The Unintended Consequences of Campaign Finance Reform

Posted in: Election Law

There appear to be three major prongs to Donald Trump’s campaign to become our next president. First, he is long on personal attacks—Marco Rubio drinks too much water; Carly Fiorina doesn’t have the face of a president, Ben Carson (the internationally-renowned pediatric neurosurgeon) is only an “OK doctor,” and reminds him of a child molester, any Iowa voters who do not support him are “stupid.” And so it goes, on and on.

The second and third prongs are actually issues. First, he’s against immigration and many of the Mexican immigrants are “rapists.” Last, there is campaign finance.

People should vote for the billionaire because he’s a billionaire, he says repeatedly. “I am self-funding my campaign,” he says, “and therefore I will not be controlled by the donors, special interests, and lobbyists who have corrupted our politics and politicians for far too long.” Like his other signature issues, his assertions are not true.

First, Mr. Trump’s campaign is not self-financing. He is soliciting donors, not just relying on his personal wealth. As of last month, Trump received almost $4 million in what his campaign called “unsolicited donations.” Trump claims he does not solicit donations, but it’s hard to call them “unsolicited” when his campaign website posts a prominent “donate“ button. As the New York Times reported, “[Trump] is no longer self-financing his campaign.”

Perhaps Trump is unaware of what he claims on his own website. That’s possible if you believe Trump’s statement during the CNBC debate, when Becky Quick asked him about his comment that referred to Senator Rubio as Facebook founder Mark Zuckerberg’s “personal senator.” Trump’s response: “I never said that, I never said that.” He doubled down on his denial, “Somebody’s really doing some bad fact-checking,” he claimed. And then he repeated it again. Yet, he prominently says (on his own webpage), that “Mark Zuckerberg’s personal Senator, Marco Rubio, has a bill to triple H-1Bs that would decimate women and minorities.” His assertion is still there and he has not withdrawn his false assertions that Becky Quick has a bad fact-checker.

Perhaps Trump is blissfully ignorant of what he publishes on his campaign website. Or, perhaps Trump is just lying (a trait found in politicians and sharp businessmen). Mr. Trump’s “self-financing” claim is hypocritical—another trait not unusual among politicians and sharp businessmen.

However, there is more to his assertion that he is self-financing his campaign while soliciting donations. If one believes that campaign contributions corrupt, Trump’s method of financing corrupts more (not less), because the campaign contributions to his campaign go directly into his pocket. This problem is not hypocrisy but the specter of actual corruption—he has set up his campaign financing so that donations to his campaign go to him, personally. That’s much more serious. (This problem is in addition to any Super PAC that supports Trump.)

Let me explain. Federal election law allows the candidate to spend as much of his personal money on his own campaign as he wants, the “millionaire’s exception.” The theory of limiting campaign contributions is that the contributor might have special access to the candidate, which leads to the possibility of the appearance of corruption. However, one cannot corrupt himself, so Trump can spend as much as he wants on his campaign. However, Trump is not giving money to his campaign but lending it.

Trump argues that the people should vote for the billionaire because he won’t be beholden to campaign contributors. The Federal Election Commission’s report shows that in the most recent quarter, ending September 30, Trump raised $3.8 million, but spent only about $100,000 of his own money. When his campaign raises money from third parties, it pays off debts. A major creditor of Trump’s campaign is . . . Trump. Money goes from campaign contributors directly to Mr. Trump personally (with a brief visit to the official campaign treasury). I do not claim that Mr. Trump is corrupt, only that if he is correct that a politician accepting donations makes him obligated to the donors, Trump is talking about himself because he is collecting donations so his campaign can pay its debt to Trump.

What does Mr. Trump buy with his campaign funds? For one thing, he flies in his Trump-owned plane, a giant Boing 757, and that cost $100 million (before he remodeled it). He can spend his own money on that plane, but we know he only spent $100,000 of his own money last quarter. The Trump campaign pays Trump’s jet management company for the use of his plane. When the Trump Campaign pays for his airplane costs ($506,000 in the second quarter alone), Trump is, in effect, reimbursing himself for using his own plane. When someone gives money to the Trump Campaign, that money goes to the campaign bank account, where it rests a while, and then moves directly to Mr. Trump’s personal bank account or the bank account of one of his companies, to pay off some of the money that Trump lent to his own campaign.

Mr. Trump could calm concerns if he stopped lending money to his campaign while simultaneously claiming that he’s “self-financing” it. Or, he could refuse donations. After all, he insists that such donations are corrupting. Recall that when Megan Kelly asked him, in the first debate, what he got for his hundreds of thousands of dollars in political donations to Democrats, he said his political contributions made Clintons to go to his most recent wedding. “I’ll tell you what, with Hillary Clinton, I said, ‘Be at my wedding,’ and she came to my wedding. You know why? She had no choice, because I gave.” That’s a very expensive way to corral a wedding guest and it has nothing to do with political corruption. Unwittingly, Trump undercuts his whole theory of campaign funding. That’s what he got for his political contributions to others—he “forced” two people to come to his wedding.

In one of the recent debates, one of the questioners criticized Marco Rubio for cashing in part of his retirement assets in order to pay some bills. Donald Trump has echoed this charge, claiming that Rubio cannot handle his finances. (This argument dovetails nicely with Trump’s claim that the people should vote for him because he’s a billionaire. Rubio, it seems, is too poor to be president.

Actually, Rubio handles his finances the way many people do; he withdraws money from his accounts, pays taxes on the withdrawal, and then pays his expenses. While Trump has never personally declared bankruptcy, his companies have done so four times. That is another way to handle finances, although creditors prefer Rubio’s method, where the creditors get paid in full. Maybe Trump is the one who has trouble controlling his finances. His response is that he is proud of the bankruptcies. ““I used the law four times and made a tremendous thing.”

  • wesleyfew

    Interesting. Trump certainly appears to have issues remembering what he has said / what is on his web-site. Yet, people continue to be attracted to his message. Have you considered doing a similar piece on the Clinton’s increase in wealth since circa 1992? That may end up being a book, instead of a blog post ;-).

  • Valerie R. Jones

    So bash Donald Trump because he is not under some big drug company or another company. BIG money is RUNNING the elected sheep in Washington. Sorry how about pointing out Clinton money. I truly do not understand how all their money has not been investigated. Bashing Trump for HIS plane really? His taking private donations etc. is nothing more than blowing smoke.
    Find something else to pick at. LIKE an on going investigation of the FBI. Have all the candidates post all their let’s call them sponsors as a nice word. Someone needs to post a full complete list of BIG MONEY sponsors and $$ of each candidate. Like Race car drivers do. Oh that is advertising for race cars. Underhanded dealings within our political world. Little different.
    Obama and his how many millions on vacations? Cost of daughters special trip with friends for birthday. That is abuse of the system.


    Mr. Rotunda, what is the point? Trump is financing his campaign with help from the supporters by small donations. That is “Common Knowledge”. Trump has said , he could not turn away people giving small sums , that would be an insult to his supporters.

    The other candidates are heavily in the pockets of the “Donors” and are doing their bidding.

    Trump is Number One in the polls and has spent the least.

    Essentially, your article has praised Trump which was not your intent. The Left has a habit of insulting the Right and then when the Left is insulted, the Left whimpers.

  • Stephanie Helm


    Donald Trump(R)

    Top Contributors Federal Data

    Election cycles covered: 2016

    Donor Demographics, federal election data


    Percent of Funds Number of Contributors Total Amount

    Female 18.4% 357 $186,029

    Male 81.6% 1341 $826,155

    Contribution Details

    Female Donors Male Donors

    $200-$499 # Donors 178 732

    Total $48,162 $190,183

    $500-$999 # Donors 68 216

    Total $37,274 $115,345

    $1000-$2700 # Donors 23 150

    Total $27,955 $160,292

    $2700+ # Donors 21 88

    Total $65,053 $343,937

    $5400+ # Donors 3 8

    Total $16,200 $127,237

    METHODOLOGY: The numbers on this page are calculated from contributions of more than $200 from individuals, as reported to the Federal Election Commission. PAC dollars are not included.

    NOTE: Federal-level numbers are for the 2016 election cycle and based on Federal Election Commission data released electronically on Friday, October 16, 2015.

    Feel free to distribute or cite this material, but please credit the Center for Responsive Politics. For permission to reprint for commercial uses, such as textbooks, contact the Center:

  • Stephanie Helm

    Donald Trump Is Not Self-Funding His Campaign Like He Wants You to Believe

    “I don’t need anybody’s money,” Donald Trump boasted in June during his rambling presidential announcement. “I’m using my own money. I’m not using the lobbyists. I’m not using donors. I don’t care. I’m really rich.” Four months later, though, and Trump’s carefully crafted image as a self-funded politician is starting to look as suspect as the idea that he’s a self-made man.

    The latest crack in the façade comes by way of the Washington Post, which did some digging and found a super PAC—fittingly, named Make America Great Again—that, in the paper’s words, is “viewed by people familiar with [Trump’s] campaign as the sanctioned outlet for wealthy donors” and “as operating with his blessing.”

    The GOP front-runner’s camp responded the way it usually does to stories it doesn’t like—by pre-emptively threatening to sue the paper if it reported what it found. “Unlike other campaigns, we don’t have a quote-unquote designated super PAC that we tell people to give money to,” campaign manager Corey Lewandowski told thePost, later adding: “I want to be crystal clear, there is no sanctioned super PAC.”

    Technically speaking, Lewandowski may be right: The paper didn’t find any direct evidence that Trump ever specifically asked anyone to donate to the PAC—as he’s allowed to do under Federal Election Commission rules as long as he doesn’t solicit donations greater than $5,000. Still, when it comes to campaign finance, technicallytrue and actually true can be two different things—and the Post makes a convincing case that even if the candidate isn’t doing everything he can to help the group, Trump isn’t nearly as PAC-free as he’d like to be seen. Among the evidence, some of which had been previously reported:

    Trump attended at least two events organized by the group this summer, including one at the estate of Ivanka Trump’s in-laws (Lewandowski maintains that the gatherings were not official fundraisers, and called the party at the home of Ivanka’s in-laws “a family event”).

    Ivanka Trump’s mother-in-law, Seryl Kushner, donated at least $100,000 to the group (a Kushner spokesman says Trump did not solicit the donation).

    A political operative who works for the PAC has ties to Trump’s inner circle and has had business dealings with his official campaign—and, according to thePost’s sources, was seen at Trump HQ “repeatedly in May and June” (asked whether he knew the operative in question, Lewandowski went from “I don’t know him” to “I know of [him]” to hanging up).

    It wouldn’t be the first time that Lewandowski got burned with a don’t-know-him response that turned out to be untrue, nor would it be the first time that Team Trump’s version of reality doesn’t align with the rest of the world’s.

    The Post’s report comes only days after Trump revealed his most recent fundraising numbers, which contained their own surprise: The vast majority of the $3.7 million he raised during the previous three months came from people named something other than Donald J. Trump. In fact, the billionaire reported donating just $100,779 to his own campaign from the start of June through the end of September—a far cry from the more than $1.9 million he gave himself during the opening fundraising period of his candidacy, and nowhere near as much as you’d expect from a candidate who constantly reminds people that he doesn’t “need anybody’s money.”

    Trump never swore off small-dollar donations, so in and of itself his (relatively impressive) outside haul is more unexpected than problematic. His campaign, though, was quick to brand all of those non-Trump Trump donations “unsolicited contributions”—despite the fact Trump’s website has a page for donations and his campaign has joined forced with conservative Newsmax Media to fundraise over email.

    As should be clear by now, the Donald’s much more of a politician than his anti-establishment campaign would like you to believe.

  • KC

    And Obama spent a half million remodeling his rented B757 for his campaign.

  • Feet2Fire

    Let’s hear about Hillary’s “financing dodges,” while you’re at it. :)

  • AZDynamics

    Oh, well, this changes everything. Since Trump accepts donations from the American people, he is fully beholden to the American people. Yeah, that’s different . . .