When Money and Leadership Don't Mix

Leadership PACs have let members of Congress and special interest groups skirt donation limits and campaign finance reform

REP. Bill McCollum (R) of Florida and Rep. Tom DeLay (R) of Texas both want to be House minority whip. They're assuming the position will become vacant this fall if Rep. Newt Gingrich (R) of Georgia moves over to the position of House minority leader after Rep. Bob Michel (R) of Illinois retires.

It is no coincidence that Representatives McCollum and DeLay set up leadership political-action committees earlier this year. Says Christina Collins, executive director of McCollum's new PAC, Countdown to Majority, ``All members who want to show leadership need to be able to raise money and help others raise money.''

If showing leadership means raising money, then the record on these PACs reveals an amazing explosion of leadership. Over the past 10 years, 69 leadership PACs took in over $111 million in contributions, according to data from the National Library on Money and Politics, analyzed by Public Citizen.

``Leadership PAC'' is an inside-the-beltway term for PACs associated with members of Congress or other politicians. Like other PACs, leadership PACs are allowed to give out contributions to political candidates - up to $5,000 per calendar year. They may also receive contributions of up to $5,000 a year. Politicians use them as an additional source of fundraising separate from their personal campaign committees and as a way of building influence with others. Leadership PACs are not always easy to identify, since there is not always a formal connection between a politician and a PAC. Public Citizen's analysis is based on leadership PACs identified as such by the National Library on Money and Politics, the Almanac on Federal PACs, and other published sources.

The Senate and the House banned leadership PACs in the 1992 campaign finance reform bill vetoed by President Bush. In this session's reform offering, however, only the Senate banned leadership PACs. As the House and Senate meet to reconcile their two bills, the ban on leadership PACs may get knocked out. If that happens, leadership PACs won't just survive, they'll flourish. The aggregate limits on PAC donations contained in this year's campaign finance bill will make leadership PACs an even more tempting way of soliciting money from special interest groups. In fact, the ``leadership'' in leadership PAC will become practically meaningless as 535 members of Congress scramble to form their own leadership PACs.

Analysis of receipts and spending patterns by leadership PACs over the past 10 years shows why it is necessary to clean up the campaign finance system:

* If money speaks, then leadership PACs allow special interests and the wealthy to speak louder and more often. Campaign donation limits are meant to prevent those with money from corrupting elections. Yet it's common to skirt PAC limits - and earn a politician's good will - by giving to a member's personal campaign fund and to his or her leadership PAC. In 1991-92, Anthony Kurtz, president of the New Jersey-based company Ku-Lite Semiconductor, gave the maximum allowed - $2,000 - to Gephardt in Congress, the personal campaign fund of House Majority Leader Richard Gephardt (D) of Missouri. During that same period, Mr. Kurtz gave $5,000 to Mr. Gephardt's leadership PAC, the Effective Government Committee. That is $5,000 that he would have been prohibited from donating to Gephardt's campaign committee.

Fundraisers take full advantage of this trick. Campaign America, the leadership PAC of Sen. Bob Dole (R) of Kansas, has regularly solicited Barnett People for Better Government. Brian Babcock, director of the Florida-based PAC for Barnett Banks, says the PAC has given $5,000 annually to Campaign America, the maximum allowed, ``mainly because of his position in the leadership.'' The Barnett PAC also gave $7,500 in 1991-92 to Mr. Dole's personal campaign, Dole for US Senate.

* Members become special interests. Members use their PACs the same way that special interests use theirs - to ensure gratitude from their colleagues in Congress or in their state legislatures. Sometimes they want it for a tight race or simply to consolidate power in a committee. For candidates, then, the members with leadership PACs are yet another special interest to please who is not a constituent.

When House Speaker Tom Foley (D) of Washington faced a tough reelection for speaker in 1992, his leadership PAC, the House Leadership Fund, gave out $266,659 to Democratic candidates, mostly to House candidates. Dole gave out $82,240 to Kansas Republican candidates in 1992 - much of it in $1,000 and $500 blocks to state senate and state house candidates. Rep. Dan Rostenkowski (D) of Illinois also uses his leadership fund to show generosity both in his home state of Illinois and to congressional candidates. For example, his leadership PAC gave $57,703 to Democratic candidates in 1992.

* Leadership PACs as slush funds. It's a maxim of campaign finance that a little donation goes a long way. A multibillion-dollar company PAC can earn the gratitude of a member of Congress with a contribution that may be a hundredth the size of a major advertising campaign but can make a big difference in company profits when legislation is voted on.

The same goes with leadership PACs. Members astute at the art use only a small portion of funds to give to their colleagues. According to Public Citizen's analysis, of the $111 million that went to leadership PACs over the past 10 years, only about 15 percent went out to colleagues' campaigns. Dole's Campaign America, which has raised $15,099,284 over the past decade, spent about 11 percent on federal campaign contributions. Sen. Jesse Helms (D) of North Carolina, whose National Congressional Club is infamous for raising millions from small donors around the country, spent only 2 percent - or $619,420 of the $34,497,534 raised over 10 years - on campaign contributions.

The bulk of the money pays for airline tickets, dining out, and other expenses incurred when a politician is trying to build a national reputation. For example, according to a 1987 Nation article, Gephardt used his leadership PAC to help pay for trips to Iowa and New Hampshire in 1985-86 when he was eyeing the presidential race but hadn't yet announced. This tactic allowed him to avoid presidential-election spending limits. Clever lawyers and campaign strategists will surely seek new ways to finance campaigns through leadership PACs to avoid congressional spending limits - if campaign finance reform passes without a leadership PAC ban.

For some members, leadership PACs become a source for more frivolous purposes. A 1993 profile of Representative Rostenkowski in Congressional Quarterly states that $19,000 from his America's Leaders Fund went to pay for sweaters embroidered with his name. Most recently, Rostenkowski has used his leadership PAC to help cover legal expenses for him and his staff, who are being investigated as part of the House Post Office scandal.

A campaign finance bill without a leadership PAC ban only invites future abuses. Members will turn to leadership PACs to avoid aggregate limits on PAC donations by special interest groups and spending limits on their own campaigns. The public would soon see that campaign finance reform didn't go far enough.

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