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.