in the room.
From all the various reports on this issue, a few key points seem to have gotten lost.
#1 It is unique. No other presidential candidate has established a Victory Fund (PAC) before securing the nomination. With the 2014 Supreme Court ruling in McCutcheon , et al. v. FEC, future incumbent Presidents running for re-election will undoubtedly set up such a victory fund in the year before the next general election. From a practical standpoint that will decrease the likelihood that an incumbent President is challenged for the nomination. So, it’s sort of like an incumbent protection racket. Thus, under this new structure, not much chance that there would have been a McCarthy (’68), Kennedy (’80), or Buchanan (’92).
For a candidate and political party to set up such an arrangement when there is a contested primary, further increases the power of the party elites and major money-bags. Had this been an option for the 2008 election, Obama is unlikely to have had a chance.
#2 It increases the amount of hard money. The money raised by the Victory Fund is all soft (not subject to contribution limits). It becomes “hard money” through the distributions. The hard money donation caps are unchanged, and therefore, it doesn’t make any difference if the donor writes one check or thirty five checks. What we’ve been told is that a maximum donation from an individual to the Victory Fund will be divvied up like this:
$2,700 to HRC for America
$33,400 to the DNC
$10,000 to each of some number of state DEM Parties.
(Double all those numbers for election cycle limits.)
We’re also told that the state DEM Parties transfer their $10,000 receipt to the DNC. As there are no restrictions on transfers of hard money from or to state parties and the national party, this particular scheme increases the potential hard money to the DNC from a single donor from $33,400 to $363,400.
Why would a state party agree to this?
State parties may have had little to no access to these donations anyway; so, it doesn’t change their current financial position. It would reduce any obligation state parties have for funding the DNC. A financially strong DNC is potentially helpful for state parties and candidates and it leaves open the possibility of transfers from the DNC to state parties.
#3 Under the excellent stewardship of Ms. Wasserman-Shultz (DWS) the DNC was a million dollars in the red in 2015. McCutchceon doubled the amount the DNC (and RNC) could collect in an election cycle from $33,400 to $66,800 from wealthy donors, but the receipts in the past for the DNC weren’t chump change:
- $278 million
- $230 million
- $316 millon
- $168 million
- $82 million (FEC report released April 6, 2016)
The RNC as of the latest FEC report has raised $126 million, but for the election cycles 2000 through 2014, the RNC raised more money than the DNC in all of those election except 2004 and 2010.
Bottom line, the DNC needed to raise a lot more money and quickly and the joint Hillary Victory Fund was an excellent vehicle to do so.
#4 Soft money substitutes for hard money. Over several months, it was seen that Carly Fiorina’s SuperPac funds were being used for regular campaign functions. That is a legal violation (and the FEC might get around to questioning the Carly fund sometime in the next decade). Coordination between SuperPacs and a campaign is also strictly verboten, but so far it borders on being a joke.
Uber-sleaze, David Brock and his Correct the Record (a dark money PAC) is using a loophole in that prohibition and isn’t hiding the coordination with the HRC campaign.
The Hillary Victory Fund (HVF) is in-house with Hillary for America. Through 12/31/15, HVF had $29.6 million in receipts and spent $14.1 million. The divvying up is slower than the collections. HVF paid HFA $1.5 million for “Salary and Overhead Expenses”. Whether that is for dedicated HVF workers and space or an allocation of worker time and space to HVF isn’t defined.
Another significant expense item is direct marketing (a standard PAC expense category). This doesn’t fit in with the “high roller” concept for this PAC. Why collect small dollar contributions from individuals? This is a puzzler. None of these small donations have the appearance of being from people that during the course of 2015 would have maxxed out.
Is it possible that donors that wouldn’t exceed the limits are confusing HVF with HFA?
More than $4 million of the fund went to direct mail and online fundraising for small contributions. Much of this material resembled Clinton campaign materials and used the campaign slogan.
Another point:
The fund also runs Clinton’s online merchandise store. Purchases at the store do not count towards contribution maximums.
Would rephrase that to: Purchases at the store do not count as donations. For the Sanders’ campaign all memorabilia purchases count as donations even though the campaign only ends up with the net amount after costs and shipping.
Why so many $33,400 contributions?
I randomly checked through a few of the smaller and $33,400 contributions to HVF with what is listed for those donors at OpenSecrets. This is what I found:
Donor A: 10/16/15 – $250 to HVF, 10/16/15 – $250 to HFA, 10/22/15 – $250 to HFA
Donor B: 10/24/15 – $250 to HVF, 10/26/15 – $140.45 to HVF, 10/24/15 – $250 to HFA, 10/26/15 – $140 to HFA
Donor C: 11/27/15 – $2,300 to HVF and HFA
Donor D: 12/10/15 – $1,000 to HVF and HFA
Donor E: same day – $1,500 to HVF and HFA
Donor F: same day – $1,000 to HVF and HFA
——
Donor 1: 12/22/15 – 33,400 to HVF and 6/30/15 – $2,700 to HFA
Donor 2: 12/17/15 – $33,400 to HVF and early 2015 – $2,700 to HFA
Donor 3: 11/12/15 – $33,400 to HVF, 11/12/15 – $10,000 to NH DEM, May 2015 $2,700 HFA
Donor 4: 11/30/15 – $33,400 to HVF, 11/30/15 – $33,400 to DNC, 4/12/15 – $2,700 to HFA
Also need to note that the above donors have given to various candidates over many election cycles and all but one made other donations in 2015 in addition to the ones listed here.
I’m going to assume that the donations for the same amount that are listed for the same day to HVF and HFA, DNC, and state DEM parties were single checks written to HVF that passed those donations down to the other campaign committees. In the case of HVF to HFA, the donation is effectively being double counted. An example to clarify that statement.
Suppose a fundraiser were held, none of the 100 attendees had previously given the HFA and all of them wrote a check for $2,700 to HVF at the fundraiser. HVF and HFA would report receipts of $270,000, but for actual campaign purposes, it can only be spent once. Thus, as a large portion of the HVF receipts is a pass through to the campaign, it makes HRC’s fundraising appear to be somewhat more robust than it is.
A larger issue is that HVF controls where, when, and if funds are distributed. For example, on 12/28/15, International Union of Painters and Allied Trades Political Action Together Political Committee donated $150,000 to HVF. A single $5,000 (the limit for PAC donations) was immediately disbursed to the NH Democratic Party. This would be a monumental screw-up on the part of the HVF if the primary intent were to turn soft money into hard money as quickly as possible because the caps on donations are annual (and I’m assuming a distribution from HFV can’t be backdated to when the individual or PAC made the donation). That $150,000 donation could have been divvied up like this:
$5,000 – HFA
$15,000 – DNC
$5,000 – to each of twenty-six state DEM Party
And in 2016 another $150,000 from the same union PAC could be split up in the same way. Instead HVF chose to sit on that $145,000. Why? (One obvious advantage during the primary is that HFA minimize charges of receiving PAC money.)
Let’s look at a mega-donation of $353,400 received on 12/21/15 from individual X. Mr. X maxxed out on HFA in April 2015. On 12/21/15, $10,000 from Mr. X hit the coffers of twelve state DEM Parties. In January 2016 three more state parties received $10,000 from Mr. X. As Mr. X hadn’t made any other donations in 2015, why wasn’t $33,400 passed along to the DNC and $10,000 to seventeen other state parties? (The limited distributions from other mega-donations that I checked also eixsts.)
Thus, the narrative of how the HVF could turn two mega-donations of $353,400 of soft money into hard money for the state and national DEM parties in this election cycle has fallen short of what it has been claiming to have achieved.
Combine the fact that the distributions to state parties in 2015 was less than it could have been with the fact that state parties have been transferring some portion of what it has received from the HVF to the DNC and the claim that Clinton has been raising Yuuge dollars for DEM parties is overblown. However, it has been a powerful meme for HRC advocates to use against Sanders. It’s a lot like all the HRC attacks on Sanders — once all the facts are in evidence, it’s much ado about nothing.
As for the HVF pot of money HRC’s team is sitting on and the distributions to state parties that act as pass-throughs to get around the donation limits to the DNC, it’s as CREEPy as it was in 1972.
UPDATE — Lawrence Noble, Campaign Legal Center – January 2016 Supreme Court, Meet Reality (Covers much of the same material in this diary only Noble did it months earlier.
WaPo – Democratic Party fundraising effort helps Clinton find new donors, too
…
Even as it has bolstered the DNC, the Hillary Victory Fund has had striking success bringing in new donors to support Clinton’s fight to beat Sanders for the Democratic nomination. The committee spent more than $4 million prospecting for small-dollar contributors through direct mail and online ads that resemble official campaign material, down to the signature “I’m with her” tagline. The net proceeds raised for the campaign: $3.24 million through the end of 2015.
Several campaign finance attorneys said the fund’s early investments in small-donor recruitment for Clinton were unusual, noting that a joint fundraising committee’s resources are traditionally focused on boosting a party nominee, typically through events at upscale hotels for deep-pocketed contributors.
“I’ve never seen anything like this,” said Lawrence Noble, a former general counsel of the Federal Election Commission (FEC) who is now with the nonpartisan Campaign Legal Center. “Joint victory funds are not intended to be separate operating committees that just support a single candidate. But they appear to be turning the traditional notion of a joint committee into a Hillary fundraising committee.”
…[emp added]
The Nation 2011 – The Shelters That Clinton Built. Structurally unsafe and laced with formaldehyde, the “hurricane-proof” classroom trailers installed by the Clinton Foundation in Haiti came from the same company being sued for sickening Hurricane Katrina victims.
.
Relevance? As Billmon points out:
“Hurricane proof” trailers donated by Clinton Foundation, made by Clayton Industries, owned by Berkshire Hathaway, owned by Warren Buffett….who’s a “member” of the Clinton Initiative, and raised at least $1 million for her 2008 campaign…
The ProPublica attack on Sanders VA effort is similarly questionable due to its major funding sources who just happen to be major HRC donors: George Soros and Marion and Herb Sandler.
UPDATE #2 – April 18, 2016 – Bernie Press Release: Clinton-DNC Joint Fundraising Raises Serious Campaign Finance Concerns
…
Unlike Clinton’s presidential campaign committee, Hillary for America, the joint committee may accept large donations of up to $356,100. The first $2,700 of this amount is eligible for transfer to the Clinton campaign, $33,400 can be transferred to the DNC, with any remaining amount, up to $10,000, to each participating state party. According to public disclosure reports, however, the joint Clinton-DNC fund, Hillary Victory Fund (HVF), appears to operate in a way that skirts legal limits on federal campaign donations and primarily benefits the Clinton presidential campaign.
…
As I wrestled with why the Hillary Victory Fund would expend so much effort and money on building a small donor operation that duplicates what HFA already does, I missed the obvious that within HVF, large donors can cover the expenses of the small donor operation.
The financial disclosure reports on file with the Federal Election Commission indicate that the joint committee invested millions in low-dollar, online fundraising and advertising that solely benefits the Clinton campaign. The Sanders campaign “is particularly concerned that these extremely large-dollar individual contributions have been used by the Hillary Victory Fund to pay for more than $7.8 million in direct mail efforts and over $8.6 million in online advertising” according to the letter to the DNC. Both outlays benefit the Clinton presidential campaign “by generating low-dollar contributions that flow only to HFA [Hillary for America] rather than to the DNC or any of the participating state party committees.”
Not that HVF and HFA have to worry about the FEC busting either of them.