Candidates Bending Rules to Skirt Campaign Reform Law : Presidential Politics--a Search for Loopholes

There is not much in Ascutney, Vt., to attract a presidential candidate--only a few thousand people, a pretty view of the Green Mountains and a nearby ski area. What attracted Democratic hopeful Bruce Babbitt when he visited the town May 4, however, was a highway bridge over the Connecticut River to New Hampshire--that and a provision of the federal election law.

Much like the development of new drugs and the marketing of telephone service, presidential politics has become a federally regulated industry, complete with a volume of rules and a corps of lawyers busy stretching them. Today, a major element in any quest for the White House has become the search for loopholes and ways of interpreting the rules that will enable candidates to gather and spend more money.

The trip by Babbitt, a former Arizona governor, to the hamlet of Ascutney illustrates the point.

Set Maximums for States

Federal rules not only limit the amount of money presidential candidates can spend in total but also set maximums for individual states--limits that are especially critical for the early primaries. What Babbitt--like many before him--seized upon was the fact that staying one night on the Vermont side of the river while campaigning in the Granite State enabled him to define a weeklong trip into two three-day trips.

Under the federal rules, a weeklong trip would have counted against his New Hampshire budget, whereas the three-day trips were short enough to escape the rules entirely.

The laws--enacted in the wake of the Watergate scandal--were designed to curb the influence of big money on presidential politics, and they have largely achieved that result, experienced campaign workers say. Traditional fat cats, the old-style campaign contributors who poured tens of thousands of dollars into individual races, are largely a thing of the past.

Yet the amount of money spent on presidential quests has risen steadily, and what worries supporters of campaign reform now is the steady erosion of a law worn away by a parade of candidates trampling its edges. By searching out ways to evade the spirit if not the letter of federal rules, candidates foster disrespect for the law and put an unhealthy premium on sharp practices, some specialists warn.

And the recurrent spectacle of prominent public figures bending the rules as they seek the highest office in the land feeds the cynicism and alienation of voters, they say.

“The loopholes and the people evading the law” eventually will “undermine the credibility of the system,” said Fred Wertheimer, president of Common Cause, a citizens lobby.

“The danger is, the system gets discredited and with it, the presidency gets discredited,” Wertheimer said. “We don’t want to have to worry on a weekly basis about presidential decisions being made in response to, or in the hope of, campaign contributions.”

Certainly spending stratagems, small and large, have become commonplace in presidential politics. The rules, says an official of Massachusetts Gov. Michael S. Dukakis’ campaign, “influence every campaign decision”--from the hotels candidates sleep in to the cars they rent. “It’s like working for a utility company,” the Dukakis aide said.

“Every election cycle there seems to be a new vehicle that surfaces” to help campaigns “avoid some of the restrictions,” Scott E. Thomas, chairman of the Federal Election Commission, said in a recent interview.

This time around, for example, several prospective candidates avoided having early expenditures counted against their legal maximums by creating tax-exempt foundations to pay for travel, staff and high-profile public forums in 1985 and 1986 before the candidates formally announced. Republican presidential hopeful Rep. Jack Kemp of New York used his foundation, the Fund for an American Renaissance, to, among other things, publish a book of his speeches.

Accept Donations

The foundations accepted donations that would have violated fund-raising limits had they been given to a campaign and gifts from corporations, which are forbidden from contributing directly to candidates.

“I think we are not sliding back into the era when suitcases of cash were brought to presidential campaign headquarters,” Thomas said, but, he conceded, many ways exist “that appear to be legal but which allow influence to be brought to bear” on campaigns in ways “not intended by the law.”

Others take a still more gloomy view. When the election commission was set up, in 1976, “everyone was very fearful of what the commission would say,” said one former senior FEC official. Now, by contrast, the former official said, the attitude of campaigns increasingly appears to be that “anything that isn’t explicitly prohibited, I can do.”

That attitude is expressed in many ways. The attempts to get around the state spending ceilings, although involving relatively small amounts of money, are among the most colorful. One Democratic candidate, for example, needed cars in Iowa, the site of the crucial first caucus in the nation next year, and where the spending ceiling is $745,000. His staff went across the border to Omaha, Neb., for the rental, which will count against his spending ceiling in Nebraska, where the primary is considered relatively unimportant.

In another example, nearly all candidates have plans to invest heavily in television advertising in Boston. Massachusetts has negligible impact in the Republican primaries and is virtually conceded to Dukakis on the Democratic side. But Boston television is heavily watched in neighboring New Hampshire, and a large part of the cost of the advertisements can be counted against the Massachusetts ceiling rather than the $400,000 New Hampshire limit.

Other types of evasions involve far larger sums.

In addition to the tax-exempt foundations, for example, nearly all the major candidates used “multi-candidate” political action committees during the warm-up period to the current campaign.

In the guise of helping the campaigns of candidates for Congress or other offices, the committees allowed potential presidential candidates to develop valuable direct-mail fund-raising lists that were later sold cheap to their campaigns, raise large sums of money that were not counted against the campaign fund-raising limits and use that money to subsidize travel around the country that was not counted against spending limits.

Vice President George Bush’s PAC, the Fund for the American Future, for example, spent almost $10 million over the last two years, none of which will count against the $27-million total that the law allows for seeking a presidential nomination.

Building Good Will

In at least one case, Republican hopeful Sen. Bob Dole of Kansas used his PAC to build good will by putting local officials on his payroll. The PAC, Campaign America, paid $9,723 in consulting fees to the Republican leader of the Iowa Senate, according to an investigation by Common Cause.

The FEC staff at one point recommended that spending by multi-candidate committees be counted as campaign spending, but the commission has refused to do so.

Candidates who are members of Congress also have been able to use congressional campaigns to avoid ceilings on spending for their presidential ambitions.

Rep. Richard A. Gephardt, for example, ran for reelection last year in his St. Louis, Mo., congressional district. His congressional campaign records on file with the FEC show entries such as “Greyhound buses, Des Moines, Iowa--$1,320.” The largest was $10,000 for a charter flight from St. Louis to Des Moines the day of the Iowa Democratic Party’s Jefferson-Jackson Day dinner.

In all these maneuvers, candidates run little risk of problems from the regulators. The FEC “really doesn’t have the ability to stop a lot of things before the election,” said the former senior official, “the fear isn’t there.”

The real enforcement threat, campaign lawyers say, is the press. “The cold political truth is that candidates are judged as much by appearances as by the letter of the law,” said Washington attorney Robert F. Bauer, Gephardt’s election-law specialist.

Press reports of questionable practices can cause a campaign severe problems when it matters--before the election. The FEC, by contrast--understaffed and hobbled by procedures that give candidates repeated chances to appeal--is slow, even by bureaucratic standards. The commission not only has not finished auditing the books of the 1984 presidential candidates, it has not yet closed the books on the 1980 campaign.

When the FEC does move against a campaign, fines are minimal. The commission last year voted to take Sen. John Glenn (D-Ohio) to court, arguing that $2 million in loans Glenn received from Ohio banks for his 1984 presidential bid were made without proper collateral and therefore were illegal contributions. Last month, the commission settled the case for a $4,000 fine, small enough to allow Glenn to claim vindication.

The “reality of the political setting” is that Congress does not want too aggressive an overseer governing the political process, Thomas said. The commission’s enforcement staff, he noted, “just doesn’t have enough bodies,” only 10 lawyers and four assistants to prosecute violations nationwide.

As a result of the FEC’s own problems, the regulators prefer to leave many stones unturned. Hotel bills, for example. During 1984, a former senior aide to former Colorado Sen. Gary Hart said recently: “I don’t think we paid for a single room.” Campaign officials would call hotels and ask for a deal: free rooms for the campaign staff in return for bringing the hotel the entourage of reporters, who would want to be in the same building as that of the candidate.

Another way of reducing campaign outlays has even been enshrined in FEC regulations. Campaigns pay for much of their travel bills in the heat of the primary season by charging huge amounts for reporters and Secret Service agents to fly on the candidates’ chartered planes.

FEC rules now officially set the charter price at 150% of first class.