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November 26, 2014

McCutcheon Super PAC Already Busts Limits | Rules of the Game

An Alabama businessman whose challenge to campaign contribution limits goes before the Supreme Court on Tuesday has already spent well beyond the current limit through an unrestricted super PAC, public records show.

Shaun McCutcheon, a conservative activist who runs an Alabama electrical engineering firm, argues in McCutcheon v. Federal Election Commission that the $123,200 limit on how much he may give to candidates, political action committees and parties per election cycle stifles his free speech and does nothing to curb corruption.

But in the 2012 elections, McCutcheon spent close to three times that limit — about $300,000 — supporting his favorite candidates through his personal PAC. McCutcheon set up the Conservative Action Fund PAC in 2010 as “a good way to do political advertising” and “a way to raise money from other donors,” he said.

McCutcheon’s ability to spend hundreds of thousands beyond the aggregate contribution limit, even under the current rules, illustrates how wide-open the campaign finance system has already become. The question now is whether the high court will deregulate elections even further.

For McCutcheon’s personal PAC, raising that money turned out to be harder than expected, he has acknowledged. So the vast majority of the $354,023 that the PAC spent in the 2012 election cycle came from McCutcheon’s own pocket, according to the Center for Responsive Politics.

There’s nothing illegal about the Conservative Action Fund, which is technically a “hybrid” PAC that operates both a conventional PAC and an unrestricted super PAC out of separate accounts. In this case, virtually all the Conservative Action Fund’s receipts and expenditures flow in and out of its unrestricted super PAC arm.

But McCutcheon’s big spending in the 2012 election underscores just how easy it is for any individual to spend hundreds of thousands (or even millions) on campaigns, notwithstanding the overall cap that limits donors to giving no more than $48,600 to all candidates and $74,600 to all PACs and parties in any two-year cycle.

While the Supreme Court’s landmark Buckley v. Valeo ruling in 1976 upheld the cap on direct contributions to candidates, which now stands at $2,600 per election, it struck limits on how much an individual may spend independently from a candidate. In 2010, the high court in Citizens United v. FEC made it even easier to spend unlimited sums on campaigns, reversing the long-standing ban on independent corporate and union spending.

“If the question is: Does the aggregate limit [on contributions] to candidates and party committees stop someone from spending all the money they want on politics? The answer is clearly no,” said David Mason, a former chairman of the Federal Election Commission and senior vice president at the political software and compliance firm Aristotle.

But that’s not the question before the court, Mason said. The justices must instead decide whether they agree with McCutcheon that the aggregate contribution limit poses no corruption risk to candidates or parties. McCutcheon, who’s been joined by the Republican National Committee in his challenge, argues it’s no more corrupting for him to give the maximum $2,600 to 17 candidates than, say, 18 candidates.

Senate Minority Leader Mitch McConnell, R-Ky., who has been granted the chance to present his case to the court on Tuesday, argues in his brief that contribution limits should be held to the same strict standard of scrutiny as campaign expenditures. Should the high court concur with McConnell, it could make the “base” limit on direct donations to candidates vulnerable to a constitutional challenge, dramatically reordering the campaign finance system.

McCutcheon’s brief to the Supreme Court portrays him as hamstrung in his efforts to give as much money as he wants to candidates. The brief states that when he filed the complaint in the case as of mid-June 2012, he had given a total of $33,088 to 15 challengers. McCutcheon wanted to support another dozen candidates, but doing so “would have violated the aggregate candidate contribution limit of $48,600 per election cycle,” the brief states.

In the end, McCutcheon fell well shy of that limit in any case, giving about $45,000 to both federal candidates and party committees, CRP data show; he also donated at least $10,000 to the Alabama Republican Party. But McCutcheon gave close to $300,000 to the unrestricted account of his Conservative Action Fund PAC and another $31,500 to an unrelated super PAC called America Get Up.

The Conservative Action Fund spent money on direct mail, robocalls and online ads in a bid to “promote conservative candidates” and “bring new voters into the conservative mindset,” said GOP election lawyer Dan Backer, the PAC’s treasurer. Backer is also the person who persuaded McCutcheon to challenge the aggregate contributions in court.

“As a practical matter and as a matter of law, these are very different modes of speech,” Backer said. The PAC made tens of thousands of dollars worth of independent campaign expenditures in nine congressional races in 2012, according to the CRP. That included $26,828 to oppose Rep. Spencer Bachus, R-Ala., who won anyway, and $21,966 to oppose Florida Republican Fred Costello, who lost his primary. The PAC achieved its desired result in five of the nine races it invested in.

The Conservative Action Fund has received several letters from the FEC citing reporting irregularities, including $24,000 in activity “that does not appear to correspond with any itemized transaction(s).” Backer described these as “minor bookkeeping issues.” Data from the CRP also suggest that McCutcheon gave over the maximum $10,000 to the Alabama Republican Party in 2012, as reported by the Center for Public Integrity. Backer told CPI the Alabama GOP would be asked to redirect or refund any excess contributions.

None of this is likely to draw much notice from the Supreme Court, which will be looking at broader questions involving corruption and the First Amendment.

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