Edwards Pushes Spending Limits

DES MOINES, Iowa, Dec. 29, 2007 — -- Former senator John Edwards and his supporters are exploiting legal loopholes in campaign-finance regulations to remain competitive in Iowa's ad wars, as he seeks to hold his ground against better-financed opponents in the closing days before the caucuses.

In exchange for taking federal matching funds for his primary campaign, Edwards must comply with spending limits that apply to each state. In Iowa, where the first presidential nominating contest will be held on Thursday, he is prohibited from spending more than $1.5 million -- a sum that would quickly disappear in the state's overheated television advertising environment.

But the Edwards campaign has found legal ways to spend perhaps four times that amount in Iowa, including more than $2.7 million on television advertising alone. And outside groups that are supporting Edwards are spending at least another $2 million boosting Edwards' candidacy in the Hawkeye State.

In managing its own funds, the campaign is taking advantage of various exemptions and accounting maneuvers -- allowed for in a complex series of Federal Election Commission regulations -- to stretch its dollars in Iowa, said Joe Trippi, a senior Edwards adviser.

"You really have to be an expert at the arcane sort of formulas," Trippi said. "We haven't played any games. The rules are exactly what they are. The games were all played years ago when the FEC said, 'You can do this, you have these exemptions.'"

Those exemptions have allowed Edwards to stay on the airwaves on the eve of the caucuses despite predictions that the spending limits would leave him badly outgunned in the early-voting states.

Trippi said the campaign will still be significantly outspent in Iowa by Sen. Hillary Rodham Clinton, D-N.Y., and Sen. Barack Obama, D-Ill. But the Edwards campaign's intense focus on Iowa means Edwards, D-N.C., has to try to spend all that he can in the state, in accordance with the law.

"We have to perform in Iowa and do very well," Trippi said. "How can we go forward if we don't win or place a close second? If we take third, it's problematic for anybody, and it's very problematic for us."

The Campaign Media Analysis Group, an independent firm that tracks political advertising, estimates that Edwards has spent at least $2.7 million so far on television ads in Iowa. (That compares to $8.3 million spent in the state by Obama, and $6.5 million by Clinton.)

Trippi said the $2.7 million figure includes air-time purchases that have already been placed. He said the Edwards campaign is probably going to wind up having spent less than $2.8 million on ads in Iowa by caucus day.

Various exemptions are allowing the campaign to spend beyond the $1.5 million spending cap. For starters, only half of ad spending counts toward the cap; under Federal Election Commission rules, the other half can be attributed to fund-raising expenses, and are therefore exempt from the limit.

In addition, ads placed in media markets that reach more than one state -- in Davenport, for instance, near the Illinois border, and Sioux City, on the Nebraska state line -- count partially against the caps in the other states.

Add to that broad exemptions for things including mail sent out more than 28 days before the caucuses, as well as salaries of campaign staffers, and campaigns can spend far beyond the statutory limits, said Larry Noble, a former FEC general counsel.

"It is true that what you see on paper as the state limit is a lot less than what they actually can spend," Noble said. "I don't think the state-by-state limits serve much of a purpose."

Edwards has made his acceptance of public-financing limits a touchstone of his campaign. He has called on Clinton and Obama to join him in committing to the limits, and his campaign consistently brags about the fact that he's the only top-tier candidate who is abiding by spending caps.

In just one example, a memo released Saturday by the campaign included this statement: "John Edwards is the only candidate to work within the public financing system. He believes we need to make elections about ideas and the American people, not money."

Yet aside from his own spending, several independent groups are spending extensively to boost Edwards' prospects in Iowa. One group -- Working 4 Working Americans, which is funded by the United Brotherhood of Carpenters and Joiners -- has spent an estimated $500,000 promoting Edwards in Iowa.

Another group, the Alliance for a New America, has spent some $1.5 million touting Edwards in the Hawkeye State. The group is funded by the Service Employees International Union and is being run by Nick Baldick, who managed Edwards' 2004 campaign and worked on his 2008 presidential bid until this past summer.

The spending by the outside groups has become political fodder in the campaign, with the Obama campaign accusing Edwards of avoiding the state-level spending limits through the use of outside organizations known as 527s.

David Plouffe, Obama's campaign manager, seized on the revelation that the Alliance for a New America ads are being funded in part by a $495,000 donation from philanthropist Rachel Mellon, the 97-year-old widow of Paul Mellon, the son of industrialist Andrew Mellon.

"These latest revelations make it clear why Edwards was able to announce that he could accept public funds while still spending all he needed to spend in Iowa," Plouffe wrote in a memo to reporters and campaign supporters on Saturday.

"His campaign simply exploited the biggest loophole in the campaign finance system in order to get public matching funds while arranging through allies to benefit from a 527," Plouffe wrote. "That's how they avoided the spending limits that are a condition of the public matching funds."

The New York Times reported Thursday that SEIU officials said they were talking with the Edwards campaign in October about "what specific kinds of support they would like to see from us" in Iowa. Edwards aides maintain, however, that they have not coordinated in any way with any 527 group.

Edwards said on Saturday that he still wants all 527 groups to be outlawed, and said he is alone in the Democratic field in having never taken money from political action committees. Still, he defended the message of the advertising that's being circulated on his behalf.

"I'm proud to have the support of labor unions," Edwards said in Muscatine, Iowa. "Unless I'm mistaken, what they're doing is just positive support for my campaign."

He also accused Obama of launching "negative attacks" by focusing on the 527 spending.

"I'm going to focus on is what I'm going to do for America and the positive energy that we have in this campaign," he said. "If Sen. Obama and his campaign want to focus on negative attacks, they can do that, but that is not what I'm going to do.

SEIU President Dave Regan said in a statement Friday that "there has been no coordination or discussion of our support for the organization's work with any individual candidate or campaign at any time."

"While SEIU did not create the Alliance for a New America, the union supports the entity because it shares our goal of sparking a discussion of how best address the concerns of working people in America," Regan said.

ABC's Raelyn Johnson, traveling with the Edwards campaign, contributed to this report.