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The Bridge: Campaign Finance Shenanigans - Project On Government Oversight (POGO)

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In this issue of The Bridge, we consider whether a senator and a former president may have dodged campaign finance laws.

TO BE OR NOT TO BE (A CANDIDATE)

There are laws for how campaigns can raise and spend funds. But they don’t generally apply to someone who isn’t a candidate. This week, two watchdog groups filed suit alleging Senator Rick Scott (R-FL) skirted campaign finance rules by not declaring his candidacy for the Senate. Former President Donald Trump may be using a similar playbook.

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The candidate who wasn’t

Before announcing his bid for the Senate, then-Governor Scott raised a fortune for a political organization called New Republican PAC. The organization then spent that fortune on his campaign for Senate. That’s not how things are supposed to work.

A so-called “soft-money ban” prohibits federal candidates from raising money for political organizations that will use the money to help get them elected. The ban exists because rules for some types of organizations are looser than the rules for campaigns. For example, corporations can’t give any money directly to campaigns. But the Supreme Court’s infamous Citizens United decision in 2010 freed corporations to give unlimited amounts of money to super political action committees (“super PACs”). As long as it doesn’t coordinate with a candidate, a super PAC can then buy advertising urging the public to vote for the candidate.

In 2016, Rick Scott became the leader of the super PAC New Republican PAC, declaring his goal of ensuring the Republican Party worked toward the Trump agenda. When he later quit this position and announced his campaign for Senate, the super PAC shifted its focus to supporting him. A group called End Citizens United filed a complaint with the Federal Election Commission alleging that, while running the super PAC, Scott had actually been raising funds not for Trump’s agenda but for his own planned candidacy.

The complaint predictably died this summer in the FEC. The agency is hopelessly deadlocked, with its three Republicans and three Democrats consistently voting along party lines. “Once again, the FEC is betraying the American people by allowing massive election cheating to go unpunished,” wrote another watchdog, the Campaign Legal Center (CLC).

Undeterred, End Citizens United retained CLC to represent it in a new lawsuit filed Monday. The lawsuit seeks a court order compelling the FEC to investigate Scott and, if he’s found guilty, punish him for violating campaign finance law. If the two watchdogs win and the FEC still fails to act, they could then sue Scott directly.

All of this points to the urgent need for reform. The For the People Act (also called H.R. 1 in the House and S. 1 in the Senate), which has passed the House and is awaiting a vote in the Senate, would go far to solve the problem.

Among other things, it would break the deadlock by reducing the number of FEC commissioners from six to five, and it would increase turnover by barring commissioners from serving indefinitely beyond the end of their terms until replacements are appointed.

Donald Trump and the endless rally

Three years out from the next presidential election, Donald Trump is already holding rallies and talking about the 2024 election. As of early August, he had raised over $100 million dollars for … well, the what isn’t exactly clear. Trump hasn’t declared his candidacy.

Most of the money is in a leadership PAC, Trump’s Save America PAC. Unlike a super PAC, a leadership PAC can’t accept money from corporations and is subject to other fundraising restrictions. There is a restriction on spending, too. Politicians who create leadership PACs can’t use them to fund their own campaigns. This means Trump won’t be able to use the money to fund a run for president if, as he is expected to do, he declares himself a candidate.

Aside from that limitation, however, there’s little else Trump can’t spend the money on. Sean Cooksey, one of the FEC’s Republican members, recently explained that there’s no rule against politicians using the money for their own personal benefit. There’s a reason leadership PACs have been called “slush funds.” The state of the law on them is a disgrace.

As CLC put it, “it is one thing to contribute to a candidate in order to support their run for office; it is another to finance an officeholder’s trip to Vegas or country club dues.”

What has Trump’s leadership PAC been financing? As of early August, there was no public record that it had spent money helping other candidates run for office (though a spokesperson told Politico that it had cut some checks that would appear in later FEC filings). But it has spent several million dollars on legal fees, $1 million on a think tank employing former Trump administration staffers, and $75,000 on travel expenses for Rudy Giuliani. It has also (surprise!) spent $68,000 at Trump’s own businesses. For now, though, it seems largely focused on raising funds, not spending them. Trump’s leadership PAC has even asked loyal followers to buy plastic “Trump” cards that serve no functional purpose, sort of the modern-day equivalent of a mail-offer decoder ring for kids who eat through enough boxes of cereal.

CNN called the amount Trump has raised without declaring his candidacy “unprecedented.” Politico called it “virtually unprecedented.” CLC’s Adav Noti tells me we’re in “uncharted waters,” adding “no one has ever raised so much political money while being vague about his own plans.” Trump is again playing fast and loose with the rules. What America loses here is the transparency needed to keep candidates honest. Worse, Trump is tilting the playing field by avoiding the set of rules prohibiting candidates from coordinating with super PACs.

Is Trump a candidate?

Trump hasn’t said he’s a candidate yet, and he may perceive benefits to keeping things loose. For one thing, it frees him of the obligation to disclose his personal finances again. It may also help him justify raising funds for his leadership PAC, whose money he can use for his personal benefit. This arrangement may give him a chance to hit up donors a second time to fund a campaign because, after all, he can’t use the leadership PAC to fund a run for the White House. As Open Secrets’ Anna Massoglia told me, the “rules against candidates coordinating with super PACs and dark money groups don’t apply the same way to Trump since he isn’t a candidate” and “that gives him more room to cozy up to groups that could later spend money to help him get him elected.”

For the time being, Trump and Scott may stick to their current stories. Things would be different if Congress passed the For The People Act. The bill would significantly strengthen laws against candidates coordinating with super PACs and other political organizations. It would also increase transparency, which could lessen the influence of wealthy donors who currently operate in the shadows. America is long overdue for these reforms, and what’s happening now is a sinister example of the problem that needs fixing.