McCain's Public Financing Flip-Flops

This week John McCain deployed a new set of advertisements and campaign literature attacking Barack Obama for his decision to forgo public financing in the general election. Of the decision, McCain told reporters on June 19, "He has completely reversed himself and gone back not on his word to me, but the commitment that he made to the American people. That's disturbing." But while much of the media attention remains focused on Obama's decision, few are pointing out the relevant fact that McCain himself has reversed course on this issue at least three times in the primaries, not only raising credibility questions but also leading to a federal investigation of his campaign fundraising practices.

In early 2007, McCain notified the FEC that while he was eligible for matching funds in the primaries, he planned on "opting-out" because the limitations imposed by the public financing system would restrict his fundraising, efforts he believed would produce more than the $54 million promised to candidates under the program. In other words, McCain "opted-out" initially because he felt that it was to his financial advantage to do so.

But by the fall of 2007, a general lack of enthusiasm for the McCain candidacy among Republican donors and overspending by the candidate himself led him to reconsider this position. Desperately needing cash to remain competitive in the upcoming primary contests, McCain reversed course and requested that the FEC reinstate his eligibility. He filed the necessary Candidate Agreement and Certifications form with the FEC, signaling his legal intent to accept and abide by public financing standards in the primaries. In other words, McCain changed positions this time because it was in his financial interest to do so.

Shortly thereafter, however, McCain changed course yet again on public financing, this time potentially in violation of federal election law. After the FEC approved McCain's application for matching funds in the fall of 2007 and awarded him $5.8 million, the candidate approached Fidelity & Trust Bank in Maryland for a series of private loans. This move seemed odd considering the FEC had just made a substantial allocation to the candidate on the belief that he was now firmly committed to public financing in the primaries. But pursuing these private loans was part of a broader strategy by the campaign to "game" the public financing system and keep their options open at least through the New Hampshire primary, a critical benchmark for McCain's candidacy.

The McCain campaign knew that if the candidate affirmatively spent the $5.8 million granted to him from the public account, there could be no turning back legally on his commitment to public financing. This would have severely limited his national and state spending options if he eventually became the Republican nominee. Anticipating a potential upset in New Hampshire, the McCain camp saw the private loans scheme as a way to buy time until the New Hampshire question could be settled and the longer-term fundraising picture become clearer. Not surprisingly, on Feb 6th after winning the New Hampshire primary McCain wrote another letter to the FEC, this time indicating that he now did not need public financing for the remainder of the primaries.

Setting aside for a moment the fact that no candidate in recent memory has changed positions this many times on public financing in a presidential primary, McCain at the same time also likely violated important FEC laws. The FEC is currently awaiting review of whether McCain used $5.8 million of public money granted to him in the fall of 2007 as short-term collateral to secure an alternative $4 million in "sweatheart" private loans from Fidelity & Trust bank. Both the bank and the McCain campaign have denied any wrongdoing, but a closer look at the situation indicates a few revealing points. First, that the terms and conditions of the loans were vague and unusual, even by political standards. Second, that the terms and conditions at least implicitly contemplated payback from the public financing system if McCain's fundraising did not improve after New Hampshire, indicating that the primary source of collateral for the loan was indeed public money. Third, that accepting such loans from a private bank required McCain to seek affirmative FEC review and consent so as to determine the relevant impact it might have on his public financing standing.

In a sternly worded response to McCain's campaign on these points, FEC Chairman David Mason, a Republican appointee, stated that "a candidate enters into a binding contract with the Commission when he executes the Candidate Agreements and Certifications form" and that a candidate can only withdraw from the system under a process of formal review. Part of this review, in the case of McCain would include the investigation of whether the certification of matching funds was used as "security for private financing." Mason also warned McCain not to raise and spend in excess of the public financing system limit of $54 million while the issue remained pending. McCain never submitted his final public financing decision for review before the Commission, and has since exceeded the spending limits allowed under public financing.

Bottom line, McCain's recent attack on Barack Obama is political hypocrisy at its worst. As a candidate he has been all over the map on the issue of public financing during the primaries giving him little standing to question the judgments of other candidates on this same issue. The real issue for voters to weigh now is not whether Obama changed his mind on public financing given the solid record he has built in democratizing the fund raising process, speaking out against the use of 527 attack ads, and rejecting PAC money. Instead, it is whether an Obama presidency will follow through on his promise of more fundamental reforms that make his the last candidacy that must face the practical realities that support his current pragmatic decision.

Daniel Burrell was a Senior Advisor to John Kerry in 2004. He is a Partner at Rosemont Capital in NY

Comments

[PioneerKing]

DANIEL:

Have you just realized that McCain is a duplicitous liar and will do anything and say anything to get elected?

The republicans want to categorize Sen. Obama as a flip-flopper but McCain has flip-flopped more than any other politician. Actually he just out right lies; such as when he said he supported our troops on the GI Bill.
http://www.huffingtonpost.com/2008/06/27/mccain-takes-credit-for-g_n_109685.html

[BEHM777]

I'd like to know when John McCain's honeymoon with the MSM is going to end. Seriously! Too many of our fellow citizens are too lazy to research things on their own and they/we NEED the MSM to DO ITS JOB. NOW!

[Zhonni]

McCain is the flip-flopper and that is not in doubt.

1) He was against TORTURE before he sided with Bush and voted against the Torture ban.
2) He was against TAX-CUTS before he was for it.
3) Voted against Florida EVERGLADES now he thinks it's the best thing ever.
4) Was for PUBLIC FINANCING in the PRIMARY before he opted out--loans and all.
5) Was against OFFSHORE drilling now he is for it.
6) Would run a respectful campaign but hasn't stopped attacking Obama.
7) He would PRIVATIZE Social Security now he is not sure.

WHERE DOES McCAIN STAND?

[marktarheel]

youre kidding right???....obama' s flip flop on taking public financing.along with his flipity-flop on gun control........can you say.bye bye ohio.....and michigan??/

[Zhonni]

He did not flip flop on gun control. He has always supported the second ammendment. On public financing it was not a flip flop either, he saw the writing on the wall that Republicans are not going to play fair and that he needs all the money he can get.

Wishful thinking on your part about Ohio and especially Michigan. Obama will win both.

[Reine]

Obama has alot of flip flops but on this website, they only mention McCain's. McCain didn't sign anything & didn't receive anything. More money spent on attacking McCain in regards to 527 ads.

[kristycu]

and mccain has a lot of flip-flops but does not mention them on his website, they only mention Obama's, Duh, i don't even know why you would press post comment on that one. and you next sentence does not make any sense at all, and mccain did sign legal documents stating he would take public financing in the, primaries and then tried to give it back, this is something i heard him try to explain in an interview. so he is not lying here

[shel3364]

You people hear that he agreed with the decision and then you shut your brains down. There's more to it than that:


"The Supreme Court has now endorsed that view, and while it ruled that the D.C. gun ban went too far, Justice Scalia himself acknowledged that this right is not absolute and subject to reasonable regulations enacted by local communities to keep their streets safe. ...Today's decision reinforces that if we act responsibly, we can both protect the constitutional right to bear arms and keep our communities and our children safe."

http://my.barackobama.com/page/community/post/stateupdates/gG5NxL

[kittycago]

http://www.billpressshow.com/McCain101

Bill Press is covering McSame's checkered past .All true all documentable,He is not a maverick he is a crooked old Washington insider.

[kittycago]

Bill Press is listing Facts about John McSame.He is no more a maverick than Karl Rove is a patriot.He is in fact a crooked old Washington insider who has at best a checkered past in both his personal and political dealings.So far this is what Press has covered.All true .All documentable.

http://www.billpressshow.com/McCain101

[HAYMONBRANDON]

I AGREE WITH AUNTIECAIRE THEY ARE SORE LOSERS AND LIARS. WE ALL SAW WHAT ALL THE HOT AIR BLOWING WAS ABOUT NOTHING !BUT THAT IS ALL THEY GOT.

[NoDrama]

Naturally the commercial media ignores it - they have a conflict of interest. They earn money from stoking the debate, and making it seem like the contest is close, and quite apart from ratings which determine how much they will charge for ad-time, the NEED the candidates to have a lot of money to spend on ads!

Where it comes from? Who cares?

This has been out there in the blogosphere, but the old-school mainstream folks are invested in the fight, not the truth, so never you mind about where that GOP money comes from, now, you hear? http://obamesque.wordpress.com/2008/06/21/conflict-of-interest-follow-the-money/

[reelcobra]

Great attempt to get the focus off our guy for basically destroying the public funding of Presidential campaigns with his latest flip-flop.

Well not latest because he just reversed himself on banning handguns, but his second most recent flip-flop.

I'm afraid to hit "post a comment" before checking to see if he has reversed himself on something else again.

Can we just run John "Reporting for Duty" Kerry?

[egal]

Um...so, you think a candidate getting his funding from myriad private donors who give donations typically $5-$100 is somehow detrimental to a public funding system that is admittedly deeply flawed and full of holes the GOP abuse?

Seriously, if THIS is what you think discredits public financing, I have to ask if you're up on your history. Like, the past 20 years.

The other issue's atually iffy, since it's a very different thing to oppose illegal or automatic guns in cities and guns in general, and Obama is dedicated both to rural and inner-city issues, but feel free to continue counting supporting a gun law that basically says "guns are great to have in your home and no you still can't get them if you're crazy" as a flip-flop. And that's if you don't count all the reasonable restrictions being permitted to gun ownership/­possession­/location.

However, considering Obama is strongly FOR Constitutional rights and less government legislating of what we can or can't do in our private lives, I'd say it was pretty foolish to expect him to be against a law lifting the prohibition of keeping a simple handgun in the household for private protection to begin with.

[marktarheel]

the only thing obama is strongly for..raising taxes.period

[reelcobra]

Even supposing everything you say is correct, the fact is that Obama has broken a pledge on finance and is constantly reversing positions on a myriad of issues including meeting with enemy leaders in despotic countries, partitioning Jereusalem, gun control laws, renouncing his Reverend, etc.etc.etc.

I know that doesn't matter to lefties here on the HuffPo. Anything to win.

But we will see when normal, cenrtist, non-America bashing voters get to weigh in.

This will be interesting.

[auntiecairo]

My question all week has been why isn't the mainstream media (or anyone else) reporting this? It sounds as if McCain actually broke the law - and then has the nerve to harangue Obama about public financing. My theory is they were hoping Obama would take public financing having lined up private donors for the 527's knowing that McCain's own fundraising is pretty lame and donors would line up only to beat the Democrat. I think I also read Bush dismissed the head of the FEC who was questioning McCain on this.

[TimeJumper]

I believe that this is what you may have seen.

http://mediamatters.org/items/200806250006

[egal]

Say it with us: The mainstream media is John McCain's base.

Hadn't you wondered why he's only down by 12 or so points? It's because the people doing the polls are slanted in his favor.

....No, I can't back that last part up with any evidence, it's probably not even true. Most likely, we really ARE just as stupid as we fear we are, and largely uninformed enough to believe McCain is who he said he was several years back.