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FEC Approves Paycheck Deductions for Trade Association PACs

The Federal Election Commission on Thursday approved a new rule that could dramatically bolster the coffers of trade associations’ political action committees.

In a 5-1 vote, commissioners approved a measure that will allow trade association PACs to offer employees of their member companies the option of making contributions directly from their paychecks.

Executives of trade groups that pushed for the rule change say the change will make it simpler for employees to give to their PACs.

Michael Briggs, chief legal officer for America’s Community Bankers, the group that initiated the request for a change in 2003, said that the move will primarily benefit companies that don’t have their own PACs. Companies that operate PACs can already offer payroll deduction as a way for their executives to contribute.

“We’re hoping we’ll see a significant number of new contributors, and that they will feel more comfortable pledging larger dollar amounts,” said Briggs, whose PAC currently brings in about $450,000 per election cycle.

Brett Kappel, a campaign finance lawyer at Vorys, Sater, Seymour and Pease who has watched this issue develop, predicts that Briggs’ hopes will be realized.

The impact for trade associations, he said, will be that over the course of this election cycle, “they will see a significant increase both in the total number of contributions that they receive and in the overall amount that they receive.”

Briggs said his group filed its petition with the FEC at the urging of its members. “It just makes sense, this is 2005. That’s where the payment system is today. Paper check payments have been on a steady decline,” he said.

Ellen Weintraub, the sole FEC commissioner to vote against the rule, said she opposed the measure because the FEC has more important priorities on its agenda than helping trade association PACs in their fundraising efforts.

“We’ve got a lot of controversial and important issues, and I didn’t think we ought to be taking the time to deal with a side issue like this,” she said. “The bottom line is this is a mechanism for trade associations to collect more money … to have bigger bags of money when they go up to Capitol Hill to lobby.”

Weintraub said trade association supporters of the rule explicitly said they hoped the PAC change would help them advance their agendas in Washington.

It’s a “provision that overwhelmingly favors business interests,” she said, adding that some big-business groups will benefit just like small-business groups will.

“Groups like PhRMA and the [U.S. Chamber of Commerce] are going to be able to use this to collect more money. It’s just a boon for the business lobbying community, and they are not a community that I felt the commission” needed to go out of its way to support.

Bill Miller, the vice president for Congressional affairs and political director for the U.S. Chamber of Commerce, agreed that the move will help raise more money, but he argued that that’s not a bad thing.

“In my mind, it evens the playing field,” he said. “The unions have always been able to solicit contributions in a similar manner.”

As it happened, Thursday’s moves by the FEC included a nod to labor as well.

The commission adopted an amendment supported by the AFL-CIO that requires companies that offer the trade association PAC payroll deduction for their executives to also permit unionized workers to make direct payroll contributions to unions that represent any of a corporation’s employees.

AFL-CIO General Counsel Larry Gold said his organization did not oppose the trade association rule change but simply wanted “parity.”

“Trade associations have never been able to raise money from corporate executives through direct deposit,” Gold said. “For a lot of [companies], their trade association PAC is their proxy PAC. We didn’t oppose that in itself. … We just said if you’re going to do that, you’ve got to apply the equal treatment rule to unions across the board.”

James Clarke, senior vice president of public policy at the American Society of Association Executives, said his group supported the move by America’s Community Bankers.

“It’s just that basically these rules hadn’t been looked at for a very long time. A lot of these rules came out as a result of the Watergate reforms,” he said. “America’s Community Bankers led the way, but we thought they made real good sense.”

Clarke added that the rule change will be particularly important now that soft money has been banned. Hard dollars from PACs are now more important than ever.

While some tensions have long existed between trade association PACs and the PACs of the companies they represent, campaign finance lawyer Kappel said, this rule change could likely ease those strains.

And, of course, companies would have the final say about whether to permit their trade groups to offer the payroll deductions to their employees.