Whistling past the libel graveyard.

A mostly political Weblog.
July 17 2004 1:49 PM

No Caterpillar, No Cocoon?

Plus--Whistling past the libel graveyard.

(Continued from Page 4)

The Agreement the party nominee signs with the FEC in order to receive general election public funding commits the nominee to using only the public funds for activity during the general election period (defined as the date of nomination to the election). Therefore, the nominee may NOT "pre-fund" general election activity with primary funds. The FEC audits all publicly funded Presidential campaigns, and this issue has come up in those audits with some frequency, with a repayment of public funds required where such prepayment has occurred. [Emphasis added]

OK, I get it now. The campaign finance laws treat the pre-convention period as a single, (primary) election, which ends at the convention. If you pay for anything that happens after that date, it can't possibly be spending for the primary. It's a general election expenditure and has to be made with public funds (assuming Kerry doesn't 'opt out'). ... Two problems with this answer, though. Problem #1: One of Hasen's readers notes that if, as Potter suggests, the penalty for post-convention spending is simply that the money has to be repaid, isn't that still a good deal for a campaign?

[F]or all practical purposes you can LOAN your campaign the money from the funds raised before the convention? After all, that's what a loan is, money given to you when you need it, that you have to pay back later.

Is there some additional penalty that gets tacked on to make the loan not free? ... Also, if the FEC orders repayment only after the expenditure has won election, isn't that a bit too late? Problem #2: I still think Potter's rule must be very hard to police. Suppose for purposes of argument that Kerry consultant Tad Devine's normal fee is about $20,000 a month (I insult him). Now suppose Kerry instead pays Devine $30,000 for the three primary election months leading up to the convention, but Devine then agrees to a "pay cut" to $10,000 a month for the three months after the convention (perhaps justified as necessary in order to conserve limited 'public' funds). Devine makes the same amount of money in the end--but arguably the Kerry campaign will have subsidized 50% of his post-convention activity with pre-convention cash. Yet how would the Republicans (or, if the situation were reversed, the Democrats) ever prove it?...  Plus, if the only penalty for getting caught is that the money has to be paid back after the election--well, see Problem #1. ...

Sum-up:

a) It wouldn't make any sense for Kerry to blatantly pre-pay expenses. That would maximize the chances of the expenses being quickly caught in the FEC audit. He'd clearly have to pay the money back. But I'm now not convinced that means Kerry in practice needs to spend all his primary money by the end of the convention. Why can't he do this: Keep the pre-convention money in the bank. Take the $75 million in free federal funds. Then, if in late October, say, he thinks he needs to spend more in a close race, he can bust his agreement with the FEC and spend some of his leftover primary stash. He'd have to pay it back to the government later, and the famously toothless F.E.C. might try penalize him in an "enforcement" action. But meanwhile, he gets to be President. ... Think Kerry wouldn't break an agreed-to spending cap just because it's in his interest to do so?  Tell it to Bill Weld!  ... Update: Prof. Hasen thinks any spending over and above the agreed-to cap might be caught quickly, causing instant, prohibitively damaging negative publicity. ...

b) If Kerry simply opts out of public financing, then he won't have to agree to use only public money, so he could presumably spend his primary dollars in the fall. The main reason to think Kerry won't opt-out of public financing is that his spokeswoman, Stephanie Cutter, has flatly promised he won't.

"We are not going to opt out of the system," Ms. Cutter said.

But don't you think that Kerry aides, even as we speak, are figuring out scenarios in which they could get away with breaking this promise? The break would be billed as a response to some alleged misbehavior by the Bush campaign, of course (as Kerry's 1996 Weld reneging was billed as a response to a bogus alleged violation by Weld). Maybe it would be a response to Bush's failure to promise that he wouldn't opt out of public financing after his convention in late August. ...

c)And here's another Explainer candidate: Why couldn't Kerry take the $75 million public money, promise not to spend private money--and then, if Bush opts out in late August, Kerry could announce that he was returning the $75 million to the government and would raise his own. Rationale: Because Bush wouldn't promise to abide by the spending cap he considered his earlier promise null and void, had to level the playing field, etc.  This promise-in-July/renounce-in-September approach would preserve Kerry's ability to opt out if Bush does--while allowing Kerry enough time to raise a lot of post-convention private money to add to the primary stash discussed in (a). Do you really think the FEC would go after him for committing to use public funds and then changing his mind?... All he'd lose, compared with opting-out right away--would be the money he could have raised in August.

Correct me if I'm wrong! 11:15 P.M.

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