NY Times, washingtonpost.com omitted FEC chair's assertion that McCain cannot unilaterally withdraw from public financing

Blog posts by The New York Times and washingtonpost.com both reported on the Democratic National Committee's announcement that it would be filing a lawsuit to force the Federal Election Commission (FEC) to investigate Sen. John McCain's unilateral withdrawal from the federal public financing system for the primary election, but neither noted that FEC chairman David Mason has taken the position that McCain cannot opt out of public financing in the primary without FEC approval.

In April 13 posts, New York Times and washingtonpost.com political blogs both reported on the Democratic National Committee's (DNC) announcement that it would be filing a lawsuit in federal court seeking to force the Federal Election Commission (FEC) to investigate Sen. John McCain's unilateral withdrawal from the federal public financing system for the primary election, but neither noted that FEC chairman David Mason has taken the position that McCain cannot opt out of public financing in the primary without FEC approval and consideration of the conditions of a loan McCain took out. Rather, the Times and washingtonpost.com cited only the DNC's and McCain campaign's arguments on the issue. This is the third time in four days that the Times -- either in blog posts or in the print edition -- has reported on public financing issues in the 2008 presidential election without noting Mason's statement that McCain cannot withdraw from public financing in the primary without permission from the FEC.

In the piece for washingtonpost.com's The Trail blog, Post staff writer Matthew Mosk contrasted “the McCain campaign's argument -- crafted by the candidate's lawyer, a former FEC chairman -- that public financing is voluntary” with DNC executive director Tom McMahon's statement that "[w]e believe he's [McCain] breaking the law" and DNC General Counsel Joe Sandler's assertion that, in Mosk's words, “McCain's decision to backstop a critical bank loan with the promise to use public funds as collateral, if necessary, was the decision that locked McCain into the public system.” In the Times' post on its blog The Caucus, Times staff writer Michael Luo reported:

The D.N.C. is resting its arguments about the legality of Mr. McCain's withdrawal from the public financing system on two issues. The first is a $4 million loan Mr. McCain secured last fall to keep his campaign afloat. The D.N.C. argues that documents make clear that Mr. McCain used the promise of matching money as collateral in securing the loan, a contention the McCain campaign denies by saying the loan was carefully drawn to avoid that.

The party is also arguing that Mr. McCain used his certification for the federal matching money to get on the ballot in states like Ohio and Delaware, but Mr. McCain's lawyers said nothing about those state's laws barred Mr. McCain from being able to subsequently withdraw from public financing.

By contrast, in an April 13 article on the lawsuit, the Associated Press reported: “Part of the dispute centers on a $4 million loan McCain obtained late last year. The loan was not directly secured by his potential access to public funds. But his agreement with the bank required him to reapply for public funds if he lost early primary contests and to use that money as collateral. FEC Chairman David Mason has said McCain can only withdraw from public financing if he answers questions about the loan and gets the agency's permission.”

Indeed, in a February 19, 2008, letter to McCain, Mason -- a former senior fellow at the conservative Heritage Foundation and a former Republican congressional staffer -- wrote:

As you may be aware, in Advisory Opinion 2003-35 (Gephardt), the Commission balanced the voluntary nature of participating in the Matching Payment Program with the contractual obligations a candidate commits to once he seeks and receives Commissions certification of eligibility to receive payments under the Matching Payment Program. The Commission made clear that a candidate enters into a binding contract with the Commission when he executes the Candidate Agreements and Certifications. AO 2003-35. The Commission stated that it would withdraw a candidate's certifications 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.” Id.

Accordingly, we consider your letter as a request that the Commission withdraw its previous certifications. Just as 2 U.S.C. § 437c(c) required an affirmative vote of four Commissioners to make these certifications, it requires an affirmative vote of four Commissioners to withdraw them. Therefore, the Commission will consider your request at such time as it has a quorum.

A February 22 Washington 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.” According to the McCain campaign's FEC disclosures, the campaign has exceeded the legal limit for spending that participants in the public financing system face.

Media Matters for America previously noted that in an April 11 Caucus post, New York Times reporter Jeff Zeleny wrote that Sen. John McCain's “campaign believes Mr. [Barack] Obama reneged on his pledge to accept public financing,” but, like the April 13 Caucus and Trail posts, did not report Mason's assertion that McCain cannot unilaterally opt out of public financing in the primary without FEC approval. Media Matters also noted that an April 10 Times article by Zeleny and Luo reporting on whether McCain and Sen. 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. The Times noted that “McCain drew criticism of his own earlier this year when he backed away from public financing for the primary elections,” but did not report that Mason asserted that McCain could not legally withdraw from the public financing system unilaterally.

From the Trail post, headlined “Dems., Seeking to Hamstring McCain, to File Public Financing Suit” :

The complaint faces some significant hurdles. For one, the FEC is hamstrung from dealing with the complex legal issues by a shortage of commissioners -- four of six seats are vacant pending senate confirmations -- and each additional step in the suit would drag out the process. So long as it remains unresolved, McCain will be able to continue to spend above the primary limits.

Then there is the McCain campaign's argument -- crafted by the candidate's lawyer, a former FEC chairman -- that public financing is voluntary, and McCain had every right to withdraw from the system when it became clear the campaign wouldn't need federal matching money.

(None of this should be confused with a separate dispute between McCain and Barack Obama over the use of public funds in the general election. This lawsuit only questions whether McCain's flirtation with public financing in the primary went too far. )

DNC General Counsel Joe Sandler said he believes McCain's decision to backstop a critical bank loan with the promise to use public funds as collateral, if necessary, was the decision that locked McCain into the public system.

Assuming the FEC remains unable to resolve that question, Sandler said, the court will have to step in and resolve it. The soonest that could happen, Sandler said, would be sometime in June.

Republican National Committee spokesman Alex Conant called the pending suit “total nonsense.”

“It is now clear that the trial-lawyer Democrats' idea of campaigning for President is to hire lawyers and file frivolous lawsuits. It's unfortunate the DNC is now trying to drag the federal courts into their circus as well,” he said in a statement. “As for the lawsuit itself, it is clearly without merit and filed only for public relations purposes. The FEC's own regulations provide that the Commission must be given 120 days to review any complaint before they may be sued in court. It has only been 49 days since the DNC's initial meritless complaint to the Commission was filed, and thus we expect this lawsuit to be thrown out at the first opportunity.”

From the Caucus post, headlined “Democrats Plan Lawsuit Over McCain's Reversal on Public Campaign Financing” :

Mr. McCain had applied for public financing for the primary for his campaign when his campaign was struggling but he decided to bypass the system after his fundraising improved. The public financing system gives candidates access to millions of dollars in matching money from a taxpayer fund but forces them to abide by strict spending caps before the party conventions. Mr. McCain has by now exceeded the $54 million cap that he would have been bound by under public financing.

The D.N.C. is resting its arguments about the legality of Mr. McCain's withdrawal from the public financing system on two issues. The first is a $4 million loan Mr. McCain secured last fall to keep his campaign afloat. The D.N.C. argues that documents make clear that Mr. McCain used the promise of matching money as collateral in securing the loan, a contention the McCain campaign denies by saying the loan was carefully drawn to avoid that.

The party is also arguing that Mr. McCain used his certification for the federal matching money to get on the ballot in states like Ohio and Delaware, but Mr. McCain's lawyers said nothing about those state's laws barred Mr. McCain from being able to subsequently withdraw from public financing.

Tom McMahon, the D.N.C.'s executive director, accused Mr. McCain, who has crusaded against the influence of money in politics, of “hypocrisy” on the issue yesterday during a conference call with reporters.

From the AP article:

Part of the dispute centers on a $4 million loan McCain obtained late last year. The loan was not directly secured by his potential access to public funds. But his agreement with the bank required him to reapply for public funds if he lost early primary contests and to use that money as collateral.

FEC Chairman David Mason has said McCain can only withdraw from public financing if he answers questions about the loan and gets the agency's permission. But the FEC has no quorum, in part due to disagreement between President Bush and the Democratic-controlled Senate over possible nominees.

McCain's lawyer, former FEC Chairman Trevor Potter, has said McCain did not encumber any money he would have received from the federal treasury. McCain and Potter have said he was entitled to withdraw without FEC approval and have cited as examples Democrat Howard Dean - now the party chairman - who withdrew from public financing during the 2004 presidential primaries.