Creative Campaigning

Pacs And The Presidential Selection Process

Anthony Corrado

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9780367004651
• eBook ISBN: 9780429719523
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Ronald Reagan started it, back in 1977. George Bush perfected the art in 1988. In the 1980s and 1990s, Democrats as well as Republicans running for president (or thinking of doing so), have followed Reagan's lead in establishing precandidacy PACs as a way of raising more money faster, without the regulatory rigors laid down by Congress and the Federal Election Commission. Marshalling years of experience on the campaign trail, Anthony Corrado has documented for the first time the fundraising and spending patterns of presidential candidates who feel forced to circumvent the system in order to amass enough funds to mount a contemporary presidential campaign. He shows how a variety of factors—contribution limits, the delegate selection process, expenditure ceilings, and costly campaign strategies—have combined to push candidates to establish PACs to raise and spend money on campaign activities well in advance of an official declaration to run. These lofty-sounding organizations—such as Bush's "Fund for America's Future" and Gephardt's "Effective Government Committee"—operate as "shadow campaigns" throughout the nomination process and often live on beyond the candidate's formal bid for office. The year 1992 is a special case in presidential election year history because of the strong Bush incumbency, a reluctant Democratic challenge, and a series of foreign policy crises. Corrado explains why precandidacy PACs persist and how they are likely to grow (in number and clout) if an array of bold new reform measures is not implemented prior to the next open presidential election in 1996. After showing how the Federal Election Campaign Act not only permits but in fact inspires presidential candidates to break the laws governing campaign finance, Corrado points out how, ironically, less regulation may yield greater compliance and a more effective nomination process in the 1990s and beyond.

1
Introduction

On April 25, 1985, less than six months after being reelected vice president, George Bush began his quest for the 1988 Republican presidential nomination. On that date, a statement of organization was filed with the Federal Election Commission for the Fund for America's Future, a political action committee (PAC) sponsored by Bush and chaired by Lee Atwater.¹ The avowed purpose of this group was to help elect Republican candidates and promote state and local party-building activities. The group's true purpose, however, was to advance Bush's personal ambitions: it was primarily created to provide Bush with an organization that could be used to raise funds for activities designed to benefit his future presidential campaign without being subject to the campaign finance limits imposed on presidential candidates.

From its formation through 1987, the Fund for America's Future raised over $11 million but donated less than $850,000 to federal candidates. Most of the remaining $10 million was used to pay office expenses, hire staff and political consultants, develop a fundraising program, sponsor political receptions, establish a nationwide network of state and local supporters, and finance state-level political operations. In short, the committee functioned as a shadow campaign organization concentrating its resources on activities designed to build a foundation for Bush's 1988 presidential candidacy. But because Bush had not publicly declared his intention to run, the monies raised and spent by his PAC were not considered to be campaign-related. These funds were therefore exempt from the contribution and spending limits established by the campaign finance reforms of the 1970s. The Fund for America's Future thus provided Bush with a significant head start on his 1988 nomination campaign and in the process allowed him to spend more than $10 million dollars outside of the limits mandated by federal law.

Bush was not the only 1988 candidate to recognize the value of a political action committee. By April 30, 1986, nine other presidential aspirants had organized similar committees in anticipation of the 1988 contest. These committees spent approximately $15 million, none of which was disclosed on campaign spending reports. Nor was Bush the first candidate to adopt this approach. He and other presidential hopefuls patterned their actions on the model established by Ronald Reagan, who began his successful 1980 campaign by forming Citizens for the Republic on January 28, 1977.²

Reagan initially established Citizens for the Republic as a means of disbursing $1.6 million in surplus funds from his unsuccessful 1976 presidential campaign. Rather than give the money away or keep it and pay taxes on it, he decided to convert his campaign committee into a political action committee and use the funds to support conservative Republican candidates and causes.³ The committee sought to fulfill this objective by making contributions to Republican candidates who shared Reagan's political views, by providing assistance to state and local party organizations, and by funding Reagan's public appearances at events sponsored by candidates and various political groups.

Reagan and his advisers soon realized that this committee could also be used to conduct a wide range of campaign-related activities that would keep Reagan in the public spotlight and allow him to expand his political organization in preparation for a possible run in 1980. This insight became the operative principle that determined most of the PAC's subsequent actions. The surplus funds from the 1976 campaign were used as "seed money" to finance an extensive fundraising operation, which raised close to $5 million and developed a list of approximately 300,000 active donors, all of whom were likely prospects for future campaign contributions.⁴ The PAC used some of these funds to hire a staff, cover administrative costs, and make contributions to Republican candidates and party organizations. Most of the funds, however, were used to retain professional consultants, finance political outreach programs, organize volunteer recruitment efforts, publish a committee newsletter, subsidize Reagan's travel and public appearances, and host receptions. These operations were aimed at increasing Reagan's presence in crucial primary states, improving his support among party activists, and maintaining his public visibility. The committee thus served as a scaled-down campaign committee, providing Reagan with the essential resources and services needed to launch his 1980 campaign.

More importantly, Citizens for the Republic offered Reagan a number of advantages that he could not have achieved as a declared candidate for the presidential nomination. Because the federal campaign finance laws set forth different regulations for PACs and candidate campaign committees, a PAC can be used to conduct financial activities that are prohibited in presidential election contests. Whereas a formal campaign committee must adhere to specified expenditure ceilings, there is no limit on the amount a PAC may spend. Citizens for the Republic could therefore spend as much money as it could raise. And it raised a substantial amount, largely as a result of the more permissive contribution limits established for PACs. Although an individual donor may contribute no more than $1,000 to a candidate's campaign, he or she may donate up to $5,000 per year to a PAC. Accordingly, over the four-year period of a presidential election cycle, an individual may give up to $20,000 to a candidate's PAC and still be eligible to donate the maximum of $1,000 to that candidate's campaign because the campaign organization is a legally distinct entity from the PAC. Citizens for the Republic thus provided Reagan with a means of accepting contributions that would be considered illegal if given to his presidential campaign. It also allowed him to avoid the strict public disclosure requirements established for federal candidates. Because the PAC was not legally affiliated with Reagan's campaign operation, he did not have to include any of the monies raised and spent by the committee in his campaign disclosure reports. Consequently, the PACs greatest benefit was not that it allowed Reagan to conduct campaign activities before he declared his candidacy but that it allowed him to do so without having to be concerned with the restraints imposed on candidates by federal law.

Reagan was able to use his PAC as a vehicle for circumventing the presidential campaign finance regulations by deftly exploiting some of the technicalities embedded in the law. A prospective candidate, or any individual or group associated with a prospective candidate, may legally organize a PAC. The PAC is considered to be independent of any future campaign committee established by an individual associated with the PAC so long as the PAC or any of its members avoid certain activities specified by law as indicative of a formal candidacy. For example, a PAC may not identify a member or sponsor as a future candidate in its publications or public statements; it may not amass funds for a future campaign or use general public political advertising to promote that individual's future intention to seek office; nor may it attempt to qualify that person for a state ballot.⁵ If a member of the PAC does engage in any of these activities, then the committee's actions may be judged to be campaign-related and its receipts and expenditures must be reported in the campaign disclosure reports of the individual concerned.

Reagan and his associates deliberately avoided any actions that would cast Reagan as a legally qualified candidate. While he served as chair of Citizens for the Republic, Reagan never publicly declared his intention to enter the 1980 nomination contest nor did he ever refer to himself as a candidate. The committee's public statements and written materials never explicitly mentioned a possible Reagan candidacy. Nor did the PAC amass funds for Reagan's future use in a campaign or attempt to qualify him for the ballot under state law. As far as the law was concerned, Citizens for the Republic's sole purpose was to assist Republican candidates and help build state and local party organizations. By maintaining this facade, Reagan was able to spend two years running for president in direct violation of the spirit of the presidential campaign finance regulations and the major provisions of the Federal Election Campaign Act (FECA). A new loophole in the campaign finance system was thus created.

Reagan's use of Citizens for the Republic revolutionized the way in which presidential candidates organize and finance their campaigns. By March 1, 1978, three of his prospective opponents, George Bush, Robert Dole, and John Connally, had created PACs of their own. The activities of these committees demonstrated that any candidate could benefit from a precandidacy PAC. As a result, the use of such committees rapidly increased, and they are now a central component of most presidential campaigns.

In each of the last two elections, a majority of the candidates for the presidential nomination have sponsored PACs as the first step in initiating their candidacies. These committees have spent tens of millions of dollars and facilitated an inordinate amount of unregulated campaigning. Candidate-sponsored PACs thus represent one of the largest loopholes in the federal campaign finance system. The use of these committees as surrogate campaign organizations is making a mockery of the financial restraints established by the Federal Election Campaign Act and raises serious questions as to the ability of the current regulatory approach to control campaign finances in the future. Why these committees have become so prevalent and why the present system has failed to control this abuse of the law is the primary topic to be explored in this book.

Purpose and Overview

Since the 1976 election, the financing of presidential campaigns has been governed by the provisions of the Federal Election Campaign Act of 1971 and its subsequent amendments, which were adopted in 1974, 1976, and 1979.⁶ These statutes were the result of a reform impulse that swept through the Congress in the 1970s, an attitude spurred by growing concern over the role of money in federal elections. Rapidly rising campaign costs, an alarming increase in the role of wealthy contributors in the financing of election contests, and the financial abuses revealed through investigations of the 1972 election combined to generate a wave of support for fundamental reform of the methods of funding elections. Congress responded by placing campaign finance reform at the top of its agenda and passing legislation that completely restructured the federal political finance system.

The most important of these statutes is the Federal Election Campaign Act Amendments of 1974. Although technically a set of amendments to the 1971 law, this landmark piece of legislation actually stands as the most comprehensive reform of the campaign finance system ever adopted. These amendments required full public disclosure of the financial activities of federal candidates, set strict limits on political contributions, established spending ceilings for presidential primary and general election campaigns, created a system of public financing for presidential elections, and formed the Federal Election Commission (FEC) to administer and enforce the law.⁷ These provisions were designed to improve the efficacy of campaign disclosure laws, limit the influence of large donors on electoral outcomes, reduce the rapid growth in campaign spending, and minimize the emphasis on fundraising in presidential campaigns.

This book argues that these reforms have failed to achieve their goals and that a new approach is needed for the regulation of political finance. The Federal Election Campaign Act and its amendments have not fulfilled their purpose, which was to resolve, once and for all, the problems inherent in a private system of financing elections. Instead the reforms have simply encouraged candidates to seek out unregulated methods of funding their campaigns. Candidates have responded to the new regulations by developing innovative organizational and financial schemes based on legal technicalities that allow them to circumvent most of the law's major provisions. As a result, the ills that Congress sought to cure by changing the law, such as unlimited spending and the use of undisclosed campaign accounts, continue to plague the system.

This argument, to a certain extent, is not unique. In recent years, many scholars and observers of the political process have noted this unintended outcome of the reforms.⁸ The common conclusion of these analyses is that the law is generally fulfilling some of its objectives but that its overall effectiveness is being undermined by a number of loopholes that provide candidates, individuals, and groups with a variety of means through which they can circumvent the law's proscriptions.⁹ While a number of problems have been identified, most of the scholarly and public attention has focused almost exclusively on two types of unregulated activity, spending money independently¹⁰ and using "soft money."¹¹

As concerns presidential elections, both of these practices primarily affect the financing of general election campaigns. Independent expenditures are monies spent by an individual or group to advocate the election or defeat of a candidate that are disbursed without any prior consultation, suggestion, or coordination with a candidate or a member of a candidate's authorized campaign committee. Although an individual or group can spend funds independently in either a primary or general election, only a minor percentage of the monies spent in this manner have been disbursed during the primaries. Most of the groups or individuals who spend their own funds to advocate the election or defeat of a candidate focus their resources on attempting to influence the outcome of the general election. As Xandra Kayden of the Harvard Campaign Finance Study Group has noted, "typically, those organizations which made up the bulk of independent spenders spent somewhere between 80 to 90 percent of their funds during the general election."¹² In the 1980 presidential election, for example, approximately $10.9 million of the $13.7 million spent independently was devoted to influencing the outcome of the general election.¹³ In 1984, approximately $17 million of the $17.4 million spent independently was designed to influence the general election outcome.¹⁴

"Soft money" is the colloquial term used to refer to funds that are not subject to the provisions of the Federal Election Campaign Act but are used to influence the outcome of a federal election. As with independent spending, soft money activities can take place in a primary or general election. In presidential elections, however, such funds are used almost exclusively to supplement the public funds available to general election candidates. This is commonly accomplished by using the national party committee as a "coordinator" for soft money activities. The national party asks individuals and groups to donate unregulated monies to state and local party organizations. These committees then spend the funds on activities designed to assist the party's nominee. National party committees thus use soft money to channel private funds indirectly into presidential general election campaigns.¹⁵

This emphasis on independent expenditures and soft money in scholarly and journalistic assessments of the shortcomings of the campaign finance reforms has played a critical role in focusing public attention on these loopholes and in clarifying their effects on the financing of presidential elections. But it has also served to minimize concern about the financing of presidential nomination contests. The general impression created by the current discussions of presidential campaign finance is that the major problems with the system lie in the area of financing general election campaigns. The tactics employed by presidential candidates to avoid the law during the nomination phase of the selection process have not been a focal point of public concern and have certainly not become a central issue in the legislative debates over the need for further campaign finance reform.

Indeed, since the passage of the Federal Election Campaign Act Amendments of 1979, Congress has devoted relatively little attention to the unresolved problems in the financing of presidential campaigns. Congressional debate throughout the 1980s has been dominated by the issues associated with the financing of House and Senate campaigns, especially the issues surrounding the increasing role of PACs as a source of congressional campaign income.

This obsession with PACs is evidenced by the campaign finance reform bills submitted in recent congresses. For example, in the 98th, 99th, and 100th congresses, approximately 173 bills and amendments were proposed that called for some change in the federal campaign finance regulations.¹⁶ Most of these measures were primarily concerned with the financing of congressional campaigns. At least 61 of the bills contained provisions designed to limit the influence of PACs in congressional elections directly by requiring a ceiling on the amount of PAC money a candidate may receive (33 bills), a lower limit on PAC contributions (26 bills), or a prohibition against the bundling of individual contributions by a PAC (26 bills).¹⁷ Approximately 29 of the proposals attempted to limit the influence of PACs indirectly by raising the contribution limit for individual donors (16 bills), providing tax-credits for non-PAC donations (10 bills), or recommending some other change that would serve this purpose (11 bills). Others sought to reduce the role of PACs and limit the cost of congressional campaigns by establishing some form of public financing (37 bills) or by allowing Congress to limit campaign spending without public funding (19 bills).

The problems that have developed in the presidential campaign finance system have received significantly less attention. If one were to base a judgment solely on the proposals submitted to these 3 congresses, it would appear that the legislature sees no urgent problems with the system or has been negligent in addressing its shortcomings. Although 43 bills included provisions concerning presidential elections, 32 of these were for the most part concerned with reducing the influence of independent expenditures, a practice that affects congressional as well as presidential candidates. About 20 bills advocated some other change in the current presidential system, with almost half of these aimed at repealing major aspects of the law, such as public financing (5 bills) or state spending limits (4 bills). Only 11 proposals offered a remedy for the problems posed by soft money, despite the fact that the use of these funds wholly v...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Dedication
• Contents
• List of Tables
• Preface
• 1 INTRODUCTION
• 2 THE STRATEGIC ENVIRONMENT OF THE MODERN NOMINATING PROCESS
• 3 FEDERAL LAW AND THE NEW ALTERNATIVES
• 4 THE RISE OF PRESIDENTIAL CANDIDATE PACs
• 5 THE FINANCIAL ADVANTAGES OF PAC SPONSORSHIP
• 6 THE SHADOW CAMPAIGN
• 7 CANDIDATE PACs AND THE CAMPAIGN FINANCE SYSTEM
• 8 REFORMING THE REFORMS
• List of Acronyms and Abbreviations Used in the Notes
• Notes
• Selected Bibliography
• About the Book and Author
• Index