Washington's open secret: Profitable PACs

Most Americans believe it's illegal for politicians to profit from their public office but, as Steve Kroft reports, that's not the case

The following script is from "Washington's Open Secret" which aired on Oct. 20, 2013. The correspondent is Steve Kroft. Ira Rosen and Gabrielle Schonder, producers.

The government shutdown that finally ended on Wednesday night furloughed 800,000 government workers for the better part of two weeks, but there was one group of federal employees that was able to maintain the lifestyle that many of them have grown accustomed to: members of Congress.

With all the talk about their irreconcilable political differences, we wanted to see if they shared any common ground. And we found some. For example, there seems to be a permanent majority in Congress that's completely satisfied with the current state of campaign financing and congressional ethics and members of both parties have institutionalized ways to skirt the rules.

Most Americans believe it's against the law for congressmen and senators to profit personally from their political office but it's an open secret in Washington that that's not the case. As the saying goes the real scandal in Washington isn't what's illegal, it's what is legal.

Georgia Sen. Saxby Chambliss likes golf, so much so that he spent more than $100,000 the past two years entertaining at some of the finest courses in the world. New York congressman Gregory Meeks prefers football. He spent $35,000 on NFL games. All of this was paid for with political contributions -- all in the name of democracy.

Peter Schweizer: I think campaign fundraising is increasingly not just about winning elections. It's a lifestyle subsidy.

Peter Schweizer, is an author and fellow at the Hoover Institution. For the past few years, he and a team of researchers have been investigating the way congressmen and senators have personally benefited from the hundreds of millions of dollars in political contributions that have poured into the system.

Steve Kroft: I think most people have the impression that campaign funds cannot be used for personal expenses. Is that true?

Peter Schwiezer: Yes. Regular campaign funds cannot, that's correct. But there are ways around it. Like all things in Washington, the devil is in the details, and loopholes are usually put in place for a reason.

For example, when Congress passed the Ethics Reform Act of 1989, it plainly stated "a member shall convert no campaign funds to personal use." But soon afterwards congressional leaders quietly invented something called leadership PACs, political action committees that were not technically campaign funds and thus exempt from the personal use prohibition.

Steve Kroft: This is a loophole?

Trevor Potter: Right. That's correct.

Trevor Potter is a former chairman of the Federal Election Commission. He says it didn't take long for congressmen and senators to figure out the distinct advantages of having a Leadership PAC, with no restrictions.

Trevor Potter: Since they weren't around when the ban on personal use was put into place, they're not covered by it. And they can be used for literally anything.

Over time the leadership PACs that were created as a way for congressional leaders of both parties, to raise money and distribute it to their members, have evolved into something different. Today, nearly every congressman and senator has a leadership PAC, not just the leaders. And they are used to solicit contributions from friends and supporters in order to advance their political agendas, their careers and, in many cases, their lifestyle.

Steve Kroft: It's like a political slush fund.

Trevor Potter: That's exactly what it is. It's a political slush fund. Over time, we've had them. They've been outlawed. They spring back in new guises, and this is the latest guise.

Potter says they are essentially personal political expense accounts financed largely by lobbyists and special interest groups. Leadership PACs are now the second largest political revenue stream for members of Congress.

Peter Schwiezer: You can use them for babysitting, paying for babysitters. You can use them for paying for car service. You can use them for travel. Nobody's really checking to see whether this is personal or legitimate business expense.

Back in 2006, North Carolina senator and presidential candidate John Edwards used his leadership PAC to pay his mistress Rielle Hunter $114,000 to make a campaign video.

And Republican Congressman Ander Crenshaw of Florida spent $32,000 hosting a tour of California wineries for a group of contributors from the defense industry, which he has some oversight of.

Peter Schweizer: Look, they're not having leadership PAC meetings at the Hampton Inn down the road. They're going to the premier golfing and resorts in the United States and in-- sometimes around the world. And that's ostensibly where they're doing this leadership PAC work.

For example, Democratic Congressman Robert Andrews of New Jersey used $16,000 from his leadership PAC "the committee to strengthen America" to fly his family to Scotland, ostensibly to attend the wedding of a friend that he was thinking about hiring as a political consultant.

Peter Schweizer: Why he needed to meet him in Edinburgh, Scotland at a four-star resort, I think, is open to question.

Peter Schweizer: So they will categorize them as something related to the leadership PAC. But in reality, they're for personal use.

We wanted to talk to Congressman Andrews about his leadership PAC and the family trip to Scotland, but were turned down. We did manage to find him at a hearing, and passed him a note announcing our presence. Andrews, it turns out is under investigation by the House Ethics Committee for misusing campaign funds to advance the career of his daughter. He agreed to talk to us outside.

For more information on the Office of Congressional Ethics who first investigated Congressman Andrews, click here
To view the OCE's original investigation into Congressman Andrews, click here
To view whether your own Congressman has been investigated by the OCE, click here

60 Minutes App

New Look. New Season. The 60 Minutes app for iPad, iPhone and iPod Touch!

More from 60 Minutes