In the News
LifeZette: Porn Star Payment Likely Not Illegal, Says Former FEC Chairman
By Kathryn Blackhurst
It “really doesn’t matter” if President Donald Trump or his lawyer, Michael Cohen, paid porn star Stormy Daniels $130,000 since there’s a “strong argument” that it wasn’t a campaign expenditure, according to former Federal Election Commission Chairman Bradley Smith.
“I think that there’s a very strong argument that this is not a campaign contribution and not a campaign expenditure,” Smith told Fox News host Laura Ingraham Thursday night on “The Ingraham Angle.” …
“[T]he basic law in this is that many things that can influence a campaign are not campaign expenditures. And the rule on this is not that something related to the campaign is a campaign expenditure. It’s not that something primarily related to the campaign is a campaign expenditure.”
Smith noted that the FEC “rejected both those options” because a campaign finance law violation would have to be based upon an “obligation that would not exist but for the campaign.”
“I think that there’s a strong argument, at least from what we know publicly, that a man like Trump could say,’ Look, we would have made these payments. Celebrities have to make these kinds of payments all the time,'” Smith said.
Trump and Cohen could have had many reasons to pay off Daniels that were unrelated to the presidential campaign, Smith noted, such as “protecting his family, protecting his commercial viability, just not wanting the distraction.”
USA Today: Trump could face more legal trouble after confirming he repaid Michael Cohen, watchdogs say
By Fredreka Schouten
If Trump knew about Cohen’s payment to Daniels but didn’t disclose it on his campaign’s filings with the Federal Election Commission, that could amount to a “knowing and willful” violation of election law and a criminal statute that prohibits making false statements to the government, said Paul Ryan, a top lawyer with Common Cause, which has sought federal investigations into the payoff…
Trevor Potter, president of the Campaign Legal Center watchdog group and a former Federal Election Commission chairman, said reports of the reimbursement might not let Cohen off the hook, either.
The lawyer still likely violated election law by “fronting” $130,000 to the Trump campaign – which would have amounted to an excessive, illegal campaign contribution at the time, Potter said…
But Bradley Smith, who also served as a Federal Election Commission chairman, said regulators have set a high standard for proving potential campaign violations, and the facts aren’t that clear-cut.
Smith, a Republican who favors fewer campaign-finance regulations, said just because an action benefits a campaign doesn’t automatically make it a campaign expense that requires documentation.
To find a violation of federal election laws, he said, the commissioners need strong evidence that keeping the Daniels’ story from voters “was the motivation” for the payment, “not a motivation.”
PolitiFact: The $130,000 Stormy Daniels payoff: Was it a campaign expenditure?
By Jon Greenberg
The law says that something is personal if it’s “any commitment, obligation, or expense of a person that would exist irrespective of the candidate’s election campaign.”
By that standard, said Emory School of Law professor Michael Kang, “the circumstances and context here are suspicious,” but it’s no slam-dunk that the payment was an expenditure on behalf of the campaign.
“Cohen may have been sufficiently involved in Trump’s personal dealings, perhaps with other similar transactions in the past, that they can credibly argue the hush payment would’ve been handled in similar fashion even if Trump were not a candidate,” Kang said.
Former FEC chair Bradley Smith told us he sees evidence from Daniels that places this outside the realm of the campaign.
“Daniels herself has said that years before Trump declared for president, she was threatened about not disclosing any affair, suggesting, if she’s telling the truth, that her silence was desired long before Trump became a candidate,” Smith said…
Stephen Hoersting, a lawyer with the Gober Group, a law firm that has done high-level work for the Republican Party, said Washington officials steer clear of apportioning the reasons for an expenditure.
“The FEC does not ask, ‘Would it help a candidate to buy the silence of an old girlfriend?’ ” Hoersting said. “Rather it asks, ‘Would there be any other reason, other than the campaign, for this person to buy the silence an old girlfriend?’ The answer here is yes, there are many reasons a man like Trump would want to buy the silence of old girlfriend.”
Center for Public Integrity: Donald Trump, Michael Cohen and the Stormy Daniels payment: a Q&A
By Dave Levinthal and Carrie Levine
In three tweets Thursday morning, Trump contended that the $130,000 payment to Stormy Daniels was a “private contract between two parties” and “very common among celebrities and people of wealth.” He argued that Cohen, who facilitated the transaction with Daniels, “received a monthly retainer, not from the campaign and having nothing to do with the campaign.” Trump later underscored that “money from the campaign, or campaign contributions, played no roll [sic] in this transaction.”
It may also be difficult for government investigators to prove whether Trump’s payment to Daniels constituted a campaign contribution in any way, said Brad Smith, a former FEC chairman and president of pro-campaign deregulation organization Institute for Free Speech.
“Many, many things that influence campaigns – and may be intended to influence campaigns – are not campaign expenditures,” Smith said. “Activities of the Clinton Foundation, for example. Think tank reports on policy proposals. A candidate choosing to contribute personally to charities. A candidate might want a new suit to look good for a debate.”
He added: “The consequences of expanding the idea of ‘campaign contribution’ to anything that might indirectly help with the public perception of a candidate are, I think, not pretty.”
The Courts
Public Policy Legal Institute: 9th Circuit Denies Rehearing En Banc in Montana Contribution Limits Appeal
By Barnaby Zall
It’s been six months since a three-judge panel of the Ninth Circuit Court of Appeals, on a 2-1 vote, upheld Montana’s right to limit campaign contributions. After Citizens United, the only governmental interest strong enough to over-ride the First Amendment is quid pro quo corruption or the appearance of corruption, and the government had to show “objective evidence” of that to justify a limit on speech. See McCutcheon v. FEC, 134 S. Ct. 1434, 1441, 1444-45 (2014); Citizens United v. FEC, 558 U.S. 310, 359 (2010).
The question in Lair was what was “objective evidence” of quid pro quo corruption: was evidence about lobbying or campaign contributions enough to show corruption, even though the Supreme Court held in Citizens United and McCutcheon that “ingratiation” or “access” was not corruption or its appearance?…
The original panel decision last October ruled that, to prove “objective evidence” of corruption, Montana only had to show objective evidence of lobbying activity or campaign contributions. [Wednesday], the entire Court of Appeals refused to rehear the case en banc.
There was a dissent by five judges, written by Judge Sandra Ikuta and a concurrence with the denial by two. Judge Ikuta’s dissent stressed that the cases on which the original panel majority relied were handed down before recent Supreme Court cases like McCutcheon and Citizens United.
Election Law Blog: Ninth Circuit Denies Rehearing En Banc in Montana Campaign Contributions Case, Teeing Up Issue for Possible Supreme Court Review
By Richard Hasen
Judge Ikuta, for five judges wrote a dissent, to which Judges Fisher and Murguia responded. Judge Ikuta did not go as far as Judge Bea did in the panel decision. Instead she says that the Supreme Court’s opinions in Citizens United and McCutcheon have changed the Court’s approach to considering evidence of corruption to sustain a campaign contribution law.
Judge Ikuta’s dissent hits on an unresolved question. There are a number of campaign contribution cases, such as Shrink Missouri, decided when the Court was much more deferential to campaign finance regulations and much more willing to let states and localities support contribution limits with a little bit of evidence. No doubt these cases are in tension with McCutcheon, but McCutcheon did not overrrule these cases. And so judges like today divide on what to do.
The Supreme Court could well grant cert. in this case to resolve the ambiguity. The result, under the current Court, would almost certainly be to call into question all campaign contribution limits (as indicated in the Judge Fisher/Judge Murguia response). For that reason, the Court could decide to take a pass, as it has to the multiple challenges to the soft money provisions of the McCain-Feingold law which Jim Bopp has brought to the Court (he’s behind this one too).
Political Advertising
Axios: Google sets new rules for U.S. election ads
By David McCabe
People buying Google ads related to candidates in U.S. federal elections will have to prove they are U.S. citizens or lawful permanent residents beginning July 10, the company says…
Google’s new policies around verifying election advertisers in the U.S., announced Friday morning, come as it and other web companies race to forestall possible foreign meddling in the midterm elections…
Under Google’s new rules, people or groups who want to advertise in elections will have to go through a process that includes producing a “government-issued ID” as well as other information, like a Federal Election Commission identification number and an IRS Employer Identification Number. Google says it aims to confirm that buyers are who they say they are and can legally participate in American elections…
The new policy will not cover ads that relate to politically contentious issues rather than a candidate, which was the case for many of the online ads placed by Russian operatives trying to interfere in the 2016 election. The company says it is looking at following Facebook in tightening restrictions on those ads as well…
Google has promised to create a searchable database of election ads that have run on Google’s products and to produce a report detailing who is buying political ads.
Congress
AL.com: Watchdog group files ethics complaint against Shelby; senator alleges claim politically motivated
By Howard Koplowitz
A self-described nonpartisan watchdog group on Thursday urged the Senate Ethics Committee to investigate possible connections between donations from the payday lending industry to Sen. Richard Shelby’s campaign account and congressional votes that benefitted the industry.
“It’s no coincidence that Sen. Shelby fought for the payday lending industry’s priorities while raising money from the industry at the same time,” said Campaign for Accountability Executive Director Daniel E. Stevens in a statement. “This appears to be a textbook example of pay-to-play behavior.”
Shelby’s office dismissed the complaint from the Campaign for Accountability, whose actions have largely targeted Republicans, GOP donors and Trump administration officials, accusing the group of cherry picking facts and distorting the record.
Independent Groups
NBC News: The NRA can be so secretive about its Russian donors because it blocked campaign finance reform
By Alex Tausanovitch
[Y]ears of Federal Election Commission dysfunction, congressional inaction and advocacy against campaign finance reform by groups like the NRA have left the law in shambles.
Federal law broadly prohibits foreigners from funding advertisements or other activities “in connection with” an election. But the NRA, and some commissioners on the FEC, have often taken an extreme view of what is election-related and what is not…
Even if we take at face value the NRA’s blanket denials that there was any Russian money spent on its effort to support the Trump campaign, the fact that the American public knows so little about who funds campaign spending is a problem that the NRA has helped to create. For years, the NRA aggressively pushed for donor secrecy, fighting against any rules that require additional disclosure of the sources of campaign funds…
Fortunately, there are ready solutions to these problems. The DISCLOSE Act has made a comeback, with a new sponsor in Senator Sheldon Whitehouse (D-RI) and without a loophole for the NRA. Moreover, new efforts have arisen to take on the influence of foreign money and to require full disclosure of political dollars spent online, most notably with the recently-introduced Honest Ads Act, which has bipartisan sponsors in both the House and Senate.
Candidates and Campaigns
American Prospect: “No Corporate PAC” Pledges Go Beyond Cheap Promises
By Eliza Newlin Carney
Corporate PAC dollars often add relatively little to candidates’ campaign coffers, and are subject to strict limits and full disclosure in any case. The real corruption threat these days comes not from conventional corporate PACs but from super PACs, which may raise and spend unlimited money if they keep candidates at arm’s length, and from secretive “issue” groups that skirt disclosure rules while spending millions on politics.
Nevertheless, there are potent forces driving the more than 100 Democratic candidates who have promised to reject corporate PAC contributions, including a half-dozen potential 2020 presidential contenders. The “no PAC” pledges may strike some as campaign gimmickry, but they reflect both rising public anger over big money in politics, and the power behind anti-big money messages.
New York Times: Another Trump Effect on Midterms: More Small Donor Money for Democrats
By Rachel Shorey and Jasmine C. Lee
“A good share of Democratic small donor enthusiasm is a response to Trump,” said Sheila Krumholz, executive director at the Center for Responsive Politics…
Most of the small donors – those giving less than $200 to a candidate – are most likely people who are newly engaged who were not giving before, she said.
“A large number of small donors if they come from your district is better than a small number of large donors,” Ms. Krumholz said. “Because they’re more people, they’ve already supported you, they’re likely to fill in the dot, pull the lever.”
While both the total raised and the amount from small donors is remarkable for Democratic House candidates, much of the money is being spent on primary battles against fellow Democrats, leaving less for the November battle against Republicans…
A growing share of small donor money means candidates can still go back and ask for more money with less risk of donors hitting the maximum allowable contribution of $2,700 per election. But in the age of super PACs – which can raise and spend unlimited money supporting or opposing candidates – the advantage is limited.
“One single organization can still swoop in and change the balance,” Ms. Krumholz said.
Policy Research
HuffPost: Corruption Is Bad
By Zach Carter
[T]he latest policy proposal from the liberal-leaning Roosevelt Institute deserves special attention. Authored by incoming federal trade commissioner Rohit Chopra as he awaited Senate confirmation for his new post, the paper marks the first comprehensive attempt to rethink federal anti-corruption policy in years – maybe since the Watergate era. Instead of focusing on campaign contributions and elections, Chopra takes a look at the way special interests exercise undue influence over the federal bureaucracy and the broader policy debate in Washington.
“We can’t just address money in politics,” Chopra told HuffPost. “We have to address money in government.” …
In the Roosevelt paper, he proposes the creation of a new Public Integrity Protection Agency, or PIPA, to centralize and streamline the anti-corruption oversight that is currently dispersed throughout the federal bureaucracy…
The new PIPA wouldn’t just be responsible for policing the bureaucracy. It would also have jurisdiction over think tanks, advocacy groups and other organizations that seek to influence the political process. The PIPA could propose and enforce new rules on funding disclosure, making clear to lawmakers, regulators and the public when organizations are speaking on behalf of particular donors…
The scope of PIPA’s regulatory authority would also be tailored to the First Amendment – big donors would still be able to give freely to think tanks and other organizations, and working at a bank couldn’t be a lifetime ban on government service. But plenty of activities would still be eligible for oversight, from think tank funding disclosures to stock trading by federal employees.
The States
Gotham Gazette: Charter Revision Commission Urged to Consider Tighter Donation Rules for City-Affiliated Nonprofits
By Samar Khurshid
A government reform group is urging Mayor Bill de Blasio’s Charter Revision Commission to explore stronger restrictions on donations to nonprofits affiliated with city agencies, building on a raft of laws passed through the New York City Council and signed by the mayor in 2016, which are set to go into effect next year…
To close several holes, Reinvent Albany recommends that all donations to nonprofits affiliated with elected officials be capped. The law currently only applies the $400 doing-business cap to those nonprofits that spend more than 10 percent of their budget on public-facing communications featuring the elected official. Camarda said the limit could be higher, though he did not suggest a specific amount…
“Many of these nonprofits do important work that helps the city,” Camarda said. “We don’t want them to become avenues for companies and wealthy donors to circumvent the campaign finance system.”
