Gavin Howe
Political Action Committees (PACs) are organizations that raise and distribute campaign funds to candidates seeking political office. The first PAC was created in 1943 or 1944 by the Congress of Industrial Organizations (CIO) to raise funds for the reelection of President Franklin D. Roosevelt. This was done through voluntary contributions from union members, circumventing the Smith-Connally Act of 1943, which prohibited unions from contributing to federal candidates. The emergence of PACs was driven by campaign finance laws that restricted direct contributions from corporations, unions, and private individuals to political candidates. While the initial laws, including the Tillman Act of 1907, targeted corporations, subsequent reforms, such as the Smith-Connally Act, extended these restrictions to labor unions. The Federal Election Campaign Act (FECA) of 1971 further shaped the landscape of campaign finance by introducing disclosure rules for PACs, requiring them to report donations of $200 or more to the Federal Election Commission (FEC). The evolution of campaign finance laws and judicial decisions have led to the creation of various types of PACs, including connected and non-connected PACs, Super PACs, and Hybrid PACs, each operating under different regulations regarding contribution sources and spending capabilities.
| Characteristics | Values |
|---|---|
| Year of emergence | 1943-1944 |
| Reason for emergence | To circumvent the Tillman Act (1907) and Smith-Connally Act (1943) which prohibited unions and corporations from contributing directly to political candidates |
| First PAC | CIO-PAC, formed in July 1943-1944 under CIO president Philip Murray and headed by Sidney Hillman |
| Federal law classification | Connected, non-connected, and independent expenditure-only committees (Super PACs) |
| Types of PACs | Separate segregated funds (SSFs), nonconnected committees, and Super PACs |
| Number of active, registered PACs | 4,600 |
| Number of registered corporate PACs (as of Jan 2009) | 1,598 |
| Number of PACs related to labor unions (as of Jan 2009) | 272 |
| Number of PACs related to trade organizations (as of Jan 2009) | 995 |
| Maximum amount PACs may receive from any one individual, PAC, or party committee per calendar year | $5,000 |
| Year Super PACs were created | 2010 |
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What You'll Learn
- The Tillman Act (1907) restricted corporate contributions to political candidates
- The Smith-Connally Act (1943) extended restrictions to labour unions
- Campaign reform laws (1970s) facilitated PAC growth, allowing corporations, trade associations, and unions to form PACs
- Federal Election Campaign Act (FECA) (1971) created rules for disclosure and reporting
- Citizens United v. Federal Election Commission (2010) allowed corporations to support PACs
The Tillman Act (1907) restricted corporate contributions to political candidates
The Tillman Act of 1907 was the first federal effort to regulate campaign finance in U.S. elections. It prohibited monetary contributions to federal candidates by corporations and nationally chartered (interstate) banks. The Act was signed into law by President Theodore Roosevelt on January 26, 1907, and was named for its sponsor, South Carolina Senator Ben Tillman.
The Act was a response to a corporate fundraising scandal involving Roosevelt's own successful campaign in 1904. During the 1904 presidential election, Democrat Alton B. Parker alleged that corporations gave incumbent Roosevelt large sums of money in exchange for influence on administration policies. Roosevelt denied the charge, but investigations held after the election found that corporations did make substantial contributions to the Republican campaign. In his 1905 address to Congress, Roosevelt called for a ban on all such contributions.
The bill that Congress passed in 1907 was narrow in scope. It prohibited corporate contributions based on Congress's authority to regulate elections to the House of Representatives. The final bill prohibited national banks and federally chartered corporations from contributing to election campaigns at any level, and prohibited "any corporation whatever" from making contributions in elections for president and the House of Representatives.
The Tillman Act was the first law to require public disclosure on paper of all money spent on elections by political parties in House general elections. The following year it was amended to apply to Senate and primary elections as well, and required candidates to disclose their own spending. The amendments set limits on contributions to candidates ($5,000 to a House candidate, $10,000 to a Senate candidate, or the amount set by state law - whichever was less).
The Tillman Act restricted corporate contributions to political candidates, but it did not end the influence of corporations in politics. Corporations continued to find ways to influence elections, such as donating office space, typewriters, and free travel to members of Congress. In addition, company workers were often kept on the company payroll while working exclusively for a congressional representative’s campaign.
In the early 20th century, organizations known as political action committees (PACs) were formed after legislation added labour unions to the earlier, 1907 prohibition on corporate contributions to federal campaigns. When unions, trade organizations, and other special interests could no longer contribute directly to parties and campaigns, they created voluntary associations (PACs) that raised funds from individual members specifically for candidates.
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The Smith-Connally Act (1943) extended restrictions to labour unions
The Smith-Connally Act, also known as the War Labor Disputes Act, was passed by the US Congress on June 25, 1943, despite President Franklin D. Roosevelt's veto. The Act was a response to the threat of strikes in industries deemed crucial to the war effort. It gave the president the authority to seize control of production in these industries to ensure continued operations. This power was granted to the president in order to prevent strikes from disrupting the production of goods necessary for the war effort.
The Act was sponsored by Senator Thomas Terry Connally of Texas and Representative Howard Smith of Virginia, and it was drafted in response to 1,200 recorded strikes between December 1941 and the late summer of 1942. The Act was also a response to a specific strike by 400,000 coal miners, who were seeking a $2-a-day wage increase to compensate for high wartime inflation.
The Smith-Connally Act extended restrictions to labour unions by prohibiting them from contributing to federal election campaigns, in the same way, the Tillman Act of 1907 banned banks and corporations from doing so. This restriction was an extension of the Tillman Act's original scope, which had only applied to corporations. The Act also made unions financially liable for lost production costs if they failed to give 30 days' notice of an intent to strike.
While the Act was passed to ensure wartime production, it was controversial and seen by many as a useless law that increased tensions between labour and employers. Roosevelt himself argued that the bill could potentially create more opportunities for strikes, souring employer-employee relations and stimulating labour unrest. Despite these concerns, Congress overrode Roosevelt's veto and passed the Smith-Connally Act, which became a lasting example of the unique power of the president during World War II and the evolving relationship between the government, workers, and industry.
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Campaign reform laws (1970s) facilitated PAC growth, allowing corporations, trade associations, and unions to form PACs
Political action committees (PACs) are organizations that raise and distribute campaign funds to candidates seeking political office. The first PAC, the CIO-PAC, was formed in 1943 by the Congress of Industrial Organizations, after the US Congress prohibited unions from contributing directly to political candidates.
A series of campaign finance reforms in the 1970s facilitated the growth of PACs. These laws allowed corporations, trade associations, and unions to form PACs. The Federal Election Campaign Act (FECA) of 1971 created rules for disclosure, requiring PACs to disclose donations over $200 and to maintain a central committee for all donations received.
The number of PACs proliferated following these reforms, increasing from about 600 in the early 1970s to more than 4,000 by 2010. Most PACs are established by businesses, non-profits, labor unions, trade groups, or health organizations. These are known as "connected PACs" or "corporate PACs." There are also “non-connected PACs,” formed by groups with ideological missions, single-issue groups, and political leaders.
The role of the individual contributor has been constrained by the Federal Election Campaign Act, but the reforms of the 1970s gave businesses and unions an advantage in influencing politics. This has led to a massive escalation in the cost of running for federal office.
In 2010, the Citizens United v. Federal Election Commission Supreme Court decision allowed corporations to support PACs, further increasing their influence in politics.
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Federal Election Campaign Act (FECA) (1971) created rules for disclosure and reporting
Political Action Committees (PACs) are groups formed for the purpose of contributing money to the campaigns of federal politicians or to support politicians' campaigns indirectly. The first PAC was created in 1943 or 1944 by the Congress of Industrial Organizations, which sought to raise funds to assist the reelection of President Franklin D. Roosevelt.
The Federal Election Campaign Act (FECA) of 1971 created rules for disclosure and reporting. All donations received by PACs must go through a central committee maintained by the PAC. Additionally, PACs must file regular reports with the Federal Election Commission (FEC), disclosing anyone who has donated at least $200. PACs must register with the FEC within 10 days of their formation, providing the name and address of the PAC, its treasurer, and any connected organizations.
There are three main types of PACs: separate segregated funds (SSFs), non-connected committees, and Super PACs. SSFs are political committees established and administered by corporations, labor unions, membership organizations, or trade associations. They can only solicit contributions from individuals associated with a connected or sponsoring organization. Non-connected committees are not affiliated with any specific entity and can solicit contributions from the general public.
Super PACs, officially known as independent expenditure-only political action committees, can raise unlimited amounts from individuals, corporations, unions, and other groups to spend on activities such as ads advocating for or against political candidates. However, they cannot coordinate with or contribute directly to candidate campaigns or political parties. Super PACs were created in 2010 following the U.S. Court of Appeals decision in SpeechNow.org v. Federal Election Commission, which allowed for greater deregulation in how political funds are raised and distributed.
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Citizens United v. Federal Election Commission (2010) allowed corporations to support PACs
Political action committees (PACs) are organisations that raise and spend money for campaigns or support/oppose political candidates or ballot initiatives. The first PAC was created in 1943 or 1944 by the Congress of Industrial Organizations (CIO), which sought to raise funds to assist the reelection of the President.
In 2010, the Supreme Court's Citizens United v. Federal Election Commission decision allowed corporations and unions to make independent expenditures from their general treasuries. This ruling overturned an earlier decision, Austin v. Michigan State Chamber of Commerce, which had prohibited corporations from making independent expenditures. The Court also overruled part of McConnell v. Federal Election Commission, which stated that corporations could be banned from making electioneering communications.
The Citizens United ruling had a significant impact on political spending, particularly through the emergence of "super PACs". Super PACs are independent expenditure-only political action committees that can raise unlimited amounts from individuals, corporations, unions, and other groups to spend on political activities. They are, however, prohibited from directly contributing to or coordinating with political candidates or parties. The rise of super PACs contributed to a significant increase in political spending, with super PAC money largely coming from a small group of wealthy donors.
While Citizens United allowed greater corporate involvement in politics, it is important to note that the ruling did not affect the ban on corporate contributions to specific candidates. The Federal Election Campaign Act prohibits corporations from using their general treasury funds for speech expressly advocating for or against a federal candidate.
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Frequently asked questions
A Political Action Committee, or PAC, is a group formed for the purpose of contributing money to the campaigns of federal politicians or to support politicians' campaigns indirectly. They are generally formed by corporations, labour unions, trade associations, or other organizations or individuals.
The Federal Election Campaign Act (FECA) of 1971 created rules for disclosure, which made it so all donations received by PACs must go through a central committee maintained by the PAC. The Smith–Connally Act of 1943 also played a role, as it extended the Tillman Act's restriction on corporate contributions to labour unions.
There are three main types of PACs: separate segregated funds (SSFs), non-connected committees, and Super PACs. SSFs are created and operated by corporations, labour unions, trade associations, or other membership organizations, and they receive money from individuals associated with the sponsoring entity. Non-connected committees are not connected to any corporations, unions, or political parties and make contributions to support a particular ideology or issue. Super PACs, or independent expenditure-only committees, can raise unlimited amounts from individuals, corporations, unions, and other groups to spend on political activities but cannot contribute directly to campaigns or parties.
