Federal Campaign Finance Crash Course

So this is the first blog I’ve had. I was a bit delayed with the hurricane, and another research project I was working on over the summer. Rather then go into too much detail with the mathematical nitty-gritty of my project, for the blogs I’m going to go into an interesting side research into my research on political return on investment. This blog post will mostly go through a background on the data and research methods I’m using in the project, as well as discussing some information on the broader field of campaign finance analysis. The second post will detail the side problem I’m going into for the blogs, and the final post will be regressions and other statistical findings about the research. As a result of the hurricane, I was unable to work on the campus PCs to actually produce the regressions, so expect the conclusion of these blogs early next week.

Campaign finance is a (somewhat) regulated economic field which specializes on analyzing the political contributions, fundraising, lobbying, and interest groups that influence power. On a federal level, this field is mostly concerned with information about lobbying expenses, personal finance reports from congressional representatives, Political Action Committees, 527 organizations, Non-Profit contributions, and  individual donations, all of which contain some form of public disclosure.

An issue which develops, then, are the multiple agencies and congressional bodies that receive and handle this information. The Internal Revenue Service, the Federal Elections Commission, and both the House and Senate leadership each oversee some aspects of this information. Moreover, the data is then made available in pdf formats, which are hardly the preferred medium for broad information analysis and comprehension.

This summer, I interned at the Center for Responsive Politics, the organization which compiles all this information, cleans it, codes it, and makes it public in a matter which make the diverse data analyzable in a coherent way on their website, opensecrets.org.

Campaign finance organization at the federal level is organized in the following manner. Each candidate for congress has a campaign committee. This committee oversees all official political expenditures on the part of the candidate themselves. The sole purpose of the committee, ostensibly, is to get the affiliated candidate elected to their office. To accomplish this, the committee fundraises on behalf of the candidate, and is required to disclose any contribution exceeding $200 to the FEC. Committees may receive a maximum of $5,000 per person per election; That’s $5,000 for a primary, $5,000 for the General election, and $5,000 for a recount or special election should that occur.

Typical sources of contributions include individual contributions – contributions from private citizens – and contributions from Political Action Committees, or PACs. Political Action Committees are not affiliated with a particular candidate (Excepting “leadership PACs,” a different story altogether), and often advocate strictly for a particular issue, union or business entity. For instance, Honeywell International PAC makes political contributions on behalf of the employees and interests of the Honeywell Corporation. The International Brotherhood of Electrical Workers PAC makes contributions on behalf of that union’s members in pursuit of their political interests. The New Democrat Coalition PAC makes contributions to members who support democratic or liberal causes on behalf of democrats and liberals.

From these entities, politicians raise money for their campaign committees. However, the behavior of PACs don’t end there. PACs also can make “independent expenditures,” such as advertisements advocating for their political interests. This could include simple ads (“Support the Troops this election”) or could include “Electioneering Communications,” which explicitly endorse or deride a candidate in an election (“Vote for Rick Perry”)

As a result of the Supreme Court decision SpeechNow.org v FEC, a new political entity has emerged. An “Independent Expenditures Only PAC,” commonly referred to as a SuperPAC, can accept contributions in amounts exceeding the $5000 per cycle limit imposed on typical PACs. The trade-off is that SuperPACs cannot contribute funds directly to a political campaign committee, but instead can only make independent expenditures advocating its own opinion. This does include electioneering communications.  For instance, the SuperPAC Jobs for Iowa supports Rick Perry for the Republican presidential nomination and has produced a series of ads in Iowa advocating for the candidate. Jobs for Iowa can accept unlimited contributions to pursue their goal of electing Rick Perry as the President, but cannot directly support the candidate’s campaign committee financially in any way.

A final type of PAC that is of emerging interest is the Leadership PAC. Leadership PACs are affiliated with politicians, but not in the same way as their own campaign committees. Leadership PACs are used by politicians as a method of raising funds from their own personal base and distributing them to their colleagues and sympathetic candidates. These are often used as the way to win support during caucus elections. In so many words, a congressman who wants to be Speaker of the House gets the position by contributing support to their colleagues through their Leadership PAC.

For perspective, the top contributing  leadership PACs in 2010 belong to Speaker John Boehner, the Majority and Minority Leaders Eric Cantor and Nancy Pelosi, the Democratic Whip James Clyburn, and the Democratic Deputy Minority leader Steny Hoyer. Other contributors in the top-ten leadership PACs include DNC Chairwoman Debbie Wasserman-Schultz and (former) Republican presidential frontrunner Mitt Romney. The strategy is to allocate funds to peers in pursuit of internal caucus office, and the tactic is historically highly effective.

As for the other groups, I won’t be discussing them too much in the upcoming blog post. 527 organizations, so named because of the section in the IRS tax code which allows them, are groups which can raise funds and spend them on independent expenditures so long as those expenditures are not electioneering communications. For instance, the (in)famous 527 “Swift Boat Veterans for Truth” never actually said to vote against then-candidate John Kerry. They merely informed the public of their perspective on the Senator’s war record. Since they never said “Vote for Bush” or “Vote against Kerry,” the advertisements didn’t constitute an electioneering communication. 527 organizations are most commonly used for Get Out the Vote efforts, voter registration, and other actions which don’t directly advocate for a candidate.

Finally, 501(c) organizations have varied requirements as to regulating political involvement. Since technically anything from a Labor Union to the Boy Scouts to the Chamber of Commerce to the Roman Catholic Church is a 501(c) group in some form, the election legalese is slightly more complicated then need be explained for the purposes of this project. The typical rules state that a 501(c) organization can participate in political actions so long as political activity is not the group’s primary purpose. This hazy requirement is a legal conundrum for many organizations involved in campaign finance law lawsuits at the moment, so it’s not really worth delving into too much detail.

These organizations constitute the medium by which money is legally permissible in federal politics. Through these channels, businesses seek to influence, individuals attempt to engage, and interest groups attempt to advocate their views. Money powers politics, and that relationship is being discussed now more than ever. This project will take a look on possible measurements of political return on investment. Is political contribution an effective means of implementing change? Or is it merely a cost of doing business these days?