Provision Splits Frist, McCain

Posted August 5, 2005 at 5:44pm

The Senate’s two top Republican leaders have given ringing endorsements to an appropriations rider that would allow leadership political action committees to transfer unlimited sums to the national party committees.

Majority Leader Bill Frist (R-Tenn.), whose presidential aspirations would be greatly boosted if the provision were to become law, said before the start of the recess that he is “very supportive” of the idea. Majority Whip Mitch McConnell (R-Ky.) is also pushing the change.

The provision is part of the Treasury and Justice appropriations bill, which is expected to be considered in September. Its high-level support makes it more likely that it will remain part of the must-pass spending bill, although Sen. John McCain (R-Ariz.) has promised to fight what he believes would undermine a fundamental tenet of the campaign finance structure he helped author.

Like all other political action committees, leadership PACs are currently subject to a $15,000 annual limit on the amount they can transfer to national party committees. The proposed language would treat leadership PACs like candidates’ personal campaign committees when it comes to transfers to the national parties.

McCain has indicated he will aggressively oppose the language on the floor. The Republican Senator believes the rider would allow lawmakers to easily circumvent contribution limits established as far back at the 1970s and which Congress reaffirmed in the 2002 Bipartisan Campaign Reform Act.

McConnell, the chamber’s leading proponent of loosening restrictions on campaign funding, has spent much of the past eight years dueling with McCain over campaign finance provisions. Frist, a likely contender for the 2008 GOP presidential nomination, stands to be the single greatest beneficiary of the measure because of his prowess in raising funds for his Volunteer PAC. McCain could turn out to be his biggest rival for the GOP nod.

The measure was already attached earlier this year to legislation that would subject 527 groups to the same prohibition on using soft money to influence elections that BCRA outlawed for federal candidates and national party committees. That measure has stalled in the Senate, however, and the latest effort reflects a widely held belief that the 527 bill may not make it through the chamber this year.

In an interview before the recess, Frist did not express any reservation about legislating the provision on an appropriations bill. “It’s a common sense piece of legislation,” Frist said.

Sen. Bob Bennett (R-Utah), the GOP’s chief deputy whip, was responsible for getting the measure attached to the 527 bill in committee. In a recent interview, the Utah lawmaker argued for the provision as a way of “leveling the playing field” between Senators who have tough re-election battles and those who don’t. He explained that a Senator who is in a tough race to keep their seat would thus be at a disadvantage in his ability to contribute to the parties, and by inference, increase his chance of winning an elective leadership post among his Senate peers. A Senator in a noncompetitive state could, by contrast, give most of the money from his personal campaign committee to a party committee, putting him at an unfair advantage in the ability to win favor among his fellow Senators, Bennett said.

The chairman of a powerful committee, Bennett pointed out, can raise “very substantial sums of money. Let’s further postulate that he’s in a noncompetitive state.” Under those circumstances, Bennett said, that Senator can raise “significant amounts to his personal committee” and then turn around and give “seven-figure amounts” to his party’s Senatorial campaign committee.

“I see it as an equality issue,” Bennett said, noting that Senators can transfer from their personal committees to the parties. “Why should leadership PACs be any different?”

Democracy 21’s Fred Wertheimer, however, argued if leadership PACs are allowed to transfer funds to the national parties in the same unlimited amounts as lawmakers’ personal campaign committees, leadership PACs would go from being “slush funds” to being essentially parallel campaign committees, further eviscerating the contribution limits.

“It’s like they are writing their own new set of limits on contributions for their campaigns,” Wertheimer said. Under current law, lawmakers’ personal campaign committees and their respective leadership PACs can receive contributions from the same individuals. An individual can give $4,200 per cycle to a Senator’s re-election fund, and that same individual can give $5,000 a year to the political action committee headed by the lawmaker, meaning one person can give a Senator’s leadership PAC $30,000 over a six-year cycle.

Under the provision, all that money could be transferred to the party committee and then spent on the lawmaker’s campaign

Bennett said any parallel contributions would be “diminutive” because the “amount that an individual can give is limited,” referring to the aggregate contribution limits. A bill in the House, however, would eliminate those aggregate restrictions, originally imposed 30 years ago, that limit the total amount an individual can give to all federal party committees and candidates in a single election cycle. (Currently, an individual can give a total of $101,400 to such entities each cycle, only $40,000 of which can be given directly to federal candidates.)

“My overall position is that these limits are ultimately defeated by reality,” Bennett said, referring to 527s and the idea that “money runs downhill.”

The principal difference between a lawmaker’s personal campaign and that of his leadership PAC is that funds from the latter cannot be spent directly on the candidate’s campaign — direct mail, broadcast ads, etc. The money from leadership PACs is used primarily as funding for the lawmaker’s travel and as a way to gain chits with fellow lawmakers by making contributions to their campaigns.

Prominent Democratic campaign lawyer Bob Bauer pointed out that the only PACs that would benefit from the provision are those “associated with” federal officeholders. He believes that’s by design.

On his blog “More Soft Money Hard Law,” Bauer called the proposed change an “interesting as an exercise in incumbent self-dealing.”

“A multicandidate committee established by a prominent or visible public figure preparing a campaign for future office, such as a campaign for the Presidency, would not enjoy the same relief from limits,” he said.

Bauer did not support BCRA and has been a steady voice in Democratic circles expressing skepticism of adding layers of campaign finance restrictions. Nonetheless, he believes this language is creating a self-serving narrow exception.

Bauer further noted that the leadership PAC exemption would apply only to donations to national party committees such as the Democratic Senatorial Campaign Committee and the National Republican Congressional Committee “that incumbents control and use to support their campaigns or the campaigns of candidates whose success is important to the pursuit or retention of majority status.” State and local party committees, he pointed out, are not included.

With BCRA’s prohibition on the national parties raising soft money, the committees have become more dependent on Members’ support, according to Bauer. The Democratic Congressional Campaign Committee and the NRCC each raised $24 million from federal candidates during the 2004 election cycle, according to Federal Election Commission data. “Members anxious to avoid using their principal campaign committee — i.e. reelection — monies will have less pressure to do so with the availability of unlimited contributions from ‘leadership PACs,’” Bauer wrote.

Bauer also noted the partisan tilt to the proposal, pointing out that the effort is being resisted by Democrats. They likely have a lot less to gain than their GOP counterparts.

The Republican party committees would stand to gain the greatest edge in terms of ability to pull in large dollars from their Members. Republicans traditionally raise more money for leadership PACs than the Democrats, and the 2004 cycle reinforced that trend. According to PoliticalMoneyLine, 18 of the 25 biggest PACs in Congress in terms of dollars raised belonged to Republicans.

Also, the GOP leadership PACs maintain, in general, much larger cash balances, which would allow them to shift much larger donations to the party committees. If that trend holds, Republicans would be able to tap a much larger amount of instant cash then Democrats late in a campaign cycle.

On Sept. 30, 2004, for example, the eight largest GOP leadership PACs were sitting on a combined total of more than $5.5 million. By contrast, the eight biggest Democratic leadership PACs had just $1.8 million, according to FEC filings.

No one for the past few years has sat on as large a pile of leadership PAC cash as Frist, who as of June 30 had almost $1.2 million left in his account. He’s already given the maximum donations to every GOP Senator running for re-election, leaving him just House campaigns to give to — unless this provision allows him to dump large amounts of cash into the NRSC and the RNC.

A few years ago, leadership PACs were used primarily by a handful of Members with leadership aspirations, but recently the committees have become more common and are now used by rank-and-file and junior lawmakers.