Millionaire’s Amendment MUR Madness

December 21, 2006   •  By IFS staff   •    •  
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We always knew that the so-called “Millionaire’s Amendment” was a silly law, but if the FEC’s most recent pronouncement on the law’s requirements is correct, we may have underestimated exactly how silly it is.

For those unfamiliar with the law, the Millionaire’s Amendment was part the McCain-Feingold “reform” package passed in 2002.  Under the Amendment, candidates who self-finance beyond a threshold amount trigger contribution limit increases for their opponents, up to $12,600 (six times the ordinary limits).  This increase, so the argument goes, is necessary to create “fairness.”  Since their adoption into law, there has never been a satisfactory explanation for why contributions in excess of $2,100 cease to be corrupting when one is running against a self-finance millionaire (we suppose it’s merely a coincidence that incumbents, who rarely self-finance, are the principal beneficiaries of this law).

In the 2004 Illinois Senate race, the Amendment was triggered during the Democratic primary by candidate Blair Hull.  Mr. Hull spent enough money to max out the contribution limit increase (then set at $12,000) for his two primary opponents, Daniel Hynes and Barack Obama.  Obviously, (future Senator) Barack Obama was successful in the primary, knocking both Hynes and Hull out of the race.

This is where things get interesting.  Under the Millionaire’s Amendment, the increased contribution limit for candidates stays in effect only as long as the candidate who triggered the increase (in this case, Hull) remains in the race.  Hull’s exit from the race meant that Obama would have to go back to raising contributions within the then-applicable $2,000 limit.  But what does it mean for Hynes, who was no longer in the race?  Hynes exited the race with $400,000 in campaign debt.  After consulting two attorneys, he began raising money to retire the debt, still accepting contributions as high as $12,000.

As BNA reports ($), the FEC takes a different view of the law than Hynes’s attorneys did.  In a decision announced on Tuesday, the FEC found that Hynes campaign committee violated the law by continuing to raise funds at the $12,000 limit (MUR 5744 (.pdf)).

Even if it is the correct legal conclusion–more on that in a moment–this strikes us as a strange result.  We can see why, through then lens of “reform,” this rule makes sense as applied to Obama; once Hull was out of the race, Obama was no longer challenging a millionaire and the “fairness” rationale no longer exists.  But it makes little sense to apply this rule to another unsuccessful primary candidate.  There doesn’t appear to be an anti-corruption rationale; whether Hynes retires his debt with $2,000 contributions or $12,000 contributions, he won’t be a U.S. Senator when the election is over, so there’s no fear of quid pro quo.

Even stranger, it appears that if Hull had won the primary instead of Obama, Hynes would have been allowed to continue raising contributions under the increased limits.  The statute provides:

A candidate and a candidate’s authorized committee shall not accept any contribution…under the increased limit after the date on which an opposing candidate ceases to be a candidate to the extent that the amount of such increased limit is attributable to such an opposing candidate.

2 U.S.C. 441a(i)(2)(B).

Had Hull, who triggered the increase, defeated Obama in the primary, he would not have “ceased to be a candidate,” and the increased contribution limits would have remained in effect.  But once Hynes has exited the race, why should his contribution limits turn on whether he lost to Hull or Obama?  If we are concerned about “fairness,” surely it is fairness within the campaign itself, not fairness in retiring debt.

Analysis of the statute reveals another twist: It applies only to “a candidate and a candidate’s authorized committee.”  But if Hull’s primary loss meant that he had “ceased to be a candidate” for purpose of the statute, then surely Mr. Hynes had ceased to be a candidate as well and was, therefore, not subject to the rule.  Indeed, Hynes was ultimately dismissed from the case, but apparently not on these grounds; the General Counsel’s report found reason to believe that Hynes himself had violated the law.  Perhaps the General Counsel believed that interpreting the statute to apply to a former candidates’ authorized campaign committee but not to the former candidate himself would verge on an absurd result.  This strikes us as no more absurd, however, than interpreting “candidate” to include former candidates in once instance and exclude them in another, both within the same sentence.

These textual quirks and the bizarre outcome in this case shouldn’t surprise anyone.  They are the natural consequence of regulation unmoored from principle.  Our concerns about “corruption” should be at their lowest when dealing with ex-candidates.  It’s hard enough for losing candidates to retire their debt without placing unnecessary obstacles in their way.  If Hynes and his Committee did violate the letter of the Millionaire’s Amendment, it is further proof of the absurdity of that law.

IFS staff

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