In his opening statement at Thursday’s Democratic debate, entrepreneur Andrew Yang made a surprise announcement. He told voters he plans to give away $1,000 a month to 10 randomly selected families for a year.
The program is designed to demonstrate how universal basic income, Yang’s signature policy proposal, would work.
Yang’s announcement prompted a lot of reaction on social media — including comparisons with Oprah Winfrey’s legendary giveaways — as well as head-scratching by legal experts.
We spoke with legal experts to explore key campaign-finance questions swirling around Yang’s announcement.
What is Yang actually proposing?
If elected President, Yang says the government will give $1,000 a month to every American over the age of 18, no matter their employment status. He argues his proposal would jump-start the economy and make it a little easier for families to pay their bills.
This policy, known as universal basic income, is being tested in small pilot programs around the world. Yang himself tried to gin up enthusiasm for the idea earlier this year, when he began paying $1,000 to three families — in New Hampshire, Florida and Iowa.
Yang’s Thursday announcement is an expansion of that, but with one key difference. Currently, Yang is using his own money to fund his giveaway, reporting the monthly stipend as a gift to his campaign on federal campaign reports.
The expanded program, however, would use campaign funds. To be selected for Yang’s “Freedom Dividend Giveaway,” people can submit their names on his campaign website. The campaign will randomly select 10 winners of the giveaway. The detailed rules clarify that donating to his campaign does not increase your chances of winning.
What are the restrictions on what campaign money can be used for? As a donor, why should I care where my money goes?
Federal campaign committees have certain restrictions on what they can use donors’ money for. One of the biggest no-no’s is the prohibition on “personal use.”
That means campaign money must be used for expenses that exist because the campaign exists. That includes the big expenses — staff salaries, offices, etc. — and smaller ones, like thank-you cards to supporters.
Campaign money cannot be used for personal expenses like home mortgage or country club dues.
It is not just the candidates who must abide by this rule — campaign funds cannot be used for the personal expenses of “any person,” experts note.
The personal use prohibition has a dual purpose: to prevent corruption and to protect donors and make sure their money is “not going to line anybody else’s pocket other than for services provided to the campaign,” said Adav Noti, a former lawyer for the Federal Election Commission who is now chief of staff of the Campaign Legal Center, a group that advocates greater restrictions in campaign finance.
“To maintain donors’ faith in the system, it’s important that they have some reasonable level of certainty that their money — especially small-donor money, but all money — is getting used” for a campaign purpose, Noti said.
So, can Yang's campaign money be used in this way?
That’s the big question here.
Yang’s “freedom dividend” would be given away to individuals for expenses that would exist whether Yang is running for president. The people who receive the monthly $1,000 check from the Freedom Dividend Giveaway would be using the money for their own personal use.
The campaign argues, however, that this does not violate campaign finance rules because the money is really being spent on a campaign purpose, furthering the goals of the campaign by demonstrating the impact of Yang’s flagship policy proposal.
The campaign said they consulted with lawyers who told them the plan does not violate the law. Some experts agree with this interpretation, saying Yang’s expense is a form of campaign advertising.
But others see major flaws in the campaign’s argument.
“It’s like saying a candidate is running on a proposal to revitalize the Detroit auto industry, and so therefore, they give you a brand-new car,” said Michael Toner, former Republican chairman of the FEC and partner at Wiley Rein.
Another example, Toner adds: Giving free cellphones to constituents to demonstrate a policy proposal to expand broadband access and cellular coverage.
“There’s just no stopping point, and it would swallow up the personal-use restriction,” Toner said.
Jessica Levinson, an election law professor at Loyola Law School in Los Angeles, said campaign funds can be used broadly for political purposes but that writing checks to voters or supporters pushes the boundaries of what constitutes a political purpose.
“I’ve never seen anything like it,” Levinson said. “If the regulations were a rubber band, this would be stretching it to its extreme.”
What happens now?
Normally, a campaign facing questions about a possible finance violation would be able to ask the FEC for expedited legal guidance.
But the FEC, which enforces election laws and regulations, is currently unable to function. Last month, the FEC lost its voting quorum after a commissioner resigned, leaving just three members on a six-member panel that requires at least four votes to decide on matters like these.
It does not look like there will be movement on FEC appointments anytime soon. FEC commissioners must be confirmed by the Senate. Senate Majority Leader Mitch McConnell (R-Ky.) and the White House want to appoint a slate of six new commissioners, since the three currently serving are all holdovers with expired terms.
Democrats have pushed back on the idea, noting all it takes is one appointment to restore a quorum.
The last time the FEC lost a quorum, it halted business for six months in 2008. Experts worry that this time, the partisan standstill may last through the 2020 presidential election.
“We’re in a place where presidential candidates can start handing out checks, and it’s not clear if the FEC will act in any way. Without a quorum, there’s literally nothing they can do,” Levinson said.