Posted December 12, 2007 by Paul S. Ryan

No Matching Funds to Block

In a post on Daily Kos yesterday, Adam Bonin poses the question “Will Obama and Feingold Block Edwards/Dodd Matching Funds?” and then goes on to explain why he believes they will be doing so.

Adam raises some important issues, but he over-simplifies things—and overlooks one very unfortunate but important fact—in reaching his conclusion that Senators Obama and Feingold will be blocking the distribution of public funds by maintaining their hold on the nomination of Hans von Spakovsky to become an FEC Commissioner.  That is simply not the case.

As a general matter, I take issue with Adam’s decision to lay the blame for this mess at the feet of Senators Obama and Feingold.  Why not lay the blame at the feet of the Senators, led by Sen. McConnell, who refuse to confirm the pending FEC nominees who are far less controversial than Mr. von Spakovsky, in order to keep the Commission operational in the New Year?  Or why not lay the blame at the feet of the President, who nominated a Commissioner with such a shameful civil rights record and refuses to nominate a less controversial alternative?  But these general thoughts aren’t the subject of this post.

The subject of this post is how and whether and when public matching funds will be distributed to qualified presidential primary candidates.  And, though I’ll describe the applicable regulations below, my response to Adam is, in a nutshell, that unfortunately there are no public matching funds for Senators Obama and Feingold to block.

In a press release last week announcing that Sen. Biden was the fifth candidate declared eligible to receive matching funds, the Commission shared some bad news:

"Treasury Department regulations require that funds for the convention and general election grants be set aside before any matching fund payments are made.  Information provided by the Treasury Department shows the balance in the fund as of October 31, 2007 was $165,383,063 and the Commission has estimated that no funds will be available for matching payments in January 2008.  As deposits are made from tax returns in the early months of 2008, matching fund payments will be made from those deposits until all certified amounts have been paid.  Based on historical patterns, the FEC estimates that funds may not be available to disburse before March 2008."

Regardless of what happens with the confirmations of Mr. von Spakovsky and the other nominees, Messrs. Edwards and Dodd won’t receive a penny of public matching funds in January, nor will Messrs. McCain, Tancredo and Biden—the other three candidates that the FEC has so-far declared eligible to receive matching funds.  This is yet another reason that Congress should pass the legislation to repair the presidential public financing system introduced last week by Senators Feingold, Collins, Durbin, Obama, Clinton, Biden, Dodd and Kerry.

Instead, these candidates will likely be seeking commercial loans, using as collateral their eligibility to receive matching funds in March of next year when American taxpayers have replenished the public financing program coffers.  This type of borrowing has been done before by Presidential candidates.

And even if there was money in the public financing coffers, the Senate’s confirmation of FEC nominees would have no bearing on candidates’ receipt of their initial matching funds disbursement in January.  Once the Commission declares a candidate eligible to receive matching funds, the Commission must certify payment of matching funds to such candidate.  There is no restriction in the law on when the Commission may make its first certification to distribute matching funds—and the Commission has historically made its first certification in December of the pre-election year.  The Commission then communicates this certification to the Secretary of the Treasury, who is responsible for actually distributing the funds to eligible candidates if the public financing account contains sufficient funds, which it does not this year.

To be clear, regardless of when the Commission makes its first certification to distribute public funds, the Secretary of the Treasury may not distribute the funds before January 1 of the election year.  But the FEC can and should continue its practice of voting to certify the first distribution of public funds this month—in December—while the Commission still has five members.

So, “Will Obama and Feingold Block Edwards/Dodd Matching Funds?”  No, because there are no matching funds to block; and even if there were matching funds to block, the initial January disbursement of matching funds could and should be certified by the FEC before the end of December.