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McCain’s camp tests fundraising limits

NYT: A key adviser is helping John McCain maneuver to wring the maximum out of campaign finance laws in ways that some say are at odds with the spirit of reforms they championed.
Image: John McCain and Sarah Palin
Sen. John McCain and Alaska Gov., Sarah Palin hug after Palin introduced McCain at a campaign rally in Blaine, Minn., on Friday.Stephan Savoia / AP
/ Source: The New York Times

Senator John McCain toiled for years to push a campaign finance overhaul through Congress. After the measure finally passed, Trevor Potter, a lawyer and vigorous advocate for reforming the system, was instrumental in defending the law from challenges and pressing for strict enforcement.

Now, as Mr. McCain makes his final sprint for the White House, Mr. Potter is again helping Mr. McCain, but this time by maneuvering to wring the maximum out of campaign finance laws in ways that some contend are at odds with the spirit of the reforms they championed.

The tactics appear to be legally permissible. And some argue that the McCain campaign is simply doing what is necessary in the face of the record fund-raising by his Democratic rival for president, Senator Barack Obama, and Mr. Obama’s decision to bypass public financing and its attendant spending limits.

But critics point out Mr. McCain is capitalizing on legal loopholes that a watchdog organization headed by Mr. Potter has fought against.

“There are very, very few lawyers in the country that are better at exploiting campaign finance loopholes than Trevor Potter,” said Bradley A. Smith, a former Republican chairman of the Federal Election Commission. “Of course, that’s one of the odd things about the McCain campaign: ‘Here’s the rules we want, but we’ll play by the rules that are here.’ ”

Finessing the limits
Mr. McCain was an author of the Bipartisan Campaign Reform Act of 2002, known as the McCain-Feingold law, an ambitious measure that supporters hoped would help drive big money out of politics. He has also helped sponsor legislation to improve the public financing system for elections and attacked Mr. Obama for backing away from a pledge to participate in it for the general election if his opponent accepted public money as well.

But now, as Mr. McCain’s top legal adviser, Mr. Potter, a former F.E.C. chairman, and his team have been helping the campaign finesse the strict spending limits it faces under public financing. Although Mr. McCain is supposed to be out of the business of private fund-raising after he received his $84 million infusion from the Treasury this month, it is sometimes difficult to tell.

This month, the McCain campaign began running banner Web advertisements asking for donations to the McCain-Palin Compliance Fund, a fund-raising vehicle rooted in a 1980s F.E.C. ruling that candidates who accept public financing can still collect private donations for legal and accounting costs for complying with campaign finance laws.

Only a careful observer, however, would have noticed the advertisements’ fine print, which said donations to the fund would be used to pay for “a portion of the cost of broadcast advertising,” as well as other expenses.

That would seem to be a far cry from the legal and accounting exemption. But the F.E.C. issued an advisory opinion last year that said Senator John Kerry’s presidential campaign could use its compliance fund to cover up to 5 percent of its advertising costs, because of the several seconds candidates must devote in their advertisements to a disclaimer.

The Campaign Legal Center, founded by Mr. Potter, joined with Democracy 21, a watchdog group, to file a strongly worded brief opposing the practice, warning that it would be exploited.

'Reserves the option'
The McCain campaign declined to make Mr. Potter available for an interview. Brian Rogers, a spokesman for the campaign, said in a statement that the campaign had not yet paid for advertising with its compliance fund but “reserves the option to do so under this recent, clear F.E.C. precedent.”

The centerpiece of McCain-Feingold was its efforts to rein in “soft money,” or unregulated contributions, in national elections. But McCain fund-raisers continue to build much of their efforts around the solicitation of large contributions of up to about $70,000 for a special joint fund-raising account for the Republican National Committee and several state parties, which can spend money on behalf of the campaign, called McCain-Palin Victory 2008.

Campaigns have used the joint fund-raising committees in the past, but the McCain campaign took the practice to a new level by linking them with state party accounts, which can accept contributions of $10,000, on top of the $28,500 collected for the national party, $2,300 for the compliance fund and, until recently, $2,300 for the campaign’s primary coffers.

Critics have contended that the large donations to the joint fund-raising accounts amount to a form of soft money. The Obama campaign has been using its own joint fund-raising committee with the Democratic Party, but it only recently created a separate account for the state parties, so the checks are not nearly as big.

“The real irony here,” said Craig Holman, a lobbyist for Public Citizen, a watchdog group, “is we fought so hard to get B.C.R.A. through, McCain-Feingold through, with the whole intent of getting rid of those large donations, which everyone, including McCain, realized were potentially corrupting. And we’ve gone full circle with these large donations for the joint fund-raising committees.”

McCain fund-raisers certainly seem to pitch donations to the victory committee as supporting the ticket. The McCain campaign Web site attracts donors with a prominent “Contribute” button that sends them to a donation page for the committee, along with some lengthy disclaimers of the various entities that benefit from it.

By contrast, the Kerry campaign’s contribution button on its Web page in 2004 was more clearly labeled “Contribute to the Democratic Party.” The Obama campaign is not soliciting contributions for its joint fund-raising committee on its Web site.

Some lawyers said that some of the ways the McCain campaign is pushing its victory committee fit awkwardly with the broader mandate of public financing to halt private fund-raising, as well as rules that ban the designating of funds to party committees for specific candidates.

“I think it’s both an appearance and a legal question,” said Lawrence H. Norton, who left his post as general counsel to the F.E.C. last year.

But Mr. Rogers pointed to explanatory language used in literature by the joint fund-raising committees and said they undertook “substantial efforts to avoid any potential misunderstanding.”

Reputation as an activist
Mr. Potter built his reputation as an activist while he was F.E.C. chairman in the 1990s and later founded his reform-minded legal center. He took a leave this year from his position as president to devote himself to being the McCain campaign’s general counsel while also still maintaining a private practice.

Guided by Mr. Potter, the McCain campaign is also adopting one of the most controversial innovations introduced by the Bush campaign in 2004: the use of so-called hybrid advertisements, which allowed it to split the cost of television commercials with the Republican Party. The practice was later copied by the Democrats.

The F.E.C. deadlocked on the legality of the advertisements last year, paving the way for the McCain campaign to rely heavily on them. But Mr. Potter’s Campaign Legal Center joined Democracy 21 last year in a vigorous objection to the practice, labeling it a “scheme to evade the spending limits.”

Some election law lawyers speculated that the McCain campaign might push the envelope further and try to split the costs of its hybrid advertisements with state parties as well, or produce some advertisements in which the party picks up more of the cost.

Mr. Rogers said the campaign had no plans to change the 50-50 ratio for dividing the advertising costs but declined to comment on the state parties question.

Mr. Rogers said Mr. McCain’s detractors often insinuated that because of his reformist reputation “almost anything he does to raise or spend money is a violation of his principles.”

But Mr. Rogers said the campaign was complying with all laws.

Indeed, some lawyers argued that Mr. Potter and Mr. McCain were simply dealing with the realities of a close race.

“They’re taking full advantage of opportunities the law provides for them,” said Robert D. Lenhard, a former Democratic F.E.C. chairman.

This article, "McCain's Camp Tests Fund-Raising Limits," first appeared in the New York Times.