In the 2006 election cycle, Rep. Steny Hoyer raised nearly $1 million for congressional candidates by exploiting what experts call a legal loophole, according to records analyzed by the Center for Public Integrity In march 2007. Hoyer used his AmeriPAC political action committee as a conduit to collect bundles of checks from individuals and business and union interests. He then passed more than $960,000 along to 53 House candidates and another quarter of a million to the Democratic Congressional Campaign Committee. Hoyer has reportedly helped raise more than $8 million in campaign funds through the use of a secretive procedure called pass-through earmarking, which sidesteps statutory limits on leadership PAC contributions.
Federal law generally prohibits PACs, including leadership PACs run directly by politicians, from receiving more than $5,000 each year from a single donor or giving more than $10,000 to a single candidate. But in 2006, Hoyer collected as much as $136,000 from one labor union committee and distributed more than $86,000 to a single Congressional race.
Like the controversial technique where political operatives accept many small contributions designated for particular candidates and forward them to those campaigns, Hoyer’s pass-through earmarking enables him to retain political control over far larger amounts than he could legally distribute on his own under campaign finance law limits. Experts in campaign finance ethics are troubled that, while technically legal, bundling helps candidates bypass funding limits. Hoyer’s activities encourage the objectives of corruption that campaign limits serve to guard against.
Bundling is of particular concern when practiced directly by elected officials like Hoyer. This is because Hoyer’s bundling technique enables him to curry favor with special interest groups, and then turn around and use the same PAC funds provided by these special interests to curry favor with the ultimate recipients. Even though someone else wrote the checks, "it was Hoyer who actually got it to the candidate, so it enhances his position with his colleagues," said former House ethics committee chairman Joe Hefley of_Colorado.
On FEC disclosure forms, Hoyer's leadership PAC described each contribution as designated, or "earmarked," by the donor for a specific candidate. As long as donors, rather than Hoyer, nominally designate which politicians are the ultimate recipients, the earmarking loophole allows Hoyer to circumvent the $5,000 annual limits on contributions.
In the 2005-2006 election cycle, Hoyer passed through more identifiable earmarked contributions than any other House member, according to the watchdog Center for Responsive Politics. Experts believe that Hoyer’s earmarking activities were a major factor in his election as majority leader over Rep. John Murtha, Speaker Nancy Pelosi’s first choice. In 2006, Democratic Party leaders needed to funnel outside political money to a "Frontline 10"; ten House incumbents whose seats the Democrats most needed to protect. Hoyer bundled and passed along nearly $480,000 for these races, a figure far beyond the $105,000 that legally capped leadership PACs were able to contribute.
The biggest source of contributions for Hoyer's 2006 bundling operation was a PAC set up by the United Transportation Union, which represents railroad workers. The union's PAC gave Hoyer's staff 38 checks, ranging from $1,000 to $5,000 apiece, and adding up to $136,000. James Brunkenhoefer, UTU's national legislative director, said that when he had checks to deliver, he would call a Hoyer staffer, tell him "I've got contributions for you," and meet at the DCCC offices or "wherever it was convenient" to drop them off. It was more “convenient”, he said, to deliver batches of checks to Hoyer's staff than to send them to individual candidates.
Brunkenhoefer told the Center for Public Integrity that he couldn’t remember handing over checks to Hoyer directly, but admitted that Hoyer received them and had described the UTU PAC as "one of the biggest supporters of the party." Brunkenhofer denied that there was “ever a quid pro quo. You don't want him to say things like that.” The contributions were only made, he explained, “because as our legislation moves through, we would like to have our phone calls returned.” In addition to the UTU PAC, operatives representing the cable industry, accounting firms, postal workers, carpenters, and a highway materials company that lobbies for road-building appropriations all wrote checks that were earmarked through Hoyer's AmeriPAC.
Hoyer has avoided criminal corruption investigations because his technique is akin to bundling, rather than the cruder procedure of money laundering through a PAC, the scam that caught a predecessor, Republican Rep. Tom DeLay. By exploiting the pass-through earmarking technique, Hoyer has gained political control over far more PAC money than campaign finance law regulators intended.
If elected, I will reintroduce the “Leadership PAC Prohibition Act of 2006” to close down this perversion of federal campaign finance reform laws.
Source: Center for Public Integrity: http://www.publicintegrity.org/report.aspx?aid=819# (March 2007)
