NY Times and Newsweek report on public funding in general election, but not that McCain may be breaking federal campaign financing laws

››› ››› BRIAN LEVY

In reporting on whether Sens. John McCain and Barack Obama would accept public funding in a general presidential election, The New York Times and Newsweek did not mention that McCain faces possible fines and jail time for breaking spending limits imposed on candidates participating in the public financing system during the primary.

An April 10 New York Times article and an April 9 Newsweek blog post about whether Sens. John McCain and Barack Obama would accept public funding in a general presidential election did not report that McCain could be in violation of federal law for failing to abide by restrictions placed on candidates participating in the public financing system during their party's primary season. Under the Presidential Primary Matching Payment Account Act, violators could face fines up to $25,000 and up to five years of jail time. The Times noted that "McCain drew criticism of his own earlier this year when he backed away from public financing for the primary elections" and reported that Obama chief strategist David Axelrod "[a]llud[ed] to a $4 million line of credit that Mr. McCain obtained late last year, secured in part by the promise of federal matching money for the primaries." But neither the Times nor Newsweek noted that Federal Election Commission (FEC) chairman David Mason has taken the position that McCain cannot unilaterally opt out of public financing in the primary without FEC approval, meaning that every day that McCain spends beyond the limits of the public financing system that he has already exceeded, he could be breaking the law.

As Media Matters for America noted, McCain may not be able to opt out of the public financing system for the primary campaign after signing an agreement in November for a loan for his campaign, which could have required him to remain in the race, regardless of whether his candidacy was viable, in order to receive matching funds to pay back the loan. Indeed, the Associated Press reported on February 21: "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." As Media Matters noted, a March 23 Washington Post article reported that "McCain has officially broken the limits imposed by the presidential public financing system," and a February 22 article in the Post noted that "[k]nowingly violating the spending limit is a criminal offense that could put McCain at risk of stiff fines and up to five years in prison."

Additionally, the Newsweek post reported that "[l]ast March, a high-riding McCain publicly committed himself, as a matter of principle, to accept public funds in the general 'if the Democratic nominee agrees to do the same,' " while the Times article also reported that "McCain advisers have indicated that they will seek to exploit the issue if Mr. Obama indeed opts out of public financing for the general election." The Times article also included a quote from a McCain spokesman asserting that Obama "publicly promised the American people that he would accept public financing if he is the nominee of his party," and stated that while "some of Mr. McCain's advisers say privately that it is almost certain he will accept public financing, campaign officials emphasize that no final decision has been made." But the Times continued a pattern of ignoring its own reporting on McCain's waffling on public financing. The Times reported on February 13 that "Mr. McCain's advisers said that the candidate, despite his signature legislative efforts to restrict the money spent on political campaigns, would not accept public financing and spending limits for this year's general campaign." In a February 15 article reporting that the "McCain campaign's latest stand on the issue" is that it will, in fact, accept public funding if McCain's Democratic opponent does the same, the Times stated: "On Tuesday, one of Mr. McCain's advisers told The New York Times that the campaign had decided to forgo public financing in the general election, an awkward admission for a senator who has made campaign finance reform a central part of his political persona."

In his letter to McCain, Mason said that the law "requires an affirmative vote of four Commissioners to withdraw" certification of eligibility to receive public funding. Moreover, Mason noted that McCain claimed that he and his campaign had not "pledged the certification of Matching Payment funds as security for private financing," but, Mason "invite[d]" McCain "to expand on the rationale for that conclusion." Referring to the FEC's December 12, 2003, Advisory Opinion, Mason wrote: "The Commission stated that it would withdraw a candidate's certification upon written request, thus agreeing to rescind the contract, so long as the candidate: 1) had not received Matching Payment Program funds, and 2) had not pledged the certification of Matching Payment Program funds 'as security for private financing.' "

The February 22 Post article discussing Mason's letter noted that "[k]nowingly violating the spending limit is a criminal offense that could put McCain at risk of stiff fines and up to five years in prison." Indeed, the Presidential Primary Matching Payment Account Act provides in 26 U.S.C. § 9035 that "[n]o candidate shall knowingly incur qualified campaign expenses in excess of the expenditure limitation applicable under section 320(b)(1)(A) of the Federal Election Campaign Act of 1971." And 26 U.S.C. § 9042 states: "Any person who violates the provisions of section 9035 shall be fined not more than $25,000, or imprisoned not more than 5 years, or both. Any officer or member of any political committee who knowingly consents to any expenditure in violation of the provisions of section 9035 shall be fined not more than $25,000, or imprisoned not more than 5 years, or both."

The April 9 Newsweek blog post in its entirety:

In March, Barack Obama raised more than $40 million from his supporters. John McCain raised $15 million. Guess which one is more enthusiastic about accepting public financing in the general election?

That would be -- surprise! -- McCain, who stands to gain $84 million in the bargain. But it wasn't always this way. Last September, Obama filled out questionnaire from the Midwest Democracy Network that asked, "If you are nominated for President in 2008 and your major opponents agree to forgo private funding in the general election campaign, will you participate in the presidential public financing system?" Obama's answer? A check next to the box marked "yes." Underneath, the Illinois senator elaborated:

In February 2007, I proposed a novel way to preserve the strength of the public financing system in the 2008 election. My plan requires both major party candidates to agree on a fundraising truce, return excess money from donors, and stay within the public financing system for the general election. My proposal followed announcements by some presidential candidates that they would forgo public financing so they could raise unlimited funds in the general election. The Federal Election Commission ruled the proposal legal, and Senator John McCain (R-AZ) has already pledged to accept this fundraising pledge. If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election.

Of course, that was before the senator's well-oiled money machine raked in more than $230 million. With the cash flow showing no signs of slowing, the Obama campaign has spent the past few months attempting to backtrack, equivocate and wriggle free from what seemed, at the time, like a pledge. After telling the press in Feb. 2007 that Obama, if nominated, would "aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election" -- language that Obama himself echoed nine months later in the MDN survey -- Obama spokesman Bill Burton said this February that "public financing" is "an option that we wanted on the table," but added "there is no pledge" to take the money and the spending limitations that come with it. When asked by the Washington Post to clarify, Burton said (in the Post's words) "that Obama would address the issue of public financing when he becomes the Democratic nominee and that it is premature to decide the matter now."

But according to reports from a fancy fundraiser last night at Washington, D.C.'s National Museum of Women in the Arts, Obama seems to have decided already. In front of 200 people who'd forked over $2,300 for the privilege of attending, the Democratic frontrunner suggested, in what amounted to a justification of opting out of public financing, that his low-dollar network of online donors effectively represents a "parallel public financing system." "We have created a parallel public financing system where the American people decide if they want to support a campaign they can get on the Internet and finance it," he said. "They will have as much access and influence over the course and direction of our campaign that has traditionally been reserved for the wealthy and the powerful." In other words, who needs public financing when we have online fundraising.

No doubt that the Internet has massively democratized the process of funding a favored politician, and that's a wonderful thing. But there's a simple reason it's not a replacement for public financing: the latter is equal. Both candidates get the same multi-million dollar, taxpayer-financed grant--meaning that money is eliminated from the list of potentially decisive factors. And that's the point. If Obama wants to split hairs and say he never pledged to accept public financing, fine; he never uttered the words, "I pledge to accept public financing," and I doubt many voters would care if he forgoes the system in the fall. But the fact is, he did check "yes" when asked if he would "participate in the presidential public financing system," and he did say that he would "aggressively pursue an agreement... to preserve a publicly financed general election." With McCain already "pledged," as Obama put it, that logically amounts to a promise (unless Obama plans to aggressively pursue a public financing agreement he doesn't intend to honor). And he was well-aware of the power of the Internet even then.

As the Post put it in February, Obama's "enthusiasm for public financing was a way of distinguishing himself from his rival Hillary Clinton, who was raising much more private money at the time." Last March, a high-riding McCain publicly committed himself, as a matter of principle, to accept public funds in the general "if the Democratic nominee agrees to do the same." At the time, Obama effectively did just that. So however revolutionary his online receipts have been -- and however helpful they would prove against a comparatively impoverished rival -- a failure to "aggressively pursue" the agreement Obama himself outlined last February wouldn't signal the launch of a "parallel public financing system." Instead, it would represent a victory for "politics as usual." [italics in original]

From the April 10 New York Times article:

Mr. Obama, who has shattered fund-raising records for candidates of either party, is sending fresh signals that he may bypass public financing for the general election. He argues that his small contributors, many of whom have given again and again over the Internet, have injected a new democracy into fund-raising, with the result that a kind of "parallel public financing system" has been created.

Mr. McCain, conversely, increasingly offers indications that he will partake in public financing, a decision that would bar him from accepting private donations for the fall and limit his general spending to the $84.1 million that the Treasury would provide. His campaign recently began returning contributions that had been designated for the general election, asking the donors instead to contribute to a special fund, not subject to the public financing limits, for legal and accounting costs in the fall campaign.

In a comment at a fund-raiser Tuesday night, Mr. Obama appeared to be offering a hint at how he could back away from a pledge he made last year to accept public financing if the Republican nominee did the same. The remark set off a debate Wednesday, with the McCain campaign accusing Mr. Obama of flirting with reneging, and the Obama campaign responding assertively.

[...]

As for Mr. McCain, he has crusaded against the influence of money in politics in the Senate and has criticized Mr. Obama for hedging on his earlier decision to apply for public financing. But Mr. McCain drew criticism of his own earlier this year when he backed away from public financing for the primary elections. He initially sought those public matching funds, which come with limits of their own, after his campaign nearly ran out of money, but decided to bypass them after donations started coming in.

While Mr. McCain had his best fund-raising month yet in March, bringing in $15 million, he has significantly trailed both of his Democratic counterparts. If he accepts public financing and Mr. Obama does not, he will most likely face a significant spending disadvantage.

But Mr. McCain's advisers believe they will be able to make up much of the difference with strong fund-raising for the Republican National Committee, which has so far enjoyed a big edge over the Democratic National Committee. The Republican committee had $25 million in cash on hand at the end of February, compared with less than $5 million for the Democratic committee.

The parties can work on behalf of their respective nominees, with some restrictions. The McCain campaign and the Republican Party have now established a joint fund-raising arm, McCain Victory 08, that allows donors to write a single check that can be divided between the two. While checks for the campaign would be limited to $2,300 for the fall (should Mr. McCain ultimately decide against public financing), they can be up to $28,500 for the party, and Mr. McCain's advisers believe that the joint fund-raising committee can raise more than $150 million.

While some of Mr. McCain's advisers say privately that it is almost certain he will accept public financing, campaign officials emphasize that no final decision has been made.

"We could sit down in July or August and say, 'Hey, we're raising a lot of money and maybe we should forgo it,' " said Charles Black, a senior McCain adviser. "We don't have enough data."

For now, McCain advisers have indicated that they will seek to exploit the issue if Mr. Obama indeed opts out of public financing for the general election. With an obvious interest in reining in the Obama fund-raising juggernaut, the McCain campaign seized Wednesday on Mr. Obama's remark of Tuesday night.

"Barack Obama publicly promised the American people that he would accept public financing if he is the nominee of his party," said Tucker Bounds, a spokesman for Mr. McCain. "Launching his campaign by going back on a promise to voters would be dishonest, and exposes his politics of hope as empty rhetoric out of a typical politician."

As he campaigned in Pennsylvania on Wednesday, Mr. Obama intensified his focus on Mr. McCain, but did not discuss fund-raising. Mr. Axelrod, however, was ready with a rejoinder to Mr. Bounds.

Alluding to a $4 million line of credit that Mr. McCain obtained late last year, secured in part by the promise of federal matching money for the primaries, Mr. Axelrod said the rest of the primary season "should give Senator McCain time to figure out whether he was in or out of the campaign finance system in the primary, which is still an open question."

Posted In
Elections, Campaign Finance
Network/Outlet
The New York Times, Newsweek
Stories/Interests
Propaganda/Noise Machine, Barack Obama, John McCain, 2008 Elections
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