Sen. McCain in Legal and Political Pickle Over FEC Letter

Though the New York Times story about Sen. McCain's alleged improprieties with a lobbyist is dominating the news, another story could prove equally or more important to the success of McCain's candidacy. Yesterday's FEC decision barring McCain, at least temporarily, from withdrawing from the presidential public financing system for the primary season could affect McCain legally, by limiting his ability to spend money until the Republican party convention this summer (and even potentially subjecting McCain to fines for violating campaign finance laws), and politically, by taking the wind out of the sails of his recent attacks on Sen. Obama for suggesting Obama may back out of a pledge to take public financing for the fall campaign if his Republican challenger does. The developments look to be good news for Obama, at least in the short term.

Here's the relevant background: Federal law establishes voluntary presidential public financing system, which provides matching funds for participating candidates in the primary period (matching the first $250 donated per contributor) provided the candidate accepts spending limits. There's both a national spending limit of around $54 million through the time of the candidate's nomination during the summer convention and more easily-circumvented state-by state limits. In the general election, participating major party candidates receive a flat grant (expected to be about $85 million in the 2008 election) provided they agree to raise no funds (except up to $20 million for administrative and legal expenses) for themselves in the general election. In 2004, both George W. Bush and John Kerry opted out during the primary season. Bush raised $258 million in contributions and Kerry raised $241 million during the primary season. Both opted in during the general election, though there was ample fundraising for the national parties to supplement the federal limits.

Obama and Clinton decided to opt out during the primary season. This turned out to be a smart decision especially for Obama, who is breaking fundraising records, especially from small donors. McCain at first decided to opt out as well, so that he would not be bound by the spending limit. Obama pledged to opt in during the general election, provided he was the party's nominee and his Republican counterpart agreed to do so as well. McCain agreed to the pledge. Obama is raising money for the general election now, but has promised to return it if he opts in for public financing.

Here's where things got tricky. When McCain's campaign hit the summer doldrums, he decided to opt into the public financing system (a decision John Edwards made as well as his campaign faltered). But then McCain rebounded, and he sent a letter to the FEC withdrawing his decision to opt in. He relied upon a 2003 FEC decision that allowed Richard Gephardt to withdraw from the system given that Gephardt had not yet received any federal funds yet. Meanwhile, as Marc Schmitt has documented (see here, here, and here), McCain, in applying for a campaign loan, apparently promised to remain a candidate and opt back in to the system in the event his campaign faltered again.

McCain sent a letter to the FEC telling them he was withdrawing from the system for the primary. He also and went on the attack against Obama, claiming as a flip-flop Obama's failure to reaffirm his pledge to take public financing in the general election. (Obama's response has been that he will only make the agreement under certain conditions: "The candidates will have to commit to discouraging cheating by their supporters; to refusing fundraising help to outside groups; and to limiting their own parties to legal forms of involvement. And the agreement may have to address the amounts that Senator McCain, the presumptive nominee of his party, will spend for the general election while the Democratic primary contest continues.") McCain continued to pound the flip-flop point, until this week.

Yesterday the chairman of the FEC, David Mason, sent a letter to McCain telling McCain that he can't withdraw from the public financing system for the primary until the FEC has enough members to constitute a quorum. The FEC is without a quorum because of a fight between Senate Democrats (led by Obama and Sen. Feingold) and Republicans over President Bush's nomination of Hans von Spakovsky to the FEC. Von Spakovsky, as I've explained in Slate, was one of the administration's "voter fraud warriors" responsible for, among other things, approving Texas's controversial mid-decade redistricting and Georgia's photo identification law for voting. In retaliation for Obama and Feingold's hold on von Spakovsky's nomination, the Republican leadership put three other nominations on hold. Now the FEC does not have enough members to engage in certain actions, such as granting McCain the right to withdraw from the campaign finance system.

The Washington Post reports that McCain has already spent $49 million (much of it subject to the spending limits) and now he's in a pickle. He can try to go to court to try to get a court to order the FEC to grant his request for a withdrawal but we are in uncharted territory. Can a court order the FEC without a quorum to grant McCain's request? Can a court grant the request itself? There is no precedent on these questions of which I'm aware.

Even if Republicans were now willing to sacrifice von Spakovsky and approve other nominations to the FEC, that will take some time. Even assuming Democrats will cooperate, the Senate is now in recess. It won't happen tomorrow. So there's a good chance, without swift judicial action, that McCain will risk being found in violation of campaign finance laws.

That's probably not a problem legally (though it could be), and it is not clear that the party can fill in the gap for McCain while he's in limbo on his fundraising. But McCain faces at least a political problem. More than anyone else, Sen. McCain's name is synonymous with campaign finance reform (think McCain-Feingold). If he's arguably in violation of the law, that will tarnish his reputation. He may be able to make technically correct arguments that he is not in violation, but the smell is bad. And with this issue lingering, it will be hard for the opt out-opt in-opt out McCain to make political hay out of. Obama's hedging on whether to opt in during the general election.

What got both Obama and McCain into these problems in the first place is that the public financing system needs updating. The spending limits need to be increased, along with the matching funds. But, as Mark Schmitt has pointed out, McCain voted against maintaining the current system, and for all of his reform credentials he has done nothing to update it to the 21st century. Maybe McCain has no one to blame but himself.

Comments

[AxelDC]

McCain is a double loser in this battle. As a candidate, he appears insincere and manipulative, in direct violation of his "Straighttalk Express."

As a legislator, he appears naive and short-sighted. If John McCain cannot abide by "McCain-Feingold Rules", then how is anyone expected to? You would think the author of the law would be able to follow it.

McCain is going to have enough trouble running as a Republican this year without appearing as a tired, corrupt Washington insider who talks about integrity while selling his favors to corporate lobbyists and manipulating the rules to his own profit.

[rabidAtheist]

I would really like to see the Dems capitalize on this opportunity to make the Bush twerps roll over on the FEC nomination. von Spakovsky is a disgrace to the franchise and a miserable excuse for a human being. Hardball here would be a very good thing.

[Leper]

What seems to be missing here is the severity of the fines if Sen. McCain CHOOSES to violate. What I have seen in the past is that those fines have been negligible compared to the amount of money raised by the candidate.

My understanding is that the FEC determines the fines and if they do not have a quorum, then they will not be able to levy fines.

Feel free to correct me if I am wrong about any of this.

[ignorantwillyharper]

McCain, for the last 24 years has made back room deals with lobbist and then steps out in the light and tells us he can't stand them. This is the biggist hypocrite and crook Washington has to offer. I wouldn't trust him to walk my dog, if there were a dollar in selling the dog, he'd take it and you'd be out a dog.

[Canukistani]

McCain can talk the straight talk, but can he walk the straight walk? Doesn't look promising.

[Guitarsandmore]

Last week, the League of Conservation Voters (LCV) released the 2007 National Environmental Scorecard giving Senator McCain a score of ZERO. According to the scorecard, McCain was the only member of Congress to skip all 15 crucial environmental votes scored by LCV.

http://lcv.org/scorecard/

[LoRiseAntlers]

527 is the only number you need to know here.The Rethugs will just put their money into that slander machine.

[DeSwiss]

"Hoist by his own petard."

LOL!!! I love it!!! :-)

[gorgol]

Well, well, well. Look whose gotten himself into a political/financial quagmire...Poor John..he's up to his neck in lobbyists. They're in very nook and cranny of his campaign. The same "parasites" that he talks against to make political hay with voters. McCain has become so twisted in his rhetoric, that one minute he "whispers" he's against how the war has been managed, the next he's hugging Bush like a lover, and saying we need to stay in Iraq for 100 years if necessary...as this country plunges into recession. McCain is one big RED FLAG to any intelligent voter...and there lies the problem...some would still vote for Bush, at this stage of his "insanity". I'm keeping my fingers crossed, that the REPUBLICAN insanity will soon be over...except Ms. Pelosi and her recent decisions, indicates the other party is also many bricks shy of a load.

[coolkraft]

and how is he going to pay back his 4 million dollar loan against his public financing...what a blowass phony

[Doofus]

This is as good a piece of journalism as I've ever seen on the HuffPost. Thanks for putting the story together so well.

Obviously, McCain is getting favorable treatment from his bank. Why is that, you might wonder? Is he, like 'special'?

As reprehensible as the situation is, it's also ironic, maybe worse, that McCain 'can't withdraw from the public financing system for the primary until the FEC has enough members to constitute a quorum ... because of a fight between Senate Democrats ... and Republicans...'

But that's probably only what he deserves, for gaming the system.

[bobdevo]

Obama is going to mop the floor with John Sidney McCain III aka senescent senior senator from Arizona aka Crazy Old Coot™.

[LongBeachHawkeye]

McBarelySane!

Seriously, though, I hope all of the Obama and Clinton supporters can wholeheartedly support whichever candidate wins the nomination. We cannot afford a Crazy Old Coot presidency - a surefire continuation of W's disastrous policies. Democrats unite for the huge fight in November!

[SShaw490]

I don't see how McCain can take out a loan using public funds as collateral, then withdraw from public funding. If I go down and get a home equity loan and then sell my house, the bank is going to want their money back.

McCain's campaign has been a disgrace in terms of organization and credibility - doesn't America care whether a guy can run an organization with any kind of efficiency? If they do, why isn't Barack Obama already the president?

[SShaw490]

I don't see how McCain can take out a loan using public funds as collateral, then withdraw from public funding. If I go down and get a home equity loan and then sell my house, the bank is going to want their money back.

McCain's campaign has been a disgrace in terms of organization and credibility - doesn't America care whether a guy can run an organization with any kind of efficiency? If they do, why is Barack Obama already the president?

[joja]

Looks like it's put-up-or-­shut-up-ti­me for the Straight Talk Express.

McCranky has been criticizing Obama about public financing, and now it's coming back to haunt him. Will he follow the law, as he insists Obama do, or spurn it, like Cheney & Bush?

This will define his candidacy as much as anything else he does or says.

[ljsfolly]

Thanks for the post as I was wondering about the dust up and the FEC thing. The papers don't say much and the cable news have ignored it mostly. Weird stuff as it is important to the republican "chosen one" That is also a very strange thing as it seems McCain has a laundry list of things the democrats can go after and his hero status and POW thing are no longer as shiney as they once were. I also thought Mac was seen a whacko by his own party and yet here he stands. Mittster probably had the best chance and they tossed/dragged him out "for the good of the country" like he was standing in the way of the country being protected from the terrorists. Whoever told him that story sould get some kind of award. Stepford Cindy is not someone to be held up as a prize as she was the other woman who was Macs mistress as he betrayed the woman who raised his kids and stayed faithful while he was POW. FEC is justice in disguise.