The ABCs of PACs

For better or worse, money and politics go hand in hand.

To quote Mark Hanna, presidential campaign manager for William McKinley and U.S. senator from Ohio from 1897 to 1904, “There are two things that are important in politics. The first is money and I can’t remember what the second one is.”

According to the Federal Election Commission (FEC) there are over 4,000 political action committees (PACs) at any given time. By definition, federal PACs are political committees organized for the purpose of raising and/or spending money to elect or defeat federal candidates. Most of these organizations represent business or labor ideological interests.

A PAC gets money from its donors in any amount up to $5,000 annually and can give up to $10,000 per candidate per election cycle (two years for House candidates, four years for presidential campaigns, and six years for the Senate). Leading up to the 2024 election, the FEC reported, House and Senate campaigns raised approximately $332 million from PACs from January 2023 to June 2024.

PACs emerged from the labor movement of the 1940s. After the 1943 War Labor Disputes Act prohibited direct contributions from union treasuries to federal campaigns, unions began to establish separate segregated funds to contribute to their preferred candidates, according to the Congressional Research Service. For the next several decades, labor unions dominated in this area— the 1907 Tillman Act had prohibited corporations from contributing to federal campaigns and corporations were reluctant to establish separate segregated funds like unions. However, the Federal Election Campaign Act (FECA), as passed and amended in the early 1970s, provided statutory authority to unions, corporations, trade associations, and other entities to establish separate segregated funds for contributing to federal campaigns and candidates.

An organization becomes a federal PAC when it receives or spends more than $1,000 and registers with the FEC. Each state’s election laws direct how an organization becomes a PAC at that level.

The arguments for and against PACs could fill their own article. But, briefly, supporters say they offer a means to raise significant amounts of money for candidates who might otherwise lack the resources for a viable campaign. PACs can also enable underrepresented populations to have a say in electing leaders who will support their needs. Conversely, critics say PACs further obscure transparency on what entities are funding campaigns and provide corporate interests with even greater influence over elections and government policy.

By federal law, an individual can only contribute up to $5,000 to a PAC and a PAC can only contribute $5,000 per candidate to each federal primary and general election. The limit for PAC contributions was set over 50 years ago but has not kept up with inflation, which has averaged 3.8% annually in that time, according to the Bureau of Labor Statistics. The $5,000 limit in 1974 dollars is nearly $31,000 today. Meanwhile, contribution limits for individuals have increased from $1,000 in 1974 to $3,300 today. This means an individual can give almost as much as a PAC with thousands of members can give to a federal candidate.

The National Association of Business Political Action Committees (NABPAC), which advocates on behalf of business and trade association PACs, believes that PAC contributions should be increased commensurate with increased individual limits, and the amount should be indexed for inflation moving forward.

The Federal Election Commission agrees. In its congressional budget justification for fiscal year 2025, the FEC said “Congress should amend FECA to make these contribution limits subject to inflation adjustments.” Rep. Mark Amodei (R-Nev.) had planned to sponsor legislation to that effect in the 118th Congress but was unable to find a Democratic co-sponsor before the session ended. NABPAC and Amodei aim to introduce similar legislation in the current 119th Congress assuming a Democratic sponsor can be found.

There is always another side.

HR 5941, the Ban Corporate PACs Act, and its Senate companion, S 3599, introduced during the 118th Congress, proposed to ban corporate PACs entirely. Legislation of this type isn’t new and there will always be a call by some to completely ban political giving.