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Business money flows through gaps in anti-corporate PAC pledge

Business PACs not labeled ‘corporate’ gave $2.6M to pledge-takers

Rep. Cindy Axne, here at the Iowa State Fair last year, has taken the ‘no corporate PAC money’ pledge, but like other pledge-takers, she has received campaign contributions from groups representing corporate interests on Capitol Hill.
Rep. Cindy Axne, here at the Iowa State Fair last year, has taken the ‘no corporate PAC money’ pledge, but like other pledge-takers, she has received campaign contributions from groups representing corporate interests on Capitol Hill. (Caroline Brehman/CQ Roll Call)

In raising more than $2 million last year, Rep. Cindy Axne didn’t take a dime from any PAC designated as linked to a “corporation” by the Federal Election Commission. Yet her campaign is still stocked with contributions from groups that represent corporate and business interests on Capitol Hill.

And she’s not alone. The freshman Democrat, who is in a Toss-up race in an Iowa district President Donald Trump carried in 2016, is one of more than 50 sitting lawmakers who have taken a pledge not to accept direct donations from the political action committees of corporations.

The pledge has led to growing concerns among corporate PAC leaders about what it means for their future.

Yet a review of contribution records by CQ Roll Call found the political money of business interests — to the tune of $2.6 million last year alone — continued to find a way to most of the lawmakers who have taken the pledge.

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Typically, that route is through the PACs of trade associations and professional organizations. They get most of their money from dues-paying corporations or executives, and their PACs are filled with donations from some of the same corporate executives and lobbyists who may give to corporate PACs. Still, trade association and member organization PACs are not designated as corporate PACs under the FEC’s classification process and therefore don’t violate the no-corporate-PAC pledge as crafted by advocacy groups promoting it.

Supporters say taking the pledge allows candidates to make up for any lost contributions by appealing to the public for direct support. But the records show most still leave open an avenue for business PAC money.

“To be blunt, it’s nonsensical,” said Michael Toner, a Republican former FEC chairman, who leads the election law and government ethics practice at Wiley LLP. “It’s political atmospherics over substance.”

‘Good mileage’

Still, trade association PACs are worried they may be targeted next, Toner said.

“If some politicians think they’re getting good mileage out of it politically and it’s revenue-neutral and not hurting them in their fundraising, then in the trade association community, there’s concern that they could be next in terms of candidates refusing to accept their donations,” he said.

One Republican, Florida Rep. Matt Gaetz, said Feb. 27 during a speech at the Conservative Political Action Conference that he would no longer accept donations from any type of PAC. But the other members who have made a no-corporate-PAC pledge are Democrats, and rejecting corporate PAC money has become something of a litmus test for primary contests. All the Democrats who ran for their party’s 2020 presidential nomination took such a pledge.

Massachusetts Rep. Joseph P. Kennedy III announced he would no longer accept donations from business PACs on the cusp of launching his Democratic primary challenge to Sen. Edward J. Markey, who also swore off corporate PAC dollars last year. New Mexico Rep. Ben Ray Luján, another Democrat seeking a Senate seat, collected about $300,000 in corporate and association PAC money, most of it before he took his pledge.

No post-pledge refunds

Markey and Kennedy similarly are among the top recipients of business PAC funds this election cycle because they stopped taking the money mid-cycle and did not refund their earlier corporate PAC donations. Markey’s reelection campaign has received about $245,000 from business PACs; his campaign said he took his pledge Aug. 26. Kennedy brought in about $125,000 before cutting off corporate and trade association PAC donations on Sept. 5. Neither refunded corporate PAC donations that came in before their pledges.

“If we receive a check from a corporate PAC, it is immediately returned,” Kennedy campaign spokeswoman Emily Kaufman said in an email.

Ditto from Markey campaign spokeswoman Liz Vlock: “When we receive a check from a corporate PAC, we return the check.”

Brett Kappel, a Democratic campaign finance lawyer with the law firm Akerman, said it’s not immediately clear from the public record that donations have been refunded or rejected, and campaigns have options about how to reject such money.

Campaigns can deposit a donation and then issue a refund to the corporate PAC, or they can just opt not to deposit it. In that case, PACs may not realize that a check has gone un-cashed for months, or even years — all while the PACs report on their filings to the FEC that they gave the money to the candidates.

“That’s why I tell them you have to reconcile your records on a monthly basis,” said Kappel, of his advice to corporate and trade association PAC clients.

More money received

Campaigns of the most vulnerable members who reject corporate PAC money raised more campaign cash overall, about $340,000 more on average last year, than candidates who didn’t take the pledge, according to the group End Citizens United, which urges lawmakers and challengers to take the pledges and tracks which ones do. The group’s name refers to the 2010 Supreme Court decision, Citizens United v. FEC, which helped open the door to unlimited-spending super PACs.

That ruling did not directly deal with corporate PACs, which were the product of changes to campaign finance laws enacted in the wake of the Watergate scandal under President Richard Nixon. Corporate PACs raise their money from employees of the corporation and disclose both their donors and donations publicly. They are also subject to spending limits, unlike super PACs, of no more than $5,000 per election to a candidate.

“Rejecting corporate PAC money sends a powerful message to voters about who you will fight for in Washington and also sends a message to grassroots supporters about what type of candidate and leader you will be in Washington,” said Patrick Burgwinkle, a spokesman for End Citizens United. The group has its own PAC and endorses candidates, some of whom have not taken a no-corporate-PAC pledge.

“By the very nature of the pledge they have taken and upheld, they are changing Washington,” he added.

Rep. Anthony Brindisi, a moderate Democrat from New York who flipped a GOP seat in 2018, has taken about $130,000 in contributions from non-corporate business and professional PACs, such as those of the American Association for Justice, which represents trial lawyers, and the National Beer Wholesalers Association.

His campaign manager, Lucy MacIntosh, noted in an email that Brindisi, who faces a Toss-up race this fall, is the only candidate in his district to reject donations from the PACs of corporations. She added that he “believes our campaign finance system is broken and he’s worked hard to clean up Washington” and has supported “sweeping campaign finance reform legislation.”

Though Brindisi and Axne both have received large amounts from non-corporate business PACs relative to their fellow pledge-takers, with $130,000 and $110,000 respectively this cycle, those totals pale in comparison to more senior colleagues who have not taken a pledge. House Ways and Means Chairman Richard E. Neal, a Massachusetts Democrat, has collected the most — $1.4 million — from business PACs, according to the Center for Responsive Politics.

PACs challenge stigma

Yet while it appears businesses still have an avenue to support and potentially influence lawmakers and candidates who have taken the pledge, corporate PACs are working to challenge the stigma they’ve received, according to Micaela Isler, executive director of the National Association of Business Political Action Committees.

“We are trying very hard to distinguish ourselves,” she said. “There’s a lot of disinformation on employee-funded PACs.” The donations to lawmakers from company PACs are funded from contributions by individual employees, she noted. Companies can, however, pay for overhead costs, such as providing the personnel to run the PAC.

“We’ve had conversations with candidates and really tried hard to zero in on that message,” Isler said. “We’re making some headway, but it’s going to take some time.”

The focus on FEC designations for PACs also has its limitations.

American Crystal Sugar Co., for example, is organized as a cooperative, according to FEC records, so it does not violate the no-corporate-PAC pledge. After the trial lawyers’ group, American Crystal Sugar is the second-largest donor of business PAC money, giving $165,000 last year to lawmakers who took the pledge.

The company did not respond to a request for comment, but other association PACs that are among the top donors to the pledge-takers say there’s a reason for their status.

“The starting point is, we’re fundamentally different than corporate interests,” said Louis Finkel, senior vice president for government relations at the National Rural Electric Cooperative Association. “Electric cooperatives are not-for-profit community-owned electric utilities.”

He said the group’s PAC has about 36,000 donors who give an average of $65 per year. The group’s lobbying agenda includes energy technology issues, tax, infrastructure and other matters.

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