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Out of Commission

An ongoing Senate deadlock over FEC nominees could mean the federal government's electoral referee is sidelined during the 2008 elections.

| Mon Apr. 21, 2008 3:00 AM EDT

As it stands, there are a number of pressing matters currently on hold, pending an FEC quorum. First, candidates who applied for matching funds in the primary election are unable to get the money they were promised, which they would traditionally use to pay off debts. Those funds are usually distributed around the end of March, when the tax funds that supply the public financing program begin rolling in. For money to be distributed, it requires the votes of four commissioners. There is also the outstanding question of lobbyist bundling rules. "When lobbyists bundle contributions to candidates or [political action committees], the recipients have to disclose who the lobbyist was that bundled them, over a certain amount of money," says FEC spokesman Bob Biersack. "The technical rules for the mechanics of that process—who is defined as a lobbyist, how the disclosure works—are pending before the commission and can't be approved finally until there are at least four members." So lobbyists who double as major fundraisers can continue to work in the shadows.

Nor can the FEC deal with a variety of election-year complaints. Last week, for example, the Democratic Congressional Campaign Committee filed a complaint with the commission alleging that Freedom's Watch, the conservative political advocacy group backed by casino mogul Sheldon Adelson, broke the law by coordinating with the National Republican Congressional Committee in planning an ad campaign. Traditionally, FEC staff would do a little fact-finding and present what they discovered to the commissioners, who would then vote on whether or not to begin a full-scale investigation (which customarily takes over a year, much to the chagrin of reform groups). At the end of the investigation, the commissioners would review all the evidence and vote on whether to fine the violator. Without a quorum, no new investigations can even begin, nor can ongoing ones be resolved.

Two pending issues could affect the candidacy of John McCain.

The first is a complaint by the Democratic National Committee that alleges that McCain, in taking out a much-needed campaign loan in late 2007, gamed the matching-funds system for the primaries. McCain applied for matching funds in August 2007. Had he gone on to participate in the program, the federal government would have matched every donation from an individual donor up to $250. In exchange, McCain would have had to accept spending limits in each state and an overall spending cap of around $50 million during the primary season.

Running low on money last November, before the matching funds became available, the McCain campaign took out a loan using a life-insurance policy as collateral. In December, McCain looked to take out a second loan.

Hoping to avoid the spending limits but in need of collateral to justify the loan, McCain and his lawyers did some fancy legal footwork. They promised the bank that if he were to win in New Hampshire and beyond, he would repay the loan using the fundraising that would inevitably be received by a winning candidate. If he were to lose, he would drop out of the public spending system and then promptly opt back in. With this agreement, McCain wasn't technically promising the bank the matching funds he was currently lined up for. Doing so would have tied him to the spending limits. Instead, he was backing the loan—supposedly—with future funds that he had yet to apply for.

By February 2008 McCain had locked up the nomination, and he dropped out of the matching-funds program. The DNC complaint alleges that McCain could not drop out without getting the affirmative votes of four FEC commissioners, and that McCain would have prohibited from bailing because he effectively used matching funds as collateral for his loan. If the FEC were to rule for the Democrats, McCain would already be in excess of nationwide spending limits, and would likely have to pay a fine as well as curb his campaign's spending until the convention. The DNC has filed a lawsuit against the FEC in federal court, asking a judge to force the commission to act despite the lack of a quorum.

The second major McCain-related issue could hit later in the campaign, should McCain decide to accept public financing in the general election. Under that program the Arizona senator would receive a public grant of $84 million to cover the entire cost of his campaign from the convention until Election Day. McCain will likely opt in for a couple of reasons: He's a supporter of the program because it limits the influence of special interests in politics and because he doesn't expect to raise more than what the federal government can promise him. Every presidential nominee since the public funding system was established in 1974 has opted into public financing. But disbursing the funds requires an FEC vote, meaning that McCain's campaign funds could be tied up until there's a quorum. (Obama likely won't run into the same problem, since, due to his historic fundraising numbers, it does not appear that he will accept federal money. Clinton hasn't said one way or the other whether she will participate in the public financing system.)

What would happen then is anyone's guess, says Lenhard. "A candidate who wanted public financing could sue in federal court and get a federal judge to authorize the treasury to release those funds, or order the FEC to authorize the release despite an insufficient number of commissioners," he says. "But I think if you read the statute as written, it requires the affirmative vote of four commissioners to do it."

Biersack, the FEC spokesman, notes that some functions of the FEC are not hampered by the lack of a quorum. "All the disclosure activity that the Commission routinely does continues," he says. "Candidates file reports, we make them available, we ask questions if there are things on the reports that we think are unclear or problematic—all of that carries on."

But without Senate action on the FEC nominees, the commission will be unable to act on any significant issue that arises during this election cycle.

Senate Democrat and Republican leaders could reach a deal on the nominees "if they wanted to," says a Democratic Senate staffer, "but they're too dug in. If we go into this next recess [in late May] without an FEC, we probably won't have one until the next administration." But Reid's office notes it wall take "several moths" just to replace Lenhard as one of the two Democratic nominees.

Lenhard agrees that no quick solution is likely. "My sense is that there is a window that will close when this Congress goes into recess for folks to come together and reach an accord. And if they don't get the deal done then, my guess is that it will be early in the next administration until some sort of deal is struck." And that will mean an election with no referees.

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