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DeLay, Terry Nelson, and Reality


PoliticsI was talking to a friend and former colleague on the phone a few minutes ago and we discussed the increasingly vile depths to which the Democrats will sink in their quest for political victory. Specifically, we were discussing the fact that the Democrats seem to be spending more time looking into the operatives that work on campaigns, and are spending considerably less time trying to carry out policy debates or formulating sound strategies for solving the country’s ills.

A couple of days ago, I ran across a story about John McCain’s acquisition of Terry Nelson as a campaign advisor. Unlike most of the articles I had read about the deal, this one came from a blog. Unlike just about all of the other articles I had read, this one wasn’t very complimentary. In fact, it was downright hostile.

Two things struck me about this article. First, it greatly exaggerates the “crime” of which DeLay is accused and Terry’s role in it. Second, it fails to accurately capture the real world of campaign politics.

Terry’s situation with regard to the DeLay case falls into the jumbled morass of campaign finance laws. To erase the half-truths and outright lies of the left, let me explain the world of “legal money laundering” that existed in campaigns until the passage of BCRA.

Under the previous legal regime, parties were allowed to raise two types of money: federal and non-federal. They’re also referred to as hard dollars and soft dollars, or clean dollars and dirty dollars. It was a goofy system created in response to the abuses of the pre-Watergate era and rife for manipulation.

Federal dollars were contributions raised in accordance with the Federal Election Act of 1973. They had to come from individuals – who were limited to a set amount per year that varied depending on the recipient (PACs and parties could take more than candidates). They could not be made with corporate funds, and could not come from non-US citizens. (You’ll recall the prohibition on non-US citizens caused the Clintons some grief in the mid 1990s).

Non-federal dollars also prohibited non-US citizens. They relied on state law to define their amounts and sources, so the rules varied widely. In many states, there were no limits at all on the amount of non-federal money a party could raise. Some states had stricter limits than the fed, and some had no limits at all. Some states, like Texas, treated corporate and individual dollars differently at the state level.

It was not uncommon, pre-BCRA, for state parties to raise staggering sums of non-federal cash. Federal dollars, however, were much harder to raise. It was not uncommon for state parties to “sell” their federal dollars to the national committees at a premium. By that, I mean they would give up some or all of their federal money, and receive a large amount of non-federal cash in exchange. For example:

Assume a state party had raised $200,000 in non-federal dollars, and $150,000 in federal cash. It’s total buying power is $350,000. The party would arrange a transfer of $150,000 to the national committees. The national committee, which had raised $50,000,000 in non-federal funds, would transfer $300,000 back to the state. The state’s buying power is now $500,000.

All of the non-federal dollars had to be spent on non-federal races or issue ads (not advocating the election or defeat of a specific candidate). All of the federal funds would be used to benefit federal candidates. The money was spent in accordance with the laws under which it was raised.

This type of transaction was taking place all over America on an almost daily basis. It was done by both parties, and was completely legal. It was a massive loophole in the law, and one that BCRA closed, but it was the law of the land.

The money TRMPAC transferred to Texas was used to support federal races in accordance with the law. The non-federal dollars transferred back were raised in accordance with the state laws, and were used to support the candidates in accordance with those laws.

What has confused the situation, however, is the overzealous prosecution carried out by a political partisan – Ronnie Earle. The sections of the Texas Election Code that DeLay is accused of violating are as murky as the federal laws.

The law specifically prohibits corporations from making a contribution to a campaign. They didn’t. The dollars contributed to TRMPAC were delivered to the RNC and used for something else. The dollars contributed to the RNC by individuals – which were entirely permissible to use in the Texas races – were sent to Texas and used there.

At the time, state parties, the national committees, and any entity accepting both federal and non-federal cash were maintaining multiple separate bank accounts and at no time did the money from these checks co-mingle. As an example of how this was done, we at the NM GOP, maintained seven separate bank accounts – three federal, three non-federal, and one joint (some expenses are paid with a mix of funds and the joint account was the one place they mixed.)

The campaign finance laws clearly allow transfers and contributions from accounts containing permissible funds. The funds used in this transaction were appropriately raised and appropriately spent.

The Muckraker indicates Terry’s role “was crucial, although he hasn’t been charged.” There is a reason he hasn’t been charged – he did nothing illegal. He made legally permissible contributions using legally permissible funds to candidates in accordance with federal and state laws.

Earle alleges TRMPAC gave the money to the RNC as a quid pro quo for those contributions. Unfortunately, the groundwork, and DeLay’s defense against that charge is almost guaranteed by the web of bizarre complexities created by the state and federal campaign finance laws. If the contributions to the candidate were made in accordance with the law, and the transfer from TRMPAC to the RNC was legal, the only charge they have is conspiracy. That’s the charge that has been made.

But that’s not what this is about. This is partisan gamesmanship and nothing more.



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Written by Michael Turk