Sunlight Foundation Reporting Group

FEC deadlocks on supersizing corporate and union PACs

A lawyer who has already successfully fought to loosen campaign finance regulations says he'll probably go back to court to continue his crusade after the Federal Election Commission today deadlocked over allowing corporations, unions and other organizations with political action committees to create super PACs within them. 

The six commissioners divided along party lines over attorney Dan Backer's proposal to allow corporations, unions and other associations to create segregated "independent expenditure" accounts within their traditional political action committees, using the same name and brand they currently employ. Backer, of DB Capitol Strategies, was the winning attorney in Carey v. FEC, a 2011 case that allowed political action committees that aren't affiliated with unions or corporations to set up super PACs within their PACs.

For corporations and unions, the main advantage of doing the same would be reduced overhead because federal law allows them to subsidize the expenses of their PACs. They could also use their super PAC within a PAC to solicit funds from the general public or any outside organization, something their traditional PACs currently are barred from doing. The Supreme Court’s Citizens United decision in 2010 gave wide new freedoms to unions and corporations to influence elections. But while they are now permitted to spend unlimited amounts on elections, in order to do so, they must tap their own treasuries or create a new super PAC.

Backer argues that amounts to muzzling organizations that already have political action committees. “Why create multiple organizations just to speak?” Backer argued in an interview with Sunlight. “We want to speak how we want to speak and when we want to speak.” 

"The FEC has not yet caught up to the law,” added Backer, who in his January filing to the FEC referenced the Supreme Court’s ruling in Citizens United, which concluded “that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.”

Traditional PACs must abide by FEC limits on fundraising and contributions but can give directly to a candidate's campaign; an independent expenditure committee -- better known as a super PAC -- can accept and give money in unlimited amounts but may not coordinate how it is spent with candidates. Under Backer's proposal, the independent expenditure funds would be segregated from the traditional PAC account.

Among the FEC commissioners, the main partisan disagreement was over whether the courts had already decided the issue. Republican commissioner Matthew Petersen said that the Carey v. FEC case, an August ruling that allowed non-connected PACs (those not established by a corporation, union or association) to create segregated independent-expenditure-only funds, was equally applicable to this case. If the FEC does not allow Stop the Insanity, Inc., the committee that Backer is representing, to create a Carey account, Petersen argued, it would have to create two accounts, which the court found unconstitutional in Carey. 

The Democratic commissioners countered that PACs connected to corporations, unions and associations are unique and that no court has invalidated the legal restrictions placed on them, which prevent them from browbeating vulnerable employees and members into giving to the PACs.  

Backer's latest ask comes on the heels of others— some successful, some not. His big win in Carey came after the FEC deadlocked on whether National Defense PAC, a non-connected PAC, could set up an segregated independent expenditure fund. Since then, at least 23 so-called “hybrid PACs” have launched, according to a roster kept by the FEC.

However, in December, another Backer request to push the limits of campaign finance was unanimously rejected. All six commissioners said that the leadership PAC—a fund members of Congress use to spread influence—of Sen. Mike Lee, R-Utah, was not allowed to function as a super PAC.

But Backer said he is confident about this one, noting a lack of outrage from watchdog groups.

“That Fred Wertheimer hasn’t predicted the end of days over this pretty much shows that we’re right on this one,” he jokingly said, referring to the president of Democracy 21.