The Effect: The Growth of the Special Interests
North, James
The Effect: The Growth of the Special Interests by James North We used to call them fat cats, and in our stereotyped image there were hardly any more venal figures in politics. They were...
...of the leading 1,000 industrials, 802 do not have PACs...
...Thus all PACs set up by a single company or a union were limited to an aggregate $5,000 per candidate in an election...
...The politics of the 1970s changed all that, of course...
...And the most available source of money, and the largest contributions, come from PACs, which have fast overtaken the party as the prime dispenser of campaign funds...
...the right to run non-partisan registration drives and get-out-the-vote efforts...
...But the single-issue lobbies still lag far behind both business and labor in the use of PACs, and what we’re left with from them, after the “reform” dust has had time to settle, is another kind of vicious money cycle...
...PACs, especially corporate PACs, are the new fat cats...
...The story of the new campaign financing is told in astudyentitled “The Rise of Political Action Committees,” written last year by Edwin M. Epstein, a political scientist and former Woodrow Wilson Fellow...
...In 1978, however, he predicts that business will surpass labor by at least $4 million...
...It is not just the far right challengers who are left out of this system, but all challengers...
...The Hansen Amendment established the framework for the corporate and union PAC activity that exists today...
...In the industrialized Northeast especially, labor committees were efficient, organized vehicles for registering voters and get-out-the-vote drives, which could, and often did, make or break candidates...
...During presidential elections the number rises to about 300...
...The PAC contribution limit per federal candidate was $5,009 (compared to a $1,000 limit for individual contributions), and there was no combined limit a t all (individuals had a $25,000 total contribution ceiling...
...In the old, pre-Watergate days partisan political committees had been a potent tool for labor...
...But in order to draw the moderate Republican support needed to pass such a measure, the Hansen Amendment also gave the same right to corporations to establish stockholder PACs...
...and four months later, by July, there were 71 1. Yet, Epstein says, “the astounding thing is not how many company committees exist today but rather howfew there are given the total population of potential corporate PACs...
...Epstein accurately calls this “risk averting...
...A Potent Tool for Labor Although the idea of political action committees had been around for years, business never had much use for them...
...The case he makes for the new power of PACs is a convincing one...
...It was organized labor lobbyists who drafted the amendments concerning PACs and lobbied for their passage...
...In 1971 the Supreme Court agreed to hear the case...
...The company could solicit over 150,000 individuals, the union only afraction of that amount...
...The growth of PACs raises the specter of a truly vicious money cycle...
...In the 1976 elections, according to Epstein, the business and labor PACs nearly matched each other in money spent, although labor slightly outspent the business lobbies and individual companies...
...Working in conjunction with the local Democratic Party machinery, their functions were much more extensive than simply raising money from union members...
...And with the decline of the parties as fundraisers, PACs will become ever more important to congressional candidates...
...Because the unions were worried that the Court might o u t l a w PACs altogether, labor lobbyists scrambled up to Capitol Hill and got Rep...
...Recouping Labor’s Losses In 1976, when Congress once again took up a campaign finance bill, the labor lobbyists tried to recoup some of their losses in the Sun Oil ruling, and they did achieve some successes...
...In short,” Epstein writes, “the market f o r potential PAC formations is virtually untapped even if we consider only the very largest firms...
...The officers, accused of coercing what were supposed to be voluntary contributions from union members by collecting donations at job sites in amounts based on a pre-arranged formula, were convicted...
...In the short run, it gave the unions what they wanted: the right to provide members with information about political candidatesand issues...
...Incumbents play to the needs of these interest groups by the writing of laws and the seeking of special interest amendments...
...As Epstein makes clear, the growth of PACs has madea mockeryof those claims...
...All told, in 1976 incumbents received $13.2 million while the challengers got only $4.2 million...
...At its foundation lie the Political Action Committees, the so-called PACs, the political fundraising machines of unions and businesses...
...Quite the opposite: the vast majority of contributions are made to incumbents, usually incumbents sitting on committees handling legislation of interest to the donor...
...But they still kept their much more important right, to solicit people in management-the people who were most Iikely to contribute...
...At the time, union lobbyists shrugged off the potential problem: “Few union people thought that companies would take much advantage of this right[toestablish PACs1,”writes Epstein, simply because they had never done so before...
...The 1976 law contained a provision restricting corporate PACs to the solicitation of contributions from their stockholder and management personnelwhile union members continued to be restricted to soliciting union members and their families...
...Epstein documents what he calls “the PAC phenomenon,” showing where they came from, how they became so popular, and where they could lead us...
...But PACs got a much betterdealout ofthat lawthanthe general public, and again the reason was primarily the efforts of the labor lobbyists...
...for labor, the ratio was three to one...
...A candidate in the 1970s must do most of his own fundraising without much help from the local or national party machinery...
...But others have stronger words...
...As businesses see the clout unions have gained with sophisticated registration drives and get-out-the-vote campaigns, they will attempt to copy those techniques...
...But Sun Oil also wanted to be able to solicit its employees as well as its stockholders and to set up a payroll deduction plan so that they could contribute either to the Sun PAC or to their own candidates directly...
...Corporate managers are whores,” Rep...
...Those same reforms have brought with them a new kind of campaign financing, a system that evolved tentatively as the new laws were being written, but has taken firm hold in time for the 1978 elections...
...Around and around it goes, incumbents and PACs, PACs and incumbents...
...has helped to substitute one form of large contributor for another...
...As an incumbent-and as a right-wing incumbent-he is in a position to greatly benefit from the proliferation of PACs...
...Thus, corporate PACs lost their “Sun Oil right” to solicit general employees as often as they wanted...
...Whereas business once had no interest in PACs, there were at last count over 700 business PACs...
...Twice a year, however, both union and corporate PACs are permitted to “cross over” and solicit by mail campaign contributions from employees or stockholders that are otherwise off limits...
...Finally, the law contained a provision that, while allowing an unlimited number of PACs to be established by a company or union, forced all of them to be treated as one PAC where campaign contributions were concerned...
...The right has been especially incensed by industry’s tendency to give money to incumbent Democrats...
...What does it all mean...
...As a result, the rules of campaign financing have undergone a complete t r a n s f o r m a t i o n . For presidential elections, this has meant public financing for the first time, and for House and Senate elections, it has meant substantial restrictions on the amount of money individuals can contribute to campaigns...
...In 1974, in the aftermath of Watergate Congress went back to work on election reform, this time intending specifically to reduce the influence of large contribJtors...
...Then in 1968, the Justice Department indicted the officers of a local pipefitters union for violating the election laws...
...Sun Oil Company had asked the FEC to rule on its plan to use general corporate funds to set up and administer its PAC...
...This article is based on a study by Edwin M. Epstein, a lawyer andpoliticalscientist, who is a professor of Business Administration at the University of California at Berkeley...
...Within the next six months corporations and business lobbies established 150 new PACs, more than doubling the previous number...
...They were the wealthy industrialists of the W. Clement Stone mold, right-wing Rzpublicans (tending toward Neanderthal) who could buy their way into the political sysrem by wielding pen and checkbook around election time...
...All told, PACs of all kinds had raised $54 million for the 1978 election by July-and had spent almost $1 1 million in contributions to House and Senate candidates...
...They’re just out to buy you,” adds Dornan...
...Dornan, of course, doesn’t have much to worry about...
...The Effect: The Growth of the Special Interests by James North We used to call them fat cats, and in our stereotyped image there were hardly any more venal figures in politics...
...It is money subcommittee chairmen in particular have come to expect and treasure...
...The first is that when they were first passed, the election laws were hailed as signaling the end to the era of special interest influence in the electoral process...
...But outlawing fat cats has not meant that congressional candidates are going broke...
...Orville Hansen to introduce an amendment to the election bill then being debated on the House floor...
...Concludes Epstein: “In furthering its own short-range objectives during the 1970s, labor sowed the seeds which have born the very fruit it sought to prevent-enhanced business clout and effectiveness in the electoral processthrough the use of labor’s favorite mechanism-the political action committee...
...The business PACs are a different story entirely...
...The Commission’s dissenters complained that this destroyed the balance between the unions and the corporationsin the case of Sun Oil, for example, there were 126,555 shareholders and 27,707 employees, of whom only a small percentage were unionized...
...Yet it has been their political opponents, the business lobbies and corporations, which have been the real beneficiaries...
...Common Cause says that in the 1976 elections business-related PACs favored congressional incumbents by a four-to-one margin...
...You don’t have to agree with Dornan’s politics to see the merit of his complaint...
...today the words “fat cat” seem very old-fashioned...
...Epstein points out that in the early 1970s, they never numbered more than 90...
...Far from it...
...They also raisedagood deal of money...
...Because there are so many small “locals” affiliated with major unions, labor would have been better off without such a provision...
...The reform legislation...
...the people running the PACs could be union officers...
...In 1956 labor PACs contributed about $2 million to their favorite candidates, and by 1972 that figure had risen to $7 million...
...Labor also was allowed to use a check-off payroll deduction system for soliciting contributions if a company used that same method or agree4 to it in negotiations...
...Because it was introduced so late in the game, it was hardly debated, with no input from the business community, and its passage was entirely the result of labor’s lobbying effort...
...As the number of business PACs increases, the unions will try to get their members to make larger contributions...
...It is a bitter pill for labor to swallow, for the number of labor PACs is not going to increase dramatically-if that were going to happen, it would have happened a long time ago...
...Even more troublesome is the way u n i o n s and t h e i r c o r p o r a t e counterparts are flexing their new special interest muscle...
...An increase in PACs has not brought with it an i n c r e a s i n g d i v e r s i f i c a t i o n of contributions...
...By 1976, however, over 300 corporate PACs had been formed...
...And the amount of money contributed will soon reflect that new growth in the number of business PACs...
...Since the OS, unions have made sophisticated use of PACs, and in all that time there have never been more than about 300 labor PACs...
...This payroll deduction idea was something unions had been forbidden from doing under the TaftHartley Act...
...There is a two-fold irony in this...
...Congress passed a new election law in I97 1 -and amended it in 1974 and 1976, after the post-Watergate morality had firmly taken hold...
...The labor lobbyists also won an amendment to allow government contractors to establish PACs (government contractors previously had been forbidden to make campaign con t ri bu t i o ns) - another strategic error, since there are far more corporations doing government work than there are unions...
...Or so it seemed...
...Robert Dornan, a conservative freshman Republican, told Congressional Quarterly recently...
...and the right to solicit voluntary contributions to PACs from their members...
...Of the top 500 industrials (all with sales over$350million), 334donot have PACs, says Epstein...
...And for labor there is the final, harsh irony that this is not at all what it expected when its lobbyists began working on campaign laws in the early 1970s...
...The proliferation of PACs, he points out, has been rather astonishingduring the first four-and-a-half months of 1978, for example, they increased at a rate of six per week...
...The other irony is t h a t the proliferation of corporate PACs, in particular, was neither intended nor expected when the election laws were being written in the early 1970s...
...A good part of their popularity stems from the decline of political parties as central campaign organizations and political fundraisers...
...The provision was intended to put an end to the establishment of multiple PACs by corporations seeking to takeadvantage of the Sun Oil ruling...
...by March of this year their number had swelled to 595...
...That’s when the Federal Election Commission made perhaps its most important ruling, one that “provided the liberating imprimatur for the development of political action committees, dramatizing as it did to many companies the exciting political possibilities of PACs,” says Epstein...
...A Bitter Pill to Swallow But by then, it was too late to do anything about the proliferation of corporate PACs...
...If by this time you are muttering angrily hat this is not what election reform F; as supposed to mean, you are not alone...
...At fundraisers, even the most liberal Democratic chairman can be assured of dozens of checks from business PACs...
...But it wasn’t until a year and a half later that corporations realized the potential of the new laws...
...It is one in which two increasingly narrowminded interests-the AFL-CIO reflecting the views of a shrinking number of union members, corporations invariably parroting out-of-date Chamber of Commerce rhetoric-play to the needs of incumbents with hefty contributions...
...With considerable understatement, Epstein says: “It has struck many observers of campaign financing that among the greatest ironies of election reform legislation of the 1970s is the fact that it has greatly expanded the operating freedom of both labor and business in the electoral process...
...And both of them, realizing that keeping the other happy is in their own selfinterest, refuse to extend their loyalties to the public interest because there is no need, in this selfish scheme of things, to do so...
...They don’t care who’s in office, what party or what they stand for...
...The liberalization of PACs, the expanded freedom to solicit contributions from members and make contributions to candidates was firmly seen as benefiting labor, not business...
...That is why, ironically, labor lobbyists have become ardent supporters of public financing legislation...
...While the contributions to PACs had to be strictly segregated from union dues and fees, the committees did not have to be independent of union control...
...In a four to two decision, the FEC members said yes to all three requests...
...Indeed, the growing trend is toward the establishment of PACs by single-issue lobbies on the right-the gun lobby, the anti-abortion activists, the right-toworkerswho have discovered that they too, can gain an increasingly receptive hearing on Capitol Hill by establishing PACs and making the large contributions forbidden to individuals...
...In predictable fashion, PAC money has perpetuated a system that already had made it nearly impossible to beat congressional incumbents...
...the rest of the time, there are usually around 250...
...But it, like the other PAC provisions in previous campaign reform bills, has had the effect of backfiring on labor...
Vol. 10 • October 1978 • No. 7
