McCain's Law Preserved Loophole for Tribal Contributions

Sen. John McCain (R.-Ariz.), chairman of the Indian Affairs Committee, says the campaign finance reform law he sponsored in 2002 intentionally left open a loophole that allows Indian tribes to make campaign contributions to an unlimited number of candidates for federal office.

Before McCain’s law passed, most Americans were allowed to give an aggregate of only $25,000 to party committees and candidates for federal office in any two-year election cycle. Indian tribes were not subject to that cap. McCain’s law lifted the aggregate-contribution cap to $95,000 for ordinary American contributors, but declined to impose any cap at all on Indian tribes.

When I asked McCain last week why this was the case, he said, “Because tribes are ‘sovereign entities.’ They are treated on a government-to-government relationship, and we’re looking at that whole issue.”

(Listen to the HUMAN EVENTS interview with McCain.)

I asked, “But it was an intentional thing?” McCain replied, “Oh yeah. … Because they are ‘sovereign nations’ unquote. We sign treaties with them.”

When I pointed out that the U.S. does not allow contributions from foreign governments, McCain said, “No, we don’t. But they’re American citizens. So, it’s a unique kind of a status.”

Indeed. Before McCain-Feingold campaign finance reform was enacted, individuals were limited in the amounts they could give to individual candidates ($2,000 per election cycle), political action committees ($5,000 per cycle) and national party committees ($20,000 per cycle). They were also limited to giving no more than $25,000 in aggregate contributions.

McCain-Feingold lifted the limit on contributions to individual candidates to $4,000 per election cycle, and set a $37,500 cap on the aggregate contributions a person could make to individual candidates in a cycle. It set a separate aggregate cap of $57,500 for the amount a person could contribute to political actions committees and national party committees.

But it did not apply the aggregate caps to Indian tribes.

In fact, the aggregate-cap rules have never applied to Indian tribes. Cleta Mitchell, a Washington lawyer who specializes in campaign finance and election law, noted in a recent Roll Call column, “Aggregate contribution limits apply only to individuals, not to PACs and not to Indian tribes. But, unlike PACs, which must register with and report to the FEC, an Indian tribe does not have any reporting obligations under the law.”

Because Indian tribes aren’t subject to the aggregate “ceilings” they can, if they wish, give $4,000 per election cycle to every single candidate for Congress in every election cycle, while funding an unlimited number of PACs and national party committees.

Some in Congress at least considered changing this when the McCain-Feingold bill, and its House companion, Shays-Meehan, were being debated.

Swiss Cheese

Rep. Rob Simmons (R.-Conn.) developed an amendment that would have applied the aggregate caps to Indian tribes. But The Hill reported in July 2001 that the amendment had died in the Rules Committee, chaired by Rep. David Dreier (R.-Calif.). The National Association of Convenience Stores—whose members compete with Indian reservations that sell alcohol, cigarettes and gasoline tax-free—had planned to score the amendment as a “key vote.” In a press release at that time, the NACS said: “This [Simmons] amendment would have closed the ability for tribal nations to give unlimited sums toward federal elections. While Congress and the Rules Committee were made aware of the situation prior to the committee vote, the committee chose to move forward without addressing this glaring loophole.”

Simmons’ staff last week could offer little more than confirmation that the amendment was offered and rejected. His spokesman, John Goodwin, wrote in an email, “This amendment predates my arrival on Mr. Simmons’ staff and the staffer handling this at the time is no longer here. As my chief of staff recalls, Simmons testified before the Rules Committee on the proposed amendment. The committee did not accept the amendment.”

Rep. Mark Green (R.-Wis.) objected to the loophole on the House floor. “It [Shays-Meehan] does not ban unlimited contributions from Indian tribes and their general treasury. … This is not a Swiss cheese soft-money ban, as one of my colleagues referred to it. It is something full of holes and loopholes, but there is not enough cheese here to qualify.”

In an e-mailed response to questions from Human Events last week, Sarah Moore, press secretary to Rep. Chris Shays (R.-Conn.), defended the unrestricted Indian contributions in the Shays-Meehan bill. “While tribes are allowed to give to as many candidates as they wish, making their aggregate contribution higher than an individual, the principle underlying our campaign finance laws since Watergate is that no candidate is corrupted by a single limited contribution from any donor, including an Indian tribe.”

But, if this is true, why put an aggregate cap on contributors who are not Indian tribes?

Indian tribes enjoyed special campaign finance privileges before the 2002 campaign finance reforms. Until 2000, in fact, many tribes voluntarily complied with the Federal Elections Campaign Act of 1971 and abided by the pre-McCain-Feingold $25,000 aggregate individual contribution limit.

But on May 15, 2000, in response to the Oneida Nation of New York’s request that the FEC confirm that the $25,000 limitation does not apply to Indian tribes, the FEC commissioners issued a unanimous advisory opinion. The opinion said tribes were subject to the limit on the amount they could give an individual candidate per election cycle, but they were not subject to the aggregate cap. This, the commissioners explained, was because the limit on giving to individual candidates was imposed on “persons” by the law while the aggregate cap was imposed on “individuals.” The technical definition of the word “person” under the law, the commissioners concluded, included Indian “nations,” but the technical definition of the word “individual” did not.

“Although a Nation is a person under the act, it is not an individual and therefore not subject to the $25,000 limit on its annual total of contributions,” said the advisory opinion.

The Center for Responsive Politics, which hosts an online database of searchable political contributions, found that in 1990 Indian-gaming-related political donations were only $1,750. In 2004, they totaled more than $7.2 million. PoliticalMoneyLine, a service that tracks political donations, warns their clients that reports may underestimate tribal giving. “While candidates, PACs and party committees are held accountable for political funds, Indian tribes file nothing. … Disclosure only comes from those who file reports indicating they received donations from a tribe. … [T]here is no way to double check the accuracy of the reports.”

Second Look

Tribes were given even more political leverage in a little-publicized FEC ruling last March. The Mississippi Band of Choctaw Indians, a former client of Jack Abramoff, which owns a construction company called IKBI Inc. that seeks competitive-bid contracts with federal agencies, made an appeal to the FEC. The tribe knew campaign finance regulations did not allow federal contractors to make political contributions. Corporations are also forbidden from giving to candidates. But on March 15, the FEC ruled 4-to-2 that, “When IKBI qualifies as federal contractor, its status as federal contractor does not confer federal contractor status on the Tribe and therefore will not affect the Tribe’s political activities under the Campaign Finance Act.”

FEC Vice-Chairman Michael Toner and Commissioner David Mason, both Republicans, dissented, arguing that the Choctaw were free to establish a PAC under federal law and the tribe “must choose between being a federal contractor and making federal contributions.” The dissenters also advised the commission to acknowledge “that political activity of many tribes has been the subject of controversy.”

McCain now says Indian donations need to be examined. “We are going to have to look at the whole issue of tribal contributions and what’s happened and all that in the Indian Affairs Committee,” he said. “We’re having hearings within the next few weeks.”

When I contacted McCain’s press office for further explanation of why and how the loophole was left open in the first place, they did not return my repeated calls.

(Download an iPod-ready MP3 file of Gizzi and McCain’s exchange.)