politburo diktat 2.0

Loans Could Paint McCain Into Corner

Should the FEC or a federal court force him to remain within the system, he would have to abide by a $54 million spending cap until September, when the primary season ends. His campaign had spent $49 million as of Jan. 31, reports show.

Most reports on this called it complicated and obscure. Maybe. But the issue hinges on a single, not-too-complicated point. When McCain borrowed $4 million last year, he used the promise of federal matching funds as collateral (or so claims the DNC). If the FEC and the courts agree, then he’s stuck within the tightly limited federal financing system.

Update: Well, I thought it was a simple question.

Here’s the deal: If you are *in* the federal financing system, then you gotta play by their rules, to include a spending cap of $54 million. If you are *not in* then you can spend what you like. Clearly, a candidate can’t pick and chose, and change his mind, and be *in” this month (and gain certain benefits, like a loan, for example) and then be *not in* next month.

To respond to a couple of Jeremy’s questions … It’s certainly not a private matter when the collateral is the promise of getting Federal money.

Also, there’s no question of him defaulting on the loan, not at all. Since his campaign rebounded, he’s been able to raise a fair amount of money. Nor is there any issue here with the bank’s own business practices or possible risky lending.

A helpful perspective here is the FEC’s, on a ‘what-if’ basis. What if McCain’s maneuver is okay? Then, any candidate can borrow money, using the federal system as collateral. If their candidacies falter (and then, by definition, they don’t raise much of their own money), then they “stay within the system” and the taxpayers make good on the loans. Or, if their candidacies succeed (and they presumably DO raise money), then they opt out of the federal system, after already having used it to their advantage.

As a result, the taxpayers will be on the hook, for X millions for all the failed candidacies (the Bidens, the Huckabees, etc.), while those who win the primaries (McCain and Clinton or Obama) can opt out, after having borrowed against their commitment to stay within the system.

Lastly, while I am describing the DNC’s claim here as “simple,” I only mean that the central issue is not all that complicated. I have no idea what the FEC or the courts might rule.