Monday, February 25, 2008

JOHN MCCAIN

John McCain's Potential Headache from the FEC

The key graphs of the New York Sun's eye-opening story on John McCain potentially running into trouble with the FEC:

The case could have far-reaching implications for the fall campaign. A decision that forces Mr. McCain to remain in the public financing system for the primary or that finds him in violation of federal law could severely limit the amount of money he could spend in the six months leading up to the Republican nominating convention in late summer. The restriction would have the effect of giving the Democratic nominee a spending head start equal to tens of millions of dollars.

The situation is complicated by the current state of the FEC. Squabbling over presidential nominees between the Bush administration and the Democratic-controlled Congress has four of the six seats on the commission vacant. The panel therefore lacks the four commissioners required for a quorum and cannot rule definitively either on Mr. McCain's attempt to withdraw from the system or on the forthcoming DNC complaint against him.

The McCain camp says that all that is needed to withdraw is a letter, which they have already sent to the FEC. At issue is whether McCain committed himself to matching funds when he discussed them as potential collateral for a loan obtained for his campaign, which the Post reported on earlier this month:

John McCain's cash-strapped campaign borrowed $1 million from a Bethesda bank two weeks before the New Hampshire primary by pledging to enter the public financing system if his bid for the presidency faltered, newly disclosed records show.

McCain had already taken a $3 million bank loan in November to keep his campaign afloat, and he sought from the same bank $1 million more shortly before this month's Super Tuesday contests, this time pledging incoming but unprocessed contributions as collateral. He never used the funds of the most recent loan, because his win in the South Carolina primary helped him raise enough money to compete in Florida, his campaign aides said last night.

McCain's lawyers, who are presumably paid very well to ensure their client doesn't get into messes like this, think they're in the clear:

Under the agreement, McCain promised that if his campaign began to falter, he would commit to keeping his campaign alive and to entering the federal financing system so the money he had raised could be used to gain an infusion of matching funds. Had that happened, he would have been forced to abide by strict federal spending caps before the Republican National Convention in September.

Under FEC rules, a candidate who uses a certification for federal funds as collateral for a loan is obligated to remain within the public financing system. "We very carefully did not do that," [Trevor Potter, a McCain attorney], said.

Further complicating matters for the likely Republican nominee will be the instincts of conservatives, who may feel some hidden glee at watching McCain getting stuck in a Byzantine, over-regulated campaign finance system he helped create.

02/25 09:56 AMShare