Senators and House Members Can Keep Campaign Funds on the Way Out

March 26, 2010— -- Sen. Evan Bayh, D-Ind., dropped a political bombshell in February when he announced he would not seek re-election to another term. Among the biggest questions in the immediate aftermath: What would this mean for the Democrats?

Another big question: What would become of his $13 million campaign war chest?

Turns out that despite strict Federal Election Commission rules, Bayh and other exiting elected officials do have ways to keep unspent political contributions.

According to the Center for Responsive Politics, there are 25 senators and representatives this year who have announced their retirement and who are collectively sitting on $31 million in authorized campaign committee cash.

While the F.E.C. clearly says campaign committee cash can't be tapped for personal use, there are no such stipulations for certain political action committees, most controversially "leadership PACs" that elected officials can use to support various political causes other than their own.

Lucrative Loophole

Of the 25 members of Congress who have said they are stepping down, 18 have leadership PACs with a combined $850,000, according to CRP analysis.

"There's a wide gap, if not a gulf, between what lawmakers can do with regular campaign money versus leadership PAC money," said Dave Levinthal, communications director for the Washington, D.C.-based CRP. "The question comes up: What can politicians do with the leftover PAC money, and the answer is pretty much whatever they want."

Last March, the F.E.C. formally recommended to Congress that the loophole regarding personal use of leadership PAC money be eliminated, said Julia Queen, an F.E.C. spokeswoman. "Congress should amend [the F.E.C.'s] prohibition of the personal use of campaign funds to extend its reach to all political committees," the commission wrote.

In 2007, the Department of Justice reported "a dramatic rise in the number of cases in which candidates and campaign fiduciaries steal money that has been contributed to a candidate or political committee for the purpose of electing the candidate or the candidates supported by the political committee," according to the F.E.C.

There was a time, three decades ago, when elected officials could permissably tap unspent campaign funds for personal use after they left office. Starting in 1979, though, there have been continued efforts to outlaw unfettered personal spending of war chest money.

In 1989, Congress passed an Ethics Reform Act that was to close the door for good, repealling one last prior provision that allowed some funds to be tapped by lawmakers covered by a grandfather provision.

Kennedy's Unspent Millions

Even though a retiring lawmaker can't personally tap into authorized campaign committee funds upon leaving office the way they can leadership PACs, there nevertheless are some options for the clever and the determined.

For example, it is perfectly legal for leftover war chest money to be donated to a charity, including, say, a brand new charity a politician may be moved to create.

"Between these two sources of money, authorized campaign committee funds and leadership PACs, and considering that there are very minor restrictions, I would say that any retiring lawmaker with even an ounce of common sense can do just about anything they want with the unspent money," said Meredith McGehee, policy director at the Campaign Legal Center in Washington.

When the late Sen. Ted Kennedy passed away, he left behind a $4.5 million campaign war chest. The official treasurer of the campaign has the power to decide where that money goes, according to the F.E.C. Up to $2,000 per election can be donated to other politicial campaigns.

Kennedy's widow, Vicki, could direct the treasurer to carve off money for any number of charities, such as the Edward M. Kennedy Institute for the United States Senate, a think tank organized in Kennedy's later years, or to the JFK presidential library.

Elected officials, of course, have been known to steer money toward pet charities and causes whether they are leaving office or not. For example, the current ethics probe into the finances of Rep. Charles Rangel, D-N.Y., includes an allegation that he not so subtly used congressional letterhead to raise money for the City College of New York's Charles B. Rangel Center for Public Service.

Family Affairs

It's common for elected officials to create nonprofit foundations. In 2002 Bayh created, along with his wife, The Evan and Susan Bayh Foundation. Over the years, it has donated money to a variety of causes, including college scholarships.

Calls to Sen. Bayh's office in Washington went straight to a voice mail message recorded by Bayh himself. Efforts to contact his staffers were unsuccessful.

It would be legal for an outgoing lawmaker's campaign committee to donate leftover campaign money to a family foundation, as long as it is a bona fide charitable organization set up under Internal Revenue Service rules, according to two separate F.E.C. advisory opinions issued over the years. But the funds may not be converted thereafter for personal use.

After Sen. Bayh made his announcement, he told CNN's Wolf Blitzer he intended to use his unspent campaign millions to help support other Democratic candidates -- though considering the $2,000-per-election federal limit, he would have to support a lot of candidates if he wanted to put the $13 million to full use. Bayh's PAC, called "All America PAC," is the largest of its kind, with nearly half a million bucks in it, money he can legally keep.

PAC Men

The outgoing House member with the biggest PAC is Steve Buyer, R-Ind. Buyer, who announced in January he is not running for another term. He has around $40,000 remaining in his "Storm Chasers PAC." A spokeswoman for Rep. Buyer directed calls to the campaign committee treasurer, who did not return calls.

Sen. Chris Dodd, D-Conn., is not only on his way out of office but he is leading the charge to reform Wall Street -- which has unleashed an army of deep-pocketed lobbying groups in response.

But his "CHRIS PAC" would hardly appear to be a slush fund; it had only $38, 842 as of Dodd's last F.E.C. filing on February 8. Dodd has about $3 million in campaign committee funds on hand.