Easy Money: Donations Without Limits
By Spencer S. Hsu
Virginia has some of the nation's least-restrictive campaign finance laws, allowing candidates and political action committees to receive unlimited donations from individuals and corporations.
In past election cycles, state-based committees have been used primarily to help support state and local candidates or issues. Presidential candidates have relied largely on their federally registered PACs and their campaigns for support.
But the state organizations now being set up by potential presidential candidates who have few ties to Virginia are a new twist in the constant scramble to find ways around federal fund-raising restrictions.
By using the Virginia committees to accept large donations that would not be allowed under federal rules, presidential hopefuls can transfer some of the funds to their federal PACs and spend it on campaign activities such as travel, polling and aid for local politicians.
In Virginia, "our state PAC was merely a way for people to contribute from noneligible sources," said Peter Dickinson, co-director for Bauer's committee, Campaign for Working Families.
Presidential candidates who accept public money are limited in what they may spend (it was $37 million in the 1996 campaign), and money spent by state PACs before a candidate's formal announcement can lay the groundwork for a campaign without counting against the federal limit on spending.
A review of Virginia PAC records filed so far indicates that the committees for the most part collect money from donors outside Virginia, often from people who already have given the federal maximum. Roughly two-thirds of the money raised by the Virginia committees has been spent outside the state.
And though the Virginia-based presidential committees are relatively new, there already are signs that they will be used to accept donations well above the $5,000 limit on donations to a federally registered PAC.
k Quayle's Campaign America committee opened a Virginia-based arm last October that has raised $118,477 so far, including chunks of $55,000, $30,750 and $10,000 from major GOP backers in Chicago, Indiana and Wyoming.
Quayle wanted to get "a little bit more involved in state activities without having to use precious federal funds," said Robert Hiler, an Indiana Republican National Committee member who donated $30,750 to Quayle's Virginia PAC last year after giving the maximum $5,000 to Quayle's federal PAC.
Quayle used part of the Virginia committee money to help pay for an Iowa consultant, California voting lists, salaries for his political and PAC directors, phone bills and rented office space. Quayle, who lives in Arizona, gave about $8,000 to Virginia candidates and transferred about $12,000 of the Virginia money to his federal PAC, which is based in Scottsdale, Ariz.
The former vice president has raised $3.7 million this year through Campaign America, an organization he inherited from 1996 GOP presidential nominee Robert J. Dole.
Perhaps the most aggressive use of state PACs has been by Alexander, who has set up committees in Virginia and more than a dozen other states where fund-raising regulations are not as strict as federal limits.
Alexander was the first 2000 presidential hopeful to establish a Virginia committee, registering his Campaign for a New American Century committee with the state just after the 1996 election. Alexander, who has a committee by the same name in his home state of Tennessee, last month opened a second Virginia committee, We the Parents, to pay for television ads running in 14 states to advocate tax cuts for parents who are raising children.
Taking advantage of complex Federal Election Commission accounting rules that allow political action committees to split their spending between federal and state arms, Alexander's Tennessee PAC has transferred $1.1 million to his federal PAC to pay for such things as a New Hampshire lobster bake, campaign stops for Iowa state legislative candidates and a $10,000 contribution to Wyoming Gov. Jim Geringer (R).
He raised the money in gifts of up to $100,000. Iowa businessman Donald Lamberti, chairman of a chain of 1,120 convenience stores, gave $95,000, for example, the Boston Globe reported.
Alexander spokesman Dan Wolters said the Tennessee PAC has contributed more than $180,000 to 90 candidates and state parties -- including $12,500 to Virginia candidates in 1997 -- while funding a heavy travel and campaign schedule.
In the first six months of this year, Alexander has raised $3.4 million with his federal PAC. By comparison, 1996 GOP nominee Dole raised $3.3 million with his leadership PAC in the previous congressional election year.
Like Alexander, Bauer has registered fund-raising committees in several states. Both men have backed candidates in states likely to be critical in the presidential nomination process: New Hampshire, Iowa, California, Georgia, Florida and Illinois.
Bauer has raised $200,000 in about 10 separate state accounts and $4.8 million in his federal committee, Dickinson said.
Bauer's Virginia committee has raised $95,700, including $5,000 each from corporations in Minnesota, Colorado and Pennsylvania. Bauer gave $37,500 to Virginia candidates in 1997.
No leading Democrat appears to have established a state PAC in Virginia, based on campaign reports.
Until recently, the technique of raising funds under state rules and transferring them into federal accounts had been used widely by political parties, but not presidential hopefuls. Now, with potential candidates setting up state committees as filters for donations, watchdog groups mention the possibility of campaign finance abuses.
"The idea of giving money to state and local candidates is basically a ruse to get this machinery set up to pay for a politician's travel, meals [and] hotel rooms . . . as he or she goes about the real business, which is preparing to run for president," said Bill Hogan, of the Washington-based Center for Public Integrity. Typically, state PACs set up by these candidates give only a tiny fraction of their money to state campaigns, he said.
Bauer's organization, which doesn't expect to have the luxury of big donors, is wary of Alexander's practice of shifting huge amounts of money from state PACs to his federal PAC.
Alexander has "found a way to allow his strongest supporters to give him very large amounts of money," Dickinson said, noting that Alexander has relied on a relatively small group of 61 donors to raise $1.8 million. "Lamar seems to be the only person I'm aware of . . . using [transfers from state PACs] as an engine to drive the [federal] PAC."
Alexander spokesman Wolters countered that the Tennessee Republican's strategy is legal: "All of our transfers are approved by the Federal Election Commission."
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