In some editions yesterday, it was incorrectly stated that Vice President Bush had set up a tax-exempt foundation. Bush has set up a multicandidate political action committee.
Many of the politicians considering a 1988 presidential bid are using tax-exempt foundations and specialized political action committees (PACs) to skirt the edge of federal election law, if not to evade it.
Both Republicans and Democrats are taking advantage of innovative tactics that, in the case of foundations, permit acceptance of unlimited amounts of cash from corporations and unions, donations that do not have to be publicly reported and that the donors can deduct from taxable income.
The use of foundations and specialized PACS -- if legal -- also permits candidates directly or indirectly to promote their presidential candidacies without the expenditures falling under restrictive federal spending limits. Some candidates have used funds from tax-exempt foundations to finance their travel and set up field organizations in states with key primaries. The federal spending limits apply to the traditional presidential candidates' "exploratory" committee, but only one of the prospective Republican candidates for 1988 has formed a committee -- former Senate majority leader Howard H. Baker Jr. (R-Tenn.).
David Spear, Baker's spokesman, sharply attacked the practices of Vice President Bush and Rep. Jack Kemp (R-N.Y.).
"The notion that people who are clearly identified as likely, probable presidential candidates in 1988 are taking trips around the world paid for by what are legally considered to be charitable foundations . . . or using a multicandidate, nonpresidential PAC to organize 600-member steering committees in Michigan, a key 1988 presidential state, is a sham," he said.
"It's 1988 presidential politics, and everybody knows it is."
Spear said Baker plans to file a request for an advisory opinion from the Federal Election Commission this week on the propriety of a prospective presidential candidate using devices other than an exploratory committee to finance activities potentially related to the 1988 campaign.
Among the new practices:
Bush has set up a political action committee, The Fund for America's Future, that is legally restricted to providing support to candidates other than himself. The Bush fund is using part of the $2.1 million it has raised to pay for an operation that has strong similarities to a skeleton presidential campaign.
Expenditures include the salaries of a four-person field operation run by Helen Cameron, who handled voter registration for the Reagan-Bush '84 Committee, and $2,000 a month in consulting fees for Craig Shirley, who deals with conservative organizations and handles what are called the "sandbox" or "puppy" politics of such groups as the College and Young Republicans.
Sen. Gary Hart (D-Colo.) established a foundation, The Center for a New Democracy, "to develop new solutions to an America undergoing a profound transformation as it enters an increasing post-industrial, interdependent, mulitpolar and nuclear world." The unit appears intended to flesh out Hart's 1984 "new ideas" campaign, which faltered when Walter F. Mondale repeatedly asked, "Where's the beef?"
Hart's center has raised $350,000 -- tax-deductible donations of $25,000 each from 10 individuals and contributions of $5,000 or more from such companies as United Technologies, Bank of America, Singapore Airlines, Korean Air Lines and American Express.
Kemp has raised about $400,000 in tax-deductible contributions for his foundation, The Fund for an American Renaissance, that, like Hart's, has been used to finance conferences and seminars on foreign policy, economics and urban problems.
James Roberts, who runs the Kemp fund, would identify only a few major contributors, including Robert Krieble, owner of the Loctite Corp.; Lee Hanley of the Hanley Brick Co., and Norman Braman, owner of the Philadelphia Eagles football team.
In addition to domestic seminars, the fund financed a Kemp trip to Asia earlier this year and will finance a conference on U.S. policy toward the Third World to be held in London next year.
Television evangelist Marion G. (Pat) Robertson in 1981 set up a tax-exempt organization, the Freedom Council. The council now has a national field staff of 30, including five assigned to Michigan. In the 1986 Michigan GOP primary, 8,000 to 10,000 precinct delegates will be chosen. Those delegates will ultimately determine the makeup of the state's 1988 delegation to the presidential convention.
As field director of the Freedom Council, Robertson has hired Richard Minard, former regional political director for the Republican National Committee and political operative for Paul Weyrich's conservative Fund for the Suvival of a Free Congress. Unlike most of the other foundations, contributions to the Freedom Council, which is also a lobbying organization, are not tax deductible, but the organization pays no taxes.
Arizona Gov. Bruce Babbitt (D) has raised $100,000 for a foundation called American Horizons, based here. The foundation will hold seminars and publish newsletters and books on a range of national issues in a process that could increase public recognition of Babbitt. It has begun to hire staff that will work on issues in ways that could be useful to a Babbitt campaign.
American Horizons, according to its director, James Maddy, is "separate from the political operation. It may complement it, but it is separate." Donors of $25,000 each are Herman Chanen and David Eaton, both Phoenix businessmen involved in real estate and construction. Richard Dennis, a Chicago commodities multimillionaire who is a major donor to Democratic candidates and causes, gave $20,000.
Sen. Edward M. Kennedy (D-Mass.) has participated in the creation of two foundations -- the Nuclear Freeze Foundation, which is now inactive, and the Social Awareness Fund. The latter financed two Kennedy trips, one to Ethiopia, the other to South Africa, along with staff advance work.
The Social Awareness Fund has raised $102,500 from two donors -- $100,000 from Massachusetts computer software developer John Cullinane and $2,500 from John Douglas, a longtime Kennedy backer who is a lawyer at Covington & Burling.
Kemp, in addition to his foundation, has set up a PAC, the Campaign for Prosperity. Like the Bush's, it is a "multicandidate" organization legally restricted to channeling support to other candidates. These PACs can accept individual contributions of up to $5,000, while the law limits contributions to a conventional presidential candidate's "exploratory committee" to $1,000. Sen. Robert J. Dole (R-Kan.) and former Delaware governor Pierre S. duPont IV, two other potential GOP candidates in 1988, have also formed multicandidate PACs.)
Under FEC regulations, if a politician is "testing the waters" for a presidential bid and is spending money for "a poll, telephone calls and travel to determine whether . . . to become a candidate," he must set up an exploratory committee.
Kemp, however, has used his multicandidate PAC to finance travel for himself and his staff on six trips to Michigan, five to Iowa and four to New Hampshire, according to John Buckley, his spokesman. These three states are the sites of the most important early primaries and caucuses in the 1988 presidential contest, and Kemp has taken more trips to each than to any other state in the union.
In a presidential contest that, particularly in the GOP side, appears likely to be expensive, spending by foundations and multicandidate PACs does not count against federal spending limits. Presidential campaigns have regularly run up against the limits in such states as New Hampshire, forcing them, for example, to house staff members in motels in adjoining states to keep down in-state spending.
For a candidate, like Baker, who raises money through an exploratory committee, the contribution limit is $1,000; the contributions do not qualify for federal matching funds, and expenditures count against state and overall spending limits.
In one of the subtler twists in this process, Roberts, the director of Kemp's foundation, said he is considering use of the foundation to conduct direct mail fund-raising drives, and then renting the list of donors to Kemp's PAC.
Roberts, who learned about direct mail while director of the American Conservative Union, said no decision has been made on this maneuver. The benefit of the tactic is that the foundation can mail letters at 6 cents apiece, while the cheapest rate for the PAC is 12.5 cents. For mass mailings, the difference could be worth hundreds of thousands of dollars.