Manhattan Contrarian Guide To Campaign Finance Law

As a sophisticated observer of the political scene and reader of the Manhattan Contrarian, you undoubtedly know why we have strict and intricate campaign finance laws:  They are "to get money out of politics."  Or something like that.

Or are they really about protecting incumbents and putting roadblocks in the way of challengers?  Or, even worse, are they about giving partisan prosecutors some tools to take down inconvenient Republicans while Democrats get a pass?  I'll let you be the judge.

First, the basics of how this works.  Much of which, by the way, you can blame on the recently-departed John McCain, via the so-called McCain-Feingold campaign finance law of 2002.  One of his many mistakes in life -- but then, we all make mistakes.  The central provision of this campaign finance law is that contributions to "campaigns" for federal office are limited in amount, essentially to $2700 per election cycle for an individual or $5400 for a couple.  Obviously, for such a restriction to work, it must then be illegal for a "campaign" to pay "campaign expenses" from a source other than the funds contributed in accordance with the limits.  Equally obviously, since you have raised "campaign funds" for your "campaign" in accordance with strict limits and representations, it must be illegal to use the "campaign funds" for other than "campaign purposes."  And, to make this all work seamlessly, all "campaign expenses" over $200 must be reported and accurately described to the bureaucrats at the Federal Election Commission.  Needless to say, any violation of these rules is a crime.

So let's see how these rules get applied in a few recent examples:


You are surely aware that early last week President Trump's former personal attorney Michael Cohen entered into a plea agreement with federal prosecutors in the Southern District of New York.  Here is a copy of the plea agreement.  In the agreement, Cohen pleads guilty to eight charges.  Six of those have nothing to do with President Trump.  The remaining two charges are for alleged violations of campaign finance restrictions in Cohen's making of "hush money" (blackmail) payments on behalf of Trump to two porn actresses/models.  

But why is the making of such blackmail payments a violation of the campaign finance law?  Aren't these just personal expenses that are not regulated by that law?  According to the plea agreement, these payments were not bona fide personal matters, but rather "a contribution to Individual-1, a candidate for Federal office, and his authorized political committee in excess of the limits of the Election Act."   In other words, the theory is that since the purpose (or at least part of the purpose) of the payment was to influence the election, therefore it was a campaign expense, and had to be made with campaign funds, and no one individual could contribute more than $2700 toward the making of the payment.  Gotcha!

But wait a minute, you say!  Are they really telling us that this all would have been OK just so long as the blackmail payments were made by the campaign with funds raised in accordance with the legal limits?  Better check the next case.

Duncan Hunter

In other news from last week, you may have seen that a Republican Congressman named Duncan Hunter, from a district in California east of San Diego, got indicted on campaign finance charges.  (Hunter won his district with 63% of the vote in the 2016 election, but now that he is under indictment, it would not be impossible for the seat to flip.)  Hunter's alleged crime?  Using campaign funds for personal expenses!  Here is a copy of the indictment.  

From the Hunter indictment (paragraphs 2 and 19):

Campaign funds raised by candidates and Members of Congress are largely restricted to supporting the candidate's election (or re-election) efforts and duties in office, and cannot be used for their own or their family's personal use or enjoyment. . . .   [This constituted] a scheme to defraud the Campaign, and to obtain money and property, by means of materially false and fraudulent pretenses, representations and promises. . . .  

The indictment is supported with long lists of allegedly personal expenses paid with campaign funds, all in relatively small amounts (from a few hundred dollars to a few thousand).  Just a few examples (from paragraph 15):

Food and drinks for themselves and their friends and family at various restaurants, such as [fifteen restaurants listed]. . . .  Household and other personal items for their family from a wide variety of stores, such as Costco (where they spent more than $11,300 in Campaign funds), Walmart (where they spent more than $5,700), Barnes & Noble (where they spent more than $2,500), Target (where they spent more than $2,300), Michael's craft store (where they spent more than $2,200), and [eight more retailers listed].

OK, these sound personal on their face, but are they really more personal than a payment to a mistress?  For example, might the "friends" who dined with the Hunters be campaign contributors, or at least prospective campaign contributors?  Were the books from B&N useful in keeping the Congressman informed on political issues?  

Read through the Hunter indictment and you will find numerous individuals (identified only as "Individual 1," "Individual 2," etc.) listed as having informed the prosecutors that the purpose of one or more of these expenditures was "personal" rather than "campaign."  Just like Michael Cohen informed the prosecutors that the purpose of the Daniels blackmail payment was "campaign" rather than "personal."  Yes, it's as simple as that.  And thus can prosecutors with an agenda go after more or less any politician they want.  

But then there's:

Hillary Clinton

Do you think it's reasonable for prosecutors to exact a guilty plea from Michael Cohen for exceeding the $2700 legal campaign contribution limit via the $130,000 Stormy Daniels payoff?  Then check out this from Cleta Mitchell at National Review on Friday, "Fair-Minded Investigation or Partisan Witch Hunt?":

[I]f Mueller is interested in unreported and excessive contributions to a 2016 presidential campaign, he can certainly accomplish that objective on a much grander scale in both the amounts involved and the scope of the conspiracy by turning his attention to the $84 million that flowed through the DNC in their massive scheme to completely evade the legal contribution limits to the Clinton campaign.  

Mitchell provides a link to a Complaint that she has filed with the Federal Election Commission, laying out the claim that the Clinton campaign and DNC systematically violated the limits on campaign expenditures by raising money through the DNC (supposedly "independent" from the campaign and therefore not subject to contribution limits) and then turning the money over the the Clinton campaign to spend.  This is at least as illegal as anything that Cohen has pleaded guilty to, or that Hunter has been indicted for; except that the amount of money involved is a few hundred times larger.

But somehow neither Mueller and his team, nor any other federal prosecutor, is interested in Ms. Clinton.  I guess she's just more their type of person.

My own view:  The whole idea that you can end the "influence of money in politics" by putting limits on campaign contributions, and then draw perfect distinctions between "campaign" and "personal" contributions and expenditures, is another one of those fantasies of people who don't understand how the world works.  In practice, this regime just gives prosecutors ever more power and discretion to prosecute the disfavored and give a pass to the favored.  Perfect justice and fairness continue to be as elusive as ever.