On PACs and Legal Money Laundering

There have been some discussions here recently about PACs, and whether or not it's "ethical" to accept money from them. Recently Kay Hagan made a comment about refusing donations from PACs being "unrealistic". I have to admit, while a part of me rails at this position, another part of me is almost in agreement, considering how outrageously expensive it is to run a race like the U.S. Senate.

We've also discussed whether or not some of them are "good" PACs, as opposed to the evil, corporate kind. Well, after spending several days poring over Kay's (and others') FEC reports, I can say with a high level of confidence that there are no "good" wealthy PACs, at least not in the sense that they solely pursue their overtly stated agenda and their contributors give to them based on what they stand for.

In reality, regardless of what their name implies, many of these larger PACs are also clearing houses for money. Meaning, in addition to whatever issue-oriented business they conduct, they also serve as a conduit for other monies that have absolutely nothing to do with what they stand for. There is also a lot of money being passed back and forth between PACs, which makes it virtually impossible to trace the original donor(s) to the end recipient(s), which is why I included the term "money laundering" in the title of this diary. I'm sure some of you already know this, but I bet a lot of you don't, so pay attention.

While I am going to use some of Kay's PAC contribuitions as examples of this, compared to most others who accept PAC money, hers are fairly insubstantial, and don't represent any "smoking guns" as Betsy would say.

The first one we'll look at is the Searchlight Leadership Fund, which was the brainchild of Harry Reid and has come under fire from several sources due to the taint of some Vegas mob money as well as a little Abrahmoff stink. Here's a list of PACs who have given to this superfund PAC. This fund contributed $10,000 to Kay's campaign.

While Abramoff never directly donated to Reid, the lobbyist did instruct one tribe, the Coushattas, to send $5,000 to Reid’s tax-exempt political group, the Searchlight Leadership Fund, in 2002. About the same time, Reid sent a letter to the Interior Department helpful to the tribe, records show.

Abramoff sent a list to the tribe entitled “Coushatta Requests” recommending donations to campaigns or groups for 50 lawmakers he claimed were helpful to the tribe. Alongside Reid’s name, Abramoff wrote, “5,000 (Searchlight Leadership Fund) Senate Majority Whip.”

Another monster on my list is IMPACT, which is another clearing house that received contributions from all sorts of bank & insurance PACs, who received a lot of their money from other PACs, etc. If you have a few years to spare and your health care plan covers psychological therapy, you can try to follow these threads. This fund gave $10,000 to Kay's campaign.

The next one caught my eye because it sounded so cute! KIDSPAC was created by the Irving Harris Foundation, ostensibly to further the interests of children. While there are quite a few Harris' giving money to KIDSPAC, there are also a lot of investors and venture capitalists, like Leo Guthart of Topspin Partners, who gave $5,000 to KIDSPAC the day before KIDSPAC donated $5,000 to Kay Hagan's campaign. I know, I know. There's no proof of any connection between the two, but I've been seeing venture capitalists pop up left and right while perusing Kay's contributors, like Gray Ventures and Granville Capital.

While refusing PAC money may not be realistic in this day and age, we absolutely do need to reform campaign finance, and get a better grip on the money that PACs are tossing back and forth. That kind of regulating might well stifle some of the money flowing in, but I'm not sure if that's a bad thing.