What's in your candidate's wallet?

Photographer: Andrew Harrer/Bloomberg

Money Chase for 2016 Is Wild, Wild West

Jeanne Cummings writes on money, lobbying and politics. As political editor for Bloomberg News, she directed coverage of the 2012 and 2014 elections. The 2016 race marks her seventh presidential campaign.
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With the campaign finance regime in tatters and the Federal Election Commission known more for partisan gridlock than enforcement, presidential candidates are choosing from a broad smorgasbord of options to fund campaign activities. The hodgepodge of committees follows widely disparate rules.

So far, only three contenders, Republican Senator Lindsey Graham and former neurosurgeon Ben Carson, and former Democratic Senator James Webb, are abiding by the traditional process -- opening exploratory committees for their potential White House bids. Other senators have tapped "leadership" political action committees to fund campaign activities while several governors depend on super-PACs. Former Pennsylvania Senator Rick Santorum relies partly on an organization, Patriot Voices, which takes advantage of the Internal Revenue Services' tax exemption for social welfare groups.

As a result of the different funding vehicles, some candidates are required to limit donations while others are only prohibited from taking checks from certain categories of givers. A few, including Santorum, have organizations that are not bound by contribution caps or public reporting requirements -- their trips to Iowa and New Hampshire may be funded by unregulated, anonymous donations.

“Nearly every prospective 2016 presidential candidate is raising and spending funds outside the candidate contribution limits, through super-PACs, leadership PACs and other groups," said Paul S. Ryan, senior counsel at the Campaign Legal Center and author of the organization's analysis of the presidential campaign free-for-all. "They’re traveling to Iowa and New Hampshire; they’re hiring campaign staff; one has even opened an office in Iowa. They claim they’re not ‘testing the waters,’ but they look soaking wet to me.”

An exploratory committee, the traditional way to finance travel and events, can accept donations up to $2,700. Contributor names aren't made public unless a formal candidacy is announced. That's the cautious road chosen by Carson, Graham and Webb.

Former Florida Governor Jeb Bush represents perhaps the most aggressive path. His entry into the competition was accompanied by the creation of a super-PAC, Right to Rise, which can raise and spend unlimited sums. In addition, Bush allies created another political action committee (using the same name) that will be subject to a contribution cap of $5,000. Bush's team has set a goal of collecting $100 million, through both political committees, in the first quarter of 2015.

Like Bush, Democrat Hillary Clinton is also benefiting from a super-PAC founded by her supporters. The super-PAC, Ready for Hillary, which has imposed its own $25,000 limit on contributions, is holding events and building a mailing list. Another super-PAC, Priorities USA Action, is expected to supplant Ready for Hillary, presuming Clinton makes a formal declaration. Unlike Bush, who is headlining fundraisers for his allied political committees, Clinton has kept her distance from the Democratic super-PACs, in deference to IRS rules that prohibit super-PACs from coordinating with campaigns.

Current Senators Rand Paul of Kentucky and Marco Rubio of Florida are prohibited by federal law from creating their own super-PACs. Instead, they are using Senate leadership committees to finance early travel and appearances. Santorum recently created a similar vehicle for his prospective campaign. Leadership committees are subject to contribution caps of $5,000.

Meanwhile, New Jersey Governor Chris Christie and Wisconsin Governor Scott Walker face hurdles unique to their positions. Governors are prohibited from accepting contributions from financial institutions and executives who do business with their states, leaving some Wall Street contributors seeking another candidate to back. That complication weighed against Christie in 2012 when Republican nominee Mitt Romney was considering a vice presidential running mate.

More than ever, candidates seem to pick and choose which rules to follow. The Federal Election Commission, which is charged with enforcing campaign finance laws but rarely musters a majority of commissioners to do so, provides little deterrent to rule stretching. The IRS, which has jurisdiction over super-PACs, is gun shy after years of accusations by Republicans that the agency targeted conservative groups. IRS Commissioner John Koskinen said last month that he doesn't want to take action that would "look like we're trying to influence the 2016 election."

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Francis Wilkinson at fwilkinson1@bloomberg.net