television
ads against Wirth. Additionally, the Council on Inter-American
Security, a conservative defense lobby, has already spent
$16,000 for negative radio ads, attacking Wirth for opposing
aid to anti-Sandinista rebels in Nicaragua.^
It is mainly the large PACs, like NCPAC, which are in a
position to utilize independent spending effectively.
Therefore, a PAC limit without an accompanying independent
expenditure limit, would have the effect of bolstering a few
wealthy PACs at the expense of the smaller ones. The big
corporate PAC, of course, would stay in business while the
smaller, more labor or consumer oriented, would flounder.
Peter Laver of AMPAC predicted:
A PAC limit isn't going to knock out NCPAC, AMPAC, the
Realtors, or COPE. We'll just do independent
expenditures. But the small fry are going to be hurt in
relation to us, and well become more powerful. That's the
scary parta few gigantic PACs controlling the system. So
much for federalism or Madisonian democracy.^
The problem is that the public can't hold a candidate
accountable for the charges made against his/her opponent by an
independent political action committee. Also, since


71
independent expenditures are unlimited, it undermines the very
intent of campaign finance legislation. The frequent
utilization of negative or even vicious messages and tactics by
independent PACs makes politics appear to be a dirty business
and the independent PAC's lack of governance leaves them
virtually unaccountable to their own donors and the public in
general.
Of course, any attempt to control independent
expenditures has thus far failed. As mentioned earlier, the
Federal Election Commission tried for years to enforce a
provision of the Presidential Campaign Fund Act that banned
PACs from spending more than $1,000 each on behalf of a
presidential nominee who had accepted public financing.
Unfortunately, as a result of the Supreme Courts 1976 decision
in Buckley v. Valeo, and a later decision in 1985, the court
held that PACs, acting completely on their own, could advocate
a candidates election or defeat without limit.
There are, however, steps that could be taken to help
alleviate this problem. For example, the law requires that
independent expenditures be conducted without any consultation
with the candidate or anyone connected to his/her campaign.
Yet independent PAC managers have shared campaign consultants
with their chosen candidates, and have even been seen in the
company of people directly connected to favored campaigns.


72
They have even gone so far as to use PAC money to convince
candidates to run, by showing them encouraging polls for
example, and then subsequently launching independent spending
efforts on their behalf.^
There have been a few legislative proposals made to
tighten the enforcement of this part of the campaign laws.
They have so far met with failure. Reform bills have also been
introduced in Congress to provide candidates with free response
time when they are attacked by an independent PAC. For
instance, Representative David Obey (D.-Wisconsin) has proposed
a bill which would grant an aggrieved candidate either free
television or radio advertising or a grant equal to the amount
of the independent expenditure whenever independent spending
against him/her tops $5,000.
Unfortunately, this type of proposal overlooks the
ingenuity of some independent PACs. Terry Dolan, of NCPAC, has
actually welcomed the Obey idea, announcing that he will run
$100,000 ads "attacking" a favored candidate and urging his/her
defeat for "lowering taxes, opposing busing, and standing for a
strong defense." Besides identifying his candidate with a
litany of popular positions, Dolan's independent expenditures
will trigger another $100,000 in free time for his
14
candidate.


73
The fact is, before any legitimate limits can be put on
PAC spending, enforceable limits will have to be put on
independent expenditures.
As discussed in earlier chapters, numerous proposals
have been made to limit PAC contributions. These have taken
the form of limits based upon a percentage of the candidate's
total receipts and/or based upon some fixed dollar amount, and
have unfortunately, met with the same fate as independent
expenditure legislation.
However, on August, 14, 1986, the Senate voted to limit
money contributed by political action committees to
congressional candidates and to halt PAC contributions to
national parties. By a 69-30 vote, the Senate gave preliminary
approval to legislation which would limit how much money a
candidate could accept from PACs and would lower the maximum
amount a PAC could give to congressional candidates.
The ban on PAC contributions to political partiesan
action which would hurt the Democrats toowas added as an
amendment by Republican opponents to the candidate limits.
This amendment passed by a 58-42 vote. "We have taken a major
step, said David Boren, D-Oklahoma, who has vowed to try to
attach PAC limits to other legislation if Dole does not call
the matter up for a final vote by late 1986.


74
This proposal was actually an amendment that
substituted for the entire wording of a totally unrelated
bill. This means that a final vote on the resulting bill will
have to be taken at a later date.
The bill would limit House candidates to $100,000 in
PAC money per election cycle. Senate candidates would face a
general limit of from $175,000 to $750,000, depending on a
state's population.
Boran and other critics said that the PAC mechanism has
grown too big: 600 PACs gave $1.2 million to congressional
candidates in 1974, while 4,000 PACs donated $10.4 million for
the 1984 elections. This action was the first time that the
Senate confronted the PAC issue in over a decade.^
This is a good start to PAC reform. Limiting the
amount of money that a candidate can accept from a political
action committee is a much needed bit of legislation.
Restricting the contribution a PAC is allowed to make to $3,000
16
per candidate is also a good idea. But, it is also
necessary to restrict the amount which can be spent
independently on any given candidate in any given election
cycle. And, of course, the next logical step is to eliminate
PACs altogether and allow individual citizens only to
contribute limited amounts just as the FECA mandates. Current


75
legislation restricting individual donations to $1,000 per
candidate and $25,000 to all candidates in any given election
makes good sense. Allowing some PACs to pump millions of
dollars into the process makes no sense.


76
NOTES-CHAPTER III
1. Public Opinions, August/September, 1982. p. 53.
2. Money in the 1980 and 1982 Congressional Elections, in
Money and Politics in the United States: Financing;
Elections in the 1980s. Edited by Michael J. Malbin.
Washington D.C.: American Enterprise Institute (Chatham
House), 1984. p.41.
3. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato. New York: W.W. Norton
and Company, 1984. p.166.
4. Business in Politics: Campaign Strategies of Corporate
Political Action Committees. Edward Handler and John R.
Mulkern. Lexington, Mass.: Lexington Books, 1982. p.
79.
5. Politics. Interest Groups, and Campaign Finance Laws.
Edited by Michael J. Malbin. Washington D.C.: American
Enterprise Institute, 1980. p. 96.
6. Association Management 35. July, 1983. p. 54.
7. Political Finance/Lobby Reporter. November 18, 1981. p.54.
8. The PAC Phenomenon in American Politics:, in the Arizona
Law Review 22. No. 2. Fred Wertheimer, 1980. p.
611-612.
9. Hearing; on the Federal Election Campaign Act of 1971,
October 1971. p. 377.
10. Denver Post. June 28, 1986. p. 56.
11.
Denver Post. April 10, 1986. p. 16.


77
12. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato, New York: W.W.Norton and
Company, 1984. p. 175.
13. Political Finance/Lobby Reporter. November 11, 1981.
p. 291.
14. PAC Power: Inside the World of Political Action
Committees. Larry J. Sabato, New York: W.W. Norton and
Company, 1984. p. 183-185.
15. Denver POSt, AURUSt 13, 1986. P- 5A.
16. Denver Post, AURUSt 13, 1986. P- 6A.


CHAPTER IV
CONCLUSION
Political action committees are buying votes in
Congress. An elitist nation is being perpetuated in which
financially advantaged special interests, particularly big
business, secure favored pieces of legislation in exchange for
donations (through the PAC process) to influencial lawmakers at
campaign time. Corporate PACs abuse the intent of an electoral
system. It is no longer one person one vote "government by the
people". Groups which contribute lots of money to elect
representatives garner more than their fair share of votes.
PACs abuse the American democratic system by coordinating their
donations to maximize their influence. PACs can organize
themselves in an undemocratic fashionaccountable not to the
public, not even to their contributors, but only themselves.
Corporate PACs foster the growth of generally conservative,
narrow politics which benefit only a small percentage of
Americans. They garner donations by both overt and covert
harassment. The ideals of democracy and pluralism are
compromised when specific interests are permitted to possess a
disportionately large amount of influence over the political
system.


79
Evidence has been presented which supports these
assertions. Polls show that the public is aware of this
issue. Statistics support the contention that PACs pour far
too much money into the electoral process. Legislators have
admitted to the undemocratic nature of the PAC process.
Legislators have stated that PAC money does influence their
vote.
Political action committees have gone through
considerable change in a relatively short period of time. PAC
reform legislation has come and gone with no significant
improvement over the past decade.
The American public needs to tell their representatives
how important PAC reform is by voting with those who support a
more democratic electoral process. Once corporate PACs begin
losing some of their clout as a result of restrictive
legislation, lawmakers may be more inclined to take the final
stepthe total abolishment of PACs.


BIBLIOGRAPHY
Adamany, David W. and George E. Agree. Political Money.
Baltimore and London: The John Hopkins University
Press, 1975.
Alexander, Herbert C. Political Finance. Beverly Hills and
London: Sage Publications, Inc., 1979.
Alexander, Herbert. Financing, the 1980 Election. Lexington,
Massachusetts and Toranto: D.C. Heath and Company,
1980.
Association Management. 1983,
Brown, Kirk F. Campaign Contributions and Congressional Voting.
Chicago, Illinois: American Political Science
Association, 1983.
Burns, James, J.W. Peltason and Thomas E. Cronin. Government
by the People. New Jersey: Prentice-Hall Inc., 1975.
Campaign Contributions and Legislative Voting: Milk Money and
Dairy Price Support in Western Political Quarterly 35.
1982.
Cantor, Joseph E. Political Action Committees: Their
Evolution and Growth and their Implications for the
Political System. Washington D.C.: Library of Congress
Congressional Research Service Report NC.8292GOV, 1981.
Congressional Quarterly Weekly 41. 1983.
Denver Post, (Denver).
Dye, Thomas R. and L. Harman Zeigler. The Irony of Democracy.
California: Duxbury Press, 1981.
Handler and Mulkern. Business in Politics: Campaign Strategies
of Corporate Political Action Committees. Lexington,
MA.: Lexington Books, 1982.
Hearing on the Federal Election Campaign Act of 1971. 1971.


81
Impact. Public Affairs Council, 1983.
Ippolito, Dennis S. and Thomas G. Walker. Political Parties.
Interest Groups, and Public Policy: Group Influence in
American Politics. Jew Jersey: Prentice-Hall, Inc.,
1980.
Lowi Theodore J. The End of Liberalism. New York: W.W.
Norton and Company, 1979.
Malbin, Michael J. Money and Politics in the United States.
New Jersey: Chatham House Publishers, Inc., 1985.
Malbin, Michael J., ed. Parties, Interest Groups, and Campaign
Finance Laws. Washington D.C.: American Enterprise
Institute, 1980.
Political Finance/Lobby Reporter. 1981.
Public Opinion. 1982.
Sabato, Larry J. PAC Power: Inside the World of Political
Action Committees. New York: W.W. Norton and Company,
1984.
Sarauf, Frank J. In What Price PACs? New York: Twentieth
Century Fund, 1984.
Wall Street Journal. (New York).
Washington Post. (Washington D.C.).
Wertheiner, Fred. "The PAC Phenomenon in American Politics" in
the Arizona Law Review 22, No. 2. 1980.
Working with PACs. National Republican Congressional
Committee, 1982.


Full Text

PAGE 1

AN ANALYSIS OF THE IMPACT THAT POLITICAL ACTION COMMITTEES HAVE ON THE AMERICAN DEMOCRATIC SYSTEM BY TROY DANIEL BUNCH A.A County Jr. College. 1978 B.A. Met:ropolita. n State 1984 A thesis submitted to the faculty of the Graduate School of the University of Colorado in partial fulfillment of the requirements for the degree of Master of Arts Department of Political Science 1987

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This thesis for the Master of Arts degree by Troy Daniel Bunch has been approved for the Department of Political Science by T __ I I I

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Bunch. Troy Daniel (M.A Political Science) An Analysis of the Impact that Political Action Committees have on the American Democratic System Thesis directed by Assistant Professor Larry Mosqueda iii This thesis analyzes the increased growth and influence that political action committees (PACs) have on the American democratic system. An examination of the history. emergence, and operation of PACs is undertaken. Included will be a close examination of the evolution of PACs during the 1970s. when numerous campaign laws were passed which greatly increased incentives for business to create PACs. and a look at the present. in which corporate political action committees are buying in Congress and are generally abusing Arnericas electoral system. Information is examined which demonstrates the publics increased awareness of and concern about this important issue. and recommendations are forwarded which offer roadrnaps toward PAC reform.

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CONTENTS CHAPTER I. INTRODUCTION The American Democratic System Statement of Problem Purpose and Scope of Study II. LITERATURE REVIEW PACs Before the 1970s PACs During the 1970s PAC Creation and Organization Networking Running a PAC: The Price Tag Fundraising . PAC Money: How Much? Vote Buying III. PAC REFORM IV. CONCLUSION BIBLIOGRAPHY To Whom?. iv 1 1 9 19 23 23 25 35 39 42 43 51 56 66 78 80

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v TABLES Table 1. Number of PACs, 1981-1985 ....... 14 2. PAC Contributions to Congressional Candidates, 1974-1982 ........ 15 3. Making PAC Decisions on Which Candidates to Support 38 4. How PACs Raise Money 45 5. PAC Solicitation 50 6. Top PAC Contributors to the 1984 Colorado Legislative Campaigns 55 7. Public Perceptions of PACs 67

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CHAPTER I INTRODUCTION The American Democratic System How are political act ion committees impact.ing the American democratic system? Before this question can be answered a definition of the term "American democratic system,. needs to be in order to form the foundation for discussing the significance of such an impact. First, consider the term democratic system, or simply, democracy. Like most value-laden words, democracy has been defined in numerous ways. It has been used indiscriminately to denote different political systems; the communist regime in East Germany, for example, is officially called the German Democratic Republic. The word comes from two Greek roots--demos, the people, and kvatis, authority--and used by the Athenians to mean government by the many (i.e. people rule). Here democracy is defined as both ultimate end and instrumental means, both as goals basic to humans and as a method to reach those human goals. Democrats recognize the fundamental importance of the individual. This emphasis on the supreme worth of the individual runs throughout democratic thought. This doctrine of

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2 individualism makes the person, rich or poor, brown, black or white, male or female, the central measure of value. The state, the union, and the corporation are measured in terms of their usefulness to individuals. The democratic system recognizes the right of each individual to be treated as a unique and inviolable person, and that liberty is desirable in itself, that freedom is good in itself. Liberty means that every individual must have full opportunity to choose his or her own goals in life and the means to reach these goals. Liberty is self-determination, not simply the absence of external restraint on a person; it means the individual's power to act positively to reach goals. These basic values of democracy do not necessarily co-exist with one another perfectly in any given society. The concept of the economically motivated, private, even "selfish .. kind of individualism may conflict with the collective welfare of the citizen as a participant in the general welfare. Freedom as the liberation of the individual may conflict with freedom as the alienation of individuals from other people or from their communities. The concept of individual self-determination may conflict with that of collective decision-making for the national welfare or the public good. For example, the right of a corporation to run as it pleases, as compared to the right of the worker to join a union, or share in the running of the company, illustrates this type of conflict in everyday life.

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3 During most of the nineteenth century liberty as "freedom' from" something interlocked with the dominant economic and social doctrine of laissez faire. Under this doctrine "economic man" must be freed of government impediments that might thwart him (her) in reaching maximum efficiency and productivity. The state, it was urged, must intervene no more than was absolutely necessary to protect life, liberty, and property; further intervention was improper. The philosophy was simple--the less governmental power, the more individual freedom. But what was the meaning of liberty when other individuals, not governments, deprived .persons of their freedoms. Slavery forced Americans to rethink their idea of liberty. And with the advent of industrialization, urbanization, agrarian and labor discontent, unions and corporations, liberty became invested with far more pos!tive meanings. To abolish one type of restraints, such as legal slavery, might mean increasing another type of restraint such as wage slavery. To cut down on governmental restraint of liberty might mean increasing private economic and social power. The question was not simply one of liberating people from government, but of how to use government to free people from nongovernmental curbs on liberty as well. What has happened is that two concepts once seen as opposites have found a meeting point in a philosophy that calls

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for government both to help broaden people's social and economic liberties, and to prevent other institutions f -rom constricting peoples freedoms. Some favor democracy not only because they believe it stands for human goals such as liberty and equality, but also they see a democratic system as the best process available for governing a complex society like America. The procedures of democracy do not guarantee that "justice will be done", but the chances are better under "government by the 1 people" than any other known procedures. A crucial democratic procedure in all genuinely popular governments is a system of free, fair, and open elections. First, all citizens should possess equal voting power--one person, one vote. Second, voters should have the right of access to facts, to criticism, to competing ideas, to the views of all candidates, including extremists. Third, citizens must be free to organize for political purposes. Individuals can be more effective in most situations when they join with others in a party, interest group, demonstration--in whatever activity that does not abridge the constitutional rights of others. And last, elections must be decided by majorities, or pluralities. Those who get the most votes win. Therefore, defined within the scope of this thesis, the term "American democratic system" represents the mechanism and process by which Americans--individuals and people coalesced

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5 into diverse groups of competing interests--make decisions concerning the social, political, and economic environment they live in. These decisions are made within the of democracy--one person, one vote. Citizens elect officials who represent their cumulative interests. These officials formulate policies, select people to occupy important positions in the government, and make and enforce rules, regulations and laws. The outcome of this process is what governs the composition of the political-governmental fabric of the country--an outcome which should reflect the wishes and aspirations of its citizens. This complex apparatus, very simplified here, is the American democratic system. A system which many people feel works well and represents their interests as well as any other political doctrine might be able too. A system which, in order to function properly, must embrace, and depends upon another concept which needs to be The view of what the American democratic system is, and how it functions, is based largely on the concept of pluralism. -Pluralist theory begins with the recognition that there exist numerous sources of power and control in American society. These souices of power may be the state, labor, business or any number of other interests. Since there are so many well organized interests, there is in pluralist theory, no possibility that a unitary society, stratified in two or three

PAGE 11

6 simple homogenized classes, could persist.2 Unfortunately, if one particular interest or interest group, were allowed to exert a disproportionate amount of control and power, in relation to the relative number of individuals it represents, the pluralist model of how the system operates begins to deteriorate. In this case the nation would be moving away from a equitable distribution of power toward a state of elitism, a situation. where the American system would not be "government by the people" but actually government by the elite; and government by the elite may possess some inherently undesirable characteristics. For example, the elitist model comes into play when a small number of people exert a tremendous amount of economic, social, and political power. The elite may be wise or stupid, benign or cruel, concerned about the problems of the masses or blind to them, representative of the people as a whole or concerned only about themselves, responsible before the "bar of history" or frivolous and heedless; whatever their character or virtue or lack of it, the members of the elite would make the great decisions while the people as a whole remain essentially impotent. Elites could dominate organized interest groups, the courts, legislatures, and bureaucracies. Elites would be powerful enough to keep the great "popular" instrumentalities such as elections, political parties, and the presidency from having much control over the system.

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1 Also, elites tend to perpetuate themselves. While there may be a slow circulation of persons out of the mass population and into the elite, and out of the elite back into the masses, the elite largely comes from the upper socioeconomic levels of society and sees to it that new members of the elite do likewise. In the relatively few cases when others are admitted to the charmed circle, the price of admission is acceptance of the basic values of the elite. Hence elitism means conservatism d 3 an even stagnat1on. This does not mean that pluralism is at the opposite end of the political spectrum from elitism--or that this thesis is asserting that pluralism is the best possible model and elitism is the worst. In fact, pluralists generally do not contend that American government can be run or should be run by the great mass of people. Few favor government by public opinion, for example. Pluralists may favor full citizen participation, but they do not believe that the masses should take part in actual decision-making over foreign affairs or monetary policy. Like elites, they see great differences in political power between the people at the top and at the bottom of the class system. They-see that there is no free and easy access to the elites on the part of the masses. Pluralists see a variety of shifting elites in politics, government, business, labor, and education, along with other elitist groups that operate through antimainstream publications,

PAGE 13

8 through demonstrations and other forms of protest, or even through violence. Most elite groups are closed to the masses, pluralists grant, but some elites are open to newcomers to gain in vigor and influence through the infusion of new blood. Generally elites are conservative and unresponsive to the people as a whole, but some are "public regarding." Different elites, moreover, compete with one another for status and influence, and in doing so they draw more and more participation from the masses. This is especially valuable in a system where elections determine who will take formal authority, and where elites should be constantly tested by their capacity to appeal to popular favor and to support popular leaders. The pluralists concede that the American democratic system has not adequately taken into account the views and needs of certain groups who have been denied the right to participate in the political process. Until recently, blacks have been so oppressed that their aspirations and needs could be and were ignored by those who governed; The poor have often been underrepresented, and consumer needs have not been adequately presented. But the pluralists contend that these are not faults of the system but in the system, faults that can and should be corrected. What is needed is more interest group activity and more pluralism, so that the interests of all people are recognized in the political process. What is not needed are policies which perpetuate unfair distributions of power in the political process resulting in more elitism and less pluralism.

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9 Statement of Problem Political Action Committees (PACs) are organizations that solicit, raise, and spend tremendous sums of money on behalf of special interest groups in American elections. PACs have become one of the most sought after entities operating in the arena of American politics--they are aggressively solicited by numerous contribution-hungry candidates and various political parties. Unfortunately, the money that these PACs pour into the electoral process, in the form of contribution money, rarely (if ever) comes without strings attached. These PAC gifts are directly buying votes in the Congress of the United States. A "Special, Special Interest Nation" is being created in which interest groups with sufficient organization and financing secure favored pieces of legislation in exchange for contributions to influential congressmen at campaign time. Moreover, PACs undermine the democratic system by coordinating their gifts to maximize their electoral influence, organizing internally in an undemocratic and unaccountable fashion. Corporate PACs generally encourage the growth of conservative politics which tends to benefit only a handful of Americans. PACs solicit contributions by coercing employees, and are becoming increasingly dominate in the electoral process at all levels of government. \

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10 An example of the undemocratic nature of PAC organization is clearly demonstrated by the fact that PACs are usually created by a corporation's CEO. Additionally, the CEO may appoint whomever he/she wishes to the PAC's governing board. He/she can set criteria for picking candidates for contributions and outline the PAC scope and fundraising methods. The CEO may even direct donations to specific d' d 1 4 1n lVl ua s. In 1984 political action committees spent nearly $16 million on the 1984 election, much of which was di'sbursed by conservative groups for Ronald Reagan's re-election.5 The creation of political action committees has become a method by which corporate America can safely avoid the Federal ban on the use of corporate assets as campaign contributions. The campaign reform laws passed between 1971 and 1976 gave much increased vitality to the utilization of political action committees. Under the current status of election campaign legislation, political action committees may be established by unions, corporations, or any special interest group. A political action committee is always established under the authority of a "parent body". A corporation not only may use corporate funds to create its own PAC but is also allowed to employ -these funds to administer the committee and to solicit funds for the PAC.

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11 Corporate political action committees may at any time solicit "voluntary" contributions from company officers, management personnel and shareholders. In addition, twice each year PACs may request "voluntary" contributions from all employees of a company. Individual contributions to a political action committee are held to a $1,000 limitation per year--however, a person may contribute this maximum dollar amount to several PACs provided he/she remains within the $25,000 limitation in total annual "b 6 contr1 ut1ons. The implication here does not necessarily concern the total allowable annual contribution an individual may make, but more importantly, the "concentration" of those contributions. An individual giving $1,000 to twenty five different candidates is markedly different from one giving $1,000 to twenty five different PACs; especially when one considers the implications of numerous political action committees supporting a single candidate! A key provision in these funding regulations is the requirement that all contributions to a political action committee must be given on a voluntary basis. This voluntary contribution requirement could be subject to abuse. Until 1975, the labor unions' utilization of political action committees far exceeded that of business (see Tables 1 and 2). The primary reason for this situation was that while both business and labor unions were authorized by law to create PACs, this law barred any labor union or corporation from

PAGE 17

12 establishing a PAC if that union or corporation held any type of federal government contract. This provision effectively limited PAC creation by_ the majority of major corporations. However, beginning in the early 1970s numerous labor unions received substantial federal manpower contracts which, of course, curtailed their ability to establish and use political action committees. In order to continue to be able to make political contribution through PACs, labor unions mounted a lobbying campaign in Congress in an attempt to have the regulation barring government contractors from creating and administering PACs removed. By 1974 their efforts paid off and Congress responded by placing a provision in the 1974 amendments to the Federal Election Campaign Act eliminating this restriction. While this change, of course, pleased labor, it also had the impact of paving the way for the full utilization of political action committees by corporations. However, in that corporate America still remained a bit suspicious about the full legality of creating and using PACs as a tool to influence Congress, corporations waited a bit before embracing the full potential of the PAC mechanism. Then, in November of 1975, the Federal Election Commiss .ion handed down a lengthy opinion reaffirming the right of corporations to create, administer and fully utilize PACs in the manner they wanted to. This ruling, known as the Sun Oil Company Decision, provided full notice to the business community that it could freely in these election-related activities.7

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13 As a direct result of the 1974 amendment and the Sun Oil Company Decision, the number of corporate PACs began growing at an alarming rate. By 1985, they outnumbered union PACs by more than four to one. Contributions from corporate political action committees have increased dramatically since 1974; in 1980 and 1982 they constituted the single largest source of PAC funds. Labor PAC contributions have dropped from one-half to less than one-quarter compared to corporate PAC contributions in recent 8 years. In the 1984 presidential election, the National Conservative Political Action Committee (NCPAC) spent $9.8 million re-electing Ronald Reagan alone. NCPAC spent another $289,995 against Democratic challenger Walter Mondale and $116,000 against fourteen other Democrats and Senator Lowell Weicker of Connecticut, a liberal Republican. All told, conservative PACs spent $15.8 million promoting Reagan's re-election, while liberal PACs spent only $803,923 trying to elect Walter Mondale. PAC independent expenditures in Congressional races more than doubled from the $2.3 million spent on House and Senate races in 1980, to $5.3 million spent in 1984. (A campaign expenditure is considered independent if the activity it finances is not organized or coordinated with a candidate's 9 campa1gn).

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Year Total 1981 2,903 1982 3,373 1983 3,527 Table 1 Number of PACs, 1981 1985 Corp. corns. Unions Trade organ. 14 Other 640 873 966 1984 1985 4,009 3,992 1,329 1,469 1,538 1,682 1, 710 318 380 378 394 388 616 651 645 698 695 1,235 1,199 Source: Denver Post (Denver: January 26, 1986), p. SA. Candidates quickly realized that the new PAC legislation provided them the means to acquire PAC contributions without having to wait for the business PACs to push the money their way--they could form their own political action committees! The formation of PACs by the candidate has been especially prevalent at the presidential level. In recent years most White House hopefuls have created political action committees as a major financial source to help propel them to the highest office in this country. Creation of a PAC by a candidate has some very important political as well as financial advantages. First, it enables a candidate to travel widely, establish important political contacts, and make speeches before formally announcing his/her candidacy. This can be done without charge to the eventual presidential campaign committee or against the overall or state spending limits imposed by the Federal Election Campaign Act.

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15 Table 2 PAC Contributions to Congressional Candidates, 1974-82 (in Millions) Type of PAC Contribution 1974 1976 1978 1980 1982 Labor $6.3 $8.2 $10.3 $13.2 $20.2 Corporate 2.5 7.1 9.8 19.2 27.4 Trade/ 2.3 4.5 11.5 15.9 21.7 membership/ health Other 1.4 2.8 3.5 6.9 13.9 TOTAL 12.5 22.6 35.1 55.2 83.1 adjusted for inflation (1980 = 1.00) 20.9 32.7 44 3 55.2 70.4 Percentage Change (adjusted for inflation) Type of PAC Contribution 1974-76 1976-78 1978-80 1980-82 1074-82 Labor 13 7 2 30 62 Corporate 146 17 55 20 450 Trade/ 169 117 12 16 381 membership/ health Other. 73 6 56 70 502 TOTAL 57 32 25 28 235 Adapted from Larry J. Sabato, PAC Power: Inside the World of Political Action Committees (New York: W. W. Norton and Company, 1984), p. 15.

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16 Second, a candidate PAC can afford to get a head start on organizing and funding the campaign by training potential staff members and by developing an extensive file of contributors by utilizing direct mailings to contribution prospects. Additionally, the money raised by the candidate PAC can be used not only as a fund for the candidate and his/her entire staff, but also as a source of contributions to state and local candidates which create "debts" which are naturally expected to be repaid at the presidential nomination convention. The candidate PAC allows greatly increased financial "latitude" as well. As s.n individual the White House hopeful can give his/her favored state and local level candidates $1,000 each, while his/her PAC can give each one an additional $5,000 each. This, of course, applies equally to contributions to the presidential candidate; his/her supporters can contribute $1,000 apiece but can quintuple that contribution from their political t t 10 ac 10n comm1 tee. The enormity of the impact can be seen by examining just a few cases. For instance, the first presidential PAC, which belonged to Ronald Reagan, was formed in 1977 (called the Citizens for the Republic (CFTR)) and was specifically designed to replace his 1976 nomination committee. The CFTR PAC therefore inherited the 1976 nomination committee's existing balance of well over $1 million.11

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In the 1977-1978 election cwmpaigns the CFTR PAC expended $4.5 million, including almost $600,000 on contributions to 400 candidates and numerous local parties. 17 With a staff consisting of thirty personnel (including a staff cartoonist) the CFTR political action committee was able to expand Reagan's direct-mail contributor list from 100,000 to over 300,000. It also held political workshops, published a bimonthly newsletter showcasing Reagan's conservative views and opinions, and even sponsored Reagan's speaking tours. After Reagan announced his intention to run for the presidency, and even after he was elected and took office, the CFTR PAC continued to operate separately from both the cwmpaign committee and the White House. Reagan's PAC raised nearly $2 million for the 1980 elections and another $2.4 million for the 1982 midterm elections. Just over that relatively short period of time GOP coffers raked .in approximately $575,000 of CFTR's PAC money alone. Reagan's PAC was not operating alone on the side of the GOP. The John Connally Citizens Forum, George Bush's Fund for Limited Government, Senator Robert Dole's Cwmpaign America, and Senator Howard Baker's and Robert Dole's political action committees continued to solicit and raise money after their 1980 defeats in anticipation of future presidential bids. The Dole PAC raised in excess of $270,000 during 1981-1982. Baker's PAC raised nearly $2 million during this same period--contributing $578,000 to various GOP candidates

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18 while saving the rest for a rainy day. Another PAC, Campaign for Prosperity, formed by U.S. Representative Jack Kemp of New York, raised almost $250,000 and contributed $106,000 to 111 GOP 12 House and Senate cand1dates 1n 1982. The public recognizes the impact that political action committees have on the electoral process. According to an ABC/Harris survey, agreed that PACs are pouring too much money into the whole political process and see campaign spending as a very serious problem. By a margin of to the respondents called political action committees a "bad h 13 t 1ng". In fact, it has been this obvious public negativism toward PACs which has caused some legislative proposals to be made to restrict a congressional candidate's PAC total to a fixed dollar amount or percentage of his/her total receipts. The Oben-Railsback bill, which passed the House in 1979, proposed a limit of $70,000 per candidate.14 A measure sponsored in 1985 by Senators David Boren, Democrat from Oklahoma, and Barry Goldwater, a Republican from Arizona, would have set a $100,000 limit on PAC contributions to House candidates and limits ranging from $175,000 to $750,000 on 15 Senate candidates based upon the size of their state. An ABC/Harris survey showed the public in favor of PAC limitations by to

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19 Purpose and Scope of Study The purpose of this study is to analyze what influence political action committees have on the American democratic system, and in particular, what impact corporate PACs have on the system. This thesis will show that, because of existing campaign and electoral legislation, corporate PACs possess certain advantageous influential capabilities when compared to other organized interests. Namely, data will be presented which support the assertion that political action committees have a disproportionate amount of influence over America's democratic system of government. Through the examination of statistics, surveys, and statements made by congressional members, business leaders, and PAC officials, evidence will correlate to what degree corporate PACs actually control the electoral process. This study will show that our elected officials are moved to vote for or against issues based upon PAC contributions, rather than being based upon the desire and need of their constituency. Evidence is presented which demonstrates the overall public awareness and concern over this issue. It is anticipated that once a greater number of citizens are made fully aware of the PAC process an effort will be made to correct the situation; with an interim goal being to have new

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20 legislative restrictions placed on PAC activities, and an ultimate goal of eliminating PAC campaign contributions and independent expenditures entirely; thereby returning the electoral process to the people that our elected officials represent, and taking it out of the hands of a few financially dominant special interests. Since PACs are a relatively new phenomenon, statistical and other references will generally cover the period from the early 1970s to the present. However, there exist some historical data which date from the turn of the century to the 1970s which will be examined briefly. The scope of this study will generally be limited to a look at the effects that PAC contributions and 'independent expenditures have on the electoral process at the federal level.

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21 NOTES-CHAPTER I 1. Government by the-People. James Burns, J.W. Peltason and Thomas E. Cronin. New Jersey: Prentice-Hall, Inc., 1975. pp. 9-18. 2. The End of Liberalism. Theodore J. Lowi. New York: W.W. Norton and Company, 1979. p. 31. 3. Government by the People. James Burns, J.W. Peltason and Thomas E. Cronin.-New Jersey: Prentice-'Hall, Inc., 1975. p. 538. 4. Political Action Committees: Their Evolution and Growth and their Implications for the Political System. Joseph E. Cantor. Washington D.C.: Library of Congress Congressional Research Service Report No. 82-92GOV, November 6, 1981. pp. 108-11. 5. Denver Post, August 9, 1985. p. 3. 6. Political Parties, Interest Groups, and Public Policy: Group Influence in American Politics. Dennis s. Ippolito and Thomas G. Walker. New Jersey: Prentice-Hall, Inc., 1980. p. 349. 7. Political Parties, Interest Groups, and Public Policy: Group Influence in American Politics. Dennis S. Ippolito and Thomas G. Walker. New Jersey: Prentice-Hall, Inc., 1980. p. 350. 8. Money and Politics in the United States. Michael J. Malbin. New Jersey: House Publishers, Inc., 1984. pp. 42-43. 9. Denver Post, August 9, 1985. p. 3. 10. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W.W. Norton and Company, 1984. p. 114.

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11. Financing the 1980 Election. Herbert Alexander. Lexington, Mass. and Toronto: D.C. Heath and Company, 1980. pp. 146-148. 12. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W.W. Norton and Company, 1984. pp. 114-116; 13. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W.W. Norton and Company, 1984. pp. 160-163. 22 14. "The PAC Phenomenom in American Politics," in The Arizona Law Review 22, No. 2. Fred Wertheiner, 1980. pp. 611-612. 15. Denver Post, December 1, 1985. p. 5-A. 16. "The PAC Phenomenom in American Politics." in The Arizona Law Review 22, No. 2. Fred Wertheiner, 1980. p. 612.

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CHAPTER II LITERATURE REVIEW PACs Before the 1970s As corporations became heavily involved in the electoral process; individuals began to feel extremely disadvantaged with regards to being capable of bringing financial resources into the electoral process. Corporate America had the ability to dump huge sums of money into the electoral process, which individuals of course, could not. As a result of this obvious and overwhelming disparity between big business and the average citizen's ability to affect election results, corporations were the first to be subjected to government regulations of their campaign activities. In 1907 Congress passed the Tillman Act. This act made it illegal for any corporation to contribute any money in a federal election. The Tillman Act was later to be amended to include all types of contributions extending to primary conventions and nominating conventions. With the exception of these amendments, which broadened the scope of this Act, the Tillman Act was to remain virtually unchanged for the next sixty-five years.

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24 Corporations, feeling the pendulum of electoral power swing away from them, mounted a campaign to have labor unions' utilization of campaign contributions restricted also. This effort culminated during the Second World War when laws affecting both strike actions and campaign activities were passed in 1943. The resulting legislation, called the Smith Connally Anti-Strike Act, made it illegal for labor unions to make campaign contributions. This provision, however, was supposed to extend only until the end of the war. But with renewed pressure being applied by corporate America, legislation was passed at the close of World War II which was to further restrict labor's access to the electoral process. This legislation was known as the Taft-Hartley Act. The Taft-Hartley Act prohibited union contributions to federal, primary, general elections and nominating conventions. Congress said that it was its intent, by earlier passage of the Tillman Act and then the Taft-Hartley Act, to have labor and business subjected to uniform standards with regard to their f 1 1 t t t 1 tnancta tnvo vemen 1n campatgn ac 1v1 tes. In 1955, an event took place which caused big business to take even more interest in direct political involvement. The AFL and the CIO merged. This resulted in the subsequent increased capacity by labor for greater political activity.

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25 Business saw this, and the fact that government was taking a larger role in business activities since WWII, as a threat to its own standing in the arena of political influence. This concern over falling behind labor in its ability to influence the electoral outcome in elections culminated in the creation of the first corporate political action committee in 1963. Corporate America was still, nonetheless, restricted by legislation enacted some fifty-six years earlier (Tillman Act} with regards to contribution prohibitions. This PAC was called the Business-Industry Political Action Committee (BIPAC). It was formed by officials of the National Association of Manufacturers. BIPAC was modeled largely after the AFL-CIO's Committee / on Political Education (COPE). Since BIPAC and COPE were prohibited from making campaign contributions, their functions primarily involved political education advocating the attributes of the organization(s) they represented. BIPAC, of course, disseminated propaganda concerning the manufacturing industries, while COPE did the same in support of labor. BIPAC was intended as a direct counter to COPE at the national level. Since its founding, BIPAC has supported only business-oriented congressional candidates. PACs During the 1970s It was not until the 1970s that changes in legislation occurred which made political action committees a

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26 much more formidable tool for corporations to yield. During this period changes occurred which enhanced the importance of PACs to business with regard to campaign financing. These changes included the passage of the Federal Election Campaign Act of 1971, amendments to this Act in 1974 and 1976, a U.S. Supreme Court decision known as Buckley v. Val eo <1976) and rulings by the Federal Election Commission in the SUN-PAC, ) d 2 SUN-EPA (1975 a v1sory op1n1on. It was the passage of the Federal Election Campaign Act that provided the catalyst which initiated the real growth of political action committees. The FECA provided legislation which allowed PACs to make campaign contributions. It allowed corporations to communicate with stockholders and their families on any issue--including, of course, political and campaign related issues. This act provided the groundwork and guidelines for conducting "nonpartisan" registration and vote-getting campaigns among its stockholders and their families. And probably most significant, the Federal Election Campaign Act of 1971 allowed corporations to establish and administer a separate fund to be used for political purposes--big business was now free to utilize the vast financial resources of its corporate machine to tilt the electoral process in its direction! The intent of Congress (by passing the Taft-Hartley Act nearly a quarter century earlier), of having corporations and labor on equal ground in the electoral arena, had now been swept aside.

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27 Labor could see the obvious implications that the FECA would have. Therefore, the AFL-CIO pushed for passage of an amendment to the Federal Election Campaign Act which would allow labor the same campaign freedoms that business now had. This amendment, drafted by the AFL-CIO, was known as the Hansen Amendment. This law provided that labor unions be given identical rights as corporations with regard to electoral activities. The Hansen Amendment delineated the right of corporations and unions to communicate with their shareholders and members (respectively) on political issues; their right to pursue registration and vote-getting campaigns; and the right to utilize corporate funds and union funds in the creation and administration of PACS. Even though it was obvious to labor that the FECA and the subsequent Hansen amendment, which was passed in April 1972, gave business the clear authority to engage in activities with regards to all its members, including stockholders, the results were a bit unexpected. Nearly ninety individual corporate-related PACs were involved in the 1972 elections, eighty of which were established after the 1971 FECA went into effect in April of 1972. Big business exploited its authorization to solicit funds from its shareholders with tremendous results.

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28 Eighty-seven corporate committees reported income of $1.37 million and expenditures of $1.41 million--slightly over 20% of the total business expenditures of $6.12 million. In 1972 all business-related PACs gave $1.7 million to congressional races and over $400,000 to presidential candidates. 3 Corporate America, being far superior in financial resources and having the added benefit of being able to solicit its vast number of shareholders, would soon gain an advantage in direct political involvement that would be difficult for labor to overcome. Following the 1972 elections and the Watergate scandal, pressures for campaign reform developed new momentum and labor once again grasped the opportunity. Unions convinced Congress that big business was once more wielding too much influence in the electoral arena and pressured it for new legislation which would swing the pendulum back in labor's direction.' Then, in 1974 Congress passed another amendment to the Federal Election Campaign Act. This amendment was designed to strengthen disclosure requirements, create a federal agency to administer federal election laws (the Federal Election Commission) and most importantly, to remove the provision barring unions and corporations with government contracts from entering the electoral process. The most important element of this

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29 legislation was the affirmation of right of government contractors to establish, administer and maintain political action committees, and the right to solicit contributions from its members. Although a number of unions held government contracts, and would therefore benefit directly from this provision, the majority of government contracts were actually held by corporations. If the FECA was what initially unlocked the door to the abuse of the PAC mechanism by corporate America, then the 1974 amendment was what pushed the door open Only three months after the Federal Election Commission (FEC) began functioning in 1975, as provided by the 1974 amendment to the FECA, the Sun Oil Company requested a ruling on the propriety of its proposed PAC (SUN-PAC) and on the propriety of ils proposed political giving program (SUN-EPA). The Sun Oil Company had proposed spending general corporate funds to establish, administer, and solicit contributions to its political action committee (SUN-PAC)--it also requested a judgement on its right to utilize company n1oney to create a trustee payroll deduction plan (SUN-EPA), which would be kept separate from SUN-PAC. The Federal Election Commission ruled that not only could Sun Oil expend treasury funds in order to establish, administer and solicit contributions to both SUN-PA and

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30 SUN-EPA, it would also be allowed to solicit contributions from employees as well as stockholders, and could establish multiple PACs--each with separate contribution arid expenditure limits.4 This opinion caused outrage by its dissenters. It was argued that the 1971 FECA clearly prohibited corporations from soliciting funds for its PAC from anyone but stockholders, management level personnel and their families. In this decision the Federal Election Commission was clearly disregarding the language contained in the Federal Election Campaign Act. The commission was about to permit a corporation to solicit contributions from both stockholders and employees while conllnuing to restrict unions to solicitation from their members only. Labor viewed this as being destructive to the entire political balance which Congress had established between business and labor in earlier legislative actions. For example, The Sun Oil Company had 126,555 shareholders and 27,707 employees. Sun Oil could therefore solicit a combined total of 154,262 people--shareholders plus employees. However, the labor PAC was confined to soliciting just its members--only 27,707 people; many, many fewer than the corporate PAC was allowed to 1 5 SO lClt. While it was in fact the Federal Election Campaign Act of 1971, and the amendment to this Act in 1974 that actually unlocked and opened the door toward large-scale exploitation of the PAC mechanism by big business. it was indeed -the SUN-PAC,

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31 SUN-EPA decisions that truly liberated the corporation's development and use of political acti. on committees. Not surprisingly, labor denounced the'sun Oil Company decision, attacking it on the grounds that it virtually destroyed the congressionally established political balance between labor and corporate America. Once again labor went to Congress in an attempt to convince it to pass new legislation that would re-establish the balance in electoral involvement lost in this decision. Meanwhile, the Supreme Court handed down another important decision dealing with constitutionality of the 1971 Federal Election Campaign Act, as amended in 1974. This ruling was known as the Buckley v. Valeo (1976) decision. In reviewing the constitutionality for the FECA, the Supreme Court admitted that there existed the potential for the proliferation of political action committees; with the result being the opportunity for some "major special interest groups" to achieve a political advantage. However, the court went on to say that the 1974 Act did not limit the number of PACs that corporations could establish. Additionally, the court reaffirmed the right of corporate PACs to solicit from shareholders and employees. Lastly, this decision authorized political action committees to make unlimited independent expenditures, subject only to the PAC's resources and its ability to prove the independence of such

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32 The Buckley v. Valeo (1976) decision also provided authority for a PAC to sponsor television, radio and/or printed ads to oppose specific federal candidates.6 This decision, needless to say, was another victory for corporate political supporters and a great disappointment for its dissenters. However, labor had not been idle while this decision was being reviewed and handed down. Indeed, from the time the equally disappointing SUN-PAC, SUN-EPA (1975) opinion was announced, through the Supreme Court's announcement of its decision on Buckley v. Valeo (1976), labor had been vigorously petitioning Congress for legislation which would help to reestablish the balance in direct political involvement. Then, that same year, with lobbists representing the. AFL-C!Oand the UAW working feverously, a new amendment to the Federal Election Campaign Act was passed. The 1976 amendment to the Federal Election Campaign Act provided new guidelines for PAC solicitation. This amendment provided both labor and business the m .echanism to "cross-over" and solicit the other's constituency. Twice each year, both union and corporate PACs were allowed to crossover and solicit the other's constituency by mail--labor PACs could solicit the corporation's personnel, shareholders and their families, while business PACs could solicit the union's membership and their families.

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33 Other "balancing" measures contained within the 1976 amendment were obviously included to satisfy labor, and to end the pressure it had continually put upon Congress in an effort to make the Federal Election Campaign Act more equitable. One of these measures addressed labor's concern over the proliferation of corporate PACs. This part of the amendment stated that even though a corporation could establish an unlimited number of PACs, it was still to be subject to a single $5,000 per-candidate, per-election contribution limit. In addition, it was also to be prohibited from making transfers in excess of $5,000 to an affiliated PAC. This, of course, was intended to restrict the PACs ability to pool tremendously large sums of cash to be contributed to a single candidate. In the absence of any restrictions on the number of PACs a corporation was allowed to establish, this part of the amendment was really no more than a whitewash to help satisfy labor and the general public. A corporation could easily avoid these limitations by simply establishing several separate PACs, each of which could contribute the maximum dollar amount to the same candidate. This act also gave the authority to unions to utilize a payroll deduction plan--or help raise money for its PAC, provided the company PAC utilized the same method among its own stockholders and executive/administrative personnel.7

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34 Because of the Federal Election Campaign Act of 1971, as amended in 1974 and 1976, corporate Ameri .ca now has a legal mechanism by which to funnel its enormous financial resources into the electoral process. Unfortunately for labor and the average citizen, the fact that corporate and union PACs are uniformly unrestricted (with regard to making contributions to federal elections) does not have the same impact as when they were uniformly restricted, because of the financial superiority of big business. It will be shown later that the public has witnessed on numerous occasions how well money speaks with regards to our representatives in Congress. The sad fact is that in many cases Congressional members seem to represent the needs of those with lots of money to contribute, rather than the needs of those individuals that he/she represents. "The only reason it isn't considered bribery is that Congress gets to define bribery."--Representative Andrew Jacobs f d 8 o In 1ana. The point is, as a direct result of legislation passed during the 1970s, corporate America possesses much greater latitude in this area than many critics of business electoral involvement--and its impacts on the democratic system--find 9 tolerable.

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35 PAC Creation and Organization A political action committee must be created under the authority of a parent body. A parent body may be a corporation, a union, or any special interest group, (including a candidate). Aside from this stipulation a PAC needs to'follow only two other simple rules in order to exist, first, a PAC must have a treasurer, and second, a PAC must file a statement of organization with the Federai Election Commission within ten days of its creation. It's that easy. Generally, political action committees exhibit a wide variety of organizational structures and modes of operation. Corporate PACs are usually tied very closely with the company's chief executive officer (CEO). In the majority of cases it is actually the CEO who decides to establish a PAC and authorizes its creation. In addition, it is usually the CEO who controls the make-up of the PAC--this includes the personnel who sit on the PAC's governing board or committee. Board or committee members are selected according to specific criteria dependent on the personal preference of the CEO. The CEO determines the selection criteria for determining candidates for contributions by the corporate PAC. The CEO outlines the scope of the PAC and the general fundraising techniques to be utilized. In some cases the CEO may even direct donations be contributed to specific candidates and/or officeholders.

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36 Even though it is usually the CEO who is fundamental in the creation and formation of the PAC, the actual day to day operation is most often delegated to the public affairs, or governmental affairs officer within the corporate hierarchy. The public/governmental affairs executive, who is in most cases an executive vice-president within the company, is given the task of PAC operation generally because of his/her existing responsibilities withiri the organization. This individual is usually already in charge of all lobbying activities and all governmental relation activities within the business. In the majority of instances the public/governmental affairs executive was originally recruited from the political arena--generally from a major party, a political analysis or consulting firm, congressional staffs, and even from elected positions from federal, state and city levels. In most cases this position is held by a Republican. Corporate PACs are governed by a committee or board which is in most instances chaired by the public/governmental affairs executive. Committee members are shareholders and the corporate executive and administrative personnel. This membership usually includes a representative from the company's financial division, a representative from the Washington staff (if applicable), and generally a core group of mid-management contributors. This means that there exists a board-seat for

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37 each division within the corporate hierarchy, a seat for each regional office, at least one seat for each plant facility and oftentimes a seat for each level of management. A relatively recent trend among several corporations is to establish a PAC for each separate region, division, or plant, with each individual PAC having its own governing board. This, of course, gives the corporation certain distinct advantages over the typical single PAC operation. The decentralized nature of multiple PACs gives its members and contributors an opportunity to "feel" more closely involved with their political action committee. This has the effect of greatly enhancing the solicitation process by creating a sense of having more control over the money raised by their PAC. But most important, multiple PACs can easily hide the degree of electoral involvement the corporation is really engaged in. American Telephone and Telegraph (AT&T), for example, appeared on no one's list of top PACs, but in fact the twenty three individual AT&T committees, if aggregated, would have placed the company as the tenth-largest contributor to federal candidates with more than $650,000 disbursed. Dow Chemical, with eight PACs, also has used the multiple PAC system to great advantage.lO Approximately three-fourths of all multicandidate PACs depend upon the governing board or committee to decide the recipients of money contributed. In only a few cases does the CEO exercise his authority for total control of this decision. However, in that the CEO is the person who selects members to the committee, it is likely that those decisions made by the committee are

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38 congruent with the CEO's w\shes; if they were not, it is probable that new committee members would be appointed. This selection process takes place at the committee meeting. Table 3 shows the methods by which PAC committees select recipients of contributions. To help make a selection decision the PAC committee gathers information from various sources. These sources include the actual PAC staff and members, campaign managers, political parties, candidates and shareholders. Even though the PAC Table 3 Making PAC Decisions on Which Candidates to Support Category of Multicandidate PAC Decision-maker All PACS Corporate Labor Washington Office Staff 6'fo 2'1o 6% Chief Executive Officer(s) of company, union or association 4 2 12 PAC Board or committee 74 84 60 Joint Decision of PAC 10 11 0 Board and Washington Office Staff Other 7 2 23 Source: Lary J. Sabato, PAC Power: Inside the World of Political Action Committees (New York: W. W. Norton and Company, 1984), p. 38: Trade 14'fo 3 61 16 7

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39 intelligence network is quite extensive, rarely is a formal survey of PAC contributors undertaken in order to determine their opinions concerning prospective recipients. Networking Political action committees share information among themselves. This allows PACs to coordinate their contributions in order to achieve the maximum electoral influence. PACs "team-up" exchanging information with one another at organized meetings. Don't lie, exaggerate, or obfuscate. PAC people talk with one another and have a very effective communications network. Pull a fast one with one PAC and the word will get around to others in no time at all.ll The Business-Industry Political Action Committee (BIPAC) is at the forefront in this field. As mentioned earlier, BIPAC was established in 1963 by the National Association of Manufacturers. BIPAC currently has a membership in excess of 1,500. When originally founded, this PAC, because of .existing legislation in 1963, was restricted from making any direct candidate contribution. However, under current campaign law BIPAC now contributes directly to candidates. In addition, BIPAC holds monthly briefings during election years to inform more than two hundred PAC managers concerning political campaign issues pertinent to business. These meetings are held in various

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40 locations throughout the country, including of course, the Washington D.C. area. BIPAC also operates a unique telephone service which it calls "DIAL". When someone telephones "DIAL" they will receive daily updates on various Congressional races. In the corporate PAC community a BIPAC endorsement is generally viewed as an asset to the This endorsement sends a signal to other political action committees that the selected candidate has at least a reasonably good change of winning his/her race. With its extensive field staff and nationwide communication/ information network, BIPAC is in a position to alert its members to information on close races by means of its own publication. In addition, because of its financial strength, BIPAC is in a position to contribute money to selected candidates many months before the general election campaign officially begins. The Free Congress Foundation, affiliated with the Committee for the Survival of a Free Congress, also publishes a report which gives important data on Congressional races which includes its ratings of conservative and liberal candidates. Another organization, called the National Chamber Alliance for Politics, which is the United States Chamber of Commerce's political action committee, publishes a list of preferred candidates in close Congressional races. And, according to its director, just being in this publication tends to carry a significant signal as to the potential of the mentioned candidate.

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41 Congressman Tony Coelho has stated that our endorsement is worth $100,000 to a candidate. We know that one U.S. Senator (Jennings Randolph of West Virginia), because we had endorsed his opponent went out and borrowed $80,000.12 The National Chamber Alliance for Politics PAC (NCAPPAC), ran a four-hour, closed circuit teleconference in which several key Congressional races were reviewed and handicapped, thus allowing a PAC to place its money on those with the best chance of winning. This teleconference was viewed by almost two hundred managers located throughout the United States. At the time that this closed circuit program was being utilized there were plans on the drawing board to begin a weekly teleconference "show" These shows, utilizing personalized two-way teleconferencing interaction, would be designed to further broaden NCAPPAC's information disemination capabilities. The Public Affairs Council, chartered in 1954, which is a conservative organization dedicated to supporting conservative ideology, has in excess of four hundred and thirty corporate members. Of these members more than 50% are Fortune 500 companies with their own PACs. As far back as 1975, after the Federal Election Commission's SUN-PAC, SUN-EPA decision, which caused the proliferation of corporate PACs, the Public Affairs Council began sponsoring seminars on organizing and administering PACs. They currently produce films and

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42 newsletters in an effort to help alert PAC leaders to new material that might help spread the word about how the PAC mechanism may be successfully utilized by corporate 13 Amer1ca. Besides the numerous professional groups, of which only a few have been mentioned above, there are several other conservative groups and individuals who act as go-betweens in the PAC information arena. The American's for Constitutional Action (ACA) sponsors fundraising events which are specifically designed to bring conservative Congressmen and PAC officials together. Running a PAC: The Pricetag It requires considerable sums of money just to administer a successful PAC. In the 1980 elections nearly $57 million of the $131 million spent by various political action committees went directly to administrative expenses. This means that of every dollar contributed to a PAC, nearly half (43.5), never even reaches the candidate. Additionally, it was estimated that another $30 million went to other administrative costs not required to be reported by the Federal Election Commission or Federal Election Campaign Act legislation. This amounts to a total of $87 million spent on PAC operating expenses alone for the 1980 elections!14

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43 Therefore, it is easy to see that PACs aren't necessarily a very efficient manner in which to get one's contribution dollars to the candidate. With a look a little further into the issue, it becomes apparent that some money meant for contributions could quite easily end up serving some other need of the corporation. This becomes apparent when one learns of a certain advantage that corporations possess with regard to paying their adlninistrative expenses. Corporate PACs are permitted to pay their operating costs, such as staff salaries, per diem, travel, legal/accounting services, equipment, printing/postage and various consulting fees directly from their general treasury funds; that is, all the company's monies are available to run the PAC, thereby circumventing the intent behind restricting campaign contributions in the first place. Fundraising Before a PAC can contribute money to a favored.candidate it must first get the contribution from someone else. Fundraising, utilizing state-of-the-art technology, has rapidly become a science with political action committees. PAC managers are using direct mail, television, videotape and telephone banks in an ever increasing effort to enlarge their PAC's bank accounts.

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44 According to current campaign legislation, corporate PACs may solicit the parent corporation's administrative, executive and professional employees, all stockholders, and family members of all those listed. They may solicit at any time and as frequently as they desire. Additionally, a corporate PAC is allowed to solicit the corporation's rank-and-file employees twice a year by mail. Even though labor union PACs are also allowed to "cross-over" and solicit the corporation's executive, managerial and professional personnel twice a year, they may not do it whenever or as frequently as they wish. They must first secure prior approval each year from their member corporation. The member corporation is free to restrict the solicitation of its personnel by labor to a single PAC--even though numerous unions and their PACs may exist within the corporation. The corporation may also restrict the solicitation pool and the number of solicitations to be accomplished by the chosen PAC. However, labor PACs cannot make these restrictions apply to member corporate PACs. As can be seen, even though the Federal Election Campaign Act allowed corporate PACs and labor PACs to "cross-over'' in their fundraising efforts, the restrictions put on each are far from being equitable or balanced. The regulatory framework that fundraising must be carried out in seems far from balanced. Unfortunately, this is

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45 the status of current campaign legislation, and until other interests begin to pressure Congress, this is the framework that corporate PACs will continue to utilize to its fullest. Table 4 shows just how various political action committees go about asking for money. Table 4 How PACs Raise Money Category of Multicandidate PAC Solicitation Method Personal, face-to-face Direct mail/ letters Group seminars Telephone Other All PACs 54% 67 37 10 20 Corpo rate 451o 82 40 7 12 Labor 79'1. 36 0 46 Trade 65'1. 73 27 46 19 Nonconnected 56% 56 22 44 11 Source: Larry J. Sabato, PAC Power: Inside the World of Political Action Committees (New York: W.W. Norton and Company, 1984), p. 54. As can be seen, direct mail solicitation seems to be the most effective method utilized. Personal, solicitation is the second most popular method, with group seminars coming in third. The PACs with the highest response

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46 rates utilized repeated follow-ups; they simply bugged the hell out of the prospective donor. Their philosophy was--if at first you don't succeed try, try again. In the majority of cases the modern corporate PAC will center its solicitation pitch around some sort of video presentation. This presentation usually depicts leading politicians praising the PAC and begging everyone to get involved. Getting involved, of course, doesn't really mean getting involved--this simply means give money. Many times these political bull sessions become pep rallies; often followed by a speech from the appropriate chief executive officer encouraging the audience to "join up". It has been witnessed that these types of video seminars can be quite effective in the PAC's solicitation efforts. After a presentation by the Baltimore Gas and Electric PAC a random mail survey of participants indicated substantial gains in the awareness of this political action committee and showed a willingness on the part of the viewers to contribute to it. This particular PAC registered an 82% increase in d 29 contr1but1ons ur1ng the succeed1ng month. PACs also utilize all sorts of fundraising gimmicks. They have used casino nights, rummage sales, Hawaiian luaus, outings, and various sorts of sports tournaments; all in an attempt to raise campaign contributions.

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47 NEA-PAC and SMAPAC have raffled automobiles in money raising campaigns; the Pennsylvania Dental PAC hired a model to help "entice" potential contributors into its booth at the group's annual association meeting; and the National Committee for an Effective Congress hired political comic Mark Russell for a concert designed to benefit its political action committee! Many corporate PACs have created "high-donor" clubs and awards. A "high-donor" is a special title reserved for contributors who give a certain minimum amount to the corporation's PAC. The Mortgage Bankers Association PAC has, what they call, a Capital Club for those people who give $250. They also have a Chairman's Club--this club is reserved for those important individuals who contribute $500. This was probably designed to make those donors feel like a part of top management by associating their group with the corporate CEO. The Workover and Well Servicing Political Action Committee has a Wildcatter Club with an admission price of $1000 (or, if one prefers, $100 for each oil rig owned by the donor). The National Association of Broadcasters Television and Radio PAC (TARPAC) gives contributors special colored pins, their size corresponding to the size of their donation.

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48 At first glance these donors clubs may seem a bit juvenile and ineffective--however, they are anything but ineffective. "Most PACs attempt to increase the size of each person's donation at renewal time--and donor's clubs can be a special inducement."16 -Even though corporate PACs usually center their fundraising pitch around some sort of a video extravaganza, direct-mail solicitation tends to be the most effective means of garnering contribution dollars. These direct-mail mailings range all the way from crude xeroxed copies to sophisticated, personalized letters with high-quality, multi-color, glossy enclosures. Some PACs have prominent political consultants on their staff. These consultants usually have considerable direct-mail experience and utilize this knowledge in order to conduct highly profitable solicitation campaigns. The AHA's AMPAC, for example, utilizes Republican consultant Robert O'dell to oversee their direct-mail activities. Some PACs solicit not only individual contributors but also other PACs. PACs are permitted, under FECA legislation, to give up to $5,000 to one another. Even some very well established corporate PACs with large inventories of direct-mail donators spend a considerable portion of new funds on both mailing costs and direct-mail

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consultants, the National Congressional Club (associated with Jesse Helms) spends a minimum of of its total annual budget on direct-mail solicitation alone. Most corporate PACs consider direct-mail not only an effective method by which to help raise contribution dollars, but also a very persuasive form of advertising--and therefore consider it an investment with some important secondary rewards; such as the increased exposure and name identification for the corporation, and the exposure received by the candidate or candidates who are recipients of PAC contribution dollars. 49 Political action committees establish contribution guidelines. These guidelines are utilized to suggest to those solicited how much they are expected to give. In general, corporate PACs strive for donations of between .02 and 1.5% of an individual's gross salary. Utilizing direct-mail solicitation techniques, in order to merely break-even, a PAC must receive this 0.2 to 1.5% of gross salary from at least 1 to of those solicited. In addition, an average donation of ten to fifteen dollars must be received from those respondents. Overall, PACs raise about 41% of their funds in the first year of an election cycle and the remaining during 17 the second year.

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so PACs solicit fairly frequently. Around 38% try to raise funds at least twice a year, while less than half solicit only one time per year. The average amount contributed by each individual is one hundred dollars--contributors giving an average of one hundred and sixty dollars to corporate PACs, while labor PACs receive a meager fourteen dollars per individual contributor. See Table 5. Table 5 PAC Solicitions Category of Multicandidate PAC Solicitation Method All PACs Corpo rate Labor Trade Nonconneted Average donation to PAC (1981-82) Frequency of solicitation More than twice a year Twice a year Once a year Once every two years Other $100 $160 16'fo S'f. 22'fo 24'fo 4 7'fo 561. 10'fo 12'1. S'f. 2'fo $ 14 $ 81 $ 65 21'fo 18'f. 33'f. O'f. 30'f. 22'f. 501. 48'fo 22'fo 01. 4'1. 221. 29'fo 01. O'fo Adapted from Larry J. Sabato, PAC Power: Inside the World of Political Action Committees (New York: W.W. Norton and Company, 1984), p. 59. A total of 7% of all adult Americans report contributing to one or more PACs--as many as donate to all 18 other candidate organizations put together.

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PAC Honey: How Much? To Whom? The National Conservative Political Action Committee, on March 17, 1985, won a Supreme Court decision over the Federal Election Commission ensuring its right to spend unlimited amounts of money, independently, on a candidate's campaign. By a 7-2 vote, the justices said that post-Watergate legislation which limited the spending by political action comreittees violated constitutionally protected freedom of speech. The Federal Election Commission and the Democratic Party had challenged a lower courts decision which had initially invalidated this spending limit (the Presidential Campaign Fund Act barred PACs from spending over $1,000 each on behalf of presidential nominees). The high court agreed that the law impermissibly restricts "clearly protected 19 conduct". This decision, of course, reaffirmed the right of corporate PACs to continue to spend enormous sums of money on the campaign process. The Federal Election Commission said that of the $113 million in contributions by political action committees to federal office seekers in 1984, $80.6 million went to Congressional incumbents. About $75 million of these PAC dollars went to incumbents up for reelection in 1984. Incumbent Senate 51

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52 Republicans received $14.1 million, while incumbent Senate Democrats got only $8.1 million. PAC contributions increased by 29 percent over the nearly $88 million contributed in the 1982 election campaign. There were a total of 3,046 PACs that solicited and contributed money to federal candidates in the 1984 1 20 e ect1ons. Immediately after Reagan took office the nation's biggest defense contractors doubled their political donations. The top 20 firms contributed $3.6 million to the 1984 congressional and presidential Of the 20 House members who received more than $15,000 from defense industry political action committees, 17 voted to approve the president's request for $1.5 billion to build 21 more MX missiles. Thirteen of the 14 senators who received in excess of $30,000 from these PACs also backed Reagan's SDI project. Senator John Warner, a Republican from Virginia, and the top recipient of PAC money, stated that these contributions gain the firms no special attention. Through its own PAC, Rockwell International Corporation increased contributions from $59,625 in 1980 to $328,440 in 1984--an increase of 450 percent. Over the four year period from 1980 to 1984 Rockwell's defense contracts increased from $1 billion to $8.4 billion. This moved Rockwell from 14th place on the Pentagon's annual list of major contractors to number 1.

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53 This dramatic increase in PAC contributions was easily explained by Rockwell spokesman Dan O'Neal. He stated that the firm's higher PAC spending came from new employees hired to work on bigger defense contracts and from larger donations by more senior employees who have an "increased awareness of the value" of contributions.21 In 1984 Colorado PACs contributed a record $700,000 to Congressional races. Of these contributions nearly two-thirds went to Republican candidates. The majority of this money came from business aligned political action committees Republicans running for legislative seats in Colorado received $460,767 while Democrats received only $236,995. The Colorado Association of Realtors was Colorado's top PAC contributor. It donated $95,736 to mostly Republican candidates. Of the PAC contributions that were received by republican Representatives Mike Strang and Ken Kramer from Colorado most were donated by conservative organizations. Strang's PAC contributors included numerous energy companies and financial institutions. Strang received $6,000 from the National Association of Homebuilders and $5,000 from the American Medical Association. Kramer received contributions from General Dynamics, Lockheed, Northrop,

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United Technologies, Grumman, Martin Marietta and the McDonnell Douglas Corporation. His largest donations came from the Realtors PAC ($3,400), and the Associated General Contractor's PAC ($2,250), both located in Washington 22 D.C.. See Table 6. Most of the PAC money goes to candidates that support 54 business and conservative issues, thereby creating a nation of single-issue politics. The Supreme Court decision of March, 1985, which reaffirmed the right of political action committees to contribute up to $5,000 per candidate, and to make independent expenditures in any amount, has left open the possibility that Congress may pass a new, less restrictive campaign spending law. Colorado Democratic Senator Gary Hart, who does not accept any PAC money, said that this decision ... demonstrates the inadequacies of laws that govern campaign spending and the immediate need for reform. The explosive growth of political action committees and their ever-increasing influence must be controlled if we care about preserving the integrity of our political process.23

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Table 6 Top PAC Contributors to the 1984 Colorado Legislative Campaigns Colorado Association of Realtors Colorado Education Association Adolph Coors Co. Mountain Bell Colorado Assoc. Commerce & Industry Colorado Energy Resources Political Action Committee Colorado AFL-CIO Colorado Committee of Automotive Retailers Public Service Company of Colorado Colorado Apartment Association TOTAL Republican Democrats 82. 5'fo 17. 5'1o 00. 003'1o 98. 537o 2. 4 7'fo 89'fo 88.73"fo 11. 277o 95.2"fo 4.8'fo O'fo 92. 5"fo 7.5"fo 93 9'fo 6.1'fo 96.3"fo 647o Total $95,736 $89,076 $42,468 $35,537 $33,700 $22.550 $21,305 $20,505 $19,378 $17,500 $697,762 Source: Denver Post (Denver: February 18, 1985), p. 18A. 55

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56 Vote Buying Justin Dart, who happens to be a close personal friend of Ronald Reagan, and head of Dart Industries, once said that talking to politicians ... is a fine thing btit with a little 24 money they hear you -better". As seen in previous chapters, political action committees contribute enormous sums of money to mostly Republican congressional incumbents. They provide these legislators with vast sums of financial resources which help to intimidate potential contenders. Many times PAC money is donated after an election. This allows a large campaign debt to be retired. PACs give money to those congressional members who sit on committees that have some influence on the corporation or profession that the political action committee represents. Members on committees without PAC constituencies are often ignored. PACs are directly associated with organizations that lobby for legislative favors on a regular basis. The California Medical Association PAC in a solicitation brochure, said: Unless your presence is felt in congressional campaigns, your voice may not be heard in the legislative deliberations that follow. Medicine's involvement in campaign politics is intended to influence public policy. 39

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57 Having public policy influenced because a majority of citizens want it influenced is one thing: Influencing public policy because one category of special interest have disportionately vast sums of money to contribute is another. Representative John Bryant of Texas said: Anytime someone, whether a person or a PAC, gives you a large sum of money, you can't help but feel the need to give them extra attention, whether it is access to your time or, subconsciously, the obligation to vote with them.26 Representative Barney Frank of Massachusetts stated: We are the only human beings in the world who are expected to take thousands of dollars from perfect strangers on important matters and not be affected by it.27 Some members of Congress will openly admit that PAC money does affect their voting behavior. Other legislators and PAC officials insist that the only thing that political action committee donations buy is access. Whether one actually calls it vote buying or simply buying access makes little difference in the end. If one is given special access to the lawmaker as a result of contribution money, then it is logical to assume, especially when looking at instances from previous chapters and examples still to be examined in this chapter, that this access will eventually result in a positive vote for them. Having access to a legislator's time is therefore practically as valuable as a vote.

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Members of Congress have their time carefully merchandised by party officials. A great deal of their time is provided to meet with the officials of PACs which have contributed money to the party committees. Lawmakers will even go so far as to personally make the connection between their open door policy and money contributed by PACs. One PAC manager described his success in arranging a private meeting with a powerful House committee chairman. This access to this particular legislator's time was acquired only after the PAC purchased very expensive tickets for a fundraising dinner to be held in the chairman's honor.28 58 This type of activity may be considered an exercise in purchasing access--but few could argue about the advantage gained by the PACs acquisition of this access, or that a large sum of money would have no effect on this chairman's voting behavior. Then, a legislator's vote for or against a bill is based on PAC contribution dollars, rather than being based upon what his/her constituentcy desires and/or by long held beliefs which might normally predispose him/her to vote one way or another. Some top people in government will not only admit that this situation does exist, but will go on to justify this type of vote-buying activity. Justice William Rehnquist said:

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The fact that candidates and elected officials may alter or reaffirm their own positions on issues in response political messages paid for by the PACs can hardly be called corruption, for one of the essential features of democracy is the presentation to the electorate of varying points of view.29 Unfortunately, when a lawmaker or candidate bends to the will of corporate political action he/she is bending to the of a narrow, monetarily over 59 represented segment of special interest, and therefore not representing the people in a democratic manner. In recent years political scientists have been able to better control specific variables (i.e. party affiliation, ideology and his/her voting record), in order to determine what independent effects PAC money have on legislator's voting behavior. John Fendreis and Richard Waterman, for example, investigated a U S. Senate vote on deregulation of the trucking industry in 1980. The American Trucking Association PAC contributed to 54 senators and 319 representatives in 1979 and 1980. The results showed a very strong connection between votes and PAC money. This connection was strongest for 30 senators up for reelection. A study was undertaken that was designed to determine the relationship between legislators' votes and money contributed by dairy PACs. Votes in favor of dairy price supports were clearly related to contributions made to the

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. 60 legislators by dairy PACs in the next election. In other ./ words, these PACs gave rewards (campaign contributions) to those congressmen who voted in their favor.31 In 1982 Kirk Brown examined bills that were passed by the House that had a direct effect on the National Automobile Dealers Association (NADA) and the American Medical Association (AMA). Both of these organizations maintain very large political action committees. First, the House approved a veto of the Federal Trade Commission's (FTC) "lemon rule". The "lemon rule" would have forced automobile dealers to provide a list of defects that a car had for the prospective buyer to look at. Of the 286 House members who supported this veto, 242 had previously received contributions from NADA's PAC. Furthermore, lawmakers who voted in favor of the NADA received substantially generous PAC donations for their 1982 re-election campaigns. Of the 251 members who supported the veto and ran again, 89 percent received contributions from the NADA PAC which averaged over $2,300 per legislator. Only 22 percent of the 125 lawmakers who voted against NADA received contributions from them in 1982--these donations averaged only $1,000 each. Assuming two legislators held basically the same ideological views, served on the same committees, and were facing about equally costly reelection campaigns, the one who voted with NADA could expect to receive $1,050 more -than the

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one who voted against them. Additionally, the NADA PAC rewarded members who had sponsored the veto resolution by giving them an extra $400 each in 1982.32 Just six months after the NADA decision was made the House voted to exempt professionals from regulation by the Federal Trade Commission. The AMA and the American Dental Association (ADA) were the primary backers of this bill. In 61 this case a favorable vote was worth about $1,000 per lawmaker and about $1,800 per sponsor from the AHA and ADA PACs. Since only seven votes would have had to be changed for the professional's exemption to have been defeated in the House, it is not difficult to conclude that the AHA's and ADA's campaign contributions of over $1.5 million to House members during the 1982 election provided the margin of victory.33 PACs affect legislative proceedings to a decisive degree. When particular conditions exist this effect can be greatly enhanced. First, the more invisible the issue, the more likely it is that PAC contribution dollars can change a lawmaker's vote in their favor. In the case of the FTC exemption for professionals the bill had little visibility when it was on the House side. However, once it went to the Senate the bill gained considerable publicity in the press. Once the public was aware of the acute unfairness of this measure the medical and dental PACs, even with their huge contributions, could not

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62 quite save the bill. The Senate rejected the measure in a 59 to 37 vote. Therefore, PACs tend to yield their greatest influence in the earlier stages of the legislative process. This usually means that PACs exercise greatest power during agenda setting and at subcommittee meetings rather than during the more public floor deliberations. Unfortunately, the press, public and even "watchdog" groups are not nearly as 34 attentive to initial legislative hearings as PACs are. Of course, if the bill is defeated early out in the process it will never become a highly visible public issue for the press and public to contend with anyway! This provides even more reason why "sunshine" legislation should be passed. Political action committees can expect to garner more congressional votes when large PACs or groups of PACs are allied. According to Democratic Representative Dave Obey from Wisconsin, "The pressure generated from these aggregate contributions is enormous and warps the process. It is as if h d 1 1 1 'b 35 t ey rna e a s1ng e, extreme y arge contr1 ut1on." PACs do coordinate their gifts in order to maximize their electoral influence. Big business with its extraordinary financial resources, is purchasing favored pieces of legislation with huge campaign contributions. PACs do buy votes. "I fear we have become a coin-operated Congress. Instead of two bits, you put in $2,500 and pull out a vote." 36 Representative Barbara Mikulski of Maryland.

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63 "NOTES -CHAPTER II" 1. Political Finance. Herbert E. Alexander. Beverly Hills and Landon: Sage Publications, Inc., pp. 159-160. 2. Political Money. _David W. Adarnany and George E. Agree. Baltimore and Landon: The John Hopkins University Press, 1975. pp. 4-5. 3. Political Finance. Herbert E. Alexander. Beverly Hills and Landon: Sage Publications, Inc., 1979. pp. 162-164. 4. Political Finance. Herbert E. Alexander. Beverly Hills and Landon: Sage Publications, Inc., 1979. pp. 166-168. 5. Political Finance. Herbert E. Alexander. Beverly Hills and Landon: Sage Inc. 1979. pp. 166-168. 6. Business and Labor Under Federal Election Campaign Act of 1971. In Parties, Interest Groups, and Campaign Finance Laws. Edited by Michael J. Malbin. Washington, D.C.: American Enterprise Institute, 1980. pp. 12-26. 7. Business and Labor Under Federal Election Campaign Act of 1971. In Parties, Interest Groups, and Campaign Finance Laws. Edited by Michael J. Malbin. Washington, D.C.: American Enterprise Institute, 1980. 8. Washington Post, August 2, 1983. p. A-9. 9. Business and Labor Under Federal Election Campaign Act of 1971. In Parties, Interest Groups, and Campaign Finance Laws. Edited by Michael J. Halbin. Washington, D.C.: American Enterprise Institute, 1980. pp. 56-75. 10. Political Action Committees: Their Evolution and Growth and Their Implications for the Political System. Joseph E. Cantor. Washington, D.C.: Library of Congress Congressional Research Service Report No. 82-92 Gov, November 6, 1981. pp. 108-111. 11. Working With PACs. National Republican Congressional Committee, 1982.

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12. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W. W. Norton and Company, 1984. pp. 48-49. 13. IMPACT. Public Affairs Council, May 1983. p. I. 14. Political Finance/Lobb:y: ReEorter. October 28, 1981. p. 276. 15. Washington Post. April 5. 1983. p. C3. 16. Business in Politics. Handler and Mulkern, 1982. pp. 45-46. 17. The Twentieth Century Fund Task Force on PACs, in What Price PACs? Frank I. Sorauf. New York: Twentieth Century Fund, 1984. p. 79. 18. The Twentietyh Century Fund Task Force on PACs, In What Price PACs? Frank J. Sorauf. New York: Twentieth Century Fund, 1984. pp. 81-82. 19. Denver Post, March 18, 1985. p. 1A. 20. Denver Post, December 1, 1985. p. SA. 21. Denver Post, April 1, 1985. p. 1A. 22. Denver Post, April 20, 1985. p. 4A. 23. Denver Post, March 18. 1985. p. 1A. 24. Wall Street Journal, August 15, 1978. p. I. 64 25. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato, New York: W. W. Norton and Company, 1984. p. 123 26. Washington Post, August 21, 1983. p. A-16. 27. Congressional Quarterl:y: Weekl:y: 41, March 12, 1983. p. 505. 28. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato, New York: W. W. Norton and Company, 1984. pp. 127-128. 29. Denver Post, March 18, 1985. p. A1.

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65 30. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato, New York: W. W. Norton and Company, 1984. pp. 133-134. 31. Campaign Contributions and Legislative Voting: Milk Haney and Dairy Price Support. in Western Political Quarterly December, 1982. pp. 478-495. 32. Campaign Contributions and Congressional Voting. Kirk F. Brown, prepared for the American Political Science Association, Chicago, Illinois, September 1, 1983. p. 134. 33. Campaign Contributions and Congressional Voting. Kirk F. Brown, prepared for the American Political Science Association, Chicago, Illinois, September 1, 1983. p. 135. 34. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W W. Norton and Company, 1984. p. 135. 35. Political Action Committees: Their Evolution and Growth and Their Implications for the Political System. Joseph E. Cantor. Washington, D.C.: Library of Congress Congressional Research Science Report No. 82-90 Gov, November 6, 1981. p. 168. 36. Washington Post, August 21, 1983. p. A-16.

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CHAPTER III PAC REFORM According to an ABC News/Harris survey, of the people feel that PACs are "pouring too much money into the whole political process". By a margin of to the d 11 d b d h 1 respon ents ca e PACs a a t 1ng". See Table 7. Political action committees are making it more and more expensive to run for office. The increase in campaign costs between 1980 and 1982 was more than double the usual 2 average. In 1982 all the general election congressional candidates spent a combined total of $318 million--the f h $ 3 campa1gn expense or t e average House nom1nee was 228,000. With the cost of running an election campaign so high, unless the individual is rich, he/she must accept PAC money just to stand a chance of winning. Look at Gary Hart, for example, he accepted no PAC money in his 1984 bid for the White House and he is still in debt. As Will Rogers said in 1931: "Politics has got so expensivethat it takes lots of money to even get beat with."

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67 Table 7 Public Perceptions of PAC's PAC/Political Contributor Good Influence Bad Influence Not Sure Conservative PACs 40 46 Labor unions 34 60 Labor unions PACs 27 64 Big companies 26 67 Big company PACs 20 71 Firms that do business with the government 23 69 Rich people who want to protect their interests 16 77 Adopted from Harris Survey, release 1983 No. 1, January 3, 1983. PACs are incumbent biased. They pour money into campaign coffers of incumbents to such an extent that challengers rarely stand a chance. The undemocratic character of political action committees' candidate selection process totally severs the link between contributor and candidate. Many PACs are accountable to no one and respond only to their own For example, candidates who receive contributions from the 14 6 9 7 9 8 6 Conservative Congressional Club were recommended by Republican Senators Jesse Helms and the late John East

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68 In some corporate PACs it is the CEOs who have either total control, or an inordinate amount of influence over PAC decisions. Many corporate PAC officers will admit that they don't encourage suggestions about candidates from their donors 4 at all! The use of coercion, covert and implied, is always a potential threat when subordinate employees are solicited to giye to a CEO-endorsed program. Additionally, the supervision of the PAC's activities rarely extends to the corporation's stockholders, the company's real owners in the first place, because management wishes to avoid accountability.5 The point is, as stated by Democratic representative Dan Glickman of Kansas: "The sum of all the PAC interests is not equal to the whole public interest."6 It's time for PAC reform: "My own thought on electoral law can be summed up in five little words; its time 7 for a change."--Senator Roger Jepsen (R-Iowa). A number of legislative proposals have been made to restrict a congressional candidate's PAC total to a fixed amount or a fixed percentage of the candidate's total receipts. An ABC New/Harris poll showed the public in favor of a PAC limit by 68 percent to 29 percent.9 However, if PAC limitations are established there will have to be restrictions placed on PAC independent expenditures also.

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69 According to the late Terry Dolan, head of NCPAC, If Congress passes a limit on what a PAC can give directly to candidates, it will aut-omatically encouragemore independent expenditures. In fact it will probably encourage an exponential growth of independent expenditures. I can assure you that I will look forward to conducting seminars for other political action committees telling them how to set up independent carnpaigns.59 Unfortunately, independent expenditures are the least accountable of political spending because there is no affiliation or coordination with candidates or parties, and fewer reporting requirements than with all other PAC spending. The FEC estimates that $22.8 million in independent expenditures were spent in the 1984 election by various PACs. Independent expenditures are also utilized to wage dirty, viciously negative campaign battles. In June, 1986, one of this country's wealthiest PACs, the National Conservative Political Action Committee, unveiled $53,000 worth of negative, anti-Wirth television commercials ($53,000 worth of independent expenditures). At least two Colorado stations refused to broadcast these negative commercials about Democratic Senate candidate Tim Wirth. In one 30-second spot, phone numbers are listed and viewers are urged to call Wirth's campaign headquarters in an attempt to jam his phone lines. Another commercial featured a very unflattering portrait of a grimacing Wirth with stacks of dollar bills next to him. The commercial went on to that

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70 more than of Tim Wirth's itemized contributions came from outside Colorado, and indeed came from liberal anti-Reagan special interest groups like big labor. Wirth's press secretary said that the ad was a series of half-truths, a campaign of misinformation and dis-information.'lO NCPAC officials spent $250,000 on negative television ads against Wirth. Additionally, the Council on Inter-American Security, a conservative defense lobby, has already spent $16,000 for negative radio ads, attacking Wirth for opposing aid to anti-Sandinista rebels in Nicaragua.11 It is mainly the large PACs, like NCPAC, which are in a position to utilize independent spending effectively. Therefore, a PAC limit without an accompanying independent expenditure limit, would have the effect of bolstering a few wealthy PACs at the expense of the smaller ones. The big corporate PAC, of course, would stay in business while the smaller, more labor or consumer oriented, would flounder. Peter Laver of AMPAC predicted: A PAC limit isn't going to knock out NCPAC, AMPAC, the Realtors, or We'll just do independent expenditures. But the small fry are going to be hurt in relation to us, and we'll become more powerful. That's the scary part--a few gigantic PACs controlling the system. So much for federalism or Madisonian democracy.12 The problem is that the public can't hold a candidate accountable for the charges made against his/her opponent by an independent political action committee. Also, since

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71 independent expenditures are unlimited, it undermines the very intent of campaign finance legislation. The frequent utilization of negative or even vicious messages and tactics by independent PACs makes politics appear to be a dirty business and the independent PAC's lack of governance leaves them -virtually unaccountable to their own donors and the public in general. Of course, any attempt to control independent expenditures has thus far failed. As mentioned earlier, the Federal Election Commission tried for years to enforce a provision of the Presidential Campaign Fund Act that banned PACs from spending more than $1,000 each on behalf of a presidential nominee who had accepted public financing. Unfortunately, as a result of the Supreme Court's 1976 decision in Buckley v. Valeo, and a later decision in 1985, the court held that PACs, acting completely on their own, could advocate a candidate's election or defeat without limit. There are, however, steps that could be taken to help alleviate this problem. For example, the law requires that independent expenditures be conducted without any consultation with the candidate or anyone connected to his/her campaign. Yet independent PAC managers have shared campaign consultants with their chosen candidates, and have even been seen in the company of people directly connected to favored campaigns.

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They have even gone so far as to use PAC money to convince candidates to run, by showing them encouraging polls for example, and then subsequently launching independent spending efforts on their behalf.13 There have been a few legislative proposals made to tighten the enforcement of this part of the campaign laws. 72 They have so far met with failure. Reform bills have also been introduced in Congress to provide candidates with free response time when they are attacked by an independent PAC. For instance, Representative David Obey (D.-Wisconsin) has proposed a bill which would grant an aggrieved candidate either free television or radio advertising or a grant equal to the amount of the independent expenditure whenever independent spending against him/her tops $5,000. Unfortunately, this type of proposal overlooks the ingenuity of some independent PACs. Terry Dolan, of NCPAC, has actually welcomed the Obey idea, announcing that he will run $100,000 ads "attacking" a favored candidate and urging his/her defeat for "lowering taxes, opposing busing, and standing for a strong defense." Besides identifying his candidate with litany of popular positions, Dolan's independent expenditures will trigger another $100,000 in free time for his candidate.14

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73 The fact is, before any legitimate limits can be put on PAC spending, enforceable limits will have to be put on independent expenditures. As discussed in earlier chapters, numerous proposals have been made to limit PAC contributions. These have taken the form of limits based upon a percentage of the candidate's total receipts and/or based upon some fixed dollar and have unfortunately, met with the fate as independent expenditure legislation. However, on August, 14, 1986, the Senate voted to limit money contributed by political action committees to congressional candidates and to halt PAC contributions to national parties. By a 69-30 vote, the Senate gave preliminary approval to legislation which would limit how much money a candidate could accept from PACs and would lower the maximum a PAC could give to congressional candidates. The ban on PAC contributions to political parties--an action which would hurt the Democrats too--was added as an amendment by Republican opponents to the candidate limits. This amendment passed by a 58-42 vote. "We have taken a major step", said David Boren, D-Oklahoma, who has vowed to try to attach PAC limits to other legislation if Dole does not call the matter up for a final vote by late 1986.

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74 This proposal was actually an amendment that substituted for the entire wording of a totally unrelated bill. This means that a final vote on the resulting bill will have to be taken at a later date. The bill would limit House candidates to $100,000 in PAC money per election cycle. Senate candidates would face a general limit of from $175,000 to $750,000, depending on a state's population. Boran and other critics said that the PAC mechanism has grown too big: 600 PACs gave $1.2 million to congressional candidates in 1974, while 4,000 PACs donated $10.4 million for the 1984 elections. This action was the first time that the f d d 15 Senate con ronte the PAC 1ssue 1n over a deca e. This is a good start to PAC reform. Limiting the amount of money that a candidate can accept from a political action committee is a much needed bit of legislation. Restricting the contribution a PAC is allowed to make to $3,000 per candidate is also a good idea.16 But, it is also necessary to restrict the amount which can be spent independently on any given candidate in any given election cycle. And, of course, the next logical step is to eliminate PACs altogether and allow individual citizens only to contribute limited amounts just as the FECA mandates. Current

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legislation restricting individual donations to $1,000 per candidateand $25,000 to all candidates in any given election makes good sense. Allowing some PACs to pump millions of dollars into the process makes no sense. 75

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76 NOTES-CHAPTER III 1. Public Opinions, August/September, 1982. p. 53. 2. Money in the 1980 and 1982 Congressional Elections, in Money and Politics in the United States: Financing Elections in the 1980s. Edited by Michael J. Malbin. Washington D.C.: American Enterprise Institute (Chatham House), 1984. p.41. 3. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato. New York: W.W. Norton and Company, 1984. p.l66. 4. Business in Politics: Campaign Stratesies-of Corporate Political Action Committees. Edward Handler and John R. Mulkern. Lexington, Mass.: Lexington Books, 1982. p. 79. 5. Politics, Interest Groups, and Campaign Finance Laws. Edited by Michael J. Malbin. Washington D.C.: American Enterprise Institute, 1980. p. 96. 6. Association Management 35, July, 1983. p. 54. 7. Political Finance/Lobby Reporter, November 18, 1981. p.54. 8. The PAC Phenomenon in American Politics:, in the Arizona Law Review 22, No. 2. Fred Wertheimer, 1980. p. 611-612. 9. Hearing on the Federal Election Campaign Act of 1971, October 1971. p. 377. 10. Denver Post, June 28, 1986. p. 56. 11. Denver Post, April 10, 1986. p. 16.

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77 12. PAC Power: Inside the World of Political Action Committees. Larry J. Sabato, New York: W.W.Norton and Company, 1984. p. 175. 13. Political Finance/Lobby Reporter, November 11, 1981 p. 291. 14. PAC Power: Inside the World of Political Action Committees. La:rry J. Sabato, New York: w.w. Norton Company, 1984. p. 183-185. 15. Denver Post, August 13' 1986 p. SA. 16. Denver Post, August 13, 1986. p. 6A. and

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CHAPTER IV CONCLUSION Political action committees are buying votes in Congress. An elitist nation is being perpetuated in which financially advantaged special interests, particularly big business, secure favored pieces of legislation in exchange for donations (through the PAC process) to influencial lawmakers at campaign time. Corporate PACs abuse the intent of an electoral system. It is no longer one person one vote "government by the people". Groups which contribute lots of money to elect representatives garner more than their fair share of votes. PACs abuse the American democratic system by coordinating their donations to maximize their influence. PACs can organize themselves in an undemocratic fashion--accountable not to the public, not even to their contributors, but only themselves. Corporate PACs foster the growth of generally conservative, narrow politics which benefit only a small percentage of Americans. They garner donations by both overt and covert harassment. The ideals of democracy and pluralism are compromised when specific interests are permitted to possess a disportionately large amount of influence over the political system.

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Evidence has been presented which supports these assertions. Polls show that the public is aware of this issue. Statistics support the contention that PACs pour far too much money into the electoral process. Legislators have admitted to the undemocratic nature of the PAC process. Legislators have stated that PAC money does influence their vote. 79 Political action committees have gone through considerable change in a relatively short period of time. PAC reform legislation has come and gone with no significant improvement over the past decade. The American public needs to tell their representatives how important PAC reform is by voting with those who support a more democratic electoral process. Once corporate PACs begin losing some of their clout as a result of restrictive legislation, lawmakers may be more inclined to take the final step--the total abolishment of PACs.

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BIBLIOGRAPHY Adamany, David W. and George E. Agree. Political Honey. Baltimore and London: The John Hopkins University Press, 1975. Alexander, Herbert C. Political Finance. Beverly Hills and London: Sage Publications, Inc., 1979. Alexander, Herbert. Financing the 1980 Election. Lexington, Massachusetts and Taranto: D.C. Heath and Company, 1980. Association Management, 1983, Brown, Kirk F. Campaign Contributions and Congressional Voting. Chicago, Illinois: American Political Science Association, 1983. Burns, James, J.W. Peltason and Thomas E. Cronin. Government by the People. New Jersey: Prentice-Hall Inc., 1975. Campaign Contributions and Legislative Voting: Milk Money and Dairy Price Support in Western Political Quarterly 35, 1982. Cantor, Joseph E. Political Action Committees: Their Evolution and Growth and their Implications for the Political System. Washington D.C.: Library of Congress Congressional Research Service Report NC.8292GOV, 1981. Congressional Quarterly Weekly 41, 1983. Denver Post, (Denver). Dye, Thomas R. and L. Harman Zeigler. The Irony of Democracy. California: Duxbury Press, 1981. Handler and Mulkern. Business in Politics: Campaign Strategies of Corporate Political Action Committees. Lexington, MA.: Lexington Books, 1982. Hearing on the Federal Election Campaign Act of 1971, 1971.

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81 Impact. Public Affairs Council, 1983. Ippolito, Dennis S. and Thomas G. Walker. Political Parties, Interest Groups, and Public Policy: Group Influence in American Politics. Jew Jersey: Prentice-Hall, Inc., 1980. Lowi, Theodore J. The End of Liberalism. New York: W.W. Norton and Company, 1979. Halbin, Michael J. Honey and Politics in the United States. New Jersey: Chatham House Publishers, Inc., 1985. Halbin, Michael J., ed. Parties, Interest Groups, and Campaign Finance Laws. Washington D.C.: American Enterprise Institute, 1980 Political Finance/Lobby Reporter, 1981. Public Opinion, 1982. Sabato, Larry J. PAC Power: Inside the World of Political Action Committees. New York: W.W. Norton and Company, 1984. Sarauf, Frank J. In What Price PACs? New York: Twentieth Century Fund, 1984. Wall Street Journal, (New York). Washington Post, (Washington D.C.). Wertheiner, Fred. "The PAC Phenomenon in American Politics" in the Arizona Law Review 22, No. 2, 1980. Working with PACs. National Republican Congressional Committee, 1982.