Faced with spending limits that are termed unrealistically low, John Connaly's presidential campaign is considering rejecting federal funds for the New Hampshire primary so it can spend freely in hopes of having maximum impact there.
Other candidates are know to be researching the same possibility.
The possibility that one or more of the major presidential candidates might reject the money -- and thus avoid the attached spending limits -- worries the Federal Election Commission so much that it has started processing a regulation to deny federal funds in later primaries to any candidate who violates the limit in the early ones.
State spending limits and nationwide primary spending ceiling were enacted by Congress as part of the law providing federal money to presidential candidates. A candidate qualified for the money by raising $5,000 in contributions of $250 or under in at least 20 states. The government then matches private contributions.
In order to remain eligible, for the money, however, a candidate must adhere to the spending limitations.
Until now, the FEC has not specifically ruled on whether a campaign can decline the money at first -- freeing it from the limits in the early, critical primaries -- and then come in later to qualify for the money.
The Connally campaign is considering doing just that, "I am at a loss to know how candidates can possibly function in New Hampshire" under the contemplated ceiling of about $300,000, said Eddie Mahe, Connally's campaign director.
Mahe said his decision would await the FEC determination and some indication "of what the competitors are going to do" about it. Others indicated that their actions would be determined by the same factors and all agreed the New Hampshire limit is difficult to live with.
It never occurred to us until we heard about Connally," said Ronald Reagan spokesman Jim Lake, who added that Reagan was not considering it.
"If one campaign does it, it could force the others, including us, to do the same," said Peter Teeley, spokesman for the George Bush campaign. "We hope the FEC and Congress will close the loophole and make it clear that you either accept matching funds or you don't."
The proposed FEC regulation must first be approved by Congress.
The problem is that the spending limits are grounded in demographics, not the realities of political campaigns. Regardless of the importance of a state in the presidential race, each one's limit is set by multiplying the number of voting-age residents by 16 cents and adding a cost-of-living increase based on the Consumer Price Index.
he New Hampshire primary on Feb. 26 is the earliest and, for most candidates, the most critical. Spending is already heavy there six months in advance.
But because its voting age population is one of the smallest (614,000), New Hampshire's spending limit is one of the lowest.
Even "with all the steps we're taking," said Tim Smith, counsel for the Carter-Mondale campaign, "we're going to be hard up against the limit in New Hampshire."
The "steps" being taken or contemplated by the campaigns to minimize the New Hampshire impact are bookkeeping wonders:
Howard Baker's campaign schedule shows him spending three days in New Hampshire with overnight stops in Maine, Vermont and Massachusetts. The costs of accommodations can then be attributed to the other states. "The motels on the New Hampshire border are going to do quite a business," commented an official of another campaign which is using the same technique.
The Connally campaign is searching airline schedules in New England to see how often its candidate can go through Boston between stops in New Hampshire. Interstate trips -- as opposed to intrastate -- do not fall under a spending limit.
Because fund-raising costs are exempt from the ceiling, most campaigns are trying to plan New Hampshire events so that each has a fundraising element. This not only helps raise money but allows at least some costs of the event to be exempt from the limit.
All the campaigns, for the same reason, are carefully soliciting funds on all mailings in order to prevent the mailing costs from counting against the limit.
Many campaigns are also planning on attributing large portions of their New Hampshire television costs -- usually purchased on Boston stations -- to the Massachusetts limits instead of New Hampshire's.
The Carter campaign has placed its New Hampshire field director on the campaign's national staff, in part so that at least a portion of his salary can be excluded from the New Hampshire spending tally.
All of the campaign officials say that they will be scrupulous in adhering to the federal election law as they try to minimize the impact of the ceiling.
In fact, the law and the regulations implementing it offer precious little guidance as to what is and what is not permissible.
Among the Republicans, the Connally campaign may be one of the best equipped to do without matching funds. Its fund-raising has outpaced the others, and, with heavy support from big business, its treasury could be more easily replenished as the face goes on.
A poor showing in New Hampshire could also force Connally out of the race, and make adherence to state limitations moot thereafter.