The Campaign For Finance

Donald Trump Shows Us How to Get Money Out of Politics

Dec 19, 2020

“Every country has its own type criminal. In America we got the confidence man, the snake oil salesman, grifter. He don’t rob you so much as trick you into robbing yourself, because, you see, in America, people want to believe. They got that dream. And a dreamer, you can fleece.”

-Loy Cannon, Chris Rock’s character in the Fargo TV series

To paraphrase the Frank Sinatra hit from the 1950’s, money and politics, like love and marriage, “go together like a horse and carriage… you can’t have one without the other”. If marriage is the union of two lovers, then power is the nexus of money and politics. On one hand, money fuels the engine of politics, the ability to gain and use power. On the other, political power rests on the control of money, the power to tax and to spend.

But the exercise of government’s authority to administer the public’s funds is only one aspect of the nexus. Political campaigns in the United States are expensive. Spending on this year’s campaigns for President and Congress is estimated to have been about 14 billion dollars, on par with the annual revenues of companies such as US Steel and Uber. To win elections, parties and candidates are compelled to raise large sums of money, a massive effort. Supreme Court rulings over the last forty-five years have loosened restrictions on campaign contributions and spending: Buckley v. Valeo (1976) gave us ‘dark money’, funds raised from anonymous donors by nonprofit groups and spent on campaigns. In 2010, Citizens United allowed corporations and other organizations to spend directly on political campaigns. The 2014 McCutcheon decision removed the limits on the amount donors could contribute. The cash poured in and the Electoral-Industrial Complex emerged from the smoldering wreckage of post-Watergate campaign finance law.

Campaigns are expensive endeavors: advertising, staff, travel, pollsters, data analysts, consultants… People paid six-figure salaries to have titles like Campaign Strategist or Senior Adviser. The temptation to profiteer is often irresistible. Brad Pascale, erstwhile Trump campaign manager, reportedly collected almost $40 million via companies he owned that were doing business with the campaign he was managing.

The basic organizational mechanism for raising funds is the Political Action Committee or PAC. PACs are limited in the amount of money they can donate to any specific campaign. They can, however, spend unlimited funds independently of campaigns. Citizens United and a subsequent Federal appellate court decision, Speechnow.org, led to the creation of the Super PAC, an organization able to raise and spend unlimited amounts but barred from donating directly to campaigns or parties and from directly co-coordinating with campaigns. Super PACs now play a major role in campaigns.

(Source: OpenSecrets.org)

In the convoluted world of modern campaign finance in America, the source of campaign donations can be hidden in an opaque web of fundraising operations. A donor can make a large contribution to a non-profit entity which does not have to disclose its donor’s names. The non-profit in turn makes a donation in its own name to a Super PAC. In this way, large donors- wealthy individuals or corporations- can anonymously funnel money into a campaign.

Sloshing around in a pool of cash

For the avaricious among the political class, the proximity to all this money can result in misuse of campaign funds, usually in spending on personal items in violation of Federal Election Commission rules. In 2019, Rep. Duncan Hunter pleaded guilty to spending more than $200,000 of campaign money on things such as vacations and groceries, including $625 for bringing his pet rabbit on flights. While this is a recent case of egregious conduct, it is not uncommon, especially when state and local campaigns are factored in. (A Google search for “misuse of campaign funds” returned over seven million responses.) Greed, like sex, can lead to reckless behavior even among people in public life.

Donald Trump, a failure as an ordinary businessman but possessed of the personality and cunning of a con man, understood the potential of being a candidate: Whether he won in 2016 or not, he realized his campaign was a vehicle to solicit money. On January 20. 2017, the day he was inaugurated as President, he filed for re-election. His 2020 campaign was able to not only continue to raise money while he was in office, but to legally siphon off some of that money. Earlier this month, the Washington Post emphasized this last point by reporting that

President Trump’s campaign and its affiliated committees spent more than $1.1 million at Trump’s own properties in the last weeks of the 2020 campaign — continuing a pattern of self-enrichment in which Trump has converted $6.7 million from his campaign donors into revenue for his businesses since taking office, new campaign finance filings show.

And today, the Business Insider site broke the news that Jared Kushner had “approved the creation of a campaign shell company that secretly paid the president’s family members and spent almost half of the campaign’s $1.26 billion war chest… The ‘campaign within a campaign’… allowed Trump… to skirt federally mandated disclosures.” The shell company acted as pass-through, paying for services provided to the campaign by outside vendors.*

This is all of a piece: In 2017, a few months into his Presidency, Trump’s sons’ significant others- Don Jr.’s girlfriend, Kimberly Guilfoyle, and Eric’s wife Lara- were each hired at an annual salary of $180,000 by Brad Pascale’s digital consulting firm, Giles-Pascale, which worked for the campaign. So that the Trump Organization could collect the rental fees for the use of its venues fundraising events were held whenever possible at a Trump property. And though the election has ended, Trump’s reelection committee continues to pay $37,000 a month for office space in Trump Tower despite the committee being headquartered in Virginia.

Outside of the campaigns, Trump did not miss a chance to use his businesses to monetize the Presidency itself. There were the obvious items, such as the more than one million dollars (room and golf cart rentals) in taxpayer dollars paid to Trump businesses whenever the Secret Service accompanied him on one of the hundreds of golf outings at his own courses. There were the petty things, like selling mugs embossed with the Presidential Seal (which is against the law) in the gift shop of Trump Tower. There was his attempt to host the 2020 G7 summit at his Doral golf resort.

Having failed to be reelected, Trump was not about to relinquish the opportunity to raise money. 70 million people had voted for him. He had a coveted email list. Refusing to concede gave him the pretext to continue to solicit donations. He raised more than $207 million after the election via a joint fundraising committee with the RNC. The initial appeal was to raise funds for a non-existent “Election Defense Fund”; instead, most of the contributions were directed to his new leadership PAC, Save America. The appeal for donations has since changed direction to support Republicans Kelly Loeffler and David Perdue in the run-off election for Georgia’s two Senate seats. As you may have guessed, none of the money Trump raises is going to the Loeffler or Perdue campaigns, but it being pocketed by Save America PAC.

Forget Trump Steaks, Trump Wine, or even Trump Hotels. The leadership PAC is the perfect vehicle for Trump, since there are few restrictions on how money is spent. He learned that having political power meant he could direct huge sums of money to his businesses. For the most part, it was legal- or just legal enough- even if it trampled on ethical norms.As Brendan Fischer, the director of the federal reform program at the Campaign Legal Center, pointed out in Politico, the PAC could “potentially benefit him and family financially.”

Call it “The Art of the Self-Deal”.

*This scheme is similar to one employed by Trump and his siblings in managing the family’s real estate holdings. As the New York Times reported, they formed a company to ostensibly act as purchasing agent for the family’s properties. In reality, the company merely marked up suppliers’ prices, with the increase pocketed by the owners.

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