Maine’s Attempt at PAC Regulation
December 1, 2017
By: Eric Reid
The issue of money in politics is certainly nothing new, but recent elections have shined a national spotlight on the issue of campaign finance. U.S. federal election campaigns have become increasingly expensive, and the past three presidential election cycles have seen a steep rise in spending. The 2016 election price tag was an incredible $6.8 billion, which was an $800 million increase in spending since the 2012 election. It is important to note that this figure includes money spent by both campaigns, outside groups, and independent organizations. Federal congressional races have fared no better. The 2012 presidential election was in turn a $700 million increase from the 2008 election. The special congressional election in Georgia in June saw the candidates and Super PACs spend a whopping $55 million.
This increase has largely come from Super PACs and other outside groups that are able to raise an unlimited amount from donors. There are several types of outside groups that donors can use to supply money to politicians. Super PACs are politically active groups that emerged after the Supreme Court’s decision in Citizens United in 2010. They can raise unlimited funds and overtly advocate for their chosen politicians. They are slightly curtailed by the fact that they are, on paper at least, independent from a politician’s campaign. They cannot donate their money directly to their candidate and they cannot coordinate directly with that candidate’s campaign. Further, they are required to report their donors to the Federal Election Commission on a regular basis.
Other outside groups include “527 organizations” and 501(c)(4) nonprofit groups. 527 organizations get their name because they are registered under section 527 of the Internal Revenue Code. Before Citizens United, they were curtailed to only issue advocacy, but now they can openly support a candidate. However, they do need to disclose their donors.
501(c)(4) groups cannot have politics as their primary purpose, but they also do not have to disclose their donors. The 501(c)(4) groups are groups such as the NRA and the Sierra Club, and are considered by the IRS to be “social welfare” organizations. These groups can largely hide how they spend their money and their donors. The groups must submit a 990 form to the IRS, which shows which major vendors they hired and groups they give their money to. However, they are able to give vague explanations as to how that money was spent. It is important to note that if any 501(c)(4) group spends money explicitly advocating for a candidate, then they have to report the spending to the FEC.
As Super PACs and other outside groups have gained influence, Americans have become increasingly skeptical of money in politics. A poll conducted by the New York Times in June 2015, found that “[i]n a rare show of unity, Americans, regardless of their political affiliation, agree that money has too much influence on election[s]. . .” Further, approximately 66% of the population believe that “wealthy Americans have more of a chance to influence the elections process than other Americans.”
In light of this national trend, Maine has decided to try to prevent corruption, or at least the appearance of corruption. Last month, Maine’s Commission on Governmental Ethics and Election Practices stated that they wanted to create a system to better scrutinize the leadership PACs that State House lawmakers use to help fund their campaigns. The commission wants to be able to randomly sample and audit PAC expenses, specifically trying to focus on Super PACs supporting currently sitting state legislatures.
Politicians can create Leadership PACs to help fund expenses that their campaigns would otherwise be unable to pay for. These PACs can accept donated money from both other PACs and individuals.
Maine’s commission’s statement comes in light of recent ethics complaints against state Senator Andre Cushing for violating Maine’s campaign finance reporting laws during his 2016. He was fined $9,000 for filing records of campaign contributions several months late and for misreporting statements regarding a leadership PAC he currently heads.
The real issue is whether this increased scrutiny will have a real impact on curtailing corruption. First, if the commission issues new regulations, there is a question of whether those regulations will have any teeth. The commission has been soliciting feedback from the leadership and lawyers of the PACs, and has said that, at the very least, they would give the PACs a “fair warning.” If the commission decides to take too many suggestions from PACs, then it could lead to an ineffectual bill. Further, a former Republican lawmaker, Commissioner Richard Nass has voiced a concern that that such a bill “could prompt the Legislature to change reporting laws and prohibit the ethics commission from reviewing the spending.” Finally, because the bill only addresses leadership PACs, it only tackles part of the problem. Super PACs and other outside groups can still have a heavy hand in politics.
Still, it is a step in the right direction of tackling corruption and transparency in campaign finance. Commissioner Nass has also stated that while most PACs follow the laws, there are a few that “misuse the system.” And, there have been a few cases in Maine that seem to validate his argument. In 2016, state Representative Diane Russell was fined $500 for not disclosing an email list her campaign used to raise nearly $90,000. In 2014, former state Senator John Tuttle was found to have used over $17,000 of his PAC to pay for personal expenses. This bill should help bring extra scrutiny to these PACs to help prevent their leaders from misusing them.