Update: After I posted this entry, I found an article by the WSJ's Todd Farnam reporting on the release of these numbers -- good for him, and good for the WSJ.
Here's a story you can say you read first at The Jed Report: according to FEC reports filed on July 15, through June 30, John McCain had raised at $62.5 million in private funds that can be used for his general election campaign -- even though he's already committed to accepting public funding for the general.
Moreover, based on my own analysis, of that $62.5 million, three-quarters -- $46.3 million -- comes from a total of 1,803 wealthy individuals who made five figure contributions averaging $25,664 each.
So not only is John McCain blatantly violating his public financing pledge, but he's doing it in grand style, raising money in increments of up to $70,000 per donor -- more than thirty times the amount a donor can give to Barack Obama's general election campaign.
How is this all possible? How has most of the media missed the story? Allow me to explain.
As you recall, on June 19th, Barack Obama announced that he would forgo the public finance system, electing to raise money directly from his 1.7 million supporters. In explaining his decision, Barack cited two key arguments: one, that John McCain and the RNC were jointly raising millions for the general election from private sources including from PACs and lobbyists and two, 527s would spend millions attacking him during the closing weeks of the campaign.
Now that the July 15 FEC reports have been filed, Barack's first argument has been validated. The jury is still out on the second argument; it cannot be evaluated until the campaign is over or until a major 527 or independent ad effort has materialized, whichever comes first.
Still, even though Barack has already been proven correct on one of his key points, he was subject to a ruthless browbeating by the mass media, which pilloried him as a cynical opportunist for days on end. Not surprisingly, the McCain campaign aggressively pushed that storyline with a daily barrage of sanctimonious and hypocritical personal attacks from McCain on Obama.
Now, however, it is clear that even as the McCain campaign was on the warpath against Barack Obama, they knew that his argument about the McCain campaign's coordination with the RNC was absolutely true.
First, ten days before Barack Obama announced his decision to forgo the public finance system, McCain campaign manager Rick Davis told McCain supporters that the campaign had discovered a way around the campaign finance system that would allow McCain to raise at least as much money as Obama -- if not more.
Second, of the $62.5 million in private funds that McCain can use in the general election, $54.1 million -- 86% -- was raised before Barack Obama's decision.
So it is absolutely clear that even as the McCain campaign was telling reporters one thing about their intention to stick by the public financing pledge, they were actually raising tens of millions of dollars from private sources for the general election campaign.
In short, the McCain campaign brazenly lied to the media.
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The issue isn't that John McCain will withdraw from the public finance system -- he won't -- but rather that he's devised a way to spend tens if not hundreds of millions in privates funds even as he takes $85 million in taxpayer funds. (Talk about a bridge to nowhere.)
McCain, whose campaign is predicting a campaign budget of $400 million through the November 4, is skillfully exploiting loopholes in a campaign finance law that he wrote.
Here's the nuts-and-bolts of the loophole: the money McCain is currently raising through the campaign committees which reported their quarterly results on July 15 is actually being funneled to the Republican National Committee, even though each campaign committee bears McCain's name.
There are two reasons why the money is transferred to the RNC. First, if it were not transferred to the RNC, the money could not be used in the general. Second, by raising the money for the RNC, McCain is able to take advantage of a much higher contribution limits, allowing each donor to contribute $70,000 to his campaign instead of the $2,300 limit that Barack Obama's general election campaign has.
(Although Barack Obama could exploit the same loopholes as McCain, he doesn't have access to the sheer number of wealthy donors that McCain does, so the loopholes are of far less value to him.)
Once transferred to the RNC, the money can be used on a number of McCain campaign activities such as get out the vote operations, advertising, or producing literature and signs -- without any spending limitations whatsoever.
The only restriction is that any advertising in excess of $19 million must be orchestrated by what's called an independent expenditure committee. Legally, there can be no coordination between the McCain campaign and this independent expenditure committee, but practically speaking there's no way to enforce that restriction. In fact, the McCain campaign offices and the expenditure vendor offices are just 3 miles apart -- on the same road.
The McCain campaign and the RNC are already running ads through this independent expenditure loophole.
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Ultimately, what we've got here is a press corps that got completely bamboozled by a dishonest McCain campaign because the McCain campaign was able to deftly take advantage of the fact that most journalists don't know very much about the campaign finance system.
Given John McCain's personal familiarity with that system -- he helped create it, after all -- it's pretty clear that McCain himself knew that he was misleading the press corps.
Now, the question is how the media will respond to having been lied to.
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Update: If you can afford to, please donate to Obama for America -- with McCain doing this kind of end-run around the system, Barack needs all the help he can get.
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