By William Hicks
WASHINGTON — When Jeb Bush posted on Facebook in December that he was “actively exploring the possibility to run for president, three little words — “exploring the possibility” – made all the difference.
The extra layer in a carefully worded statement put Bush in the advantageous position of being able to set the foundation of a presidential campaign, free from pesky federal contribution limits.. He had stopped short of an official announcement.
And he is far from alone.
“The structure of the pre-pre-campaign is layered like an onion – first you explore exploring running for president, then you form an exploratory committee to explore running for president, then you become a candidate for president.” said David Mitrani, an attorney and campaign finance law expert.
“In order to avoid going from the first to the second stage, the pre-pre candidates should be very careful about what they say and do in the public eye.”
Although would-be candidates may follow the letter of the law, their behavior circumvents some campaign finance laws. That’s because they essentially act as candidates, raise money like candidates, but simply say they are not candidates – not really, that is.
Politicians in this pre-pre-candidacy phase include Bush, Wisconsin Gov. Scott Walker and former Secretary of State Hillary Clinton. All are viewed as candidates but enjoy the perks of staying outside bounds of federal election law.
“They are basically making a mockery of the campaign finance laws that are left in place,” said Adam Smith, spokesman for Public Campaign, a campaign finance reform advocacy group. “These people are running for president, whether they say so or not.”
Through legal maneuvering, prospective candidates have found a convenient place to gain national attention and donor support without having to comply with federal election law.
With the advent of super PACs and other unlimited money-raising machines, the pre-pre-candidacy phase has become more lucrative and advantageous than ever before.
“We are talking about uncharted waters,” said Ken Gross, a former associate general counsel at the Federal Election Commission. “These are issue that have not been decided by the FEC and may never be.”
Usually when a candidate states he or she is exploring a run for president, the hopeful enters into what is referred to as a “testing the waters” phase of a potential candidacy. During this pre-election phase, would-be candidates are subject to limits of $2,700 for individual contributions and may not accept corporate or union donations. That’s a step beyond where Bush, Walker and Clinton have positioned themselves.
In this testing phase, the non-candidates do not have to immediately declare their future intentionsto the Federal Election Commission. Once they declare as candidates, they must open their books and show that they have raised and spent money in accordance with federal election law.
Under FEC guidelines, testing the waters activity includes forming an “exploratory committee,” conducting polls, hiring staffers and opening offices outside a candidate’s home state. When a prospective candidate raises or spends more than $5,000 in this phase, he or she is in – and must officially register as a candidate.
Staying out of this maybe phase requires careful verbal consistency. At no time while speaking with donors and hiring political action committee staffers may the thinking-about-it candidate say that such actions are for the purpose of running for president, or even evaluating support.
Almost all are walking a tightrope in a thin legal gray area, but many of them are reaping extensive rewards.
Bush, the former governor of Florida, is in a good position financially to raise massive amounts of money.
He does not hold a public office, so he is not subject to “pay to play” rules that inhibit contributions to sitting governors. Pay to play rules bar businesses from receiving government contracts if they donated to elected officials in their area in the past election. This restricts Wisconsin Gov. Walker and New Jersey Gov. Chris Christie from drawing the financial backing of big donors tied to government contracts.
Sitting U.S. senators and House members have their own restrictions. Under a federal “soft money” ban, prospective candidates such as Sen. Rand Paul, R-Ky., and Sen. Marco Rubio, R-Fla., cannot raise funds through a super PAC.
Free of these restrictions, Bush founded a “leadership” PAC, Right to Rise, and his associates founded a super PAC using the same name.
A super PAC can raise unlimited money from corporations, unions, associations and individuals, but cannot donate directly to candidates and cannot coordinate with official campaigns in any way.
Born out of the Supreme Court’s Citizens United ruling, Super PACs were originally envisioned as issue advocacy groups that were unaffiliated with particular candidates. In a five to four decision, the Supreme Court in 2010 ruled that money is the equivalent of speech and groups like Citizens United could raise unlimited funds for the purpose of influencing elections.
A leadership PAC is different from a super PAC in that it can only accept donations of up to $5,000 from each individual per year, and may donate up to $5,000 per candidate to other campaigns. Like an official campaign committee, a leadership PAC cannot accept money from corporations or unions. Unlike a super PAC, a leadership PAC can be controlled by a federal candidate, but cannot be affiliated with the candidate’s official election committee.
Bush’s loosely affiliated super PAC allows him to raise unlimited dollars that could later be used to help him run for president. The son of one president and brother of another is traveling the country and meeting with deep-pocketed donors, asking them to contribute to the Right to Rise Super PAC.
“It seems to me that Jeb Bush is testing the waters for his candidacy and he’s paying for that activity with money raised outside candidate contribution limits,” said Paul Ryan, senior counsel at the Campaign Legal Center. In a February report, Ryan detailed the many ways prospective candidates evade this early testing phase and still manage to setup the precursors of their campaign.
“It is unclear what Bush will do with his super PAC if and when he becomes a presidential candidate,” Ryan said. “The FEC has never provided clear guidance on it, because no one has ever used the strategy that Jeb Bush is unfolding.”
If Bush eventually uses the super PAC money to support an official candidacy, Ryan argues that would be a violation of federal campaign finance law. To get around this, Bush would probably have to sever all official ties and coordination to the super PAC.
Gov. Walker has taken a different route. He established a 527 group, Our American Revival, which has gone as far as leasing office space in Iowa, the state that votes first in the Republican campaign.
A 527 is a tax-exempt organization that files with the Internal Revenue Service. It is created primarily to influence the election of candidates in federal, state or local public officew. Such groups do not face any contribution or spending limits, but they must publicly disclose donors.
Walker, who has emerged as an early rival to Bush, has scheduled trips to both Iowa and New Hampshire – two early voting states — but he says only to discuss political issues, not his candidacy.
This comes at a time when Walker is being investigated in Wisconsin for allegedly coordinating with outside conservative groups during his 2011-2012 recall election.
Unlike the prospective Republican field, the Democrats have a single big name sucking up oxygen – Hillary Clinton.
Clinton has neither an affiliated super PAC nor leadership, although super PACs like Ready for Hillary and Priorities USA Action have pledged their support while remaining uncoordinated.
A conservative super PAC, America Rising, has accused herof using money from the non-profit Clinton Foundation for political travel expenses and using fees from paid speeches to lay the foundation of her candidacy.
“Because Hillary Clinton is acting as a candidate, the money she gets for paid speeches can be considered corporate donations, far in excess of contribution limits,” said Jeff Bechdel, a spokesman for America Rising. “This activity should raise some red flags with the FEC.”
While these accusations are contested by Clinton and are not backed by substantial evidence, her activity does show the advantages ofnot officially declaring a candidacy at this early stage. As a non-candidate, Clinton can receive large sums of money for speeches while still getting her message out to voters.
A longshot Democrat, former Maryland Gov. Martin O’Malley, has his own multi-candidate PAC, which operates under the same rules as a leadership PAC. His PAC allows him to try to gain traction in primary states by donating to political candidates and paying for travel expenses.
The only two prospective candidates that are carefully observing federal campaign finance law are former Virginia Sen. Jim Webb, a Democrat, and Sen. Lindsey Graham, R-S.C, in Ryan’s view. They have both established exploratory committees for president and only accept contributions up to $2,700.
And where is the FEC, as these prospective presidential candidates behave more and more like real candidates, but without the financial restrictions? Isn’t it up to the regulatory agency to penalize those who step over the lines?
Don’t hold your breath. Any action is unlikely due to the nature of the slow-moving FEC, said Richard Briffault, professor of election law at Columbia Law School. Since the FEC commissioners consist of three Democrats and three Republicans, they are often paralyzed in acting on matters other than egregious violations.
