Running for president is a cash bonanza

Running for president of the United States has turned into a cash cow for several politicians. The reason is that the Federal Election Commission (FEC), which was created in 1974 to disclose campaign finance information; to enforce the provisions of the Federal Election Campaign Act of 1971, including the limits and prohibitions on contributions; and to oversee the public funding of Presidential elections is all but out of business.

The FEC is made up of six commissioners appointed by the president. No more than three members can be from the same party. Consequently, the standard for FEC membership has been three Republicans and three Democrats. Four votes are required for the FEC to take any official action.

The problem for the FEC is that because of extreme partisanship, the FEC has deadlocked on important votes in 3-3 ties since 2008. In addition, there are two vacancies and four of the remaining members’ terms have long since expired. Nevertheless, the four have agreed to serve until they are replaced. The current FEC chair is Democrat Ellen Weintraub, appointed by President George W. Bush in 2002 and whose term expired in 2007. Two other members, both Republicans and appointed by Bush in 2013, saw their terms expire in 2011 and 2013, respectively. A single Independent, Stephen Walther, also appointed by Bush, continues to serve, even though his term expired in 2009.

When Donald Trump nominated the FEC vice chair, Republican Matthew Peterson, to be a judge on the United States District Court for the District of Columbia there was almost another FEC vacancy. However, Peterson’s name was withdrawn after he was not able to answer a single answer about the law posed by Democratic and Republican members of the Senate Judiciary Committee. Regardless, Peterson continues to serve on the FEC.

Because of the vacancies and the amount of time it takes to bring action against a federal political campaign, a toothless commission is now on life support.

As a result of the FEC being administered all but a lethal injection, it monitors the amount of  contributions being collected by 2020 presidential candidates, even though it is virtually powerless to monitor illegalities, such as the infusion of foreign money into the campaign and clever work-arounds designed to exceed spending caps by individuals and political action committees (PACS).

The FEC website currently tells us that Donald Trump leads all other 2020 presidential contenders, having raised $97,852,465.13. Coming in second is Bernie Sanders (Independent Socialist) with $20,700,446.12. Third is Democratic former Representative John Delaney at $18,289,849.08. Fourth is Democratic Senator Elizabeth Warren at $16,482,752.41.

Why are so many Democrats announcing they are running for president in 2020? Because, as discovered by almost two dozen Republicans in 2016, running for president can be a quite lucrative financial bonanza.

FEC rules state that after a candidate withdraws from a presidential campaign, he or she is not permitted to use campaign and PAC contributions for personal use. Donald Trump got around that restriction by never ending his 2016 campaign and immediately morphing it into his 2020 campaign. As a result, as of June 2017, Trump has $12 million in re-election campaign cash on hand. Trump even had the nerve to shift $1.2 million to his Trump Tower Commercial LLC as rent for his re-election campaign committee in Trump Tower in New York. Other Trump 2020 campaign cash has ended up in the coffers of the Trump International Hotel in Washington and Trump Plaza in New York.

In 2016, several Republican candidates announced that they were merely “suspending” their campaign, not ending them. Candidates’ Super-PAC money is often used to support other runs for national or state office. For example, Sanders has been adept, like Trump, in playing the system—especially in the absence of strong FEC oversight—by transferring $1.5 million from his Senate campaign committee to his presidential campaign committee. Sanders has also become a millionaire as a result of book sales, including revenue from books translated into six languages, including Dutch, French, and German. Sanders said there is no need for him to answer any more questions about his book sales. Some politicians have fallen as a result of relying on subsidized book sales to violate campaign finance laws. They include two speakers of the U.S. House and, more recently, the mayor of Baltimore.

The FEC does have strict rules governing how leftover campaign cash is used. But without a fully functioning FEC and vacancies at the top, certain politicians have been fast and loose when it comes to reusing cash for other purposes. New Jersey Republican Governor Chris Christie was permitted to use some of his campaign cash from his 2014 gubernatorial re-election campaign to pay off legal fees incurred from the George Washington Bridge closure scandal.

Some candidates form other Super-PACS with their own Super-PAC funds and other campaign cash on hand. They then establish themselves as political kingmakers within their parties for up and coming politicians.

Candidates are also permitted to donate their leftover campaign funds to charity. Some politicians have an expansive view of what constitutes a “charity.” For example, buying college football season tickets, as what former Republican Representative Steve LaTourette did with Ohio State tickets in 2018, may not qualify as a charitable donation to a college or university, but it has been done and the FEC is spread too thin to investigate such infractions from what are called “zombie campaigns.”

The FEC considers such personal use of campaign funds to violate what is known as the “Irrespective Test.” The FEC considers personal use as “any commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election campaign.” Trump’s paying hush money to a porn actress from campaign funds would have violated the Irrespective Test.

The favorite method for spending remaining campaign cash is to start a nonprofit charity linked closely to the politician. Former Republican Representative Ron Paul of Texas used the remainder of his 2008 presidential campaign funds to start his Campaign for Liberty, a 501(c)(4) nonprofit organization that is permitted to partially engage in political activity. Paul also paid his daughter $16,170 from his presidential campaign through 2017. Paul’s presidential campaign ended in 2012.

The most attractive method for re-using campaign cash is to donate it to an educational institution or independent foundation bearing the name of the candidate, for example, the Tom Harkin Institute at Drake University in Iowa, the John McCain Institute for International Leadership of Arizona State University (located in Washington, DC), The Evan and Susan Bayh Foundation; and the Joe Lieberman Connecticut Scholarship Fund. Bayh’s campaign funds total $10.02 million. He left the Senate in 2011.

There is even campaign cash after death. The Donald M. Payne Sr. Global Foundation has $185,000 in the bank. Payne, a New Jersey Democratic congressman, died in 2012. Payne’s family is permitted to determine how to use the leftover cash. New Jersey Senator Frank Lautenberg died in 2013. Yet, Lautenberg’s campaign committee paid Common Sense Consulting, the personal company of the campaign’s treasurer, $14,000 between 2013 and 2015.

When a politician must travel to an annual or ad hoc meeting of his or her generic PAC or nonprofit institute, the old campaign slush funds come in handy for paying for business class airline tickets, limousines, country club membership (Mar-a-Lago anyone?), expensive dinners, or booze.

Some former members of Congress, who are lobbyists, use their campaign war chests to donate to sitting members of Congress. Believe it or not, FEC rules and campaign finance laws permit such donations.

With some two dozen Democratic presidential candidates and the possibility of at least two Republicans joining former Massachusetts governor William Weld in challenging Trump in the Republican primary, there will be millions of dollars in campaign cash left over at the end of the 2020 race. As in the past, much of its will be plowed into quite legal “slush funds” that will fatten the political wallets of the failed presidential candidates while an emaciated FEC is left to muddle its way through another election cycle as best as it can.

Previously published in the Wayne Madsen Report.

Copyright © 2019

Wayne Madsen is a Washington, DC-based investigative journalist and nationally-distributed columnist. He is the editor and publisher of the Wayne Madsen Report (subscription required).

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