Making Sense of Political Action Committees

NJ Spotlight News | October 19, 2015 | Elections, Politics

Some $7 billion was spent on the 2012 presidential race. This race could out-strip that. PACs — Political Action Committees — aren’t new. The labor union CIO, before the American Federation of Labor was added, formed one in 1944 to re-elect Roosevelt. The donations came from workers, not union treasuries. Fast forward 66 years to Citizens United, when the Supreme Court ruled unfettered political spending is protected under the first amendment, just like speech, and doesn’t buy political influence. That gave rise to Super political action committees that can raise as much as they want from anyone they want. They can also spend it any way they want, without restriction, provided they are “independent” of a candidate. Election law expert attorney Steven Kleinman spoke with NJTV News Anchor Mary Alice Williams about the differences in different kinds of political action committees.

A super political action committee is a relatively new form of political organization that emerged from a couple of recent cases, of which Citizens United was one of them, according to Kleinman. “A super political action committee, so long as they don’t directly coordinate with candidates for public office, under the first amendment can raise and spend unlimited amounts of money,” he said. “It can raise money from sources that can not give directly to candidates, such as corporations and labor unions. The candidates themselves are fairly limited in the amount of money that they can raise at any one time, and they can not take money from corporation and labor unions. So you might have a circumstance where a wealthy donor might give the federal limit of $2,700 to a federal candidate, but could give millions of dollars to a super political action committee that’s running ads in support of that very same candidate.”

Super political action committees are allowed in the state of New Jersey and Kleinman says there are some active right now in certain legislative races. When it comes to different type of organizations that can donate to campaigns, he explains the difference between a 527 and 501(c)(4) organizations. He explains that a 501(c)(4) is a social welfare organization. “Basically they fall under a different section of the tax code,” he said. “All a 527 is is the section of the internal revenue code that deals with political organizations. Since it’s a 501(c) organization, it can not spend more than half of it’s resources on political activities, but a 501(c)(4) does not need to disclose it’s donors, unlike a 527 group. So some people form 501(c)(4)s when they don’t want their donors to be known to the general public.”

Kleinman says that 527 organizations formed to support a particular candidate are generally formed by people who are very close to the candidates themselves, perhaps former staffers, long time fundraisers. As far as the rules for the chairman of those kinds of organizations, he says they are absolutely supposed to remain independent, and need to step aside, in large part because of the operations of the super political action committee. “There are some ways of coordination in some limited amounts and it’s generally a very very fine line as to how far you can go,” he said.

He says there’s an advantage in entering a presidential race later in terms of fundraising and that we saw this when some candidates announced their bid for president this year. “This actually happened where you saw some candidates for president, since they all have super political action committees, but once they officially declare they can no longer coordinate with super political action committees. That’s the really big restriction when you deal with super political action committees is they’re supposed to be independent of the candidates. So what you saw are candidates delaying their entry in the race so they could raise as much money with the super political action committees, knowing that once they declare they’re going to have to separate themselves and be independent from their operations,” Kleinman said.

Kleinman says there’s no conflict for candidates like Governor Chris Christie, who currently hold office while running for another. “Gov. Christie has a separate campaign account for his race for president,” he said. “The rules are different in federal and state. In New Jersey corporations and labor unions actually can give directly to political candidates where they can’t on the federal level.”

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