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Dems vs. McCain on campaign financing

  • Story Highlights
  • John McCain says he should be able to opt out of public financing
  • Howard Dean says McCain is dodging campaign finance laws
  • Democrats have filed formal complaint with federal election officials
  • McCain says he's confident the move to withdraw will be validated
  • Next Article in Politics »
From Paul Courson and Kate Boulduan
CNN
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WASHINGTON (CNN) -- Sen. John McCain's campaign said the Republican presidential hopeful has the "constitutional right" to opt out of the public election funds program.

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Howard Dean says McCain has been trying to dodge campaign finance laws.

In a letter issued Monday to the chairman of the Federal Election Committee, McCain's lawyer said the Arizona senator has the right to withdraw from the program because it is voluntary and he has not used funds from it.

Democrats argue McCain used expected funds as collateral to get a multimillion dollar loan last year, but McCain's camp denied that.

The National Democratic Party has filed a formal complaint with election officials, saying McCain is trying to skirt election laws by opting out of the program.

"He used the possibility of public financing with a bank loan," Democratic Party Chairman Howard Dean said Tuesday on CNN's "American Morning." "He got on the ballot free of charge in a lot of states, and we had to pay for it." Video Watch Dean accuse McCain of skirting laws »

The McCain campaign flatly rejects that.

McCain on February 6 filed a request to withdraw from the public campaign financing program, which is funded by taxpayers checking a box on their federal income tax returns.

Monday, McCain told reporters he is confident the move to withdraw will be validated.

But if the FEC, which regulates campaign financing, were to side with the Democrats, it could severely hurt his campaign, because the public financing system also imposes a spending cap on candidates.

The spending limit is about $54 million for the primaries, but as of last week, McCain had spent more than $49 million of his own campaign money. That would leave him with $5 million between now and the GOP convention in September.

McCain in December cited a conditional promise to seek public funding to help persuade a commercial bank to lend his campaign additional money.

Those conditions, contained in a formal modification to an outstanding loan, linked public funding to the possibility McCain would place poorly in early primaries.

But none of those conditions came to pass, according to a letter dated Monday from lawyers representing the bank -- released by the McCain campaign. The attorneys have told the FEC the lender does not view as collateral any promise of a public company to help secure the loan.

The FEC responded to McCain's withdrawal letter by asking him to explain the terms of his private loan, but the FEC cannot resolve the matter until vacancies are filled that are preventing a quorum among commissioners charged with deciding.

Four of the commission's six seats are empty, and a deadlock between President Bush and the Senate has stalled nominees for those posts.

McCain has not received public money in the time since he signed up to participate. But the promise itself had value to the bank, according to a former FEC attorney, which may keep him tied to the program and its spending limits.

"They're getting some kind of benefit from participating in the system," said Allison Hayward, who was chief counsel to former FEC chairman Brad Smith, whose resignation created one of the panel vacancies.

Smith said McCain's earlier decision to participate in public campaign financing helped get his name on state ballots across the country. "The complaint from the Democrats now obligates the FEC to investigate, beyond its simple request for information about the loan," Smith said Monday evening.

McCain, reacting to the filing by the Democratic Party, said "I have no doubt about the eventual outcome."

McCain campaign attorney Trevor Potter, himself a former chairman of the FEC, filed a response Friday to the commission, asserting there is no "security interest in any certification for matching funds."

Furthermore, McCain's camp said he's doing the same thing Dean did in 2004. McCain spokesman Brian Rogers accused Dean of "breathtaking" hypocrisy, because he opted out of public financing for his 2004 White House bid.

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But Dean argues his situation was different.

"I have a letter from the FEC, which excused me from public financing. We would just want him to get the same thing," Dean said. E-mail to a friend E-mail to a friend

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