Saturday, July 26, 2008

irony: McCain supporters seek campaign finance loopholes

From Brody Mullins and TW Farnam in the WSJ...

Allies of Sen. John McCain have found new loopholes in the campaign-finance law he helped write -- and they're using them to reel in huge contributions to help him compete with Sen. Barack Obama.

In one method, a Republican Party fund aimed at electing governors has started marketing itself as a home for contributions of unlimited size to help Sen. McCain. His 2002 campaign law limits donations to presidential races to try to curtail the influence of wealth.

The Republican Governors Association isn't subject to those limits, and has long gathered up large donations from individuals and companies. Now it is telling donors it can use their contributions to benefit Sen. McCain in some key battleground states.

That makes the group "the best way to help McCain," says donor David Hanna, who gave $25,000 -- more than 10 times the legal cap of $2,300 for direct gifts to presidential candidates.

Democrats question the legality, and even the McCain camp questions the accuracy of the group's pitch. In 2005 the Federal Election Commission banned such groups from soliciting donations by pledging help to a federal candidate, but campaign-finance experts disagree about how the law might be applied in this case.

The 2008 campaign has featured numerous end runs around supposed donation and spending limits for the benefit of all the candidates during the primaries. In a first for a presidential candidate, Sen. Obama last month rejected taxpayer financing for his general-election campaign, allowing him to spend without limit after the primary season. Analysts now expect him to raise more than $200 million in private donations for the general election, following a record $287 million raised through May 30 for the primary campaign.

Some recent innovations on Sen. McCain's behalf illustrate the acute pressure Republicans feel to close their general-election money gap with the Democratic standard-bearer. Sen. McCain has raised $119 million during the primary phase. Because he is going into the public-funding system, his campaign organization will be limited to $84.1 million for the general-election campaign, funded by taxpayers who checked off a $3 contribution on their annual tax forms. To try to keep up with Sen. Obama, the Republican party hopes to raise an additional $120 million on his behalf in a variety of ways. Those include a technique that allows donors to contribute more than $70,000 in a single check.

The $2,300 limit on contributions to presidential candidates, set by the so-called McCain-Feingold Act of 2002, is the best-known cap on political donations, but it doesn't apply to all types of fund raising. National parties can accept up to $28,500 and state parties can collect up to $10,000 to spend on federal campaigns. Altogether, individuals can give $108,000 to federal campaigns within each two-year election cycle.

Donors with deep pockets also can avoid limits completely by contributing to groups called 527 organizations, after a provision in the tax code. Those groups can collect uncapped donations from individuals -- and also collect from companies and unions, which have been prohibited from giving to parties or candidates since 2002....


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