AP, WSJ left out FEC chairman's statement that McCain cannot withdraw from public financing system without FEC consent

››› ››› MATT GERTZ

The Associated Press reported that Sen. John McCain "has decided not to accept the public matching funds," but that the Federal Election Commission "wants him to assure regulators that he did not use the promise of public money as collateral for [a] loan." The article did not mention that FEC Chairman David Mason has asserted that McCain cannot legally withdraw from the public finance system without FEC approval. Additionally, a Wall Street Journal article did not note that McCain may not be able to opt out of the public financing system.

A March 21 Associated Press article reported that Sen. John McCain "has now spent $58.4 million in his primary bid, surpassing the $50 million limit he would have faced if he participated in the public financing system he had been certified to join." The article, by staff writer Jim Kuhnhenn, continued: "McCain has decided not to accept the public matching funds, but the FEC [Federal Election Commission] wants him to assure regulators that he did not use the promise of public money as collateral for the loan." Kuhnhenn also reported that "[t]he Democratic National Committee [DNC] has filed a complaint with the FEC arguing McCain cannot withdraw from the public finance system without FEC approval." In fact, as Kuhnhenn himself has noted in previous articles, in addition to the DNC, FEC Chairman David Mason has also asserted that McCain cannot legally withdraw from the public finance system without such approval.

In a February 21 AP article, Kuhnhenn reported: "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." Kuhnhenn also reported: "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." Similarly, in a February 25 AP article, Kuhnhenn reported that "McCain's loan, from Fidelity & Trust Bank, has become a central issue in the Arizona senator's attempt to bypass the public financing system and the strict spending caps that come with it. Mason told McCain last week that the commission's approval was required and that he needed to explain the terms of his loan."

Indeed, in his letter to McCain, Mason 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."

In addition, in a March 21 Wall Street Journal article about McCain's February fundraising, staff writer Mary Jacoby reported that the McCain campaign "spent $8.8 million in February," and that, according to his FEC report, "in February, the McCain campaign repaid $923,000 of a $4 million bank loan he took out in November." But Jacoby did not note that McCain may not be able to opt out of the public financing system for the primary campaign after obtaining that loan, or that by spending $8.8 million that month, his campaign has exceeded the legal limit for spending that participants in the public financing system face.

From the March 21 Associated Press article:

Republican John McCain reported raising $11 million in February, a slight dip from January but still a better fundraising clip than he had last year. Now, as the presumed GOP nominee, McCain has embarked on an aggressive fundraising schedule in March to finance his campaign against the Democrats, whoever their nominee might be.

McCain reported $8 million cash on hand -- $3 million of which is for the general election. At month's end, McCain still owed $3 million on a loan, but he paid that off this week, aides said.

[...]

[Sen. Barack] Obama, as the delegate and money leader in the race, has found himself staving off both [Sen. Hillary] Clinton and McCain in recent weeks. His campaign underscored the challenge in a fundraising appeal Thursday.

"No one could have imagined it would go on this long, or that we'd have to fight this battle on two fronts at the same time," Obama campaign manager David Plouffe wrote in an e-mail to potential donors. "We've got to take on both Senator Clinton and Senator McCain at the same time."

In a testament to the financial heft behind the Democrats, Obama and Clinton together spent more in a month than McCain has for the length of the yearlong campaign.

McCain has now spent $58.4 million in his primary bid, surpassing the $50 million limit he would have faced if he participated in the public financing system he had been certified to join. McCain has decided not to accept the public matching funds, but the FEC wants him to assure regulators that he did not use the promise of public money as collateral for the loan.

McCain and his lawyers said the loan was secured with other assets, thus freeing him to spend as much money as he wishes on his primary campaign. The Democratic National Committee has filed a complaint with the FEC arguing McCain cannot withdraw from the public finance system without FEC approval. The FEC for now can't act, however, because four of its six seats are vacant.

While eschewing public funds for the primary, McCain has called on Obama to accept public financing with him for the fall campaign. Such a step would limit both candidates to about $85 million to be spent from September to Election Day in November. Obama has hedged, setting several conditions before he would consider taking public money. Few Democrats believe Obama should abandon his prodigious fundraising, which could generate far more than the public funding would permit.

McCain is keeping his options open. Last month he filed documents to create a "compliance fund" -- an account used by publicly financed candidates so they can accept private donations to cover legal expenses and other exempted costs.

The Wall Street Journal article, headlined "McCain Raised $11 Million in February," in its entirety:

Sen. John McCain raised $11 million for his presidential primary bid in February, an amount far behind the Democratic contenders but reflecting the settled nature of the Republican race.

The Arizona senator all but wrapped up the Republican nomination March 4 when former Arkansas Gov. Mike Huckabee dropped out of the race following losses in the Ohio and Texas primaries. The McCain campaign spent $8.8 million in February, a report filed Thursday evening with the Federal Election Commission shows. In all, Sen. McCain has raised $59.6 million for his bid. He reported cash on hand of nearly $8 million and debts of $4.3 million.

Democratic Sens. Barack Obama of Illinois and Hillary Clinton of New York were expected to report raising about $55 million and $35 million in the month, respectively. Their reports had not been filed with the FEC late Thursday.

Also in February, the McCain campaign repaid $923,000 of a $4 million bank loan he took out in November, his report shows. However, a campaign official said the entire loan was repaid this week and the campaign's current debt is much lower than the amount reported for February.

Posted In
Elections, Campaign Finance, Election Law
Network/Outlet
Wall Street Journal, Associated Press
Person
Jim Kuhnhenn, Mary Jacoby
Stories/Interests
John McCain, 2008 Elections
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