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  • Is McCain gaming the campaign finance system?

    I don't know where he gets off criticizing Obama for waiting a while before spelling out exactly what they are going to do if they are both nominated. What did he do here?

    McCain Campaign Banked on Taxpayer-Funded Bailout
    By Paul Kiel - February 18, 2008, 5:15PM
    As The Washington Post reported on Saturday, John McCain's campaign struck a canny deal with a bank in December. If his campaign tanked, public funds would be there to bail him out. But if he emerged as the nominee, there'd be no need for public financing, since the contributions would come flowing.
    It's an arrangement that no one has ever tried before. And it appears that McCain, who has built his reputation on campaign finance reform, was gaming the system. Or as a campaign finance expert who preferred to remain anonymous told me, referring to the prominent role that lobbyists have as advisers to his campaign, "This places McCain’s grandstanding on public financing in a new light. True reformers believe public financing is a way to replace the lobbyists’ influence, not a slush fund that the lobbyists use to pay off campaign debts."
    Here's the back story. As of December, McCain was still enrolled in the public financing system, but had yet to actually receive any public matching funds. The Federal Election Commission had certified that the campaign would be receiving $5.8 million in public funds. But they wouldn't get that money for a couple more months. In need of even more cash beyond the $3 million loan he'd already secured from a Maryland bank (he'd taken out a life insurance policy as collateral), the McCain campaign was stuck in a bind. They needed more money, but the bank needed collateral.
    The promise of those public matching funds (to the tune of more than $5 million) was the only collateral the campaign could offer. But there was a problem with that. Using that promised money as collateral would have bound McCain to the public financing system, according to FEC rules. And the McCain camp wanted to avoid that, because the system limits campaigns to spending $54 million in the primary (through August). That would mean McCain would get seriously outspent by the Democratic nominee through the summer. (McCain has separately pledged to enroll in the system for the general election; that would give him $85 million in taxpayer funds for use after the party convention through Election Day but bar other contributions.)
    So here's what the McCain campaign did. They struck a deal with the bank that simultaneously allowed his campaign to secure public funds if necessary, but did not compel his campaign to stay in the public system if fundraising went well (i.e. if he won the nomination). As McCain's lawyer told the Post, "We very carefully did not do that."
    He was not promising to remain in the system -- he was promising to drop out of the system, and then opt back in if things went poorly. In that event, the $5.8 million would still be waiting for him. And he'd just hang around to collect it, even if he'd gotten drubbed in New Hampshire and the following states.
    You can see the agreement here. The relevant paragraph is on page two. Sizing it up, Mark Schmitt writes at Tapped:
    What we know is that McCain found a way to use the public funds as an insurance policy: If he did poorly, he would use public funds to pay off his loans. If he did well, he would have the advantage of unlimited spending. There's a reason no one's ever done anything like this. It makes a travesty of the choice inherent in voluntary public financing, between public funds and unlimited spending.
    v



  • #2
    Interesting, on one hand we have a thread about a guy using someone else words, in the end it means little about what kind of president he would be nor does it have anything to do with an actual political issue.
    And here we have McCain trying to work around campaign financing to make himself look better on a issue he has bitched about needing to fix.

    And all the post are in the Obama thread that is much to do about nothing.
    Be passionate about what you believe in, or why bother.

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    • #3
      welcome to my world.
      v


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      • #4
        If true, did this strategy violate any laws? I don't think so. All it seems to mean is he promised the bank to stay in the race and get the public funds if things didn't go well in fund raising in order to get the bank to approve thje loan.

        Neither story is a big deal.
        Go Cards ...12 in 13.


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        • #5
          Originally posted by madyaks View Post
          Interesting, on one hand we have a thread about a guy using someone else words, in the end it means little about what kind of president he would be nor does it have anything to do with an actual political issue.
          And here we have McCain trying to work around campaign financing to make himself look better on a issue he has bitched about needing to fix.

          And all the post are in the Obama thread that is much to do about nothing.
          It was open for all of 20 minutes dingleberry.
          Go Cards ...12 in 13.


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          • #6
            Originally posted by TTB View Post
            If true, did this strategy violate any laws? I don't think so. All it seems to mean is he promised the bank to stay in the race and get the public funds if things didn't go well in fund raising in order to get the bank to approve thje loan.

            Neither story is a big deal.
            In both cases, it was the juxtapostion of what they were doing against what they were supposed to be. I am not objective---so I saw not much with the Obama story. I think there might be some lasting legs with this----it should put McCain in a defensive posture. These are the people who were going to be paid---

            John McCain, who made his name attacking special interests, has more lobbyists working on his staff or as advisers than any of his competitors, Republican or Democrat.
            A Huffington Post examination of the campaigns of the top three presidential candidates in each party shows that lobbyists are playing key roles in both Democratic and Republican bids --although they are far more prevalent on the GOP side. But, all the campaigns pale in comparison to McCain's, whose rhetoric stands in sharp contrast to his conduct.
            "Too often the special interest lobbyists with the fattest wallets and best access carry the day when issues of public policy are being decided," McCain asserts on his web site, declaring that he "has fought the 'revolving door' by which lawmakers and other influential officials leave their posts and become lobbyists for the special interests they have aided."
            In actual practice, at least two of McCain's top advisers fit precisely the class of former elected officials he criticizes so sharply. On March 7, 2007, McCain named ex-Texas Representative Tom Loeffler, who has one of the most lucrative and influential practices in the nation's capital, as his campaign co-chair. In the same month, McCain named former Washington Sen. Slade Gorton, now a heavyweight lobbyist, as his honorary chairman for Washington state.
            Loeffler's client list includes PhRMA, the drug industry association; Southwest Airlines; Toyota; and Martin Marietta. Gorton represents, among others, Burlington Northern Santa Fe Corp., Weyerhaeuser and Fidelity National Financial.
            In addition, David Crane, now the campaign's senior policy advisor, was a senior executive at The Washington Group, a firm with 2006 billings of $10.4 million and 52 clients, including Delta Airlines, the Association of American Railroads, and the governments of Panama and Bangladesh. And Charlie Black, who is now a campaign spokesman appearing on McCain's behalf on radio, television, and as a "spin-doctor" after debates, is chairman of BKSH & Associates, with lobbying billings of $7.6 million in 2006, representing J.P. Morgan, Occidental and General Motors.
            v


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            • #7
              Originally posted by kjoe View Post
              In both cases, it was the juxtapostion of what they were doing against what they were supposed to be. I am not objective---so I saw not much with the Obama story. I think there might be some lasting legs with this----it should put McCain in a defensive posture. These are the people who were going to be paid---
              Have you not heard...the conservative media will drop this like hot potato.

              So far...nuthin and I've had the news on all day.
              Go Cards ...12 in 13.


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              • #8
                Originally posted by madyaks View Post
                And all the post are in the Obama thread that is much to do about nothing.
                I need Turd to translate this for me.
                Official 2014-15 Lounge Sponsor of Jori Lehterä
                "He'll Finnish You Off"

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                • #9
                  Originally posted by Ohio Blues View Post
                  I need Turd to translate this for me.
                  Yaks is mis-referencing Shakespeare.
                  If you believe in something sacrifice a hobo to it or don't bother.

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                  • #10
                    Originally posted by Turd Ferguson View Post
                    Yaks is mis-referencing Shakespeare.
                    Oh, and all of your base are belong to him.
                    If you believe in something sacrifice a hobo to it or don't bother.

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                    • #11
                      You can't talk straighter than that.
                      Official sponsor of the St. Louis Cardinals

                      "This is a heavyweight bout indeed."--John Rooney, Oct. 27, 2011

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                      • #12
                        Originally posted by madyaks View Post
                        IMO, all of the posts in the Obama thread are much ado about nothing. Jhuegy's son went to Rice.
                        Fixt for the albino.
                        If you believe in something sacrifice a hobo to it or don't bother.

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                        • #13
                          Originally posted by TTB View Post
                          Have you not heard...the conservative media will drop this like hot potato.

                          So far...nuthin and I've had the news on all day.
                          Actually---this cavalier attitude about federal campaign funding might help him with the conservatives. "hey---he is using that crap that we hate to screw over the taxpayers. That is impressive. He can't be all bad."

                          Olberman is on him about it on msnbc. Are you shocked?
                          v


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                          • #14
                            Originally posted by TTB View Post
                            If true, did this strategy violate any laws? I don't think so. All it seems to mean is he promised the bank to stay in the race and get the public funds if things didn't go well in fund raising in order to get the bank to approve thje loan.

                            Neither story is a big deal.
                            Yeah, at first reading, I am not seeing the outrage. McCain did nothing untoward in his dealing with the bank or the public funds.

                            Slow day on the campaign trail.
                            "I am for truth no matter who says it. I am for justice no matter who it is for or against."...Malcom X

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                            • #15
                              probably right that this will go nowhere. Tpm gave us access to whoever this guy is---

                              BETTING THE SPREAD.
                              We now have the exact language of John McCain's "second loan," and it is a legal masterpiece, albeit an ethical travesty. Based on the Washington Post report, I inferred that McCain had not excluded public matching funds from the collateral for his additional loan. But it's much more complex than that. The second loan, for $1 million, was actually a modification of the first, and so it continued to exclude the certification for matching funds from the loan's collateral. But it included this remarkable addition (which I'm going to quote in full just so no one thinks I used an ellipsis to distort the meaning):
                              Additional Requirement. Borrower and lender agree that if Borrower [McCain's campaign commitee] withdraws from the public matching funds program, but John McCain then does not win the next primary or caucus in which he is active (which can be any primary or caucus held the same day) or does not place at least within 10 percentage points of the winner of that primary or caucus, Borrower will cause John McCain to remain an active political candidate and Borrower will, within thirty (3) days of said primary or caucus (i) reapply for public matching funds, (ii) grant to Lender, as additional collateral for the Loan, a first priority perfected security interest in and to all Borrower's right, title and interest in and to the public matching funds program, and (iii) execute and deliver to Lender such documents, instruments and agreements as Lender may require with respect to the foregoing.
                              (Here's the document: http://query.nictusa.com/cgi-bin/fecimg/?_28039612468+0. From this link, you can read the document by page or produce a pdf. Much of it is blurry and boilerplate, until you get to the loan modification agreement starting page 21, which is legible.)
                              What does this mean? It means that rather than pledge his existing certification for matching funds as collateral for the loan, which would bind him to the system and thus the spending limits, McCain carefully pledged to seek to re-enter the system later, and to use a non-existent future certification as collateral. And while the system is "voluntary," McCain essentially traded away for cash his right to choose whether to participate in the system, and even his right to drop out of the presidential race, allowing the bank to force McCain "to remain an active candidate" in order to reapply for and qualify for funds. He was betting the spread (10 points) on his own primary performance! I don't think it's an exaggeration to say this is a promise to perpetuate a fraud on the American taxpayers: if he no longer intended to seek the presidency, he made a legally-binding promise to pretend to remain in the race just long enough to collect public money to repay the loan.
                              Is this illegal? Who knows. Note that it took several days of discussion among top lawyers and former FEC commissioners to figure out whether it was even possible to opt out of the public financing system after opting in and qualifying for funds. No one's ever done that. And therefore, no one's ever opted back in, after opting out, after opting in. And therefore, no one's ever borrowed on the basis of a promise to opt back in, after opting out, after opting in. Is your head exploding yet?
                              What we know is that McCain found a way to use the public funds as an insurance policy: If he did poorly, he would use public funds to pay off his loans. If he did well, he would have the advantage of unlimited spending.
                              There's a reason no one's ever done anything like this. It makes a travesty of the choice inherent in voluntary public financing, between public funds and unlimited spending. I've said it before, and I'll say it again: Legal or not, it should bring to an end whatever tiny thread of credibility John McCain still has as a straight-talker or reformer of the political process.
                              -- Mark Schmitt
                              v


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