States Offer BCRA Loophole

Posted July 31, 2007 at 6:45pm

When it comes to paying down campaign debt, Sen. Claire McCaskill (D-Mo.) knows how to find a deal. A Dirt-Cheap deal.

During recent months, the freshman Senator has raised more than $50,000 directly from the corporate tills of companies ranging from St. Louis-based brewer Anheuser-Busch to discount retailer Dirt-Cheap Cigarettes and Beer, allowing her to chip away at debts from an ill-fated 2004 gubernatorial run — and, some argue, expose a much applied soft-money loophole in federal campaign finance law.

“One of my favorite misstatements about [the Bipartisan Campaign Reform Act] is that it banned soft money, that it took federal office holders out of the soft-money game,” said Larry Norton, former top career lawyer at the Federal Election Commission and now at Womble Carlyle.

Since the passage of BCRA in 2002, numerous Senators or House Members have made — or attempted to make — the move from Washington, D.C., back to a governor’s mansion or city hall. In the two most recent election cycles, former Reps. Jim Gibbons (R-Nev.), Ted Strickland (D-Ohio), Butch Otter (R-Idaho), Tom Osborne (R-Neb.), Jim Davis (D-Fla.), and former Sen. Jon Corzine (D-N.J.) all made the run for governor. This year, Reps. Chaka Fattah (D-Pa.) and Bob Brady (D-Pa.) lost in a crowded Philadelphia mayoral primary.

And depending on the state, nearly all of them raised money under state and local law with few restrictions regarding how much and from whom money can be raised.

“There are any number of individuals who run for [state office] and raise money under more permissive rules as sitting Members,” said Marc Elias, McCaskill’s lawyer. “People who run for governor typically are running under a more liberal regime.”

Elias continued that prior to BCRA, “states regulated state campaign finance [laws] and federal [laws] regulated federal campaign finance.” But when the bill was being drafted, lawmakers “carved out an exemption for candidates to be able to raise money for state offices that they run for.”

“Congress did not want to hamper [Members’] ability to run for state office,” he said.

Since April, McCaskill has raised $131,000 from corporations, individuals and labor unions for a state-level committee that serves as a way station for still-unpaid campaign loans. McCaskill, who lost in 2004 to now-Gov. Matt Blunt (R), lent her campaign considerable sums during the race, repaying herself $230,000 between May and April 2007. After losing to Blunt, the two-term state auditor presumably had difficulty soliciting donations to pay herself back.

But soon after defeating first-term Sen. Jim Talent (R-Mo.) in November and landing a seat on the Senate Commerce, Science and Transportation Committee, her fundraising prospects appeared to change drastically. And in late December, McCaskill’s lawyers requested FEC guidance regarding whether state or federal contribution limits apply to her lingering state campaign debt.

“When Sen. McCaskill won her election, she decided that she wanted to raise money to retire her debt from a state committee. We went to the FEC just to make sure that [the state] provision would apply in full force to that debt retirement issue,” Elias recalled.

At the time, Missouri had few restrictions or limits on campaign contributions. And based on the BCRA exemption, former FEC lawyer Norton said, the FEC’s five commissioners voted to grant McCaskill permission to abide by state law. Still, McCaskill imposed her own limits.

“She accepted a voluntary set of guidelines,” Elias said. “In the way some Senators say they won’t accept PAC money or contributions from lobbyists.”

Despite the FEC’s carte blanche, McCaskill spokeswoman Adrianne Marsh confirmed her boss is not accepting gifts from lobbyists and is adhering to federal campaign limits of $4,600, the combined individual federal contribution limit for both primary and general elections. According to her disclosure statements, McCaskill refunded more than $9,000 in lobbying gifts in the previous quarter.

“She set these limits on herself,” Marsh said.

Marsh continued that in the case of unlimited gifts allowed under state law, “McCaskill [was] a little more strict.” But corporate contributions — normally banned under federal law — are “completely allowed under state ethical guidelines,” Marsh said.

Craig Holman, a lobbyist at Public Citizen, said the major concern with the BCRA carve-out is that it allows current office holders to bypass contribution caps or bans intended to keep corporate money out of federal politics — without exceptions.

“Once an office holder gets into a position of power and authority in Congress, special interests groups that have business before that officeholder will try to buy access and influence through any means possible,” Holman said. “While she’s a Member of Congress, many of those paying off her debt have no stake at all in Missouri or Missouri politics — they’re interests that have business before her as a Congresswoman.”

“They could care less about the state debt, they just want to give her money,” he added.

Of the more than $125,000 raised by McCaskill’s state account since April, more than $70,000 came from organized labor and private contributions — some originating as far away as California and Massachusetts. McCaskill also received $4,600 from Charles Ergen, the chief executive officer of EchoStar Satellite LLC, who listed an address in Littleton, Colo.

McCaskill raised $4,500 directly from the Isle of Capri Casinos Inc., $4,600 from a minor league baseball team, more than $25,000 from Anheuser-Busch, and $4,000 from a gas station and discount liquor and cigarette retailer.

Marsh said McCaskill’s expected vote to fund the State Children’s Health Insurance Program, which would slap additional federal taxes on tobacco products — much to the chagrin of discount retailers — is proof her boss’ vote is not for sale.

“She exhibits vehement independence from campaign contributions and that’s evident this week, as she plans to vote for the SCHIP funding, which would mean an increase in the tobacco tax,” Marsh said.

While McCaskill’s state campaign continues to accept contributions under certain federal guidelines, the Missouri Supreme Court threw her a curveball in mid-July, when the court brought back the state’s $1,275 contribution limit.