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FEC Warns McCain on Campaign Spending

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THE PROGRESSIVE REVIEW - February 25, 2008

FEC Warns McCain on Campaign Spending
By Matthew Mosk and Glenn Kessler
The Washington Post

The nation's top federal election official told Sen. John 
McCain yesterday that he cannot immediately withdraw from 
the presidential public financing system as he had request-
ed, a decision that threatens to dramatically restrict his 
spending until the general election campaign begins in the 

The prospect of being financially hamstrung by the very 
fundraising system he helped create is the latest in a 
series of bitter challenges for the presumed GOP nominee, 
who still faces a fractured conservative coalition as he 
assumes the mantle of party leadership. 

Yesterday, McCain blasted the New York Times for an article 
that alleged that he had an inappropriate, romantic 
relationship with a female lobbyist eight years ago. With 
his wife, Cindy, standing next to him at a Toledo campaign 
stop, he called the report "untrue" and assailed the news-
paper, saying it was waging a "smear campaign" against him. 

McCain's aides went on the offensive, blaming the Times. 
"Obviously, we were very angry," said senior adviser Steve 
Schmidt, speaking to reporters as McCain flew to Michigan 
from Ohio. "When we read the story, my initial reaction 
was that it was something you would see in the National 
Enquirer, not the New York Times." 

Cindy McCain told reporters that she trusts her husband, 
saying that he "would never do anything to... disappoint 
our family" or the American people. "He's a man of great 

John McCain disputed almost every part of the Times 
article, saying that he did not have a romantic affair 
with lobbyist Vicki Iseman and that he had never done 
inappropriate favors for her or other lobbyists. He denied 
the part of the story, also reported in The Washington 
Post, that his staffers had confronted him about his ties 
to Iseman. 

McCain said that if staffers had had such concerns, "they 
did not communicate them to me." He noted that as many as 
150 people worked on his staff at the time and said he had 
no idea who could have spoken to the newspapers. 

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One of those former staffers, John Weaver, was quoted on 
the record in both papers as saying he had a confrontation 
with Iseman about her claims of closeness to McCain. But 
McCain said he did not know of the conversation until he 
read about it. 

Weaver quit McCain's campaign last year when it appeared 
to be on the verge of collapse. But McCain said that there 
were no hard feelings and that the two men still talk from 
time to time. "John was a friend of mine, and he remains a 
friend of mine," the senator from Arizona said. 

Within hours of the article's publication, McCain sought 
to turn it to his advantage, sending out a fundraising 
appeal decrying the "baseless attacks" and urging 
contributions. "With your immediate help today, we'll be 
able to respond and defend our nominee from the liberal 
attack machine," McCain's campaign manager, Rick Davis, 
said in an e-mail. 

But McCain's attempts to build up his campaign coffers 
before a general election contest appeared to be threaten-
ed by the stern warning yesterday from Federal Election 
Commission Chairman David M. Mason, a Republican. Mason 
notified McCain that the commission had not granted his 
Feb. 6 request to withdraw from the presidential public 
financing system. 

The implications of that could be dramatic. Last year, when 
McCain's campaign was starved for cash, he applied to join 
the financing system to gain access to millions of dollars 
in federal matching money. He was also permitted to use his 
FEC certification to bypass the time-consuming process of 
gathering signatures to get his name on the ballot in 
several states, including Ohio. 

By signing up for matching money, McCain agreed to adhere 
to strict state-by-state spending limits and an overall 
limit on spending of $54 million for the primary season, 
which lasts until the party's nominating convention in 
September. The general election has a separate public 
financing arrangement. 

But after McCain won a series of early contests and the 
campaign found its financial footing, his lawyer wrote to 
the FEC requesting to back out of the program - which is 
permitted for candidates who have not yet received any 
federal money and who have not used the promise of federal 
funding as collateral for borrowing money. 

Mason's letter raises two issues as the basis for his 
position. One is that the six-member commission lacks a 
quorum, with four vacancies because of a Senate deadlock 
over President Bush's nominees for the seats. Mason said 
the FEC would need to vote on McCain's request to leave 
the system, which is not possible without a quorum. Until 
that can happen, the candidate will have to remain within 
the system, he said. 

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The second issue is more complicated. It involves a 
$1 million loan McCain obtained from a Bethesda bank in 
January. The bank was worried about his ability to repay 
the loan if he exited the federal financing program and 
started to lose in the primary race. McCain promised the 
bank that, if that happened, he would reapply for matching 
money and offer those as collateral for the loan. While 
McCain's aides have argued that the campaign was careful 
to make sure that they technically complied with the rules, 
Mason indicated that the question needs further FEC review. 

If the FEC refuses McCain's request to leave the system, 
his campaign could be bound by a potentially debilitating 
spending limit until he formally accepts his party's 
nomination. His campaign has already spent $49 million, 
federal reports show. Knowingly violating the spending 
limit is a criminal offense that could put McCain at risk 
of stiff fines and up to five years in prison. 

"If in fact he is stuck with these spending limits, it 
would be a serious limitation on what he can do," said 
Rick Hasen, an election law expert at Loyola Law School 
in Los Angeles. 

Finance experts compared the situation to the massive 
imbalance faced by Republican presidential nominee Robert 
J. Dole in 1996, when he was forced to contend with spend-
ing limits while his opponent, President Bill Clinton, 
was not. 

Trevor Potter, a former FEC chairman who is McCain's top 
lawyer, immediately disputed the assertions in Mason's 
letter, saying McCain has a constitutional right to exit 
the federal program. He also dismissed the letter as 
unenforceable because the FEC lacks a quorum to resolve 
the dispute. 

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"We believe that Senator McCain had a clear legal right 
to withdraw from the primary matching fund system, and he 
has done so," Potter told the Associated Press. "No FEC 
action was or is required for withdrawal." 

Campaign finance experts were split on how serious the FEC 
position could become. But several agreed that the matter 
would not be resolved by McCain simply ignoring the letter 
and plowing ahead. 

"It's nice for Trevor Potter to say 'Buzz off,' but the 
campaign is going to have to respond," said Bradley Smith, 
a former FEC chairman. 

"This is serious," agreed Republican election lawyer Jan 
Baran. Ignoring the matter on the grounds that the FEC 
lacks a quorum, Baran said, "is like saying you're going 
to break into houses because the sheriff is out of town." 


Kessler reported from Toledo. Staff writer Michael D. Shear 
contributed to this report. 

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