via TPM -- McCain's FEC Problem We noted this yesterday . But The Washington Post does a good job today in sizing up the situation and its possible mammoth consequences for McCain's campaign. There are really two completely separate issues here. First, 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: Note: Hasen cites Mark Schmitt on a certain irony. Pretty much everyone agrees that the public financing system for the primaries is broken -- the spending limits are too low and the payouts are too late (March). As Steve Weissman of the Campaign Finance Institute put it to me, the primary system in its current state is "basically only for losing candidates" -- candidates without the fundraising wherewithal to really compete. But McCain has refused to support efforts to fix the system, so in a way, he has himself to blame for the fact that the system is so unworkable that he's possibly bent the rules to get out of it.
no, but he could look mighty silly. [rquoter]McCain's Real Secret February 22, 2008; Page A14 Consider us as skeptical as everyone else about yesterday's nonbombshell in the New York Times that John McCain was once friendly with a female lobbyist he did no favors for. It's an ideal story for the blogosphere. We're more interested in his campaign's continued machinations within the election-finance rules that he did so much to create. Last week, we wrote about the $3 million loan his campaign took out to keep his campaign afloat in November, putting up its fund-raising lists and a life insurance policy as collateral. If the campaign had gone south, Mr. McCain would still have been able to tap into donors from his position as a powerful Senator on the Commerce Committee to make good on the debt. More cash started to come in, but now it turns out that Mr. McCain's campaign looked into borrowing another $1 million at its moment of peril before the New Hampshire primary, this time pledging its eligibility for federal matching campaign funds. [John McCain] Here's where the explanation gets really lawyered up. The McCain campaign hurries to say it didn't actually surrender its public funding certification as collateral, oh no. The campaign applied to the Federal Election Commission for matching funds, and once that application was approved went to a bank and opened a line of credit based on the possibility that they might someday reapply for matching funds if the campaign faltered. "We never claimed that the matching funds were collateral for the loan," says McCain lawyer Trevor Potter. "This was all a hypothetical future transaction." (We wish we could get bank loans like that.) So why does the distinction matter? Because under FEC rules, using the certification as collateral would have locked the candidate into accepting the matching funds and the federal spending limits that come with them. And Mr. McCain has declared he has no intention of accepting federal funds for the Republican primary season. Yesterday, FEC Chairman David Mason said he still has questions about Mr. McCain's loan terms -- questions that need to be answered before the candidate will be allowed to drop out of the primary financing system and its restrictions. Adds Capital University Law Professor and Former FEC Chairman Brad Smith: "There is certainly an argument that what they did amounts to a pledge of the funds" as collateral. Either way, it appears that Mr. McCain has been employing lawyers to game the campaign finance rules he hails as a defense against "corruption." Having decided not to accept public financing during the primary, the possibility of going up against Barack Obama in the general election is a different story. Mr. McCain insists he intends to take public financing, saying: "I made the commitment to the American people." And, by the way, he expects Mr. Obama to honor his earlier pledge to do the same. But, naturally, Mr. Obama is having second thoughts now that he's rolling in dough. (See "Obama's Cash Games") Public funding was hatched in the 1970s and has now become one of those blind touchstones of "progressive" thinking. No matter how regularly its proponents are mugged by reality, they never give up. Running for President is a serious business, with millions of people devoting time and money to promoting the candidate of their choice. We suppose we can't blame Mr. McCain for trying to make the finance rules work for him, but it'd be nice if he finally admitted their embarrassing folly.[/rquoter] and this gets at conservatives, and libertarians, primary complaint with st. john, his fast and loose attitude re the 1st amendment.
Its an interesting situation but other than political embarrassment I don't think there's any chance McCain goes to jail. I could be wrong on this but I don't think McCain actually got the Fed financing so even though he had opted in he didn't collect the money so I don't see how that could tie him to staying with the Fed spending limits. While he certainly gamed the system it looks like it worked and it was the bank that took the risk and if McCain had faltered and put his campaign into suspension this wouldn't be an issue.
