FEC Issues Advisory Opinion for Obama General Election Fundraising

Last month, I noted that Senator Barack Obama had submitted a request for an Advisory Opinion to the FEC asking whether he can raise money for a potential general election campaign, but still maintain his eligibility to receive public funding should he decide. The FEC has unanimously approved a draft Advisory Opinion today.

The Commission concludes that

Senator Obama may solicit and receive private contributions for the 2008 presidential general election without losing his eligibility to receive public funding if he receives his party’s nomination for President, if he (1) deposits and maintains all private contributions designated for the general election in a separate account, (2) refrains from using these contributions for any purpose, and (3) refunds the private contributions in full if he ultimately decides to receive public funds.

This is probably good news for all candidates, including Obama, Senator Hillary Clinton and others who have already disclosed that they will accept funds for the general election now. The AO, which will probably be approved by the Commission, gives the maximum flexibility to candidats to accept public funding for the general election.

The Commission also notes that the procedural safeguards that the Obama committee plan to implement are key to the acceptability of the arrangement. Those safeguards include a separate escrow account with access to the escrow account being limited to the treasurer and COO of the campaign.

An interesting side note came up when I first read the request, what would happen with any interest earned on the account, which would probably not be an insubstantial sum. I had sent an email to Bob Bauer (one of the attorney's for the Obama campaign) asking what would happen if the account earned interest and how that interest would be treated. I never got a response from Bauer, but the FEC did address the issue:

[I]f any contributions designated for the general election are deposited in an interest-bearing account, but Senator Obama later opts to receive public funds for the general election and refunds those contributions, then all interest earned on such funds must be disgorged to the U.S. Treasury within 60 days after Senator Obama certifies his eligibility to receive public funds under 11 CFR 9003.2(a)(2).

So my question is answered.

In many respects this is pretty solid ground for the Commission. Candidates for Congress and Senate may accept funds for the general election even if their primary has not occured or if they are unopposed. However, such contributions, if specifically designated for the General election may not be used until the primary has passed. This arrangement was permitted under the terms of Advisory Opinion 2003-18 issued to former Senator Bob Smith.

On a broader scale, the FEC appears to be ready to accept alternative fundraising situations that allow for a great deal of flexibility. Last year, the Commission approved Advisory Opinion 2006-30 for ActBlue which permited that organization to raise funds for the future presidential nominee, even though that nominee may not be known for some time, so long as the situation is fully disclosed to the contributors. These alternative arrangements indicate that so long as source and limit regulations are adhered to, along with information to contributors, the Commission seems ready to accept some creativity with fundraising efforts.

The Washington Post has this story on the matter.

Update: Democracy 21 has issued this statement. Democracy 21 seems to think that this ruling will help save the public funding program for presidential elections. I am not so sure that the ruling does that. Sure, it means that some candidates will resserve the option. But if between now and the end of the first round of primaries, when the nominees are likely to be know, the probably nominees can spend their time raising money for the General election, they may not need the public funding. Public funding for 2008 is expected to be in the neighborhood of $80 million. Any national level candidate who can put the nomination in the bag by March of 2008 can spend roughly five to six months before the conventions raising money for the general election and $80 million would be peanuts, or at least should be. In six months, the candiates could raise more than enough from private sources to fund a campaign with $120 to $150 million plus whatever is left over from the primary campaign.

I think the public funding program, at least as currently configured, is on its death bed.

Update II: I added the links to my original post and the Obama Advisory Opinion request in the first paragraph.