The Obama IPO
Will technology developed by his campaign make the president a power broker for many elections to come?
Even to enforce employee contracts, Obama for America would have to remain active long after what is likely its figurehead’s final run. It often takes a while for campaign committees to wind down—Bush-Cheney ’04 didn’t shut its doors until the spring of 2007—but usually they only stick around to settle accounts and comply with audits, not to control property. (Hillary Clinton for President is still paying off its debts.) Committees can’t continue fundraising unless it’s for a specific election, so if Obama were intent on keeping former staffers from getting rich off their campaign work he would need to end this campaign with plenty of money on hand to fund its ongoing activities, including lawyers’ bills.
If Obama is able to defend his ownership of campaign innovations, what could he do with them? Federal election laws were written to set rules for campaigns getting rid of things like copy machines and desk chairs, bumper stickers and posters, and the occasional pile of unspent cash. Less consideration has been devoted to the intellectual property developed in the service of an election—research binders, polling data, issue papers—which has tended to be worthless immediately after the polls close. The law appears to leave Obama wide latitude if he wanted to constructively liquidate his tech holdings after November: The Federal Elections Commission clearly encourages campaign committees to transfer assets to charitable organizations, which could even include the Barack Obama Presidential Library Foundation. (Such a foundation would be restricted by its own tax status on how the gift could be put to use.)
The same rules about winding down committees would probably allow Obama to leave an electioneering legacy by bequeathing his innovations as a sort of tech endowment for future Democratic campaigns. Federal law allows unlimited transfers of assets to party committees, which should mean Obama for America could sign over ownership of a valuable app or the code to a text-messaging protocol to the Democratic National Committee without any issue.
But what if Obama wanted to pick and choose which candidates benefited from his tools—like, for example, making sure that Democrats who voted against health care reform were on their own, or that Joe Biden got a boost over Hillary Clinton in the 2016 primaries? The FEC has carved out a specific exemption for campaigns to market one kind of intellectual property that campaigns generate for which there is high demand: their lists of fundraising targets, which can be sold to other campaigns. Would the commission treat a piece of software or a technological breakthrough that resides in a snippet of code the same way? “If the committee created an asset for its own use, it can sell that asset at fair market value to anyone, including a corporation,” says Neil Reiff, a former deputy general counsel for the Democratic National Committee. “They could even sell the same asset to more than one entity, like a list.”
Obama for America could probably use the same part of the law to become an off-the-books tech supplier for Democratic candidates. The FEC discourages campaigns from using asset sales to “engage in an ongoing enterprise, rather than an isolated transaction,” but is more open-minded if no cash changes hands. Candidates are permitted to swap their mailing lists with other campaigns, parties, and advocacy groups—as long as the traded items have the same value. Usually these swaps feature similar objects being traded—one group’s fundraising targets for another’s—but what if Obama offered favored 2014 congressional campaigns or Biden for President a yearlong software license in exchange for $5,000 of polling data or opposition research? Because no cash exchanges hands, neither party would be under any obligation to report the arrangement—which means Obama could keep an invisible hand in Democratic campaigns for years.
What if the campaign were more interested in just cashing out after November and distributing the revenue to political allies, charities, or sitting on it so Obama could remain a Democratic power broker in perpetuity? There is nothing in the law that would clearly prevent Obama for America from taking its most valuable technology and putting it out to bid in Silicon Valley—although the fact that such a loophole exists means that regulators would probably be quick to close it. "Something like an app that has durable market value—the FEC hasn't grappled with that question in the past,” says Toner, who served as the commission’s chairman. “I think it is unlikely that the FEC would permit a company like Google to pay a presidential campaign $1 million for an app with the campaign pocketing that money.” The Obama campaign has so far succeeded in thinking like a startup; now it just needs to decide what to do with its products come November.
Sasha Issenberg is the author of The Victory Lab about the new science of political campaigns.