With campaign finance loophole, Romney’s wealth cannot be matched

An inconsistency in campaign-finance rules places former Massachusetts Gov. Mitt Romney (R) in an advantageous position should he decide to subsidize his White House run with his own fortune.

Romney’s personal assets reportedly exceed $500 million, and he has shown willingness to self-finance. He already has loaned himself more than $2 million to help kick-start his campaign. His top opponents for the GOP nomination, Sen. John McCain (Ariz.) and former New York City Mayor Rudy Giuliani, are not nearly as wealthy.

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Should Romney inject more of his own money into his campaign, McCain, Giuliani and others would be unable to take advantage of a provision in the Bipartisan Campaign Reform Act of 2002 that allows congressional candidates to accept contributions in excess of usual limits when facing a wealthy self-funding opponent.

The so-called “Millionaires’ Amendment,” a component of campaign legislation authored by McCain, cannot be invoked in presidential campaigns. The amendment applies only to House and Senate races.

“Our campaign is focused on building its support through the grassroots,” the press secretary for the Romney campaign, Kevin Madden, said. “The fact we have received more than $20 million, more than 32,000 donors, shows the breadth and depth of our support.”

“If you take in account a candidate like Romney or any other candidate who can write himself some checks, that can be a significant advantage,” said Evan Tracey, chief operating officer for TNS Media Intelligence, a media research firm that specializes in politics and public affairs. “If you can loan yourself $20 million, you can buy yourself three weeks of media.”

If Romney pours millions of his own dollars into the race, Republican primary opponents would have little recourse but to raise further funds in $2,300 increments, a time-consuming process.

“We are confident that we will have the resources necessary to win the Republican nomination,” the deputy communications director to the McCain Campaign, Matt David, said.

Romney has joked that contributing to his campaign would be “a nightmare,” though the governor has not ruled out doing so. As it stands, the candidate is the top GOP earner, with $20 million raised this quarter. 

“What is ironic about this is we have had several self-funding presidential candidates in the past,” a former Federal Elections Commission (FEC) chair and now a partner at Bryan Cave LLP, Michael Toner, said.

Since 1980, five major candidates, with Ross Perot and Steve Forbes as repeats, have self-financed their presidential runs to some degree, according to the FEC. Perot holds the record for most spent, using about $65 million of his own money in the 1992 general-election race.

“While the record shows self-financed candidates did not do well, candidates that combine their personal wealth with a fundraising base have done quite well recently,” said Meredith McGehee, policy director for the Campaign Legal Center, citing New Jersey Gov. Jon Corzine (D) and New York City Mayor Michael Bloomberg (R) as examples.

The Millionaires’ Amendment was added late to the McCain-Feingold Act and was decried by many critics as protection for incumbents.

The McCain-Feingold Act “started out as a comprehensive campaign finance reform bill. But by its end, it had been stripped down to two issues: the sham issue ads and soft money,” McGehee said. The Millionaires’ Amendment “was considered to be opening up another can of worms.” 

According to the FEC, candidates in 24 races during the 2004 election cycle filed that they contributed more than the amendment’s threshold to their own campaigns. In 2006, the number jumped to 31.

The clause has helped candidates win victory in the past. For example, Sen. Barack Obama (D-Ill.) used the provision in his 2004 Senate primary campaign against securities trader Blair Hull, taking individual contributions as large as $12,000.
The presidential public-financing system was seen as a counterweight to self-financed candidates for the White House but experts predict private funds alone will fuel the campaigns in 2008.

“This could be the first presidential election since Watergate that is entirely privately financed,” Toner said.

“The presidential public-financing system is like a 30-year-old car that needs maintenance.  Without it, the system is broken,” McGehee said. “The viability of their candidacy is being judged by one thing and one thing alone: how much money you can bring the table. So if you are a millionaire, sure, that is an advantage.”

Tracey speculated that the front-loaded primary schedule with several states going to the polls on February 5 could be advantageous for a self-financed candidate.

“We haven’t had this dynamic ever before with close to 40 percent of the delegates up for grabs,” the executive said. “The media buyers are going to earn their money this time around because they are going to have to make tough choices. But if you have enough money lying around, they will not have to make those tough choices.”

Though useful as a resource, Tracey added a candidate’s wealth could work against him or her.

“It’s a double-edged sword,” Tracey said. “As soon as you start self-funding your campaign, you start getting accused of buying elections.”