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Obama’s Fundraising Fraud

He may now be running the biggest underground finance operation since Nixon deployed the plumbers as his key operatives in 1972.

by
Donald Kent Douglas

Bio

October 24, 2008 - 10:30 am
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John McCain’s got a problem.

Democratic nominee Barack Obama has raised more than $600 million in his presidential campaign so far. In September alone, Obama raised $150 million, and his organization’s fundraising machine continues to pump out pleas for cash, including an appeal for small $10 contributions sent before the “deadline,” so backers won’t miss out on a nifty “Obama-Biden Car Magnet!”

All of this might sound impressive — a sign that citizen participation is thriving in 2008 — except that the McCain campaign is locked away in the public financing dungeon, unable to compete in this year’s private-money extravaganza. Earlier this year, worried about cash shortfalls, the GOP nominee accepted $85 million in public funding from the Federal Election Commission. In a normal year, say, like 2004, when both George W. Bush and John Kerry financed their campaigns with $75 million from the FEC, public funding for the fall campaign was highly anticipated. Freed from the onerous job of cold-calling donors, party nominees could hit the hustings amid a level playing-field. But this year’s different, way different. Now more than ever, the post-Watergate presidential funding system has completely collapsed.

The irony of it all — which brings us back to McCain’s problem — is that the maverick Arizona senator made his own bed. In 2002, working with Democratic Senator Russell Feingold, McCain helped push through “bipartisan” campaign finance reform in Congress. The key element of the legislation was a ban on “soft money” contributions to the national party organizations. These unregulated donations to the parties totaled $263 million in 1996 and $410 million in 2000. As any good party insider will tell you, soft money is a bonanza for presidential campaigns. Completely unlimited, soft money receipts allow presidential candidates to evade the financial restrictions under the FEC’s “hard-money” limits. With no ceiling on what donors could give, and no limits on party spending on generic “uncoordinated” issue advertisements on behalf of the standard-bearer, a new model of private funding emerged to blow the lid off both the intent and spirit of the 1970s-era reforms.

No one took better advantage of this than President Bill Clinton in his 1996 reelection campaign. Clinton’s political position was precarious after the GOP takeover of Congress in 1994. In early summer 1995, hoping to continue the effective Democratic advertising strategy on the administration’s proposed assault weapons ban, the president’s strategists sought to continue the ad blitz to boost Clinton’s popularity heading into the 1996 Democratic primaries. Running up against hard money limits, the Clinton camp turned to the DNC, which began airing an unprecedented “issue advocacy” campaign on behalf of the Democratic policy agenda. In all, the Democrats spent $34 million in pro-Clinton soft money spots, in twelve key general election battleground states, before a single primary was held in January 1996.

This Clinton-Democratic model of campaign spending triggered a new wave of public backlash against money in politics. In response, Senator McCain’s 2002 legislation banned unlimited soft money contributions to the national parties, while increasing individual hard money contribution limits. The maximum amount under current law is $2,300 per candidate per election, up to $47,500 annually.

The impact of the law was to unleash records sums of political giving in the 2008 election cycle. Noting Hillary Clinton’s record financial haul in the primaries, Obama saw the phenomenal potential for record contributions at his campaign’s website. Unlike any candidate in history, the Obama campaign has successful married web fundraising to the hunger for political change that has animated Democratic constituencies all year.

Yet, the Illinois senator’s success is tarnished by a dark undercurrent of deception.

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