A Second Hand Conjecture

After working very hard and soliciting thousands of ideas for a slogan to attack and bring more attention to Rush Limbaugh, the DNC has settled on, “Americans didn’t vote for a Rush to failure”.

This slogan seems like especially bad timing with the currently Obama talking point being headlined today, “Obama Claim: Done More in 30 Days Than Other Presidents“

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Sadly, it seems Angela Keaton has finally resigned from the Libertarian National Committee. If you haven’t been following this little bit of salacious Libertarian Party drama, here’s the “Resolution of Discipline” against her from December 1st, which details many of her alleged injuries to the “public image” of the party. My personal favorite demand:

An apology [from Angela Keaton] to the Libertarian National Committee for offering sex to the LNC officers conditional on the performance of our Presidential candidate by stating in an Internet interview on June 26, 2008, “If Bob Barr breaks 1%, the officers of the national party can pass me around like a pu-pu platter.”
(IPR)

For the record, Bob Barr received 0.4% of the national popular vote in 2008, and thus Angela was spared the indignity of becoming a Chinese appetizer in a vorarephilic Libertarian orgy. That in itself is probably a source for some of the hostility by members of the LNC. It’s one thing to brutally mock your party, it’s something altogether more offensive to be proven accurate in your mockery.

Yet with the passing of the colorful and combative Ms. Keaton, there is once again officially no immediate reason to pay attention to the doings of the LNC that I can think of. Not that anyone outside the LP was paying attention to this either…which does call into question the integrity of the charges made by Angela’s critics. After all, a “public image” which is subject to injury, does tend to require a public audience.

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Patterico’s Pontifications
This didn’t seem possible just a few months ago.

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No Left Turns
“Then Cory Booker of Newark attacked teachers unions specifically–and there was
applause. In a room of 500 people at the Democratic convention! “The politics
are so vicious,” Booker complained, remembering how he’d been told his political
career would be over if he kept pushing school choice, how early on he’d gotten
help from Republicans rather than from Democrats. The party would “have to admit
as Democrats we have been wrong on education.” Loud applause!”

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Some people are hoping to hoist John McCain on his own campaign finance petard. As satisfying as it would be to see the Senator receive a healthy dose of his bitter medicine, however, the complaints filed against him with the FEC will almost assuredly fail.

In the blogosphere it is the most recent complaint filed by Jane Hamsher, et al. that is getting the most attention.

Yesterday, on behalf of a large number of progressive bloggers and activists, Jane went to the FEC and filed an official complaint against John McCain’s alleged campaign finance violations. We’ve been asking a lot of questions about this, and the answers have been less than forthcoming. So, instead of just sitting here and stewing about yet another GOP ethical problem, we decided to put our action where our concerns were.

[...]

As Markos of DailyKos pointed out in joining the complaint, “John McCain has officially blown past campaign spending limits mandated by his original acceptance of public campaign funding. While he has signaled his intent to withdraw from such financing, that has been hindered by the fact that he used the promise of public funding to secure a campaign loan.” Guess the campaign finance laws only apply when they aren’t inconvenient for McCain’s ambitions.

In truth, Hamsher’s complaint is a just piggy-backing off of the DNC’s complaint filed on February 25, 2008. Unsurprisingly, the DNC complaint is much more substantive:

In order to receive matching funds, John McCain signed a binding agreement with the FEC to accept spending limits and to abide by the conditions of receiving those funds. The FEC makes clear that any request to withdraw from the agreement must be granted by the FEC. In other words, McCain can’t just unilaterally withdraw. FEC Chairman David Mason made this clear in a letter to McCain advising him that the law requires the FEC to approve his request to withdraw from his contract.

According to past Commission rulings, the McCain campaign would not be allowed to withdraw from matching funds because it has already violated a key condition for being let out of the program - pledging matching funds as collateral for a private loan. McCain obtained a $4 million line of credit — drew $2,971,697 from it - and documents make clear that the promise of public financing was used to secure his loan.

The gravamen of both complaints is that McCain’s attempt to withdraw from the matching funds program, and thus to spend more than allowed thereunder, is a dead letter because he pledged the certification for federal matching funds as security for private financing. According to the FEC, withdrawal from the program will normally be automatically granted “prior to the payment date for any such funds to such candidate or his or her committee upon receipt of a written request signed by the candidate, provided that the certification of funds has not been pledged as security for private financing.” However, the loan documents tell a different story.

In November of 2007, McCain took out a $3 Million line of credit with Fidelity & Trust Bank of Maryland (see DNC Comp., Ex. 4, pdf p.18). As a part of that loan, McCain also executed a Security Agreement pledging all of his assets to the Bank as collateral, with the explicit exception of:

any certifications of matching fund eligibility currently possessed by [McCain] or obtained before January 1, 2008 and the right of John McCain 2008, Inc. and John McCain to receive payment under these certifications [which] are not collateral under the Commercial Security Agreement for this Loan.

(see pdf p.21). Such disclaiming language appears throughout the loan documents, making it abundantly clear that the Bank had no security interest in or to the certifications or any matching funds.

The entire loan was later modified, on December 17, 2007, raising the limit on the amount that could be borrowed to $4 Million. The modification also altered the language concerning the matching fund certifications. In particular, the parties had anticipated all along that McCain may withdraw from the program, and the documents addressed the scenario of McCain then losing the New Hampshire primary afterwards. In that case, McCain would then reapply (i.e. re-certify) for federal matching funds, and then pledge a security interest therein to the Bank. The Loan modification, changed the re-certification promise to include the next primary McCain ran in after withdrawal. (see pdf p.35).

In addition, the modification revised the “STATUS OF CURRENTLY HELD CERTIFICATIONS OF MATCHING FUNDS” to read:

[McCain] and Lender agree that any certifications of matching funds eligibility now held by [McCain], and the right of [McCain] to receive payment under such certifications, are not (and shall not be) collateral for the Loan.

At this point it should be painfully clear that neither McCain nor the Bank think that there is a security interest in the certification.

The DNC attempts to argue that despite the clear and unambiguous language to the contrary, McCain did in fact pledge a security interest in the certification … with respect to future matching funds! The DNC basically makes three arguments in order to prove its case:

(1) McCain’s promise to re-certify for matching funds in the event that he loses a primary after withdrawing from the program, and to grant a security interest in such certification and matching funds to the Bank, creates “a present encumbrance, however conditional, of the Campaign’s future interest in and entitlement to matching funds ….”

This argument is fallacious on its face. The FEC policy of automatically granting a request to withdraw from the program provided that the currently held certification has not been pledged does not have anything to do with future certifications. It only deals with a certification presently held by a candidate. That McCain promised to grant a security interest to future certifications, upon certain other conditions being met, is not material to the current certifications. Indeed, both the Bank and McCain understood that a security interest in the certification would prevent McCain from withdrawing, which is why they drafted the documents the way that they did.

Furthermore, even accepting the DNC’s argument as valid, it is self-defeating. If the Bank’s has a present security interest in future certifications, and that security interest prevents McCain’s withdrawal from the program, then the conditions precedent to the Bank perfecting it’s security interest (i.e. withdrawal and re-certification) cannot be met. Ergo, it has no security interest.

(2) McCain agreed to abide by, and to stay within, “overall or state spending limits set forth in the Federal Matching Funds Program,” regardless of whether the campaign was still participating in the program or not. The DNC reasons that these provisions are for the sole purpose of ensuring that McCain can receive future matching funds, and that the Bank can take a security interest therein.

The DNC is probably right about that, but so what? It still doesn’t create any security interest since not only was any such interest specifically and repeatedly disclaimed, the only possible interest the Bank could have would be in funds received after McCain withdrew from the program and then re-certified. At the time McCain attempted to withdraw from the program, the certification his campaign held was not encumbered. End of story.

(3) While the description of collateral excludes current certifications held by McCain, it implicitly includes “rights to receive matching funds, i.e., that come into existence, after January 1, 2008, based on matchable contributions received and presentations in good order made after that date … The modification makes clear again that, although the initial amount certified in December 2007 may not be part of the Collateral, the Collateral will include future amounts of matching funds paid, based on future submissions, even though based on the initial certification of eligibility.”

Although this argument is also wrong, it is certainly clever. If we assume that the specific exclusions of McCain’s certification found throughout the documents are simply ineffective, and that the limits on the Bank’s interest in such certification and the rights to any matching funds is only the good up to date of the modification, then the DNC’s argument that any certified funds after that date are in fact part of the Collateral might actually make some sense. However, there are a couple of problems with it.

First of all, there is only one certification, and that is the initial one made by McCain in August of 2007. When McCain withdrew from the program on February 7, 2008, it is implied that the initial amount certified had not been amended, and that no further funds had been certified for matching. Accordingly, once again there has not been a present security interest created, nor is it even clear that a future interest was anticipated by the Bank prior to McCain’s withdrawal and re-certification.

Secondly, looking at Exhibit 2 of the DNC Complaint we see that as of December 20, 2007 John McCain had certified $5,812,197.35 (also found here). However, when we look at the FEC data for 2008 Presidential Matching Fund Submissions, there are no new funds submitted for certification since the December 20 press release. If we accept the DNC’s argument as correct, and McCain has not in fact submitted any new funds for certification since December 20, 2007, then the Bank still does not have any security interest in the certification or matching funds.

Accordingly, the DNC’s Complaint will most likely be denied since the Bank quite clearly excluded McCain’s certification and any matching funds from becoming security for the loan. If McCain actually did submit funds after December 20, 2007 for certification, there is a colorable argument that such certified funds are pledged as collateral, but given the totality of the documents that’s not a very winnable position.

Regarding Hamsher’s Complaint, it tries to make the case that because the FEC has not yet granted McCain’s request that he withdraw from the program, that he is still bound by the spending caps, and that he has violated those caps. Even if she is right about McCain’s campaign exceeding the spending limits, McCain would certainly have a reasonable expectation to believe that he will eventually be released from the program, given that he complies with the provisos for an automatic grant of his request. Moreover, it would not be reasonable to expect to him to await the FEC’s decision on the matter when the commission doesn’t even have enough members to do so:

The only trouble is, the commission hasn’t got a quorum… and it won’t, until the Senate breaks a deadlock on approving nominees.

The FEC can’t deliver any decision yet, and prior opinions indicate clearly that McCain will be released. Why should he be restricted to the spending caps?

Furthermore, and this goes to all the arguments above, it’s not even clear that the FEC has the power to prevent McCain from withdrawing in the first place. The FEC thinks that the certification process creates a binding contract between the candidate and the commission, but it doesn’t look like any enforceable contract I’ve ever seen. There is no consideration, and there is no mutuality of obligation. A candidate can apply for the funds, but he can’t be required to actually take them, can he? If he were to take the funds, then there is probably an enforceable contract, but prior to that time the candidate is merely trying to establish eligibility. Imagine going to a bank and applying for a loan, and then having the bank sue you because your credit score does not allow you to qualify for a loan. That’s pretty much the argument being made.

So that’s the DNC and Hamsher case against McCain in a nut shell. He accepted a loan from a bank, specifically excluding as collateral any certification for matching federal funds, except that he secretly really did! Oh, and because the FEC hasn’t granted McCain permission to not accept federal matching funds, then he is still bound by the spending caps, and he’s violated those with reckless abandon. Needless to say, I don’t think either complaint will be successful.

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(Originally posted at What if?)

From the moment I purchased “Managing Your Money” software many years ago, I realized that Andrew Tobias is a very smart and very amusing fellow. Later, I discovered that Andy is also warm, friendly and has a huge heart. Despite being a huge business and DNC celebrity (he’s the DNC’s treasurer), he frequently takes times to email-correspond with lil’ ol’ me.

Often, Andy and I disagree on a multitude of policy issues. Nevertheless, on at least one issue, we are quite in agreement: gay folks deserve the same rights and responsibilities as the rest of us.

While Andy happens to be gay, I am not. Neither is Jon Kislak, a Floridian active in Republican politics. Mr. Kislak, Andy, I and many others appreciate that your sexual orientation should not be an obstacle to enjoying the same civil rights that heterosexuals have. While I seem unable to put in an excerpt at what if?, please do go to Andy’s site to see what Mr. Kislak has to say. (Just a little warning; you’ll have to scroll down a lot of pro-DNC stuff before you get to it. Forewarned is forearmed! :))

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Steven Taylor takes a look at Paul Kane’s conclusion that it is now mathematically impossible for either Obama or Clinton to win the nomination with pledged delegates, and notes that a super-delegate decided nominee represents an enormous political problem for the Democrats:

The party that has a legitimate gripe about the 2000 election and the fact that Al Gore won the popular vote cannot find themselves in a situation in which the nominee with less popularly-selected delegates is given the nomination by delegates who were not elected via the primary/caucus process.
(PoliBlog)

Not only is this a problem of political perception and party unity, it could conceivably jeopardize the unification of the two candidates on a single ticket. The candidate perceptions themselves of whether or not they’ve been swindled out of the top slot on the ticket could be significant. Given the nature of this race, it has become almost imperative that the loser is named the vice presidential nominee. But when we are dealing with two candidates who no longer seem particularly fond of each other to begin with, trouble may lie ahead by adding the dimension of a potential backroom convention deal.

Supplementally, Dr. Taylor also adds:

Also, at the end of the day, the DNC may very much come to regret taking the Michigan and Florida delegates out of the pool.
(PoliBlog)

Further evidence that the politics of exclusion always ends up punishing you in democracy.

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Because of his support/endorsement of McCain. The Dems made a rule (because of Zell Miller and his endorsement of Bush in 04) that any democrat crossing the lines to endorse a republican (or presumably 3rd party too) candidate would be stripped of their superdelegate status. So that will be one less superdelegate for CT. Can’t say I necessarily disagree with this. Would kinda be embarrassing for one of your delegates to vote for someone in another party at the convention.

(HT FDL)

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Barack Obama launches the first nation-wide television advertising campaign (cable tv spot on CNN and MSNBC). Team Hillary is upset about the violation to the DNC Florida campaigning boycott. She’s probably more upset by how strong this ad is.

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(photo: Marc Nozell)

Matt Stoller at OpenLeft has a pretty interesting observation about the swing of the self-described “very liberal” constituency from Obama to Hillary over the course of the primaries:

In Iowa, Obama beat Clinton by 16 points among those who consider themselves as ‘very liberal’. In New Hampshire, they were even. And now in Nevada, Clinton simply destroyed Obama within that block by 16 points. In other words, while it’s not entirely clear who ‘won’ Nevada, whatever that means, had Obama run even with Clinton among those who describe themselves as ‘very liberal’, he would have soundly defeated her at the caucuses outright instead of having to play delegate games.
(OpenLeft via Corrente)

Matt goes on to make the argument that Obama’s recent praise of the Reagan legacy was the catalyst for Obama’s defeat. Overall Matt’s grinding old ideological axes a bit too hard here, given that this would clearly fail to answer how the trend he identified managed to precede Obama’s remarks on Reagan. But he is onto something at the margins. It would be interesting if Obama was losing the “very liberals” as Matt notes, among the aging and still resentful leftists who were adults during the Reagan era.

(more…)

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