Money Rules: Candidates Go Around The Law, As Cash Records To Be Smashed

Mar 30, 2015
Originally published on April 20, 2015 9:32 am

This is Part One in an occasional series of features on campaign finance, called "Money Rules."

The hunt for big bucks is changing the way politicians run for president.

When a candidate finally admits he or she is a candidate, donors are limited to gifts of $2,700. (A donor can give an additional $2,700 if the candidate makes it through to the general election.)

Not so long ago, a "testing-the-waters" or "exploratory" committee was the usual first step in a campaign. But that's changed. After the Supreme Court's 2010 Citizens United ruling, in which individuals, corporations and unions can give unlimited to tax-exempt groups loosely — and sometimes quite closely — aligned with candidates, a new trend has emerged: candidates who have figured out how to stay outside the system — and game it.

By not declaring, and thus not being constrained by federal limits, they are free to coax billionaires into writing multi-million dollar checks. In other words, they can raise more money, more easily, than if they were official candidates, spending it to set up staff and travel to places like Iowa and New Hampshire freely.

In this new world, things like rides on someone else's luxury jet, for example, wouldn't raise a flag for the Federal Election Commission – until a potential candidate actually became a declared one. And it's one reason that in 2016, more money is likely to be raised and spent than ever before in a presidential campaign, but much of it will never be seen or tracked.

This is the big explanation of why, approaching the second quarter of the off-year, there's just a single official candidate: Texas Sen. Ted Cruz, a Republican. Cruz, who had been an afterthought for primary voters and in the polls so far, had his own reasons for announcing "early," not the least of which was gaining attention and, in turn, raising money.

At least 19 other would-be candidates are delaying the big step. That's a big reversal from the 2008 presidential cycle, the last time no incumbent president was seeking reelection. By late March 2007, there were already 15 announced candidates.

Of what we'll call this year's 19 un-candidates, four are testing the waters or, less formally, "exploring" — Democrats Hillary Clinton and Jim Webb, a former senator from Virginia; plus Sen. Lindsey Graham of South Carolina and retired neurosurgeon Ben Carson on the GOP side.

It's not possible to know yet how much their committees have raised, or from whom.

The 15 remaining un-candidates are operating "outside the system" — that is, avoiding the statutes that Congress enacted during and after the Watergate scandal 40 years ago. These politicians want to build their Super PACs' bank accounts before the day that candidacy becomes official, a legal wall goes up between candidate and Super PAC, and they are officially limited.

They seem to be skirting a legal provision that anyone who stockpiles cash for a presidential campaign automatically becomes a candidate, subject to contribution limits and donor disclosure rules.

Republican Jeb Bush appears to be the most aggressive of the outside-the-system un-candidates. This past winter, he launched two committees with matching names. Right To Rise PAC is standing in for a campaign committee yet to come. Right To Rise Super PAC will have to do its advocacy independent of the Bush campaign — once one exists.

Until then, Bush is busy raising cash. The PAC has limits of $5,000 per donor. For the Super PAC, Bush can accept as much as a donor will give.

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A liberal watchdog group says some presidential hopefuls are violating campaign finance laws by acting like candidates while claiming they're not. The Campaign Legal Center named four unofficial candidates in legal complaints filed this afternoon with the Federal Election Commission. They are Republicans Jeb Bush, Rick Santorum and Scott Walker and Democrat Martin O'Malley. The concept of the presidential un-candidate is a new one this election cycle. Peter Overby is NPR's power, money and influence correspondent, and he explains the political logic behind it.

PETER OVERBY, BYLINE: Stories about money can be complicated, and - I admit it - a little bit dry. So I invited someone to help out to add a little emphasis on the key points.


OVERBY: Hey, Bill. Bill Kurtis is the announcer and official scorekeeper of NPR's Wait Wait...Don't Tell Me. Today, Bill and I are going to talk about America's favorite political pastime...

KURTIS: ...Running for president. Sound like fun to me, Peter.

OVERBY: I hope so, Bill. Now, if you want to start a run for the White House, what you need is money to build a campaign and see if it'll fly. Here's how it used to work just two elections ago. You'd probably set up a little committee.

KURTIS: Ah, the old testing-the-waters committee.

OVERBY: The money it raised would help you travel to Iowa and New Hampshire, talk to voters, chat up more donors. But testing-the-waters committees come with rules and regulations. The big one - you can't ask any of your donors for very much money.

KURTIS: Twenty-seven-hundred dollars - that's the max.

OVERBY: That's it. Once you say you're testing the waters or exploring a run for president, your friends and allies, your true believers, your mom - they're all restricted to contributions of $2,700 or less. Congress framed these rules 40 years ago during the Watergate scandal, and testing-the-waters committees and exploratory committees were common as recently as 2008. That's the last time Democrats and Republicans both had primary contests. Today, those contribution limits feel too restrictive for many candidates.

KURTIS: And this brings us to the un-candidate.

OVERBY: That's the way around the rules. If you're not a candidate, you can stay outside the system where you can raise a lot more money through other types of political committees.

KURTIS: And here's where political action committees come in - leadership PACs, super PACs.

OVERBY: A leadership PAC is kind of like an exploratory committee, but its contribution limit is nearly twice as high. And a super PAC? A super PAC has no contribution limits at all.

KURTIS: Well, that should make fundraising a little easier. Million-dollar checks are legal.

OVERBY: A million dollars, 5 million dollars - more. And that's the rub with testing the waters and exploratory committees. Compared to what an un-candidate can raise, the take from this kind of committee is chump change. We'll talk more about super PACs another time. With thanks right now to Bill Kurtis of Wait Wait...Don't Tell Me...

KURTIS: You're welcome, Peter.

OVERBY: ...I'm Peter Overby, NPR News, Washington. Transcript provided by NPR, Copyright NPR.