ACRU

Hillary Clinton, the DNC and the Law

Economics - Money

This column by ACRU Policy Board member Hans von Spakovsky and Cleta Mitchell was published November 12, 2017 by The Wall Street Journal.

Did their arrangement violate legal limits on coordination between a candidate and a party?

Donna Brazile has confirmed Bernie Sanders’s worst suspicions. Ms. Brazile, who served as interim chairman of the Democratic National Committee during the fall 2016 campaign, says in a new book that during the primaries, the DNC was controlled by Hillary Clinton’s campaign. Ms. Brazile claims the arrangement was “not illegal,” but that is far from clear.

Ms. Brazile reports that when she arrived on the job in July 2016, Gary Gensler, the campaign’s chief financial officer, told her the DNC was fully under the control of the campaign. In September 2015, 10 months before Mrs. Clinton’s nomination, the party had moved its bank account to the same bank in New York used by the Clinton campaign and created a joint fundraising committee, the Hillary Victory Fund, whose treasurer, bank account, and control were vested in the campaign.

Then, in an August 2015 memorandum of understanding, the DNC essentially handed over its operations to the Clinton campaign for the next 15 months.

The purpose of joint fundraising committees is to allow more than one entity to collaborate in raising money and share in the costs. Each participant is subject to federal contribution limits. When the party itself is a participant, its committee (in this case the DNC) normally handles accounting and financial controls. Not here. The Hillary Victory Fund was controlled by the Clinton campaign, with a campaign employee as treasurer and the fund’s bank account established at the Clinton campaign’s bank. According to Federal Election Commission reports, the Hillary Victory Fund has raised more than $526 million.

The DNC asserted its “neutrality” by also entering into a joint fundraising committee with the Sanders campaign. It raised a total of $1,000. And the Bernie Victory Committee treasurer was the DNC’s designee.

“Money in the battleground states usually stayed in that state,” Ms. Brazile writes, “but all the other states funneled that money directly to the DNC, which quickly transferred the money to Brooklyn”—-i.e., Clinton headquarters. She says state parties raised $82 million, of which they kept less than 0.5%.

The memorandum of understanding promised the Clinton campaign, among other things, “complete and seamless access to all research work product and tools” paid for by the DNC, despite Federal Election Commission regulations that prohibit privately sharing such research with a candidate without either reporting the costs as an in-kind contribution or allocating them against the party’s coordinated spending limits for that candidate.

The memo also tied transfers of funds raised for the DNC by the Hillary Victory Fund to operational control of the DNC’s expenditures: “The release of the Base Amounts each month are conditioned on the following: . . . hiring of DNC Communications Director . . . DNC senior staff . . . joint authority over strategic decisions . . . alerting HFA”—-Hillary for America, the campaign—-“in advance of . . . any direct mail communications that features a particular Democratic primary candidate or his or her signature.”

Contributions to the DNC, even though made through the Hillary Victory Fund, were required by law to be transferred to the party and could not legally be withheld by the Clinton-designated treasurer. Nor does the law allow a single candidate to control a political party’s operations and expenditures.

National party committees have higher contribution limits than candidates do—-$334,000 a year vs. $2,700 for each election. The memorandum raises the possibility that Clinton campaign took advantage of the DNC’s higher limits, then availed itself of all the resources the DNC could buy—-without having any of the attendant costs or expenditures assessed against the campaign.

There are strict statutory limits on what a party committee can contribute to any candidate and what a party can spend in coordination with its candidates. We don’t like limits on the ability of parties to support their candidates. But campaign-finance zealots, egged on by media outlets (which are not subject to any limits), made certain that the McCain-Feingold law of 2002 stringently limited coordination between candidates and political parties. Although the Supreme Court struck down parts of McCain-Feingold in the 2010 Citizens United case, the coordination limits still apply. The FEC and the Justice Department should investigate the Clinton-DNC arrangement.

Candidate Clinton railed against Citizens United—-a case that involved a documentary film critical of her—-arguing that “big money” and “secret spending” are ruining our politics. Is it too much to ask that those who loudly demand greater regulation of political speech and spending themselves abide by the laws already on the books?