Over the last year, U.S. Rep. Andy Barr, R-Lexington, spent nearly $32,000 on tickets to the Kentucky Derby and Breeders’ Cup, plus $300 to hire handicapper Ellis Starr to provide betting tips for his racetrack guests. “Nobody was even talking politics. It was just entertainment for everyone,” Starr recently recalled.
U.S. Rep. Hal Rogers, R-Somerset, paid $21,504 to golf at Pebble Beach Resorts on California’s beautiful Monterey Peninsula. Down the coastline, retiring U.S. Rep. Ed Whitfield, R-Hopkinsville, dropped more than $20,000 for a weekend of dining and poolside socializing in Beverly Hills.
These members of Kentucky’s congressional delegation didn’t take this money from their campaign committees, which hold the funds they raised to keep their current jobs. Instead, they tapped their leadership PACs — their lightly regulated, seldom scrutinized political action committees, which are mostly funded by interest groups who lobby Congress for favorable legislation.
Leadership PAC money can be spent however lawmakers want, as long as it doesn’t pay for their own campaigns. They donate some to the campaigns of other politicians, earning them the goodwill necessary to rise in the congressional ranks. Some covers the PACs’ record-keeping expenses. And — as is the case with Kentucky’s delegation — some goes to upscale dining, out-of-state trips, clothing, cigars, alcohol, entertainment and payments to lawmakers’ families and staff for services defined as “consulting” or “planning.”
“Leadership PACs are little more than slush funds, really. It’s pretty much ‘Anything goes,’” said Viveca Novak of the Center for Responsive Politics, which studies the influence of money on politics. “The only one who could impose legal restrictions on this practice would be Congress. And given who the system personally benefits, it’s not likely you’re going to see Congress do that.”
Most members of Congress are paid $174,000 a year. That’s more than four times Kentucky’s per-capita income, but it’s modest compared to the salaries of the industry lobbyists and corporate titans with whom they socialize at Washington fundraisers.
Leadership PACs allow congressmen to keep pace. They let Hal Rogers, for instance, hand somebody else the bill for $5,913 at Casa Luca, a popular Italian restaurant near the White House — as Rogers did April 4 — or a total of $5,915 over 17 meals at the private Capitol Hill Club, where Rogers likes to have lunch a short stroll from his House office.
Raising money to raise more money
As of April 30, Rogers’ Help America’s Leaders PAC had raised $455,427 for the 2015-16 election cycle.
Its top donors (at $20,500) were the executives at Rajant Corp., a Pennsylvania broadband provider that last year won $300,000 in state tax incentives to open a facility in Morehead through the Shaping Our Appalachian Region initiative that Rogers helped establish. Its next-largest donor (at $15,000) is New York real estate investor Jed Manocherian, who lobbies Congress to spend more on scientific research. Rogers helps decide federal spending as chairman of the House Appropriations Committee.
In a statement, Rogers spokeswoman Megan Bell said the 18-term congressman is not influenced by donors. The financial assistance Rajant Corp. received through the SOAR initiative is unrelated to contributions its executives made to HALPAC or, separately, to Rogers’ re-election campaign, which they gave $6,000 at around the same time, Bell said. A call to Rajant Corp. about HALPAC was not returned.
“The congressman, as you know, has fought tirelessly to bring new industries and related jobs to Southern and Eastern Kentucky throughout his career,” Bell said. “His interest in and support for companies that are seeking to locate facilities in Kentucky are in no way related to or dictated by the political leanings of their key staff.”
Travel and meals billed to HALPAC — such as the Pebble Beach golf trip — are necessary operating expenses for fund-raising events where Rogers meets with his PAC’s donors, Bell said.
In fact, two-thirds of the $395,388 HALPAC has spent this election cycle went to operating expenses. Just 29 percent went to campaign donations from Rogers to his fellow Republicans, according to Federal Election Commission data.
In other words, most of the money HALPAC has raised is paying for HALPAC to raise more money — whether it’s at the Ritz-Carlton Golf Resort in Naples, Fla., ($40,168 in April) or the Sun Valley Golf Course in Ketchum, Idaho, ($3,065 last September) or Joe’s Seafood, Prime Steak & Stone Crab in Washington ($695 over three visits).
“The expenses you noted were incurred in conjunction with official HALPAC fund-raising events,” Bell said. “It is typical for members (of Congress) to host events, including those which require travel, to solicit donations for their PACs. The events are generally attended by a dozen or more individuals.”
Other HALPAC purchases include cigars ($1,297); a limo service ($1,120); payments to Rogers’ wife, Cynthia, for “event planning” ($2,000); and tens of thousands of dollars more for meals, lodging and airfare around the country. HALPAC also paid $27,225 for “political consulting” to Will Smith, who already gets a $172,500 public salary as Rogers’ staff director at the House Appropriations Committee.
Smith did not return a call seeking comment. Bell said Smith “has been a trusted adviser to Congressman Rogers for two decades” and “performs a number of duties to assist the congressman in successfully administering his leadership PAC,” such as analyzing key congressional and state races to decide where to send campaign donations. Rogers’ wife is paid because she “performs several administrative functions for HALPAC,” Bell said.
‘A political lifestyle’
Ed Whitfield told his constituents last September that he was retiring from the House after 11 terms amid a congressional ethics probe into allegations that he improperly used his position to help his wife lobby for the Humane Society of the United States.
But Whitfield’s Thoroughbred PAC still had business to conduct.
For years, the leadership PAC held a fund-raising event at the reserved poolside cabana of the Beverly Hills Hotel in Los Angeles. Interest groups were invited to make “suggested contributions” of at least $3,000 from their own PACs in exchange for socializing with the congressman against the backdrop of Hollywood glamor. Many Thoroughbred PAC donors came from the energy industry, since Whitfield heads the House Subcommittee on Energy and Power.
The year 2015 would be no different. Six days after Whitfield announced his retirement, his PAC cut checks to the luxury hotel ($10,000) and two nearby restaurants, Spago Beverly Hills ($7,532) and Mastro’s Steakhouse ($1,145), plus $2,131 for “fund-raising event” airfare. All told, Thoroughbred PAC has paid $53,077 in operating expenses since Whitfield said he was ending his career. It still has $170,004 on hand.
Whitfield spokesman Taylor Booth declined to discuss the Beverly Hills event.
“The Thoroughbred PAC was created and currently operates to support the election of Republican candidates to Congress,” Booth said. “Rep. Whitfield receives no personal benefit from the Thoroughbred PAC, and all receipts, expenditures and reporting are carried out within the regulations set forth by the Federal Election Commission.”
Critics say leadership PACs are one more way for wealthy contributors to buy access to Congress so their concerns can get the highest priority.
“This money basically subsidizes what you would call a ‘political lifestyle’ — fine dining, travel to sporting events and luxury resorts — and the lobbyists and other major donors not only fund that for the lawmakers, they often go along for the weekend,” said Nick Nyhart, president of The Every Voice Center, a Washington nonprofit that works to limit the role of money in politics.
“One of the most disturbing things to me is how, on Capitol Hill, this has come to be considered normal. They don’t view their behavior as counter to the public interest when everyone else is doing it,” Nyhart said. “As leadership PACs become more commonly used this way, it creates a norm in this insulated, entitled Washington bubble that is far from the norms of everyday Americans, who are just trying to make their rent payments and put food on the table.”
Helping our friends
The first leadership PAC was started in 1978 by Henry Waxman, a Democratic congressman from Los Angeles.
Some of Waxman’s supporters wanted to raise money that he could use to help elect like-minded Democrats to office. Waxman agreed to this plan, but only if the money they collected did not count against the contribution limits of his own campaign committee. By law, individuals and PACs can only give so much to a candidate’s campaign for each election.
What the Federal Election Commission authorized for Waxman was a new creature, a political action committee for politicians who want to support other politicians. Waxman could now max out his donor network twice, once for his campaign and again for his PAC, which would funnel the cash to his Democratic congressional colleagues and hopeful challengers. He passed out $40,000 that year and subsequently was picked to lead a House subcommittee he wanted.
“So the FEC basically created these things on its own,” said Paul Ryan, deputy executive director of the Campaign Legal Center, a campaign-finance reform group. “They don’t appear in the statutes anywhere. That’s one reason there’s so little regulation restricting their activities.”
Initially, the PACs tended to be limited to senior members of Congress — lawmakers who either held or hungered for floor leadership posts or committee chairmanships. To win enough support from colleagues, lawmakers handed out a fortune in campaign donations. That’s why they were called “leadership” PACs.
But that changed over the last two decades. Pressure grew on even junior lawmakers to give away $100,000 or more every election cycle if they wanted good committee assignments, plum office locations and other perks. Eventually, most congressmen had their own leadership PACs. The sums these PACs collected steadily climbed from $5 million in the 1993-94 election cycle to $62 million in 2013-2014, according to an analysis by the Center for Responsive Politics.
Most of the money comes from other PACs, usually run by an industry, corporation or union that lobbies Congress to get what it wants.
Andy Barr’s Building America’s Republican Representation PAC has taken $188,875 so far this election cycle. Of that, 86 percent came from PACs, chiefly finance sector PACs (representing bankers, payday lenders, investment brokers and the like). These are companies interested in Barr as a member of the House Financial Services Committee, which writes laws affecting their bottom line.
Some max out their donations to Barr’s campaign committee, so BARR PAC lets them give twice. For instance, the PAC of the American Financial Services Association — representing credit and debit cards and other lenders — has given the maximum allowable $10,000 to Barr’s campaign and $4,500 more to BARR PAC.
Barr was the keynote speaker at AFSA’s Washington conference in February, where he supported the group’s call for easier access to consumer debt and a rollback of federal restrictions on lending practices. AFSA officials also have gotten a friendly reception from Barr when they’ve testified before his House committee.
Likewise, of BARR PAC’s individual donors — there are only 11 so far — most are lobbyists or executives from the finance sector in Washington or New York. Almost nobody in Barr’s House district in Central Kentucky gives to his PAC.
A spokesman said Barr was “unavailable” to discuss his leadership PAC. Andrew Theodore, a political fund-raising consultant in Washington who handles BARR PAC’s books, said Barr’s racetrack events over the last year were fundraisers. House Majority Leader Kevin McCarthy, R-Calif., was Barr’s featured guest at the 2015 Breeders’ Cup at Keeneland, which made it “larger and therefore more expensive” but also “a tremendous success,” Theodore said.
‘Buying access to congressmen’
Jack Abramoff changed how leadership PAC money got spent.
Abramoff made $20 million a year lobbying Congress before he went to prison in 2006 for conspiracy, fraud and tax evasion. He showered congressmen and their families and staffs with expensive meals, fabulous vacations, sports tickets and jobs. He famously flew some to Scotland on a private Gulfstream II jet for golf weekends. At least 100 members of Congress were happy to file bills for him because he was their generous benefactor, Abramoff said.
“I think most congressmen don’t feel they’re being bought. Most congressmen can, in their own mind, justify the system,” Abramoff said in a 2012 interview with CBS News.
In response to the Abramoff scandal, Congress in 2007 passed new ethics rules banning gifts, meals and travel paid for by lobbyists. If a senator or a representative wants an expensive steak dinner, under the rules, he is expected to pull out his own wallet for it.
That’s when some leadership PACs began to spend less on campaign donations, their original purpose, and more on “operating expenses,” including the gifts, meals and travel that once came directly from lobbyists. While interest groups cannot take a congressman on a golf trip anymore, they can underwrite the PAC that pays for the golf trip — and they can send their executives and lobbyists along to chat up the congressman as they all hit the links together.
“This is just one of many ways the biggest donors can give more money to individual members of Congress,” said Lisa Gilbert of director of Public Citizen’s Congress Watch division. “When you spend at this level, let’s face it, you’re buying access to congressmen. You’re getting something most Americans can’t afford. But money tends to find a way around ethics rules.”
Several times in recent years, the FEC has urged Congress to prohibit any personal benefit from the use of leadership PAC funds. It’s already illegal to spend campaign funds for personal benefit, the FEC wrote in a 2013 letter to lawmakers, and “the close relationship of leadership PACs to the officeholders who sponsor them make leadership PACs very similar.” Congress has ignored the FEC’s recommendations.
All PACs great and small
All eight members of Kentucky’s congressional delegation have a leadership PAC.
Several House members do comparatively little with their PACs. Republicans Brett Guthrie of Bowling Green and Thomas Massie of Vanceburg and the lone Democrat, John Yarmuth of Louisville, all have spent less than $100,000 during this election cycle. Most of that went to their colleagues as political donations.
“I typically ask donors who have already made a large contribution to my congressional campaign,” Massie said in reply to questions about his Making A Sensible Shift In Elections PAC, which has raised $40,400. “My congressional account is modest, too. I don’t spend as much time raising money as most congressmen.”
Senate Republican Leader Mitch McConnell runs the delegation’s biggest PAC. His Bluegrass Committee has raised $1.27 million and spent $997,313 so far this election cycle. About half, 52 percent, went to fellow Republicans on the federal and state levels, including $2,000 last June to the gubernatorial campaign of Matt Bevin, his 2014 GOP Senate primary opponent.
The remaining 48 percent of the Bluegrass Committee’s money went to operating expenses. The expenses look similar to those racked up by the year-round fund-raising operations at McConnell’s campaign committee, which dropped $28.2 million in 2014 to give him a fifth Senate term. Among those: $190,143 to Laura Sequeira, his national finance director; $150,000 to two consulting firms run by Josh Holmes, his 2014 campaign manager; and $20,000 to Republican speechwriter C. Landon Parvin for “strategic consulting.”
None of the PAC’s expenses are related to McConnell’s own campaigns, said Holmes, McConnell’s political spokesman.
“The purpose of Bluegrass PAC is to support Republican candidates and party committees on federal, state and local levels in accordance with laws governing each,” Holmes said. “All expenses incurred by the PAC are in pursuit of that mission.”
Most of McConnell’s PAC money comes from other PACs operated by interest groups lobbying the Senate. Its top donor, BGR Group, is a Washington lobbying firm that held a fundraiser for the Bluegrass Committee in early 2015, just as the 114th Congress began. McConnell’s PAC reported collecting $88,000. BGR Group represents dozens of corporate clients that have business before McConnell in the Senate.