Forget the Dictionary, Super PACs Aren't New
Merriam-Webster announced this week that it has added the term "super PAC" to its dictionary. The entry cites a quote tracing the term's birth to the Supreme Court's 2010 Citizens United decision and a subsequent lower court ruling. That connection -- while technically accurate -- unfortunately perpetuates a gross misunderstanding of the impact the case has had on political spending.
There may be no bigger bogeyman in liberal political circles than Citizens United, which is widely blamed for a huge increase in outside campaign spending by wealthy interests. Much of that growth, however, has been via channels that had nothing to do with the case, and much of the rest probably would have happened anyway.
The confusion stems largely from the idea that independent political committees that can raise unlimited contributions from individuals, corporations and labor unions to influence elections -- what are now called super PACs -- were illegal before Citizens United. But they were not.
In 1976, the Supreme Court ruled in Buckley v. Valeo that individuals may spend unlimited amounts of money supporting or opposing candidates so long as such spending isn't coordinated with the candidates and doesn't fund "express advocacy," which the court defined as exhortation containing phrases such as "vote for" and "vote against."
As a result, individuals and corporations could write large checks (called soft money) to political parties and other election-related groups. During the 2000 campaign, those checks started flowing to 527 groups, so-called because they were organized under Section 527 of the tax code. Not only could these groups accept unlimited individual, corporate and union contributions, they weren't required to disclose their donors, a loophole Congress closed in 2000, shining some light on these so-called stealth PACs. In 2004, after the McCain-Feingold reforms shut political parties out of soft money, George Soros gave $27.5 million to 527 groups supporting John Kerry's presidential candidacy, and multimillion dollar contributions also went to groups such as Swift Vets and POWs for Truth.
These 527 groups -- independent organizations raising unlimited contributions, including from unions and corporations, to influence elections -- are essentially identical to today's super PACs, with one significant exception: Super PACs may expressly advocate for the election or defeat of candidates.
The ban on express advocacy was lifted in two steps. First, in January 2010, Citizens United effectively overturned the ban for corporations and labor unions, adopted in 1947 over President Harry Truman's veto. The decision, however, only allowed the groups to spend unlimited amounts, not contribute unlimited amounts to independent committees. Any contributions to committees engaging in express advocacy remained subject to the $5,000 limit that applied to individuals.
Two months later, the D.C. Court of Appeals struck down that limit in a 9-0 ruling in Speechnow.org v FEC. Since then, individuals, corporations and labor unions have been free to spend freely on express advocacy, including through independent groups.
This broader right to engage in express advocacy has given wealthy donors another option for where to send large checks. Those checks, however, are increasingly being sent to groups that were unaffected by the Citizens United and Speechnow decisions: 501(c) organizations that, like the old stealth PACs, do not have to disclose their donors. Governed by the Internal Revenue Service rather than the Federal Election Commission, the election activity of these groups is more restricted than that of political committees, but oversight has always been lax. From 2004 to 2012, spending by 501(c) organizations grew by almost 500 percent, to $334 million from less than $60 million.
Over the same period, total spending by 527 groups dropped by 65 percent, to $151 million from $431 million. Some of the missing money undoubtedly went to 501(c) organizations, and some of it went to super PACs, which raised $609 million in 2014. But let's put these numbers in context.
Total spending by political committees accepting unlimited contributions (Super PACs and 527s) grew by 76 percent from 2004 to 2012. Meanwhile, total contributions raised by the two major parties' presidential candidates grew by 72 percent, from $696 million in 2004 to $1.2 billion in 2012.
I draw four conclusions from this data.
First, even without the two 2010 court decisions, the amount of money coming into the political system was dramatically increasing, as evidenced by the five-fold increase in contributions to 501(c)s and the increase in donations to the presidential candidates.
Second, the fact that the percentage increase in contributions to the two major-party candidates mirrored the increase for political committees accepting unlimited contributions underscores that the impact of the 2010 court decisions has been overplayed.
Third, many donors continue to seek anonymity. The 2010 court decisions expressly upheld disclosure requirements for election-related contributions, but the IRS is unable, and the FEC is unwilling, to police them.
Fourth, the explosion of 501(c) activity is testament to the fact that non-express advocacy can be just as effective as (and often more effective than) express advocacy. The Koch brothers, for instance, are often vilified as the main promoters of post-Citizens United outside money, but their main spending vehicle -- Americans for Prosperity -- is a 501(c)(4) organization. And that gets to the heart of the matter.
Super PACs -- independent political committees raising unlimited contributions and engaging in election communications -- have existed for decades. The Speechnow decision expanded their license to communicate, but their freedom to raise unlimited sums -- rather than constraints placed on the wording of their advertisements -- has always been their (Merriam-Webster, take note) defining feature.
The valid legal debate over the wisdom of Citizens United should be separated from the misplaced political hysteria over its impact.
(Francis Barry is a member of the Bloomberg View editorial board. Follow him on Twitter at @FSBarry.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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