Parties Funnel Funds To Va. Governor's Race
As President Obama campaigns Tuesday in Virginia — one of two states with elections for governor next week — the Democratic and Republican national committees are shoveling money into the Old Dominion.
And in the most hard-fought stretch of the race, between Oct. 1 and Election Day, that national money is flowing in secret. Seemingly small details in the federal and state campaign finance laws create a loophole, thwarting until after Election Day the public disclosure of funds that could run to $1 million or more for each party.
The disclosure loophole could also affect the national debate over campaign finance regulation. Federal laws set prohibitions and limits on different types of political money. Critics of that approach often point to Virginia, where the law favors no limits and full disclosure.
Loophole
Here's the loophole: Under federal law, state parties are considered affiliates of the Democratic and Republican national committees. So, as former Federal Election Commission chair Michael Toner notes, "the RNC [Republican National Committee] and DNC [Democratic National Committee] can make unlimited transfers to their sister state parties under the McCain-Feingold law."
The key word there is "transfers." Federal law doesn't consider these transactions to be contributions, as an outsider might see them.
That's half the loophole. The other half is in state law.
Virginia mandates prompt disclosure of big money flowing into the political system. Campaign finance lawyer James Lamb points to one law in particular: "The state statute requires that the state party committees report any single contributions or loans of $10,000 or more within three business days."
But as Lamb notes, Virginia specifically targets contributions and loans. And, as Toner says, a state party gets money from the national party committee via transfers.
"The state statute does not require that it report any transfers," Lamb says.
Both Parties Raise Millions For Race
Virginia's gubernatorial contest looms large for both parties. Obama carried the state last year — the first Democratic presidential candidate to do so since 1964. But this year, Democratic gubernatorial nominee Creigh Deeds trails in polls against Republican Bob McDonnell.
The president has been putting the touch on donors for the DNC. Just one dinner in New York this month set donors back $30,400 per couple. The event grossed $3 million. But before Oct. 1, the DNC had already pumped $3.3 million into the Virginia race; the RNC had committed about $1 million more than that.
Virginia's free-market approach to political money also plays a significant role in the debate over federal campaign finance laws. The federal system faces major changes — in one current case, the Supreme Court is weighing whether to allow corporate money into federal campaigns. In Virginia, a corporation can give candidates as much as it wants.
The Virginia approach came up during a recent debate between Deeds and McDonnell.
McDonnell, using Virginia politicians' preferred way of referring to Thomas Jefferson, said, "We do believe that the First Amendment means what Mr. Jefferson said, and that you have the right to be able to donate to the candidate of your choice in whatever amount, but you have full and regular disclosure."
The loophole in party-committee disclosure means that the public won't learn about late-in-the-race money from Washington until Nov. 20, more than two weeks after voters choose the next governor.
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ROBERT SIEGEL, host:
President Obama hits the campaign trail tomorrow in Virginia. It's a bid to rescue the Democratic candidate for governor, Creigh Deeds. A week before Election Day, Deeds is trailing in the polls.
As NPR's Peter Overby reports, both parties are shoveling money into Virginia.
PETER OVERBY: President Obama is doing his part in the other governor's race in New Jersey. He's already campaigned there, and he cut this bilingual TV ad.
(Soundbite of political advertisement)
President BARACK OBAMA: I need you, every one of you, to vote on November 3. (Foreign language spoken) Jon Corzine.
OVERBY: The president's also putting the touch on donors for the Democratic National Committee.
(Soundbite of applause)
Pres. OBAMA: Please, everybody, have a seat. Back to your salads.
OVERBY: That was a dinner in New York. At $30,400 per couple, it brought in $3 million for the DNC. We already know the committee has spent more than that on the Virginia governor's race and the Republican National Committee is ahead of it.
So, here's the sweet thing for the party operatives: Not a single dollar that the national parties are sending down to the Virginia parties now, in the last month of the race, will be disclosed till after Election Day. Creating this loophole takes two sets of laws: federal and state.
Lawyer Michael Toner used to be chair of the Federal Election Commission.
Mr. MICHAEL TONER (Former Chairman, Federal Election Commission): Under federal law, the RNC and DNC can make unlimited transfers to their sister state parties under the McCain-Feingold law.
OVERBY: But Toner didn't say anything about contributions. Listen to it one more time.
Mr. TONER: Make unlimited transfers to their sister state parties�
OVERBY: So that's half the loophole. The other half is in state law. Virginia has strong rules on disclosure.
Here's campaign finance lawyer James Lamb.
Mr. JAMES LAMB (Campaign Finance Lawyer): In Virginia, the state statute requires that the state party committees report any single contributions or loans of $10,000 or more within three business days.
OVERBY: So Lamb says contributions get disclosed. But remember Michael Toner. He said these contributions are transfers. And there you have the loophole for a party committee, as Lamb points out.
Mr. LAMB: The state statute does not require that it report any transfers.
OVERBY: This means a lot to the candidates for governor and also for the national debate on campaign finance laws. Virginia's philosophy on campaign finance is the opposite of Washington's. Where the federal laws set prohibitions and limits, Virginia has no limits, but full disclosure.
The Republican nominee for governor, Bob McDonnell, explained Virginia's principles recently in a candidates debate. And, yes, politicians, they really do refer to Thomas Jefferson as mister.
Mr. BOB MCDONNELL (Republican Candidate for Governor, Virginia): We do believe that the First Amendment means what Mr. Jefferson said and that you have the right to be able to donate to the candidate of your choice in whatever amount, but you have full and regular disclosure.
OVERBY: Full and regular disclosure of contributions. For the party money raised in Washington, disclosure will come on November 20th, 17 days after the election.
Peter Overby, NPR News, Washington. Transcript provided by NPR, Copyright National Public Radio.
