New Report: Leadership PACs, Inc.

More than 500 leadership PACs operated by sitting members of Congress raised over $150 million so far this election cycle. Of this sum, more than 60 percent came from political action committees (PACs) connected to companies, trade associations, labor unions and other groups that frequently have business before these lawmakers.

These findings and more are at the heart of a new Issue One report — entitled “Leadership PACs, Inc.: How Washington power players use leadership PACs to buy access and influence” — in which Issue One analyzed data from the Center for Responsive Politics about contributions to leadership PACs between January 1, 2017 and September 30, 2018.

“Leadership PACs exemplify the Washington swamp,” said Issue One Executive Director Meredith McGehee. “Most Americans have no idea that leadership PACs exist, yet those who pay to play in Washington use contributions to these accounts controlled by lawmakers as a means to buy a seat at the table in the nation’s capital while legally evading campaign contribution limits. As a first order of business, the 116th Congress should act to rein in these out-of-control slush funds.”

Source: Center for Responsive Politics, reflecting contributions made between January 1, 2017, and September 30, 2018. Data obtained on October 24, 2018.

Among Issue One’s new findings:

• 35 PACs have contributed at least $500,000 to leadership PACs operated by sitting members of Congress since January 2017. Of these 35 PACs, 20 have each contributed to the leadership PACs of at least 100 sitting members of Congress.
• The largest PAC donors since January 2017 to lawmakers’ leadership PACs were Honeywell International Inc., United Parcel Service Inc., AT&T Inc. and Northrop Grumman Corp. Each of these PACs contributed at least $1 million.
• More than half of leadership PACs operated by sitting members of Congress have collected at least two-thirds of their funds this election cycle from PACs.
• Roughly one of every five leadership PACs has collected at least 90 percent of its funds this election cycle from PACs.
• Approximately 30 leadership PACs have collected fully 100 percent of their funds this election cycle from PACs.
• Roughly 90 percent of members of the U.S. House of Representatives have a leadership PAC, and just three sitting senators do not have one. A handful of members of Congress have two, and some politicians form them even before they are elected to federal office.
• Small-dollar donors giving $200 or less have accounted for less than five percent of leadership PACs’ total receipts this election cycle.

Said former Ambassador Tim Roemer, a former Democratic congressman from Indiana who now serves as a co-chair of Issue One’s ReFormers Caucus: “The proliferation of leadership PACs reflects poorly on Congress as a whole. The American people’s faith in Congress as an institution is eroded when moneyed interests can buy access and influence that are often unavailable to the average American.”

Fellow ReFormers Caucus Co-chair Zach Wamp, a former Republican congressman from Tennessee, added: “Inside-the-Beltway players contribute to these slush funds in hopes of currying favor with members of Congress. Now is the time for Congress to step up and create — in a bipartisan fashion — new rules limiting leadership PACs.”

Neither Roemer (who served in Congress for six terms and was co-chair of the Blue Dog Coalition) nor Wamp (who served in Congress for eight terms and was the ranking Republican member of two subcommittees of the House Appropriations Committee) operated a leadership PAC while they were in office.

Under current law, money given to a leadership PAC comes on top of contributions given to the same lawmaker’s official campaign committee — effectively allowing those who can afford it the opportunity to nearly triple their contributions to House members and nearly septuple their contributions to senators.

Using these committees to dole out cash to political allies was the primary reason leadership PACs were created in the late 1970s. But today, a minority of leadership PAC spending actually goes toward contributions to other candidates and political groups. As Issue One and the Campaign Legal Center detailed in a report earlier this year, lawmakers today frequently use leadership PACs to pay for stays at luxury hotels, meals at prime restaurants and tickets for highly coveted events, often under the guise of fundraising activities.

Not all 535 members of Congress have leadership PACs, but most do. Some members of Congress even operate two affiliated leadership PACs, which share one contribution limit. For this report, Issue One identified 503 leadership PACs operated by 488 lawmakers who were sitting members of Congress as of September 28, 2018.

Using data obtained from the Center for Responsive Politics in mid-October, Issue One found that the top 20 industries accounted for roughly half of the $150 million leadership PACs have raised so far this election cycle.

Not surprisingly, these are the industries that are frequently seen as the most influential in Washington. Among them:

• the securities and investment industry, which ranked as the No. 1 industry funneling money into leadership PACs, giving $8.8 million combined to 268 leadership PACs operated by 262 members of Congress;
• the insurance industry, which ranked as the No. 3 industry funneling money into leadership PACs, giving $6.4 million combined to 264 leadership PACs operated by 257 members of Congress;
• the pharmaceutical industry, which ranked as the No. 4 industry funneling money into leadership PACs, giving $5.3 million combined to 202 leadership PACs operated by 199 members of Congress;
• the telecom industry, which ranked as the No. 10 industry funneling money into leadership PACs, giving $3.5 million combined to 214 leadership PACs operated by 213 members of Congress;
• lobbyists, who ranked as the No. 11 industry funneling money into leadership PACs, giving $3.4 million combined to 235 leadership PACs operated by 231 members of Congress;
• the commercial banking industry, which ranked as the No. 13 industry funneling money into leadership PACs, giving $3.1 million combined to 190 leadership PACs operated by 186 members of Congress; and
• the defense aerospace industry, which ranked as the No. 15 industry funneling money into leadership PACs, giving $2.6 million combined to 214 leadership PACs operated by 212 members of Congress.

At the same time, a handful of individual donors have also given large sums to leadership PACs, with just eight contributing at least $100,000 to leadership PACs controlled by sitting members of Congress since January 2017 — few enough to fit into a large SUV.

Top among them: Sean Parker, the billionaire co-founder of the music-sharing website Napster who served as the first president of Facebook. Parker has contributed $170,000 so far this election cycle to 34 leadership PACs, with about two-thirds of that money benefiting Democrats and about one-third aiding Republicans.

Alexandra Parker — the singer/songwriter who is married to Sean Parker — has additionally contributed $115,000 to 23 leadership PACs since January 2017, with about 55 percent of that sum aiding Democrats and about 45 percent going to Republicans.

In 1976, the U.S. Supreme Court upheld the constitutionality of campaign contribution limits in the Buckley v. Valeo decision because of the importance of “the prevention of corruption and the appearance of corruption spawned by the real or imagined coercive influence of large financial contributions on candidates’ positions and on their actions.”

Added Issue One CEO Nick Penniman: “Leadership PACs confirm Americans’ worst suspicions about how Washington works. Congressional action to rein in leadership PACs is long overdue.”