How Super PACs Work

So what exactly is a PAC? According to Michael Beckel of the Washington, D.C.-based Center for Responsive Politics, a non-profit and non-partisan organization that tracks money in politics, traditional PACs represent businesses, labor unions or ideological interests: examples would be the Microsoft PAC, the Teamsters PAC and the National Rifle Association PAC. "An organization's PAC will solicit money from the group's employees or members and make contributions in the name of the PAC to candidates and political parties," Beckel says.

PACS have been influencing elections and campaigns since they first appeared in the 1940s, but there are limits to what they can donate in campaign and party contributions. The amount of money PACs can give per election -- meaning a primary, general or special election -- is capped at $5,000 per candidate. Additionally, PACs can give no more than $15,000 each year to a national party.

And when it comes to actually raising the money they can use to contribute to candidates or political parties, PACs also face limitations: Individuals can give no more than $5,000 per year to a PAC [source: Beckel].

Citizens can contribute money directly to parties and candidates, as well, but those donations also have limits. Every calendar year, individuals can give a maximum of $30,800 to a national political party committee, such as the Republican National Committee, and the ceiling for individual contributions to a candidate is $2,500 per election [source: Center for Responsive Politics].

Things have changed though. Now the emergence of Super PACs has the potential to fundamentally alter the landscape of money in politics, and also represents a sharp departure from previous restrictions on financial contributions. That's because as of July 22, 2010, the FEC green-lighted Super PACs all but eliminating the previous financial donation limitations. Thanks to the FEC ruling, individuals, corporations and unions can now contribute unlimited cash to Super PACs, which essentially means there is no ceiling to how much money is injected into elections.

The main prohibition placed on Super PACs, aside from having to report their expenditures and contributors to the FEC, is that they cannot coordinate directly with the campaign staff of individual candidates. (Regular PACs have to abide by these same mandates as well) [source: Beckel]. There is another key difference. Super PACs can't contribute directly to candidates the way PACs do. The money Super PACs raise can only be used for such things as creating TV or radio ads supporting or excoriating particular candidates.

Read on to learn about the Supreme Court decision that made Super PACs possible.

Super PACs would not be possible without the 2010 Supreme Court decision in the Citizens United v. the Federal Election Commission case, which lifted prohibitions on corporate spending in elections. The case had a years-long journey to arrive at the high court and had its roots in a conservative group's displeasure with Michael Moore's documentary, "Fahrenheit 9/11," which was highly critical of former President George W. Bush's handling of the 2001 terrorist attacks on the United States.

In 2004, the conservative non-profit corporation Citizens United filed a complaint with the FEC saying that commercials for Moore's film violated the Bipartisan Campaign Reform Act of 2002 -- better known as the McCain-Feingold Act -- which prohibited corporations and unions from funding TV ads advocating for the victory or defeat of a candidate within 30 days of a primary or 60 days of a general election. The FEC dismissed the complaint.

During the 2008 primary, when then-Senator Hillary Clinton was running for the Democratic presidential nomination, Citizens United produced a political documentary titled "Hillary: The Movie," which was highly unflattering of the former First Lady. The group also attempted to buy airtime for ads touting the film, but in January of 2008, a U.S. District Court ruled that the advertisements violated the McCain-Feingold Act. Citizens United appealed the ruling of the District Court and the Supreme Court took up the case and heard arguments in 2009.

The Supreme Court's decision was announced in early 2010 and was one of the most contentious in recent history. The court split largely along ideological lines, and ruled 5 to 4 in favor of the notion that the government cannot place restrictions on election spending by corporations [source: Liptak].

As the slim majority deciding the Citizens United case indicates, this was, and continues to be, an extremely controversial issue. In the past, the Supreme Court had upheld various legislative efforts to control corporate spending in campaigns. The Citizens United case overruled former rulings such as Austin v. Michigan Chamber of Commerce and part of McConnell v. The Federal Election Commission, both of which upheld the McCain-Feingold Act and maintained efforts to staunch the flow of corporate cash into elections [source: Liptak].

With the new interpretation of the Constitution, the majority justices, including conservatives Chief Justice John Roberts, Anthony Kennedy and Antonin Scalia, declared that banning or limiting the amount of money corporations could spend on elections -- even for commercials -- was tantamount to limiting free speech [source: Citizens United v. Federal Election Commission].

The reaction to the Citizens United case was, by and large, partisan in nature. President Barack Obama, a Democrat, criticized the ruling, calling it a big victory for oil, insurance and Wall Street corporations that would help them "drown out the voices of everyday Americans." Many conservative Republicans, however, cheered the ruling as a validation of the Constitution's protection of free speech.

Keep reading to find out how many Super PACs there are and whether their existence favors Democrats or Republicans.

It didn't take long after the Citizens United case for Super PACs to begin impacting elections. The FEC ruling green lighting Super PACs occurred just a few months before the 2010 midterm elections, and it's likely that the decision helped Republicans achieve their resounding victory, which included retaking the majority in the U.S. House of Representatives.

Indeed, according to the Center for Responsive Politics, conservative Super PACs were responsible for 55 percent of all the spending by Super PACs in the midterms, while their liberal counterparts accounted for only 44 percent of total expenditures [source: Beckel].

The biggest spender -- shelling out three times as much as the second biggest spending Super PAC in 2010 -- was American Crossroads, a group founded by former Republican President George W. Bush's adviser Karl Rove. American Crossroads alone raised $28 million during the 2010 election cycle, one quarter of which came from Bob Perry, a wealthy Texas homebuilder [source: Beckel]. Another conservative Super PAC is operated by the Club for Growth, which advocates for policies that reduce regulations on businesses.

Democrat-leaning Super PACs are also multiplying. In the 2010 midterms, EMILY's List, a pro-choice group formed a Super PAC that was active (albeit unsuccessful) in trying to defeat Massachusetts Republican Scott Brown, who won a special election to replace the late Democratic Senator Ted Kennedy.

Other liberal Super PACs have also formed, including Priorities USA Action and House Majority PAC. In total, the Center for Responsive Politics says that as of September, 2011, there were 141 Super PACs, though that number was escalating quickly, with a new one being added just about every week.

So how will so many Super PACS affect the next presidential election? We'll find out next.

It has become a common political observation that the next presidential election will be the "most expensive in history." But the 2012 election is different. The introduction of Super PACs into the contest for the White House all-but assures it will be the most expensive, if for no other reason that Super PACs allow corporations, unions and individuals to write very big checks to support a candidate.

"Super PACs allow donors who have already maxed out to their preferred candidate to make unlimited contributions to groups designed to aid that candidate's electoral prospects," says Michael Beckel of the Center for Responsive Politics. "Wealthy candidates don't have to sit on their hands after they've maxed out to a candidate; now they can open their checkbook for Super PACs."

Beckel also speculates that Super PACs may contribute to a coarsening of an already hyper-negative political process. After all, coordination between Super PACs and candidates is prohibited and if a candidate doesn't like what the Super PAC is saying, there isn't anything they can do to stop it. "[A Super PAC] may opt to take an even more negative tone than a candidate would choose to take," Beckel says. "They have the ability to say pretty much whatever they want, whenever they want, no matter how partisan or scathing."

In the race for the 2012 Republican presidential nomination, Super PACs generated controversy. In August 2011, news broke that a company -- W Spann LLC -- that contributed $1 million to the Restore Our Future Super PAC, which supported former Massachusetts Governor Mitt Romney's bid for the nomination, was dissolved soon after it was created, leading to allegations that the company was just a shell to cover the identities of donors [source: Isikoff]. Lawsuits and negative media coverage eventually led one individual, Ed Conrad, a former executive at the investment company Romney founded, to step forward and ask the FEC to amend its public disclosure reports to show him as the donor, not the company [source: Isikoff].

While it seems almost certain that Super PACs will not only lead to more controversy and a ceaseless stream of political advertisements, with Stephen Colbert in the mix, at least there should also be a few laughs.