October 22, 2008— -- When news broke that Gov. Sarah Palin and her family managed to spend $150,000 of other people's money on clothes after joining the McCain ticket, many scratched their heads. Is that legal?
Thanks to a loophole in federal law the answer, experts say, is yes.
Handily, the loophole was codified into law by the landmark campaign finance law passed by her ticketmate, Sen. John McCain.
It would be illegal for the McCain-Palin campaign to buy a new wardrobe for Palin and her husband, say campaign finance lawyers contacted by ABCNews.com. But the law is silent on whether such purchases can be made by the Republican National Committee (RNC).
"The party committee has much greater latitude," said Kenneth Gross, a federal election lawyer. "I think it is permissible for the party committee to make that judgment."
The distinction is simply a matter of statute. The McCain-sponsored campaign finance reform bill in 2002 specifically bars the campaign committees from purchasing items for personal use such as clothing, campaign finance lawyers say.
That same ban, however, is not written into the statute for other fundraising entities like PACs or the political party, creating one of the many loopholes that allow campaigns to skirt some of the restrictions put on election spending.
Some have still raised questions about whether the Palin wardrobe purchase is legal because it was made as a coordinated expenditure, a type of purchase done by a political party directly for a campaign and subject to monetary limits each election cycle by law.
While largely the Federal Election Commission hasn't applied the personal use restrictions to coordinated expenses, some lawyers say should be.
"There's an argument that as a coordinated party expenditure, it should be treated the same," said Lawrence Noble, former general counsel at the FEC. "I think there is a strong argument that it is."
In the meantime the RNC says that the clothing is its property and after the campaign it will be returned to them and donated to charity, which it expects will eliminate any questions of gift restrictions or taxes.
But for now, says Scott Thomas, a former chair of the FEC, "It's more of a political issue than a legal issue."