Cruz Joins Heitkamp as New Senator Forming Leadership PAC

Ted Cruz and Heidi Heitkamp haven’t begun serving their freshman years in the U.S. Senate, yet they are already raising money like congressional leaders.

Cruz, a Texas Republican, and Heitkamp, a North Dakota Democrat, established “leadership” political action committees within days of winning election on Nov. 6. Another newly elected Democratic senator, Tim Kaine of Virginia, a former national party chairman, set up his leadership PAC earlier this month. Nine newly elected House members didn’t even wait until Election Day before forming their PACs.

Originally the province of senior House and Senate members, such PACs have become as ubiquitous as re-election committees, allowing lawmakers to collect additional money from their supporters. They provide lawmakers with money to donate to other federal and state candidates, travel to attend political and party events, and conduct other election-related activities without tapping their own campaign accounts.

“This is just a second fundraising machine for incumbents,” said Craig Holman, a lobbyist for Public Citizen, a Washington-based advocacy group that favors stronger campaign- finance regulations.

Earning Chits

The number of leadership PACs is growing: 422 made donations to federal candidates in 2012, up from 226 a decade earlier, according to the Center for Responsive Politics, a Washington-based research group. These PACs are sponsored by current lawmakers, former members and other political figures such as 2008 Republican vice-presidential nominee Sarah Palin.

By helping other candidates, lawmakers earn chits to redeem for support when they seek higher office or climb the leadership ladder in Congress.

Both 2012 presidential candidates had leadership PACs before they sought the White House.

As a newly elected U.S. senator, Barack Obama set up his PAC in January 2005. And after leaving the Massachusetts governorship in 2007, Mitt Romney used leadership PACs to help fellow Republicans before both his 2008 and 2012 White House campaigns.

The three most generous leadership PACs in 2012 were all sponsored by congressional leaders. House Majority Leader Eric Cantor, a Virginia Republican, used his leadership PAC to dole out $2.1 million to congressional candidates, while House Speaker John Boehner’s PAC contributed $1.7 million and House Democratic Whip Steny Hoyer’s PAC gave out $1.2 million. Boehner is an Ohio Republican; Hoyer a Maryland Democrat.

Backing Candidates

Cruz, 41, registered his Jobs, Growth and Freedom Fund on Nov. 12. Heitkamp, 57, followed with her Dakota Prairie PAC on Nov. 14.

“A leadership PAC allows Ted and his supporters to back candidates around the country with similar views on economic growth, free markets, and limited government,” said Sean Rushton, a spokesman for Cruz. “The PAC will help Ted spread his message and build support for the reforms he wants to see.”

Phone calls to Heitcamp’s campaign office weren’t returned over a three-week period.

A Kaine spokesman, Michael Kelly, said the senator-elect wanted to support candidates who agreed with his campaign promise “to seek common ground with colleagues of both parties to break through the Senate’s recent gridlock and address our nation’s challenges.”

Four other freshmen senators -- Democrats Joe Donnelly of Indiana, Martin Heinrich of New Mexico and Tammy Baldwin of Wisconsin, and Republican Jeff Flake of Arizona -- had leadership PACs while serving in the U.S. House. A fifth House member, Democrat Mazie Hirono of Hawaii, waited until after she was elected to the Senate before setting up a PAC in December.

Contribution Limits

Federal law restricts the size of contributions to candidate re-election committees to $5,000 for individuals and $10,000 for PACs for the primary and general elections combined. Thanks to the leadership PACs, those same donors will be able to give an extra $5,000 per year to the candidate.

For a senator, who serves six years, that’s an extra $30,000 in donations, six times the amount an individual can give to a campaign committee and three times what a PAC can donate.

Doctors and other health professionals provided the biggest source of campaign cash in 2012 for the re-election of Representative Dave Camp, 59, a Michigan Republican who is chairman of the House Ways and Means Committee with jurisdiction over health issues, according to the Center for Responsive Politics. They also were the second-biggest source of money for his leadership PAC.

Tax Jurisdiction

Ways and Means also has jurisdiction over taxes, and securities and investment industry employees and executives, directly affected by levies on capital gains and carried interest, were the second most-generous donors to Camp’s campaign committee and the No. 1 giver to his leadership PAC.

Representative Steve Stivers, 47, an Ohio Republican who serves on the Financial Services Committee and was first elected two years ago with anti-tax Tea Party support, saw employees in the insurance, commercial banking and real estate industries account for three of the four biggest sources of donations to both his campaign committee and leadership PAC.

Lawyers were the biggest donors to first-term Senator Chris Coons, 49, a Delaware Democrat who sits on the Judiciary Committee. They’re also the top contributors to his leadership PAC.

‘Special Interests’

“It provides special interests with a means of throwing money at the feet of incumbent lawmakers with the expectation of getting something in return,” Holman said.

Camp, Stivers and Coons didn’t respond to requests for comment made through their press offices.

The leadership PACs set up by the newly elected House members before they officially won their offices include two with acronyms that spell part the their sponsor’s names: Arizona Republican Matt Salmon’s Safeguarding American Liberties, Morals and Opportunities Now (Salmon) PAC, formed Oct. 26; and Washington Democrat Derek Kilmer’s Defense, Economic Renewal, Education and Knowledge (Derek) PAC, created Oct. 2.

The other incoming freshman representatives with leadership PACs are Ron DeSantis of Florida, Dan Kildee of Michigan, Ann Wagner of Missouri, Robert Pittenger of North Carolina, Joaquin Castro and Roger Williams of Texas, and Mark Pocan of Wisconsin.

“This would have been silly even a decade ago,,” said Sheila Krumholz, executive director of the Center for Responsive Politics. “Freshmen understand that it’s now standard. Money is just swirling. Everyone is trying to ratchet up their fundraising ability, the capacity to bring in money through each and every possible avenue.”

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.

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