McCain Loan Raises FEC Questions-this could be a serious issue

[Yellowdogtexan]

If McCain was found to have secured a loan to his campaign with a pledge of federal matching funds, then McCain would be bound by some strict spending limits that would keep him from campaigning until after the GOP primary. The FEC is raising concerns about this loan. http://wtop.com/?nid=213&sid=1349054WASHINGTON (AP) - The government's top campaign finance regulator says John McCain can't drop out of the primary election's public financing system until he answers questions about a loan he obtained to kickstart his once faltering presidential campaign.

Federal Election Commission Chairman David Mason, in a letter to McCain this week, said the all-but-certain Republican nominee needs to assure the commission that he did not use the promise of public money to help secure a $4 million line of credit he obtained in November.

McCain's lawyer, Trevor Potter, said Wednesday evening that McCain has withdrawn from the system and that the FEC can't stop him. Potter said the campaign did not encumber the public funds in any way.

"Well, it was done before in another campaign. ... We think it's perfectly legal. One of our advisers is a former chairman of the FEC, and we are confident that it was an appropriate thing to do," McCain told a news conference Thursday.

McCain, a longtime advocate of stricter limits on money in politics, was one of the few leading presidential candidates to seek FEC certification for public money during the primaries. The FEC determined that he was entitled to at least $5.8 million. But McCain did not obtain the money, and he notified the FEC earlier this month that he would bypass the system, freeing him from its spending limits.

But just as McCain was beginning to turn his attention to a likely Democratic opponent, Mason, a Republican appointee to the commission, essentially said, "Not so fast."

By accepting the public money, McCain would be limited to spending about $54 million for the primaries, a ceiling his campaign is near. That would significantly hinder his ability to finance his campaign between now and the Republican National Convention in September.

Complicating the dispute is the FEC's current lack of a quorum. The six-member commission has four vacancies and Senate Democrats and Republicans are at loggerheads over how to fill them.

In his letter, Mason told McCain he would need the votes of four commissioners to accept his withdrawal from the system.

"The commission will consider your request at such a time as it has a quorum," Mason wrote.If McCain spends more than the $54 million limit without FEC approval, there could be a serious violation of the law here. The FEC lacks a quorom because bush is trying to force the Senate to approve a person who believes that minorities should not be allowed to vote. It appears that bush may have to back down or watch the McCain campaign have to shut down until August.

[Yellowdogtexan]

Agan, Senator McCain may be violating federal election laws unless he can answer questions about a shady loan. In addition, unless bush and Senate republicans back off of their position of wanting to confirm a person who does not believe that minorities should be allowed to vote as a commissioner of the Federal Election Commission, any expenditures by McCain above the FEC primary limits will be illegal. http://tpmmuckraker.talkingpointsmemo.com/2008/02/mccains_fec_problem.phpFirst, McCain opted in to the public finance system for the primaries last year. It meant that his struggling campaign would get $5.8 million in public matching funds in March. Now that he's effectively the Republican nominee, he wants out, because the system entails a spending limit of $54 million through the end of August. He's almost spent that much already, according to the Post.

So the McCain campaign sent the Federal Election Commission a letter (pdf) earlier this month saying that he was opting out. But there's a problem. And FEC Chairman David Mason, a Republican, made it plain in his letter (pdf) yesterday: McCain can't tell the FEC that he's out of the system. He can only ask.

And the FEC, which normally has six commissioners, can't give him an answer until it has a quorum of four commissioners. It currently only has two. That's because the Senate has been deadlocked over four nominees; Democrats insist on a separate confirmation vote for vote-suppression guru Hans von Spakovsky, and Republicans insist on a single vote for all nominees.

The second issue has to do with McCain's tricky loan and whether the FEC will conclude that it locked him into the system. But for now, that's really ancillary to the first issue.

It is a serious issue. As the Post reports, "Knowingly violating the spending limit is a criminal offense that could put McCain at risk of stiff fines and up to five years in prison."

It's really unclear as to what might happen next. McCain's lawyer says he's out of the system and that's that. It's unclear if they'll respond to Mason's letter. And it's unclear if the FEC can do anything or be forced to do anything, without the necessary quorum. It's literally an unprecedented situation.

For now, however, the consequences for the dispute are mostly political for McCain, as election law expert Rick Hasen writes: 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.At the minimum, bush may have to back off on the minority hating attorney being a member of the FEC or risk having McCain go to jail

[toxic]

The Republicans have been charging expenses to the US National Debt for so long, they have forgot that bills have to be PAID in the real world.

McCain didn't stop borrowing against the FEC money last year. Here is one from January from another bank for $1 Million:

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/21/AR2008022103141_2.html?hpid=topnews&sid=ST2008022102994
...
The second issue is more complicated. It involves a $1 million loan McCain obtained from a Bethesda bank in January. The bank was worried about his ability to repay the loan if he exited the federal financing program and started to lose in the primary race. McCain promised the bank that, if that happened, he would reapply for matching money and offer those as collateral for the loan. While McCain's aides have argued that the campaign was careful to make sure that they technically complied with the rules, Mason indicated that the question needs further FEC review.
...

[Yellowdogtexan]

The Nile is not just a river in Egypt. The McCain campaign does not want to deal with the fact that they may be committing felonies when they go over the federal spending limits. http://www.reuters.com/article/politicsNews/idUSN2259428120080222?sp=true- Republican presidential hopeful John McCain said on Friday he was not concerned over the possibility of severe campaign funding restraints from the agency that oversees money in U.S. politics.

McCain -- the likely Republican nominee in November's presidential election -- was told by the Federal Election Commission on Thursday that he might be required to use public funding and so abide by its accompanying spending limits until September when he formally would be anointed the Republican Party candidate.

That could sharply limit his ability to buy advertising and campaign while Hillary Clinton and Barack Obama -- still locked in their contest for the Democratic nomination -- are raising millions of dollars and appealing to voters nationwide.

The letter on funding is further bad news for the Arizona senator. McCain on Thursday denied a New York Times report he had an improper relationship with a lobbyist, and on Friday one of his campaign's co-chairs in Arizona, Republican Rep. Rick Renzi, was indicted on fraud and extortion charges stemming from land deals in his state.

But at a campaign stop in Indiana, McCain replied with a dismissive "no" when asked if he was concerned by the FEC's letter.

"It's not a decision. It's an opinion, according to our people," he said.

McCain, the author of a prominent law that limits money in politics, asked the FEC for public money last year at a time when his campaign was in deep trouble. He was nearly out of cash and was forced to take out a bank loan to finance his presidential bid.Violation of the spending requirements is a crime and there may be some big fines here.

[Yellowdogtexan]

Forgive the lawyer in me but I find this mess to be so very very funny. Here is a good explanation of McCain's issue due to a lack of quorum at the FEC. http://www.huffingtonpost.com/rick-hasen/sen-mccain-in-legal-and-_b_88051.htmlWhen 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.McCain risks violating the federal election laws if he spends more than$54 million which means that he may not be able to spend anything until September. This is all due to bush trying to force the Senate to confirm a voter suppression attorney as a member of the federal agency in charged of enforcing Federal electon laws. The irony in this situation is just too amusing for words.