by hilzoy

I have been idly following the fight between the McCain and Obama campaigns on the subject of accepting public financing for the general election, and thinking that at some point I'd probably have to write about it. I wasn't exactly looking forward to this: the laws are arcane and complicated, and going back and figuring out who had said what, exactly, about accepting public financing in the general election isn't really my idea of fun. I mean, I may be wonky, but even I have limits. So I've been hoping that Mark Schmitt, who actually knows a lot about this topic, would write about it, and luckily for me, he has. And he brings up a very interesting point: that John McCain might have inadvertently opted into the system of public financing by accepting a loan that did not exclude any public money he got as collateral.

The reason accepting loans matters is that the campaign finance laws try to force a choice on candidates: either you take the public money and abide by the limitations that go with it, or you don't. If you don't actually accept the money from the government, but use the fact that you are eligible to receive that money to secure a loan from someone else, then you can essentially spend the money you'd get through public financing without accepting the limitations that go with it. The consensus seems to be that this would violate the letter of campaign finance laws; it seems to me indisputable that it would violate their spirit.

Today, Schmitt has found the actual loan agreement, and it's pretty astonishing. On the one hand, it goes out of its way to redefine "collateral" as not including any public money. On the other hand, it contains the following startling passage (p. 22, Schmitt's transcript and his emphases):

"Additional Requirement. Borrower and lender agree that if Borrower [McCain's campaign commitee] withdraws from the public matching funds program, but John McCain then does not win the next primary or caucus in which he is active (which can be any primary or caucus held the same day) or does not place at least within 10 percentage points of the winner of that primary or caucus, Borrower will cause John McCain to remain an active political candidate and Borrower will, within thirty (3) days of said primary or caucus (i) reapply for public matching funds, (ii) grant to Lender, as additional collateral for the Loan, a first priority perfected security interest in and to all Borrower's right, title and interest in and to the public matching funds program, and (iii) execute and deliver to Lender such documents, instruments and agreements as Lender may require with respect to the foregoing."

You read that right: in exchange for a loan, John McCain gave away his right to decide for himself whether or not to stay in the race for the Presidency. And he did so in order to use his eligibility for future matching funds, rather than the funds themselves, as collateral. Again, I agree with Schmitt:

"I don't think it's an exaggeration to say this is a promise to perpetuate a fraud on the American taxpayers: if he no longer intended to seek the presidency, he made a legally-binding promise to pretend to remain in the race just long enough to collect public money to repay the loan."

Just remember: he probably suffered while he did this, and according to Nicholas Kristof, that makes it all OK.

Oh, and about Obama's "pledge"?

"Obama's precise statement was, and has always been, "If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election." That's an artful statement, and it's not artful in a "meaning of 'is'" sense -- it's exactly the right answer. A commitment to "preserve a publicly financed election" would have to mean much more than whether both participate in the system. It would require some significant agreement about how to handle outside money, 527s, "Swift Boat"-type attack groups, party money, etc., and other factors that have undermined the last two publicly financed elections, from both sides. It is hardly an evasion to describe this as an agreement to be negotiated, rather than a simple pledge.

The side story here is why many of the the "traditional" campaign finance reform advocates and the Times and Post editorial boards still seem so hypnotized by McCain-as-reformer, a pose he adopted for a period that ended years ago, that they cannot call him on his evasion of public funds in the primary, and are happy to be used to echo his first partisan attack in the general election, against someone who, unlike McCain, really has been a remarkably consistent and hard-working supporter of public financing, at both the state and national level."

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