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  Table of ContentsExecutive Summary Introduction The FEC's System: Problems And Solutions B. Problem: Confusing Forms C. Problem: Internally Inconsistent Data D. Problem: Inconsistent PAC Names Background Quotes on POGO's FEC Report"The POGO report does an excellent job in highlighting problems with the present state of campaign finance disclosure and makes a number of important recommendations." Lawrence Noble, Executive Director, Center for Responsive Politics and former Federal Election Commission General Counsel"POGO's proposed reforms, by requiring PACs and candidates to follow simple bookkeeping procedures, will go a long way toward ensuring that the public has access to accurate information about PAC contributions." Representative Carolyn Maloney (D-NY)"The POGO study is right on target in pointing to the deficiencies in disclosure and, in particular, the deficiencies in the enforcement concerning disclosure that unfairly disadvantage candidates and mislead the public." Tony Raymond, Co-Founder of FECInfo a campaign finance research firm and former Federal Election Commission Webmaster"We've never taken a PAC check since I first ran in 1992, and yet because we send them back and they don't give the rapid response you want them to give, we have some opponent that's demagoging there, knows darn well I don't take them, but, gee, he can find something in the record, because we had to file a notice that it was there, that we've sent it back. . . But anyhow, that's the kind of thing about which I think your [POGO's] suggestions would be very helpful." Representative Stephen Horn (R-CA) Executive Summary
FEC's Mission"The ultimate mission of the FEC is to assure that the campaign finance process is fully disclosed and that the rules are effectively and fairly enforced, fostering the electorate's faith in the ultimate integrity of the nation's political process."1 IntroductionThe enormous discrepancies between the amount of money the PACs report giving and the amount of money the House and Senate candidates report receiving demonstrates that the FEC is not fulfilling its mission. In 1998, POGO completed a report2 demonstrating that $1.45 million in campaign contributions were unaccounted for, improperly listed, or otherwise missing within the FEC's databases. At that time, POGO made 10 recommendations to help correct these systemic problems. Now, POGO has revisited the issue to assess the progress of the FEC in light of the previously recommended changes. POGO analyzed data from the 1997-1998 campaign cycle and found that the discrepancies had ballooned to more than $12 million. As a result, journalists, concerned citizens, and campaign finance watchdogs are relying on data which is fundamentally flawed. These problems mean that egregious campaign finance misconduct slips through the FEC's system as easily as honest mistakes. The building blocks for campaign finance disclosure - identifying who is getting money from whom, and how much - rely solely on the FEC's databases, yet this basic information is incorrect. Since POGO's previous report, the FEC has addressed a number of issues which had been identified in 1998. In addition, the House has acted on one major problem, the lack of electronic filing. Beginning this year, all House candidates must file electronically with the FEC. This will bring about significant changes including more timely disclosure and increased accuracy. Unfortunately, the Senate continues to rely on paper filings. Electronic filing is not a complete solution. As this report demonstrates, the electronic filing system still has significant shortcomings, but is nonetheless a substantial step in the right direction. Through this investigation, POGO found that the FEC, the agency charged with the proper collection and upkeep of the largest campaign finance data archive in the world, has been dragging its feet in reforming this flawed system. This report identifies seven sources of misinformation in the FEC's data and recommends specific reforms that must be addressed in order for more broad-reaching campaign finance reforms to be successful. The FEC's System: Problems And Solutions"The Congress should also replace the lame Federal Election Commission with a serious enforcement agency." New York Times Editorial, December 27, 1998. A. Problem: PAC And Candidate Data Is Not ComparedWhile the FEC maintains an extensive website which successfully publicizes its information, the information is so flawed that it can hardly be said to fully disclose campaign finance monies, the core of its mission. The FEC does not reconcile campaign contributions from PACs with PAC contributions received by candidates. The FEC keeps this data in two distinct databases which are never measured against each other. The first set of data is compiled from the PACs' monthly reports. The second set of data comes from the candidates' filings. When these two databases are compared only six incumbent candidates match - in the entire Congress! APPENDIX A: Senate Database Comparison List and House Database Comparison List Complicating things further, in the PAC-reported contributions made to candidates, the FEC does not separate political party PAC money from non-party PAC money. On the candidate-reporting form, however, the FEC does differentiate between party money and non-party money. The total discrepancy is $12,095,323. The discrepancy within the House, only taking into account incumbents, is over $9.5 million. In the Senate the discrepancy is more than $2.5 million. In the House, 182 Representatives reported receiving a total of $1,831,680 less than the PACs reported giving. 263 Representatives reported receiving a total of $7,756,492 more from PACs than the PACs reported giving. Only two incumbents reported receiving the same amount in PAC monies as the PACs reported giving them. In the Senate, 50 Senators reported receiving a total of $1,781,652 less than the PACs reported giving. 43 Senators reported receiving a total of $725,496 more from PACs than the PACs reported giving. Only four of the incumbents' filings reconciled. Graph showing 1997-1998 Election Cycle Contribution Discrepancies Between Candidate and PAC Reports Solution: Compare PAC Disbursements With Candidate ReceiptsThe PACs' information can and should be immediately compared to the candidates' information through a computerized system. When a discrepancy is noted above a certain threshold, the filings for the candidate or PAC could be flagged. A manual review of the data could determine the potential problems with the filing and direct the candidate or PAC to re-file their report. Because the majority of the problems POGO encountered with the candidates' and PACs' reports centered around misunderstandings or miscalculations, many of the errors could be caught immediately and easily corrected. The FEC should post the PAC-reported numbers separately, so that political party PAC money can be differentiated from non-party PAC money. Once the FEC has compared the databases, POGO recommends posting on the web a list of candidates and PACs whose filings are in error, thus encouraging accountability. Once the candidates have corrected the problems, their names may be removed from the list. B. Problem: Confusing FormsAt every turn, POGO encountered candidates who had problems filling out FEC forms, resulting in inaccurate filings. The FEC takes this misinformation as is, without sufficient quality control measures, resulting in incorrect information being entered into the databases. For example, in February 1998, The Hill, a Capitol Hill newspaper, lauded Senators who refused to take PAC monies. "Despite the pressures to raise large amounts of money, 10 senators withstood the pressure, taking no PAC money in 19973." The article then went onto list the Senators, including Senator Frank Lautenberg (D-NJ). Unfortunately, the FEC database upon which the article was based was wrong. Senator Lautenberg accepted $133,000 in PAC monies during that year. When closely scrutinized, Senator Lautenberg's campaign finance reports for the years 1997 and 1998 show that while he itemized the PAC contributions, he did not supply a number for the summary page of the report. As a result, the FEC database reflected a zero in that column. APPENDIX B Additionally, the forms do not make clear how to categorize contributions. The section of the FEC form in which candidates list contributions is section 11. Section 11a lists contributions from individuals. Section 11b lists contributions from political party committees. The third section, 11c, asks for contributions from "Other Political Committees." Included on section 11c, in parentheses, it is written "Such as PACs." However, in almost every case POGO looked into, there was some degree of confusion about which contributions belonged in which section. Because of the confusion, Representative Zach Wamp (R-TN) and the NO-PAC Caucus asked the FEC for clarification so that section 11c would be used specifically for PAC monies only. Unfortunately, the actual phrase "Political Action Committee" is neither mentioned nor defined anywhere in the laws creating the FEC. Therefore, since the FEC has not been directed to do so, it does not make clear that line 11c should only be used to report PAC contributions. APPENDIX C Senator Don Nickles' (R-OK) filings are a good example of the problem created by this confusion. All party contributions, which should have been reported in section 11b, were instead reported in section 11c along with his PAC contributions. APPENDIX D Another example is Senator Michael Crapo (R-ID), who mistakenly itemized PAC contributions by reporting them in section 12, which includes transfers from "other authorized committees4." This caused a discrepancy of $231,657 between what he reported in section 11and what PACs reported giving him. Solution: Clearly Define Political Action CommitteeNowhere do the laws governing the FEC define PAC. The FEC should define this term through a formal rule-making process and section 11c should be explicitly reserved for PAC contributions. C. Problem: Internally Inconsistent DataThe FEC maintains two distinct and separate websites, an FTP (file transfer protocol) database website, which has extremely large data files, and a public website which is easily navigated. When comparing the FEC's public information with the data from the FTP database website, it becomes apparent that the two information sources are not linked or concurrently updated. Oftentimes, candidates will file amendments after submitting their reports. The FEC updates the FTP database website to reflect these changes but does not update the public website. To access the information at the FTP database website, a user must have advanced computer knowledge and a computer with massive computing abilities. The chart below illustrates how widely the two databases vary in the amount of PAC money reported. Neglecting to update both sites concurrently leaves the public website completely inadequate to inform the public, the main mission of the FEC. In addition, it unfairly places candidates in the position of appearing to be misreporting their contributions. Solution: Link Public Website To FTP Database WebsiteWhen the FTP database website is updated, the public website should automatically be updated. D. Problem: Inconsistent PAC NamesAlthough each PAC is assigned a unique ID number, much like a Social Security Number, as an identifier, the FEC does not require its use by PACs and candidates for identification purposes. Because there is no required standardized method to identify a PAC, candidates often call the same PAC by different names. This compounds the problem when attempting to determine the source of a candidate's funding. Candidates often use the PAC's acronym, the name which is at the top of the received checks, or shorthand nicknames, when reporting monies received from the PACs. Below, POGO has listed a few examples of PAC names as they appeared on the candidate's list and as they appeared on the PAC's list.
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March 28, 2001