Are We Breaking the Law or Being Broken by Technology?

New technology overcomes old challenges. It also raises new ones. Nuclear plants generate the most electricity but have cleanup questions. The Internet has overcome and created challenges, too. Howard Dean used the internet to raise money at unheard of levels. Ken Timmerman reports Barack Obama’s campaign raised $427 million dollars, much of it coming via the internet.

Almost half of the $427 million came from donations of less than $200. Campaigns don’t have to identify donors until their aggregate giving exceeds $200. When giving was by check or cash, it was harder to cheat; cash deposits had to be accounted for and checks left paper trails. Credit card internet giving is the new way around the law.

Timmerman writes about an Obama donor, “Good Will”, who gave $17,375 in over 1,000 donations under $200, far exceeding the limit for individuals. The FEC has ordered the campaign to return the excess money, and they’ve started to. They’ve got thousands to go! Warner Todd Huston writes of testing the foreign donation firewalls of both Obama and McCain. Only one campaign had any checks on the process in place.

Complicating matters, current monitoring and regulating mechanisms are outpaced by technology. The FEC didn’t find “Good Will”. Activists did. Giving is at T1 speeds. Enforcement is stuck on dialup.

“While FEC practice is to do a post-election review of all presidential campaigns, given their sluggish metabolism, results can take three or four years,” said Ken Boehm, the chairman of the conservative National Legal and Policy Center.

If Presidential campaigns have these issues, what of lesser publicized and scrutinized down-ticket races?

Tennessee has a potential problem. According to the Democrats themselves, Jim Hawkins, a state Senate challenger raised $87,000 in the second quarter of 2008. , $22,725 of it came from ActBlue, a PAC exclusively supporting Democrats.

While a great example of new tech making new opportunities, it raises new problems, too. Per Drew Rawlins, Executive Director of the Tennessee Registry of Election Finance, in Tennessee a PAC cannot give a Senate candidate over $15,000; half in the primary and half in the general. ActBlue is clearly over that limit.

But are they violating a law? The answer may come down to applying offline laws to online issues. As with applying 1st Amendment’s rights to traditional media and New Media, how do we apply campaign Finance law crafted for yesterday’s offline campaigns to today’s online efforts?

While agreeing ActBlue was a PAC, Rawlins said ActBlue wasn’t Hawkins’ donor; the 74 people giving to ActBlue to give to Hawkins were. ActBlue served as an “intermediary” under Tennessee law. Rawlins compared them to other “intermediaries” like PayPal or traditional bundlers and doesn’t believe ActBlue violated the law. Had ActBlue given Hawkins that much in undesignated funds, they’d have broken the law. Contributions designated to Hawkins are OK.

I’m not sure. I don’t suggest ActBlue willfully broke a law. I’m suggesting old laws may be insufficient to address ActBlue’s actions. I’m suggesting we address this now and suspend this sort of campaign donation until we decide.

I’m unsure about classifying ActBlue as an intermediary. Drew Rawlins observed anyone could be an intermediary because the money didn’t come from them, but the individual donors. Given that, I asked if churches and corporations could be intermediaries. Rawlins said “No;” churches and corporations were legally forbidden to make campaign donations. But PACs have legal restrictions, too. If churches or corporations can’t go beyond their legal restrictions, why can PACs?

I’m uncomfortable with ActBlue’s processes. Bundlers don’t hold donations, they pass them on right away. Checks are payable to specific entities. Cash isn’t deposited by a bundler who then cuts a check to the campaign. Even online money transfers via PayPal are immediate. The money goes from my account to the recipient’s. But donations made via ActBlue are often held by ActBlue before being disbursed. Where is that money in the meantime? If it stops in an ActBlue account, how is the final payment not from ActBlue? What would happen if an offline bundler were to operate like this?

It comes down to murky law. Campaigns are operating under the premise “It’s easier to get forgiveness than permission!” While perhaps valid for dealing with a child's mistakes, it makes for dangerous election finance law. With what’s at stake, it seems just a matter of time before someone sues to resolve this. So why not look at it now and speak to it definitively and without the pressure of lawsuits?

I’m going to keep looking into this. I want to speak to Drew Rawlins again and a few more folks as well. In the meantime, what do you think? Is this real or no big deal? What arguments, for or against, am I missing? To help keep the election process clean, let’s deal with this now. It’ll bring us into the 21st century and keep us up to date, at least until the next idea comes along ... Blue Collar Muse