John McCain has a big problem with the Federal Election Commission.
The Washington Post reports:
The nation's top federal election official told Sen. John McCain yesterday that he cannot immediately withdraw from the presidential public financing system as he had requested, a decision that threatens to dramatically restrict his spending until the general election campaign begins in the fall.
The prospect of being financially hamstrung by the very fundraising system he helped create is the latest in a series of bitter challenges for the presumed GOP nominee, who still faces a fractured conservative coalition as he assumes the mantle of party leadership. ...
But McCain's attempts to build up his campaign coffers before a general election contest appeared to be threatened by the stern warning yesterday from Federal Election Commission Chairman David M. Mason, a Republican. Mason notified McCain that the commission had not granted his Feb. 6 request to withdraw from the presidential public financing system.
The implications of that could be dramatic. Last year, when McCain's campaign was starved for cash, he applied to join the financing system to gain access to millions of dollars in federal matching money. He was also permitted to use his FEC certification to bypass the time-consuming process of gathering signatures to get his name on the ballot in several states, including Ohio.
By signing up for matching money, McCain agreed to adhere to strict state-by-state spending limits and an overall limit on spending of $54 million for the primary season, which lasts until the party's nominating convention in September. The general election has a separate public financing arrangement.
But after McCain won a series of early contests and the campaign found its financial footing, his lawyer wrote to the FEC requesting to back out of the program -- which is permitted for candidates who have not yet received any federal money and who have not used the promise of federal funding as collateral for borrowing money.
Mason's letter raises two issues as the basis for his position. One is that the six-member commission lacks a quorum, with four vacancies because of a Senate deadlock over President Bush's nominees for the seats. Mason said the FEC would need to vote on McCain's request to leave the system, which is not possible without a quorum. Until that can happen, the candidate will have to remain within the system, he said.
The second issue is more complicated. It involves a $1 million loan McCain obtained from a Bethesda bank in January. The bank was worried about his ability to repay the loan if he exited the federal financing program and started to lose in the primary race. McCain promised the bank that, if that happened, he would reapply for matching money and offer those as collateral for the loan. While McCain's aides have argued that the campaign was careful to make sure that they technically complied with the rules, Mason indicated that the question needs further FEC review.
If the FEC refuses McCain's request to leave the system, his campaign could be bound by a potentially debilitating spending limit until he formally accepts his party's nomination. His campaign has already spent $49 million, federal reports show. Knowingly violating the spending limit is a criminal offense that could put McCain at risk of stiff fines and up to five years in prison.
"If in fact he is stuck with these spending limits, it would be a serious limitation on what he can do," said Rick Hasen, an election law expert at Loyola Law School in Los Angeles.
Finance experts compared the situation to the massive imbalance faced by Republican presidential nominee Robert J. Dole in 1996, when he was forced to contend with spending limits while his opponent, President Bill Clinton, was not.
Trevor Potter, a former FEC chairman who is McCain's top lawyer, immediately disputed the assertions in Mason's letter, saying McCain has a constitutional right to exit the federal program. He also dismissed the letter as unenforceable because the FEC lacks a quorum to resolve the dispute.
"We believe that Senator McCain had a clear legal right to withdraw from the primary matching fund system, and he has done so," Potter told the Associated Press. "No FEC action was or is required for withdrawal."
Campaign finance experts were split on how serious the FEC position could become. But several agreed that the matter would not be resolved by McCain simply ignoring the letter and plowing ahead.
"It's nice for Trevor Potter to say 'Buzz off,' but the campaign is going to have to respond," said Bradley Smith, a former FEC chairman.
"This is serious," agreed Republican election lawyer Jan Baran. Ignoring the matter on the grounds that the FEC lacks a quorum, Baran said, "is like saying you're going to break into houses because the sheriff is out of town."
This is a very big problem for McCain. He has to chose between curtailing his campaign until the Republican National Convention and breaking his agreement based on a very dubious premise: there's no one presently able to stop him from breaking the agreement. One of the big themes of McCain's political career is clean government and playing by the rules. This is a particularly inauspicious way to start the most important political campaign of his life. McCain is having trouble with the system of laws he wrote and to which his name is attached. He can't quite blame the "liberal media" for this one.
Update
Today is a bad day for McCain. After denying the substance of this Times story, Newsweek uncovers a deposition by McCain from 2002 contradicting the senator's denial:
A sworn deposition that Sen. John McCain gave in a lawsuit more than five years ago appears to contradict one part of a sweeping denial that his campaign issued this week to rebut a New York Times story about his ties to a Washington lobbyist.
On Wednesday night the Times published a story suggesting that McCain might have done legislative favors for the clients of the lobbyist, Vicki Iseman, who worked for the firm of Alcalde & Fay. One example it cited were two letters McCain wrote in late 1999 demanding that the Federal Communications Commission act on a long-stalled bid by one of Iseman's clients, Florida-based Paxson Communications, to purchase a Pittsburgh television station.
Just hours after the Times's story was posted, the McCain campaign issued a point-by-point response that depicted the letters as routine correspondence handled by his staff—and insisted that McCain had never even spoken with anybody from Paxson or Alcalde & Fay about the matter. "No representative of Paxson or Alcalde & Fay personally asked Senator McCain to send a letter to the FCC," the campaign said in a statement e-mailed to reporters.
But that flat claim seems to be contradicted by an impeccable source: McCain himself. "I was contacted by Mr. Paxson on this issue," McCain said in the Sept. 25, 2002, deposition obtained by NEWSWEEK. "He wanted their approval very bad for purposes of his business. I believe that Mr. Paxson had a legitimate complaint."
While McCain said "I don't recall" if he ever directly spoke to the firm's lobbyist about the issue—an apparent reference to Iseman, though she is not named—"I'm sure I spoke to [Paxson]." McCain agreed that his letters on behalf of Paxson, a campaign contributor, could "possibly be an appearance of corruption"—even though McCain denied doing anything improper.
McCain's subsequent letters to the FCC—coming around the same time that Paxson's firm was flying the senator to campaign events aboard its corporate jet and contributing $20,000 to his campaign—first surfaced as an issue during his unsuccessful 2000 presidential bid. William Kennard, the FCC chair at the time, described the sharply worded letters from McCain, then chairman of the Senate Commerce Committee, as "highly unusual."
One of the consequences of the media's slavishness toward McCain—no matter what he does, he'll always be a "maverick"—is that, really, we don't know too much about him. In a lot of ways, the McCain narrative doesn't add up. He's the scourge of big-money politics, yet his campaign manager is a lobbyist. He's a fiery opponent of perks for legislators, yet he's flown on a few corporate jets. Would not a lone wolf fly coach?
I think we're beginning to see McCain's biggest vulnerability as a politician: he's not nearly as pure as he's insisted he is, and he seems frequently overwhelmed by strong criticism. It was particularly foolish to deny something he had admitted to in a deposition. You'd think a Republican would know something like that could get you into big trouble.
Second Update
I get the feeling John McCain will rue this day. According to Reuters, he's not going to listen to the FEC:
[A]t a campaign stop in Indiana, McCain replied with a dismissive "no" when asked if he was concerned by the FEC's letter.
"It's not a decision. It's an opinion, according to our people," he said. ...
McCain opted out of the system earlier this month because he has nearly reached the FEC's $54 million spending cap for the primary season and expects to raise more money.
But FEC Chairman David Mason told McCain the commission may not approve the Arizona senator's request because four of the commission's six seats remain unfilled due to a standoff between the Senate and President George W. Bush.
Mason also said the FEC needs to review whether the terms of McCain's bank loan might have violated commission guidelines by pledging its expected matching funds as collateral. He asked for a reply by March 7.
The reason the FEC can do nothing, as the Post article explains, is that the Senate is refusing a request by President Bush to approve his nominees for the commission in a single vote. The commission now has only two members and it needs a quorum of four to act. The Senate wants to vote on each nominee because one, Hans von Spakovsky, previously worked for the Justice Department's Voting Rights Section, and several Democratic Senators, including Barack Obama and Russ Feingold, allege that his work in that office was focused on disenfranchising certain voters, rather than enforcing election laws. Spakovsky is also an opponent of the financing laws he would be responsible for enforcing.
McCain seems to be betting this situation will continue. He has already been rebuked by the commission's chairman, who is a Republican, and it would seem if the commission were to act, it would decide against McCain because he is very clearly contravening at least the spirit of the laws.
—Douglas Carlucci