2016 Presidential Candidates Use Pre-Announcement Phase To Push Fundraising Limits

Scott Walker, governor of Wisconsin, speaks during a panel discussion at the American Action Forum in Washington, D.C., U.S., on Friday, Jan. 30, 2015. This week Walker announced the formation of a new committee to explore his presidential option dubbed 'Our American Revival,' and is the latest clue as to whether Walker would seek his party's nomination. Photographer: Andrew Harrer/Bloomberg via Getty Images
Scott Walker, governor of Wisconsin, speaks during a panel discussion at the American Action Forum in Washington, D.C., U.S., on Friday, Jan. 30, 2015. This week Walker announced the formation of a new committee to explore his presidential option dubbed 'Our American Revival,' and is the latest clue as to whether Walker would seek his party's nomination. Photographer: Andrew Harrer/Bloomberg via Getty Images

WASHINGTON -- The 2016 presidential campaign is already in its beta launch stage, as candidates are beginning to roll themselves out so audiences of party insiders and wealthy donors can test them for bugs. This process also requires a platform to allow access to the candidate during this important, formative stage.

Technically, presidential candidates are required to launch an official presidential exploratory committee, subject to source and contribution limits. But ever since this system was established, people have been finding ways around it. So far, only one candidate, Democratic Sen. Jim Webb (Va.), has created a formal presidential exploratory committee for 2016.

Other "non-candidates" are using different platforms in the form of specialized political committees, allowing these people to raise money and connect with the all-important wealthy donors who could bankroll their future campaigns. These pre-candidates need the money to pay for travel, advertising and even contributions to other congressional and state-level candidates -- who are often important party insiders themselves.

In each new election, candidates tend to find new, innovative ways to approach this pre-announcement phase. These innovations usually follow changes in campaign finance law enacted by Congress or pronounced by the courts. The 2016 election is already shaping up to be the first where candidates who are in the secret primary period are truly pushing the boundaries of the unlimited spending opened up by the Supreme Court’s 2010 Citizens United decision.

Potential 2016 Presidential Candidates and Their Political Committees

The clearest example of this so far has been former Florida Gov. Jeb Bush’s announcement that he would “actively explore the possibility” of running for president. As The Huffington Post previously reported, Bush’s announcement that he is thinking about running -- but is not yet an official candidate -- allows him to launch the Right to Rise super PAC to raise unlimited contributions, without worrying about those pesky rules banning coordination between candidates and supposedly independent groups.

Other candidates also are connected to committees that can raise and spend unlimited sums, including money that comes from corporations and unions.

Gov. Scott Walker (R-Wisc.) announced the creation of a 527 political committee called Our American Revival as part of his official pre-announcement that he, too, is maybe running for president.

The 527 committee form -- named after the section of the tax code that actually covers all political committees -- was a popular unlimited money vehicle following the enactment of the 2002 McCain-Feingold reform law, but has largely gone out of style as Citizens United and the subsequent lower court SpeechNow.org decision enabled the same kind of unlimited fundraising available for committees registered with the Federal Election Commission.

Bush is not the only potential candidate directly connected to a super PAC. Former Hewlett-Packard CEO Carly Fiorina is seen as a possible GOP contender, and currently runs a super PAC called Unlocking Potential. Her group raised $1.8 million in the 2014 elections, with $1.2 million coming from four donors who wrote six-figure checks: designer Sydney Murphy and her oil executive husband Mike Murphy, investor Charles Snowden Jones and hedge fund executive and massive Republican Party donor Paul Singer.

Supporters of Louisiana Gov. Bobby Jindal (R) recently launched a super PAC called Believe Again, though the group does not appear as directly linked to Jindal as the Bush and Fiorina super PACs are to their respective candidates.

Some potential candidates are attached to committees that can not only raise unlimited sums, but also do not have to disclose their donors. National Journal’s Shane Goldmacher reported this month on the rise of single-candidate 501(c)(4) nonprofits that can raise undisclosed “dark” money, noting that Jindal, former Texas Gov. Rick Perry and former Pennsylvania Sen. Rick Santorum all are connected to these types of groups.

Santorum’s political enterprise includes not just a dark money nonprofit, but another type of vehicle that no other candidate maintains. His Patriot Voices PAC is a hybrid PAC, which means it operates as both a traditional PAC that can raise contributions capped at $5,000 per year and give money to other candidates, and a super PAC that can raise unlimited contributions but must spend money independently of candidates.

The diversity of committees launched by potential presidential candidates is not entirely a new phenomenon. Ever since the passage of campaign finance reform in the 1970s, candidates for the presidency have launched their own political committees and sought to press the boundaries of what the law required.

After losing a closely fought primary battle for the Republican nomination with President Gerald Ford, Ronald Reagan converted his Reagan for the Republic presidential campaign committee into what was then a relatively new innovation, a political action committee. Alongside his new Citizens for the Republic PAC, Reagan launched a nonprofit group called Citizens for the Republic Education and Research Foundation to raise unlimited corporate funds. Reagan eventually ran into legal trouble with the FEC when the nonprofit's operations and corporate funds intermingled with the PAC, which was bound by more restrictive rules.

During the 2012 election campaign, prospective candidates like Mitt Romney and then-Mississippi Gov. Haley Barbour launched PACs at the state-level, where campaign limits were looser than at the federal level. This allowed them to collect large contributions -- including from corporations -- and then spend that money to aid their pre-campaigns by buying fundraising and contact lists and contributing to candidates in crucial states like Iowa, New Hampshire and South Carolina.

What is different now is that these unlimited vehicles currently connected to potential candidates will be able to spend money to support those candidates once they move beyond the beta stage. This means that all of the unlimited funds raised by Bush, Walker, Fiorina, Jindal and the rest will likely be turned towards helping their nomination and election to the White House -- once they decide they are actually candidates. All the candidates will have to do is announce that they are no longer connected to these super PACs, nonprofits and 527s run by their allies.

A common thread among the candidates pushing the limits of the new fundraising landscape is that they either do not currently hold elected office or, if they do, are elected at the state level. This provides them with more leeway than the potential candidates expected to run while serving in the Senate.

Potential Republican candidates Sens. Rand Paul (R-Ky.), Ted Cruz (R-Texas) and Marco Rubio (R-Fla.) and possible Democratic candidate Sen. Bernie Sanders (I-Vt.) are not allowed to explicitly run or raise unlimited funds for a super PAC, nonprofit or 527. Instead, they have to rely on the leadership PACs that they all already control, and let their allies launch unlimited vehicles. Of course, the rules limiting coordination for these so-called independent groups are still notoriously loose, but they are much looser if you don’t already hold federal office and your candidacy exists in the nebulous “actively exploring the possibility” phase.

Campaign finance reformers have vigorously opposed the PAC-focused pre-announcement phase of the presidential campaign as a way for candidates to circumvent contribution limits by raising money while pretending to not be a candidate. A 2011 report from the Campaign Legal Center questioned the non-candidacy of potential candidates by stating, “If it walks like a duck and quacks like a duck, you can be reasonably sure it is a duck.”

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