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Context of '1944: Labor Union Forms First PAC'

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The Smith-Connally Act restricts contributions to federal candidates from labor unions as well as from corporate and interstate banks (see 1925). The law is passed in response to the powerful influence of labor unions in elections beginning in 1936, where some unions used labor dues to support federal candidates (Center for Responsive Politics 2002 pdf file) , and by public outrage at a steelworkers’ union going on strike for higher wages during the war, an action characterized by many as unpatriotic. The law was written both to punish labor unions and to make lawmakers less dependent on them and their contributions. (Campaign Finance Timeline 1999) One example held up to scrutiny is the 1936 donation of $500,000 in union funds to the Democratic Party by John L. Lewis of the Congress of Industrial Organizations (CIO). (Geraci 2006 pdf file) Motivated by anti-union and anti-liberal sentiment after the war’s end, the Taft-Hartley Act (see June 23, 1947) will make the ban permanent. (Campaign Finance Timeline 1999)

The first “political action committee,” or PAC, is formed by the Congress of Industrial Organizations (CIO), a powerful labor union, on behalf of the efforts to re-elect President Franklin D. Roosevelt. PAC donations come from voluntary contributions and not labor dues, and therefore the donations are not prohibited (see June 25, 1943). (Center for Responsive Politics 2002 pdf file; National Public Radio 2012)

In the case of Pipefitters Local Union No. 562 et al v. US, the Supreme Court overturns a criminal conviction of the Pipefitters Union for violating the Smith-Connally Act (see June 25, 1943) and the Federal Corrupt Practices Act (FCPA—see 1925). That law bans labor unions from contributing to political campaigns, and Pipefitters Union officials had administered a political action committee (see 1944). The Court, citing the newly passed Federal Election Campaign Act (FECA—see February 7, 1972), overturns the conviction, ruling that FECA “plainly permits union officials to establish, administer, and solicit contributions for a political fund.” The decision is later codified by the amendments to the law (see 1974). (Campaign Finance Timeline 1999; US Supreme Court Center 2012)

President Bush vetoes the Campaign Finance Reform Act of 1992, which would have provided partial public financing for Congressional candidates who voluntarily accept fundraising restrictions. The legislation would have also put restrictions on so-called “soft money” raised on behalf of presidential candidates. The bill is sponsored by Congressional Democrats, and if signed into law, would have provided public funds and other incentives for Senate and House candidates who agreed to limit election spending. Bush says in his veto message that the bill would allow “a corrupting influence of special interests” in campaign financing and give an unfair advantage to Congressional incumbents, the majority of whom are Democrats. The bill is little more than “a taxpayer-financed incumbent protection plan,” Bush says. Democrats retort that the bill would lessen, not increase, campaign finance corruption by providing public funds instead of private (largely corporate) donations, and note that Bush netted $9 million in corporate and individual donations in a single evening during a so-called “President’s Dinner” fundraising event. Democratic leaders have acknowledged that if Bush indeed vetoes the bill, they lack the numbers in the Senate to override the veto; some believe that Democrats will try to use the veto in the 1994 and perhaps 1996 election campaigns. House and Senate candidates are breaking fundraising records, raising almost 29 percent more money this cycle than in a corresponding cycle two years ago. Much of those funds come from political action committees (PACs—see 1944, February 7, 1972, and November 28, 1984). In 1989, Bush said he would like to abolish PACs entirely, and he now says, “If the Congress is serious about enacting campaign finance reform, it should pass legislation along the lines I proposed in 1989, and I would sign it immediately.” The Democratic bill would curtail the influence of PACs, but not ban them outright. (Eaton 5/10/1992; Reuters 5/11/1992; Campaign Finance Timeline 1999; Geraci 2006 pdf file) Fred Wertheimer of Common Cause, which had pressured for passage of the bill, called the legislation “the most important government reform legislation in about 20 years.” He added, “If President Bush vetoes the reform legislation, the corrupt campaign finance system in Washington will be his system, his personal responsibility.” (Clymer 4/3/1992) In an angry editorial in the Orlando Sun-Sentinel, Tom Kelly will blast Bush and the members of both parties whom he will say “are as comfortable with the present arrangement as fat cats reclining on a plush sofa.” Kelly will write that Bush’s characterization of the bill as “incumbent protection” is insulting and inaccurate. The result of the veto, he will write, is that Bush himself becomes the incumbent most protected by the current system, and “the prospects for meaningful change in a disgraceful system by which special interests manipulate public policy with the leverage of big bucks have been set back to Square One—again.” Kelly will note that at the recent “President’s Dinner” that raised $9 million in contributions, the costs were plainly delineated: ”$1,500 per plate for dinner, $15,000 to sit with a congressman, $30,000 for a senator or Cabinet member, $92,000 for a photograph with the president, and $400,000 to share head-table chitchat with Bush himself.” Presidential spokesman Marlin Fitzwater admits that the contributors were buying “access” to the administration, access, Kelly will write, is “all too often is denied to the people who need government services most and those who have to pay the bills.” All of the $9 million raised at the dinner, and the monies raised at other such events, becomes so-called “soft money,” which Kelly will note has been labeled “sewer money” by the New York Times. While the law pretends that such monies go for voter turnout and education efforts, Kelly will write, it usually goes into buying negative television ads financed by third-party political organizations. Kelly will call Bush’s call to eliminate PACs “fraudulent,” writing, “The same power brokers could simply reorganize as ‘ideological’ lobbies and resume bribery as usual.” (Kelly 5/15/1992)

A number of political action committees, or PACs (see 1944, February 7, 1972, 1975, and November 28, 1984), created by “independent” organizations inform the Federal Election Commission (FEC) that they will not disclose the names of donors or amounts of funds raised, because they are not expressly advocating for or against any individual candidate. These PACs become known as “527 groups,” based on Section 527 of the federal tax code. Congress soon passes a disclosure mandate forcing PACs to reveal their donors and information about their fundraising and expenditures (see June 30, 2000). By 2005, many PACs begin registering themselves as 501(c)4 “advocacy nonprofit” organizations. Under the law, such groups can only conduct certain “political advocacy” activities, but in return do not have to disclose their contributors or information about their financing. (National Public Radio 2012)

The Tennessee State Legislature approves a bill, SB1915, that allows for direct corporate donations to political candidates. The bill also raises the amount that can be given by contributors by around 40 percent. Corporations will be treated as political action committees (PACs—see 1944 and February 7, 1972). The original bill was sponsored by Senate Speaker Pro Tempore Jamie Woodson (R-Knoxville) and passed by a party-line vote, with Republicans voting for passage and Democrats against. House Democratic Caucus Chairman Mike Turner objected to the bill, saying that foreign-based corporations could also contribute under it; House sponsor Glen Casada (R-College Grove) responds by saying that such corporations would have to have a presence in Tennessee to make such contributions. Turner says after the bill passes: “It’s going to be like an arms race with Democrats and Republicans trying to compete for this corporate cash. I just think it’s wrong. I think it’s un-American. Tennessee will rue the day we’ve done this.” For his part, Casada says the bill will lessen candidate dependence on PACs and provide more money to “educate voters.” He adds, “More money is more free speech.” Woodson says the law follows directly from the controversial Citizens United decision by the US Supreme Court (see January 21, 2010), which allows corporations and labor unions to spend unrestricted amounts of money in support of, or opposition to, federal candidates. Republicans lauded the decision by saying it promoted free speech (see January 21, 2010). The Tennessee State Legislature approved a law similar to the Citizens United decision in 2010. The new bill authorizes corporations to give directly to candidates and political parties. Tennessee has long banned such corporate contributions. (Woods 4/26/2011; Humphrey 4/27/2011) Governor Bill Haslam (R-TN) will sign the law into effect. Republicans claim the law will “equalize” contributions, and remove the “advantage” in donations from labor unions enjoyed by Democrats. “This basically would just level the playing field, because unions are allowed to do this by statute now,” says Senator Bill Ketron (R-Murfreesboro). However, in October 2010, reporter Tom Humphrey showed that corporate and PAC donations favored Republicans by as much as a 3-1 margin, an advantage not overcome by union contributions. (Humphrey 10/29/2010; Woods 4/26/2011)


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