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Oh, waiter! Charge it to my PAC

Steve Henn Jul 21, 2008

Oh, waiter! Charge it to my PAC

Steve Henn Jul 21, 2008


KAI RYSSDAL: The presidential race is getting most of the press this election cycle. Last time around, though, control of Congress was in the balance. And that November, after the Democrats won, Speaker-elect Nancy Pelosi had this to say:

NANCY PELOSI: The American people voted to restore integrity and honesty in Washington, D.C.

Pelosi was, of course, by no means the first to say her party would change the way Washington does business. Before her it was Newt Gingrich, and before him countless others.

None of them managed to actually change the culture of ethics in the nation’s capital, though. Lawmakers are still dining out and jetting off on trips they don’t pay for themselves, and taking friends and lobbyists with them.

They get the money to do that not through their campaign accounts, but by setting up something called a leadership political action committee, or PAC. Today, in part one of our series, PAC Men, Marketplace’s Steve Henn explains how they work — and why.

STEVE HENN: Just a few blocks from the Capitol is another Washington institution: Bistro Bis.

[Sound of restaurant. Pouring liquid.]

HENN: Thank you, very much.

WAITER: Certainly.

Congressional lawmakers flock to this restaurant. And sitting at a little table, it’s easy to see why.

HENN: What about appetizers?

CUSTOMER: Appetizers . . . Personal favorites, I love the duck-liver parfait. I always recommend the quenelles, which are the scallop mousse dumplings served with a little bit of the lobster bisque. . . . Another thing they do very well here.

And then the waiter shows me the wine list.

WAITER: A 2006 vintage. Shows nice spice. Full-bodied pinot noir, very unique. Does that fit in your price range or are we looking for something . . .?

Henn: Uh, $86 is probably a little bit above our price range.

But these prices aren’t a deterrent for powerful Democrats like Charlie Rangel and Ted Kennedy, or Republicans like Roy Blunt and Trent Lott.

They came to Bistro Bis frequently last year. Sometimes it was for fundraisers, sometimes it was just lunch. And often their leadership political action committees picked up the tab.

Meredith McGehee: It’s like having a little cash register, a little bank account at their beck and call.

Meredith McGehee at the Campaign Legal Center says rules about leadership PACs are incredibly loose.

McGehee: Under the federal statute, and under FEC regulations, there is no restriction on using leadership PACs for personal use.

That wasn’t the original intent. The idea for congressional PACs came from their corporate and union cousins. Congress allows corporate and union PACs to raise money for candidates they favor.

Lawmakers copied it as a way to raise money and share it with their friends’ campaigns. But virtually no rules governing these new congressional PACs were ever passed.

Tony Coelho founded his 30 years ago as a young congressman from Modesto, Calif. — looking to be a somebody on Capitol Hill.

TONY COELHO: At that point it gave me the opportunity to give people — my colleagues or challengers — a check that they weren’t used to getting from members of Congress. So if you only had 15 PACs from members of Congress, and you were one of the 15, all of a sudden you were somebody special, and I knew that.

Coelho became somebody special, indeed. He quickly rose through the ranks and became the third-most-powerful Democrat in Congress.

And it didn’t hurt that PACs weren’t obvious to the public. Lawmakers had to report PAC spending to the Federal Election Commission, but they didn’t have to disclose that they actually ran one.

COELHO: Basically, it was just . . . you raised and you reported. There was nothing . . . no restrictions to a great extent.

And almost 30 years later there still aren’t.

Here’s how it works. Lawmakers ask lobbyists and other special interests to donate money to their PACs.

And then lawmakers can spend it almost any way they want — donating to their party or colleagues or using their PAC as a catch-all for other things.

McGehee says that makes leadership PACs too tempting to pass up, especially since Congress just passed new ethics rules that ban lobbyists or corporations from paying directly for lawmakers’ meals and trips.

McGehee: If they have money in that leadership PAC, that’s going to fund their ability to go to the Super Bowl and have a party; that’s going to fund their ambition to move up in Congress. And if the ambition is to be president, to fund that as well.

According to FEC records, last year politicians used their PACs, funded by lobbyists and special interests, to pay for more than $2 million in meals and trips to golf resorts.

McGehee: The end result is they get to eat at some of the best restaurants in town and have somebody else foot the bill, lobbyists and others included.

In Tony Coelho’s day, there were just 15 leadership PACs. Today there are 350 run by politicians including governors, and current and former members of Congress.

Marketplace spent six months combing through FEC PAC filings to piece together who runs what PAC and how those PACs spend their money.

These accounts raised more than $400 million since 2000 and gave away just $150 million to candidates running in elections, according to FEC reports. That means more than 60 percent of the money went for fundraising, overhead and staff. Charities like the Red Cross try to spend just half that percentage on overhead.

In fact, in the last three years politicians have spent more than $25 million from these accounts to pay for travel and perks — including golf and skiing trips with lobbyists, chartered jets, fundraising parties, limos, dining out and other luxuries.

And all of these expenses are legal. It’s just part of how business gets done in the nation’s Capitol.

In Washington I’m Steve Henn for Marketplace.

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