Trump Already in Campaign Legal Trouble?

By Chris Good

This post has been corrected.

Donald Trump's plane showed up in Iowa this morning, creating a stir among political reporters there to cover a multi-candidate forum in Waukee tonight. Trump wasn't on it, but the trip by two aides could have more 2012 fallout than anticipated.

After Trump's lawyer, Michael Cohen, told reporters that a billionaire pharmaceutical magnate had paid for the trip, on which he and another Trump aide had planned to learn about Iowa and report back to Trumps, Politico's Ben Smith reports that Trump may have already violated campaign finance laws:

Specifically, Campaign Legal Center's Paul Ryan told POLITICO, "testing the waters" efforts are subject to a ban on corporate and union donations and a contribution limit of $2,500.

"Federal law is really clear here: if you are spending money determining whether to run that falls under the category of 'testing the waters' and you have to use federally permissible funds," Ryan said, a point he argued in a recent white paper.

In other words: If Trump sends people to Iowa to "test the waters" for his candidacy, he has to abide by campaign-finance restrictions--just as if he were already running. That's if the trip cost more than $2,500, or if the money came from the pharmaceutical company itself, not the individual donor.

This development is sure to elicit schadenfreude in Washington, where insiders love nothing more than to scoff at Beltway wannabes and their plebian lack of campaign-finance knowledge. The cocky Trump, caught up among the campaign illiterate! How delectable to Washingtonian tastes.

Some points about "testing the waters," campaign finance restrictions, and Trump's hiccup:

1) It's entirely possible that most major Republican presidential contenders have already broken these same rules. The Campaign Legal Center's white paper, published last Friday, suggested that Haley Barbour and Mitt Romney, in particular, could be furthering their 2012 ambitions with money raised through political organizations not registered as federal PACs and not subject to federal campaign-finance restrictions. CLC also concluded that "testing the waters" rules have been skirted since the 1970s, as soon as new finance restrictions were enforced.

2) Trump is technically bound by federal election restrictions even if he does not run.*

3) Trump cannot simply refund the money if he decides to run.**

4) How do we know if Trump broke the rules? Candidates are limited to raising $2,500 per person for each presidential primary and general election campaign. "In-kind" contributions of goods and services count against that limit. Corporations and unions are barred from donating to political campaigns. So, Trump broke the rules if either a) the trip cost more than $2,500, or b) it was paid for by his donor's corporation, not the donor himself.

There are, however, many gray areas in campaign finance law. For one thing, donors often "max out" all at once, which in this year means donating $5,000, half for the primary and half for the prospective general election. If the trip cost between $2,500 and $5,000, Trump could possibly massage the accounting to avoid a violation.

And after the Supreme Court's Citizens United ruling, the court may well think corporations and unions should be able to donate to political campaigns directly. That ruling dealt with independent campaign spending, and donations to third-party groups that conduct independent spending, but if we extend the base logic expressed in the majority opinion, it seems legal direct donations from corporations and unions would be validated if challenged.

5) The Federal Election Commission does not actively enforce anything. The FEC does not have a vast network of field agents to hunt down possible violations that fall into rarely considered legal gray areas. There are no plainclothes election cops, planted surreptitionsly at Iowa's diner counters, waiting to pounce if a candidate's coffee is purchased through Firefighters Union's general fund. Enforcement is further bogged down by the FEC's current makeup, split between three Republican and three Democratic commissioners. Needing a majority to take action, the FEC rarely rules in favor of new enforcements in newly questioned areas of regulation, and campaign-finance watchdogs complain that it never rules in favor of enforcement anyway.

When it comes to campaign-finance violations, it's up to other campaigns and watchdog groups (like CLC, for instance) to file complaints with the FEC, asking the commission to dig through a candidate's paperwork and determine whether a violation happened.

In sum, while this development is amusing and probably indicates Trump should hire a campaign finance lawyer to help out this Cohen fellow, it probably isn't the biggest problem he has on his hands.



*The post originally stated that CLC's Paul Ryan had told me Trump would only be bound by federal restrictions during his "testing the waters" period if he actually decided to run. This was the product of a misinterpretation of Ryan during a conversation about candidates and "testing the waters." Ryan later e-mailed to say this was not correct. We regret the error.

**The post originally asserted that, according to the CLC white paper, Trump could simply refund illegal contributions during the "testing the waters" period if he decided to run. This was the case between 1980 and 1985, but as the white paper notes, the FEC changed the rules at that point. Again, we regret the error.

This article available online at:

http://www.theatlantic.com/politics/archive/2011/03/trump-already-in-campaign-legal-trouble/72159/