McCain’s other controversy of the week

February 22, 2008

Maybe you consider the Vicki Iseman controversy to be a big deal, or maybe you’re underwhelmed by it and think the NYT shouldn’t have pulled the trigger on it. I guess we’ll be able to say more about it once some of the follow-up reporting adds some details and nails down some of the loose ends.

But either way, let’s not lose sight of John McCain’s other controversy of the week — the senator’s efforts to game the public financing system.

To review briefly: in December, McCain, who’d earlier opted in to the public financing system, needed cash. The FEC had already certified that he was owed $5.8 million in public matching funds — but he wouldn’t be getting that money until March. And he didn’t want to absolutely commit yet to using that system, because it would limit his campaign to spending only $54 million through the end of August. And FEC rules say that using public matching funds as collateral locks a candidate into the system.

So McCain struck a deal with the bank: he promised to only commit to using the system if he lost the primary. If he won, he would opt out of the program, and he’d be more than able to pay the bank back, because the funds would come flowing. McCain’s lawyers were evidently very pleased with the canniness of this arrangement.

Federal Election Commission Chairman David Mason isn’t nearly as impressed, and is sharp enough to know a candidate trying to pull a con when he sees one.

This story is a little harder to get than, say, whether McCain had an affair with a lobbyist for whom he was doing favors. But it’s still pretty important.

Hilzoy had a great item on this.

Campaign finance laws ask candidates to make a choice: either you take federal money, in which case you are subject to a number of restrictions, or else you don’t take it, in which case you are not. Getting a loan by using the matching funds you have not yet received as collateral is a way of trying to have it both ways: essentially, you get to spend your matching funds now, but because the money did not literally come from the government, you can delay a decision about whether or not to accept the restrictions that go with them until later. If you can leverage the money into enough wins to generate contributions, you can pay back the loan and duck the restrictions; if not, you’ve lost anyways, so you might as well abide by them. That’s exactly what campaign finance laws do not want candidates to be able to do.

McCain tried to be tricky about this: he didn’t use the matching funds he had qualified for as collateral, but he did use the fact that he could qualify for them at any time. That’s why he had to give away his legal right to withdraw from the campaign if he lost: to satisfy his lenders, he had to promise to stay in long enough to actually get the matching funds he qualified for, and to give them first dibs on those funds. Whether or not this violates the law — a law McCain authored — I have no idea, but it is certainly an attempt to wriggle out of its requirements, and it ought to put paid, once and for all, to the idea of McCain as a straight-talking man of principle.

Josh Marshall also summarized what happened quite nicely.

Back in August McCain opted into the public financing system for the primaries. Then in December he needed to come up with some cash quickly. Well, no problem. He was already guaranteed over $5 million from the feds. So all he needed to do was put that guarantee down as collateral for the loan.

Only McCain didn’t want to do that because once he formally made the federally-guaranteed money collateral then he gave up his right to later opt back out of the system.

But, he really, really needed the money. So McCain, along with his campaign finance lawyer Trevor Potter (whom I’ve met and is a very sharp guy) came up with a workaround. It went like this. McCain wouldn’t make the guarantee collateral. But he promised that if his campaign tanked he would opt out of the system and then opt back in. This would mean remaining a candidate even after he knew he wasn’t really in the race in order to a) get back the public money to pay his creditors and b) assure he could sign the original loan note with the de facto collateral while nonetheless maintaining his ability to once again opt out of the public financing system at any one of many possible future junctures at which his campaign might pop back from life support and it would be in his interest to go back to raising money from donors.

Of course, McCain’s campaign did come off the mat. And since he now wants to raise and spend as much as possible before the end of the summer, earlier this month he did actually opt back out. The FEC, the outfit that enforces the campaign finance laws, says McCain’s not allowed to opt out. But whatever, he opted out anyway.

Why McCain feels justified going after Obama over his commitment to the public financing system is a mystery.

What happens next in this story? The FEC’s Mason — who’s a Republican, by the way — has told McCain he can’t drop out of the primary election’s public financing system. McCain’s lawyers have effectively told Mason, “Watch us.” And because of a dispute between Bush and Congress, the FEC only has two members right now, two fewer than is necessary to take any actions at all.

Why McCain feels justified going after Obama over his commitment to the public financing system is a mystery.

It would be a mystery if McCaniac weren’t just another “The rules apply to thee but not to me” ReThuglican.

The only good thing about McCain in the White House is the country would be so fucked up and people would be so fed up, we’d have ourselves a merry little revolution.

  • Also do not lose focus of all the lobbyists who are on McCain’s paid staff (some still being paid by their lobbyist employers) and those that are advising him without pay. This is a critical fact for the many who is trying to claim he is not beholden to special interests. Would be nice to see a DNC add that calls/lists these guys and gals out to inform the public just how truly in bed McCain is with special interests–or to see some enterprising reporter (right) just go through the list of his advisors with McCoin, asking McCoin about each person’s background, employer, etc.

  • Why McCain feels justified going after Obama over his commitment to the public financing system is a mystery.

    Because Obama’s supposed to be a saint, whereas McCain’s just a “straight-talker.”

  • I want to comment on McCain’s other problem – the story in the NYT.

    Steve, you said, “I guess we’ll be able to say more about it once some of the follow-up reporting adds some details and nails down some of the loose ends.”

    Would the New York Times lead with a “teaser” version of this story then run follow ups in the days, weeks or months to follow as way of creating greater readership? From a business standpoint it might make sense. From a journalistic standpoint, it doesn’t.

    I have to believe that the editors and reporters have more cards than they played yesterday and they chose not to lead with an ace. Which means they either have an ace or other trump cards still in their hands waiting for a good moment to play them, or they’re bluffing. Self-promotion, not anti-McCain feelings, would determine how much and when they release their stories.

    Am I being too cynical?

  • Why McCain feels justified going after Obama over his commitment to the public financing system is a mystery.

    Because he knows that he won’t be exposed for doing it.

    McBush!

  • This is a guy who dumped his wife for a rich mistress 17 years younger than he was and ran for office on her daddy’s beer empire money, rather than on his crapped-out military career. A guy who has killed a lot of people by dropping flaming gasoline jelly on them, and still calls them “gooks”. In public. And this is his last chance to fulfill his wildest dream. You think he’ll obey the rules after his buddy Bush kneecapped the FEC?

    We can all guess what McCain is saying, it’s something along the lines of “Only pussies obey campaign finance laws”.

    I hope Obama is up to the task of taking him down. The media isn’t going to be much help, so WE will have to be his backup. And part of that involves informing the people who haven’t heard about the real McCain what a nutcase he is. This picture will help:

    http://www.unconfirmedsources.com/nucleus/media/3/20070716-McCain-Fired.jpg

  • Which means they either have an ace or other trump cards still in their hands waiting for a good moment to play them, or they’re bluffing.

    Argh – more binary thinking.

    Any time you boil something down to an either or situation, chances are there are other ones lurking outside the edges of your vision.

    Maybe they have more info but the editors like McCain and don’t want to embarrass him. They did endorse him for the NY GOP primary despite knowing about this story after all.

    Maybe they didn’t want to publish this story at all but circumstances forced their hand. Maybe they won’t bother trickling out more details because they don’t really want to publish it.

    Maybe the lawyers on McCain’s side convinced them to leave a bunch of stuff on the cutting room floor and, so long as McCain doesn’t do anything stupid (stuff that would force them to bring it back into play to defend themselves), they’ve agreed to leave it there.

    As you say, maybe they’re drawing it out for dollars. Or maybe they’ve got nothing. But there are a bunch of other explanations between those two that can be considered as well. And the facts that the NYT editorial staff endorsed McCain despite this story AND really had no desire to publish this story in the first place AND are well known to have a predisposition towards liking McCain all speak volumes that can’t be ignored.

  • I think the emphasis in reporting this story so far has been skirting the issue, by keeping the focus on whether or not McCain is locked into the financing system or not, when it should be paying far more attention to the results of McCain’s actions.

    The use of Public Funds is supposed to help people run for office, NOT act as a reimbursement vehicle for their debts.

    Yet McCain did just that, by pledging to stay in the race beyond any politically-viable point, merely to collect enough money to pay his debts.

    I cannot fathom why this doesn’t get larger play– after all, I thought Republicans were against using public money to bail out debts?

  • Tom(4) Yes, you are being too cynical (not that I’m less). The NYT knows they are going to come under great criticism for any negative story about any nominee. At the same time, they’ve spent a lot of time and effort to research this story, and don’t want to get scooped by the many others who also have been digging into it (Wash Post, Drudge, NY Post, New Republic). So they print the story with only the parts they feel are iron clad. Unfortunately, they end up with a story that sounds very incomplete. I’m sure they feel certain about more, but they can’t prove it, so they settle for being the first. I’d be shocked if more doesn’t come out, but not necessarily from the NYT.

    Back to the FEC/campaign finance law: If a lobbyist works for a campaign for free, how is that not an illegal donation?

  • One very interesting point out of the Washington Post:

    “He [McCain] 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.” (ital added)

    It’s not only time-consuming, it’s expensive for candidates to gather the signatures to get on the ballots. So now, we have evidence that McCain has already directly received material gain from being under public funding– maybe not in cash, but in something worth a lot of cash to a campaign.

    Therefore, since his entire argument about opting out is that he hasn’t gotten anything from the FEC yet, I think this directly refutes that. Not having to spend the money to collect, collate, and send in the signature sheets is a clear financial gift from the FEC, one which his opponents didn’t get.

  • Nope. Can’t manage to get angry over this.
    We want less-financed candidates to be able to stick around long enough to be heard?
    THIS is the bad that comes with the good. This is public finance working as expected.

    Like Democracy in Lebanon and Gaza, we may not like the results of an imperfect system.
    McCain is the GOP’s choice… by healthy margins. He may not have achieved this without teh public financing system and we require these clearly worthy, but disadvantaged candidates to go hat in hand to somebody else if they lose? I thought that was the kind of problem we hoped to avoid… and DID!

    Who would we have preferred that McCain promise favors to to secure his millions?

    There are still aspects to consider, I fully admit, but the tut-tutting seems excessive.
    It’s this type of mountains out of molehills stuff I give HRC’s fans grief for. I won’t condone the same thing against teh enemy. I think it belittles and distracts from our legit arguments against McCain

  • You have to love these Republicans. Would you or I ever be able to get a loan using collateral we didn’t have? I’m an author–I would love for a bank to loan me money based on future royalties! This reminds me of Neal Bush getting a huge interest-free loan. Both of them are crooks, plain and simple, trading on their names.

  • The FEC’s Mason — who’s a Republican, by the way — has told McCain he can’t drop out of the primary election’s public financing system. McCain’s lawyers have effectively told Mason, “Watch us.”

    The law doesn’t apply to us! Seems to me I’ve heard that before, in some other nightmare, very recently.

  • I hope Obama is up to the task of taking him down.

    RacerX – Presidential nominees should NOT attack each other. They can trade a few barbs, but they are not allowed to take anyone down. That’s what surrogates and “outside” groups are for. You plant stories in the media and whisper rumors you invented to certain journalists and pundits over drinks, to make them think they’re getting the juicy stuff that you’re actually smearing all over town (think Plame). That’s how it’s done. The candidate stays clean while his opponent gets covered in shit. And nothing can be done to stop it, as the candidate insists that he has nothing to do with it.

    Both while campaigning and presidenting, Bush doesn’t smear his opponents. He often praises them. It’s Rush Limbaugh and Bill O’Reilly who fling the shit. The dirtier stuff goes to thugs like Glenn Beck and Michael Savage. And then there are the thousands of talk radio people and no-name blogs to toss out the REALLY dirty material, like absurdist conspiracy theories and whatnot. And then you’ve got Rove’s and Cheney’s goons whispering rumors to the patsies in the media they can trust to spread the word without saying where it came from. We all know that’s how it works.

    And while we don’t need to invent lies about McCain (and I’d prefer we didn’t), that’s how we need to do things. Obama needs to keep making his sly jabs about how McCain has fifty years of service for his country, while his surrogates toss out all the dirt. And this FEC issue has the makings of a perfect situation for us. As long as the FEC is pissed about McCain’s shananigans and McCain fights it, we’ve got a news story that will make people rethink McCain’s straight talker label. Now the secret is for Obama’s people to find some lazy reporters who like having their work handed to them on a silver platter. Again, we shouldn’t invent stuff like Republicans do. But we need to understand their methods better and not get upset when Obama doesn’t attack like we might want him to. That’s just not presidential.

  • These two McCain scandals really say a lot about the guy and the advisors surrounding him. If he gets to the Oval Office what’s to stop the guy from playing clever with the rules or taking advantage of situations where he’s expected to demonstrate a high level of ethics? Deep down inside McCain’s still the same sleazy guy who got tangled up in the Keating 5 scandal and not the image of the maverick reformer he wants to be portrayed as.

  • Three things:

    1) McCain is trying to push Obama into public campaign financing just in case McCain has to follow the rules. That way Obama won’t have an advantage. If he pushes Obama into public financing and then manages to get around the rules – so much the better. If Obama doesn’t do public financing he looks like he doesn’t honor his word (even though it was taken out of context). Win-win-win.

    2) McCain pushes the NYT to write the article about the woman. Why? He gets people like Rush to remember who the enemy is (proving his bonfides). Also, if there is an uproar over the NYT’s alleged rumor mongering, any potential other scandal out there is less likely to be published.

    3) Maybe Huckabee is forced to stay in the campaign because he is guaranteeing debt (unofficially of course) with public financing and has to hang in there until he qualifies?

    Just some thoughts…

  • A word on the “The Media loves John McCain” meme. I think they did, in 2000, and for two good reasons.

    The first was purely personal. McCain was more likable than the other two. Forget politics for a minute, pretend they were all businessmen who’d never run for office, and pretend you are at a party with Bush Gore, and McCain. Who are you going to hang out with, the inarticulate, not-too-bright reformed drunk who keeps saying these stupid things, the Professor who was saying a lot of stuff you agree with, but who is stiff, lecturing, and rather humorless — to the point where the only joke he tells about himself is the one about his humorlessness — or the salty ex-military guy who tells jokes — maybe a little off-color ones — has war stories to tell, and is at least clear on his ideas. I’d be sitting in the circle around McCain, even if I agreed with what the Professor had to say and thought McCain’s ideas were, mostly, wrong.

    The second reason IS political. I’m sure the reporters ‘on the ground’ got a pretty good picture of Bush and Rove. They knew that Bush was a disaster waiting to happen — though I doubt if anybody could have foreseen how awful he’d turn out to be. But if they wrote honest stories about Bush, the boses upstairs would spike them as being too biased — reality DOES have a liberal bias. (Not because the bosses were in some vast conspiracy, mostly because they were just afraid of hearing the Limbaughs quack ‘liberal media’ for four MORE years.)

    But by pinning their stories about Bushian idiocy and Rovian ruthless to McCain, they couldn’t be accused of slanting liberal, since McCain was an authentic Republican conservative, even if he was a bit of a maverick — and he was, then. It DID take courage to blast the Religious Right the way he did before his hunger for one last chance at the Presidency drew him to giving speches for them. (And remember he was willing to change parties later and considered running as Kerry’s VP.)

    I think it was Bush’s religiosity that scared them the most. Nobody could foresee 9/11, Iraq, Guantanamo, waterboarding, or ‘signing statements.’ And remember when Cheney was looked on as Bush’s ‘adult supervision”? But it looked like Bush would be the first Republican who’d actually attempt to implement the Religious Right agenda instead of merely paying lip service to it. And reporters tend not to be evangelicals — both because reporters who confuse ‘witnessing’ with ‘reporting’ don’t get promoted anywhere except the WorldNutDaily and because reality has an atheist/agnostic bias as well.

    I think the reporters figured that Bush would probably win, but the McCain stories would warn people of what he was really like — and if McCain actually pulled off an upset, there was plenty of time to look more closely at him and show his other side. After he lost, for a couple of years he DID keep up the ‘maverick’ image, and was willing to criticize Bush — who was showing how dangerous he’d become, so they continued to quote McCain and not look to closely at who he was.

    It only became important now, and he’s not getting the free ride many commentators expected here, in their paranoia. (And he’s changed — as I keep insisting, his humor has turned sour and his speeches are getting emptier by the day as he continues to show his age — and I should remind people I’m not a kid myself. I’m 61, and an old 61. I look 75, and somedays feel 85. I am no longer gifted with the writing or speaking skills I like to think I once had. And I haven’t suffered either time in a prison camp or cancer.) And remeber a lot of reporters were still in college or high school during the first run of the ‘Straight Talk Express.’ Hell, some were probably in grammar school. They didn’t experience the ‘McCain charm’ and don’t see it in today’s model.

    No, McCain will be shown up for who he is. The coverage of the campaign so far has been better than expected in all areas. McCain will be shown for who he is, despite the tweeting of some commentators who are still stuck in 2000.

  • Prup,

    No, McCain will be shown up for who he is. The coverage of the campaign so far has been better than expected in all areas. McCain will be shown for who he is, despite the tweeting of some commentators who are still stuck in 2000.

    Your analysis is compelling. Yet, a question remains: when will McCain be shown for who he is? And who will be doing this showing? Mathews? LOL. O’Liely? ROFLOL. Broder?!?!

    The major newspapers in Ohio, Colorado, Virginia, Missouri? I would like to think so, but I just don’t see any indication of it.

  • I think Obama is going to have a royal flush up his sleeve to play against McCain in the general election. He’s already been dealt the Ace, King and Queen.

  • “Why McCain feels justified going after Obama over his commitment to the public financing system is a mystery.”

    Well if McCain had been able to goad Obama into taking public financing McCain could of avoided this potentially embarrassing problem..

  • It has always been very perplexing to me how qualities are assigned to a candidate simply because he says he has them. Even beyond the lies of McPain (“I did not (four letter word for intercourse) with that man, that Paxson.”) and under his best case presentation in which he turned tricks for somebody giving him money and other favors, what is the distinction to be drawn between Mr Strayed Walk and any other politician? Or, for that matter, any other whore?

  • I think McCain’s arguments are reasonable and rational…if not explicit in the law. McCain is saying, I will use public money, which you offer me, if my campaign fails, and I cannot raise money by private sources. If successful, I will pay you back and be on my way. So, the Federal funds become capital for a struggling startup. This is absolutely great, because it means that those candidates who could never get into the race have a way to do so, and the ones who emerge victorious at least have to pay off their debt to society.

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