Clinton Campaign Money Legal but Problematic

(Photo: AP/Matt Rourke)

Democratic presidential candidate Hillary Clinton speaks during a campaign stop in Philadelphia on April 20.

In legal terms, Bernie Sanders’s complaint that Hillary Clinton’s joint fundraising agreement with the Democratic National Committee improperly benefits her campaign doesn’t withstand close scrutiny.

The Sanders camp’s professed shock that the Hillary Victory Fund is collecting contributions “as high as $353,400 or more” says less about Clinton’s fundraising than it does about the near-total deregulation of the nation’s campaign-finance system. Sanders lawyer Brad C. Deutsch’s letter to the DNC cites no actual rules violations, and manages to contradict itself.

Deutsch in his first breath complains that the DNC has improperly spent millions to gin up small contributions to the Clinton campaign, and in his next objects that Clinton’s campaign is paying millions to cover the joint fundraising committee’s salaries and overhead. Given both the complexities of joint fundraising agreements and their legal purpose—to collect large sums and divvy them up between a variety of campaign accounts—Deutsch would have to present a lot more evidence than he offers in his letter to make a convincing case against Clinton or the DNC.

Nevertheless, the Sanders-Clinton dustup over the Hillary Victory Fund, which has raised $60.6 million to be divvied up between the DNC and 32 state party committees, spotlights a type of high-dollar fundraising that is ripe for abuse and has not been seen since the soft-money days of the 1990s. Thanks to a 2014 Supreme Court ruling, and to the Senate’s quiet move that same year to blow the lid off political party contributions, the parties are pocketing six- and seven-figure checks from donors—and lawmakers and candidates are helping them raise it.

The Supreme Court brushed off predictions of mega-donor fundraising when it ruled in McCutcheon v. FEC to throw out the aggregate limit on what a donor may give to parties and candidates in a given year. Campaign-finance watchdogs had warned the Court that such a move would allow candidates to solicit super-sized checks for joint fundraising committees. At the time, Chief Justice John Roberts dismissed such cautions as “divorced from reality.”

But now joint fundraising committees are, in fact, collecting donations that run into the high hundreds of thousands a pop, thanks in part to an eleventh-hour spending bill the Senate approved late in 2014 that dramatically raised the contribution limits for special political party accounts that pay for conventions, buildings, and recounts. Under the new rules, a single donor who gives the maximum to every one of a party’s special accounts could contribute up to $801,600 in a year, or $1.6 million in an election cycle.

Republicans have moved much more quickly to exploit these higher limits, thanks in part to lucrative joint fundraising committees run by House Speaker Paul Ryan of Wisconsin and his two top deputies. Of the top 20 joint fundraising committees in a tally by the Center for Responsive Politics, 13 are run by Republicans and only seven by Democrats. The Republican National Committee alone has collected $25 million for its special convention, recount, and building accounts since the beginning of this election cycle, FEC records show, almost five times the $5.4 million collected for the special party accounts by the DNC.

Some argue that Clinton, instead of being excoriated for running a joint fundraising committee, should be commended for doing something to help Democrats’ national and state party committees. Party officials on both sides of the aisle complain that the Supreme Court’s 2010 Citizens United v. FEC ruling, which ushered in super PACs that may collect unlimited sums as long as they operate independently from candidates, has put parties—which still face strict contribution limits—at a relative disadvantage. Clinton campaign officials have called the Sanders allegations “baseless” and “irresponsible,” and accused him of a “desperate” attempt to “poison the well.”

Clinton is walking a tightrope that by now is familiar to her party—publicly deploring unfettered campaign money, but also warning that Republicans will win the upper hand if Democrats don’t play by the same rules as the GOP. President Barack Obama made this same calculation when he reversed course to tacitly sanction Democrat-friendly super PACs.

But Obama’s failure to make good on virtually any of his campaign-finance promises has earned him a black eye among reform advocates. And Clinton’s very success as a fundraiser has made her vulnerable to attacks from Sanders over her Wall Street and K Street ties.

Six-figure donors to the Hillary Victory Fund so far include Haim Saban, CEO of the private investment firm Saban Capital Group, Inc., who gave $353,400; James H. Pugh Jr., CEO of the Florida multifamily housing developer Epoch Properties, who gave the same amount; and private equity fund manager Imaad Zuberi, who gave $110,000, and who recently made the news for allegedly failing to publicly report his advocacy on behalf of the Sri Lankan government, as required by lobbying disclosure laws. Sanders has also piled on Clinton for her recent $353,000-per-couple fundraiser hosted by George Clooney.

Sanders himself has raised some eyebrows for both suing the DNC over a dispute involving access to voter data and now assailing the party that will help elect him should he win the nomination. But Sanders is hitting Clinton where it hurts; she has a well-known credibility problem that extends to voters in her own party. His latest allegations point to “no specific statute or FEC provision” that Clinton or the DNC are violating, notes election law expert Richard L. Hasen. But, he adds, “Sometimes the real crime is not what’s illegal, but what’s legal.”

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