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An Endowed Chair 

Sen. John McCain's push for campaign-finance reform has helped his presidential bid. Donations from special interests haven't hurt, either.

Wednesday, Dec 15 1999
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When Charles Keating's Lincoln Savings and Loan Association collapsed in 1989, Arizona Republican Sen. John McCain's political career nearly went with it.

McCain, the country learned, was one of five senators who had met with federal regulators at Keating's behest. Although the senators insisted there was no quid pro quo, all had taken sizable campaign contributions from the banker. Keating and his associates had donated more than $112,000 to McCain's '82 and '84 U.S. House bids and his '86 Senate campaign.

The term "Keating Five" became international shorthand for government corruption.

A decade later, John McCain is the only member of the Keating Five who retains his Senate seat; the other four retired long ago, in varying degrees of disgrace. After a mild rebuke from the Senate Ethics Committee, McCain left the Keating mess behind and set about picking up the pieces of his career. He focused on foreign affairs -- a natural for the former Navy officer who spent five years as a prisoner of war in Vietnam.

McCain seized upon another issue as well: campaign-finance reform.

It worked.

Today, McCain is running for president. His role in the Keating Five scandal has been reduced to a paragraph in most John McCain profiles, which rhapsodize about the candidate's one-man crusade against the corrupting powers of special interests, how he spreads the gospel of clean campaigns through the backroads of New Hampshire on his campaign bus, the "Straight Talk Express," even taking a stroll with Granny D, the arthritic octogenarian who's crossing the country on foot in support of the cause.

But John McCain still raises money the old-fashioned way -- that is to say, the way he raised it from Charlie Keating.

Federal Election Commission data show that McCain has raised about $13.9 million in his past two campaigns -- his 1998 Senate re-election bid and his current presidential run. A computer-assisted analysis of gifts to both campaigns was conducted, but only $9.8 million of the total of $11.6 million that McCain has collected from individuals and political-action committees was analyzed for this story. The difference between the $9.8 million examined and the $11.6 million collected from individuals and PACs is due to the fact that not all campaign filings are available electronically. The difference between the $11.6 million figure and the $13.9 million figure exists because "other sources" cited by the FEC, including loans to the campaign, were not included in the analysis. McCain transferred about $1.9 million from his Senate campaign fund to his presidential campaign account. This is why senate and presidential numbers were combined for this analysis.

The numbers cited are conservative.

The research shows that many of McCain's most generous donors happen to have business before the Senate Committee on Commerce, Transportation, and Science, which the senator has chaired since January 1997.

Among the findings:

" Hundreds of thousands of dollars of McCain's campaign contributions can be tied to industries with interests before the Commerce Committee, with the telecommunications industry alone donating nearly $1 million.

US West's PAC and employees (along with subsidiary QWest) have donated at least $103,700 to McCain's presidential campaign and his 1998 Senate re-election campaign. Bell South has given at least $56,000, Viacom and its subsidiaries, at least $55,250.

" People who testified before the Commerce Committee between January of 1997 and November 1999 donated at least $797,917 to McCain -- nearly 10 percent of all the contributions examined for this story. They made the contributions personally, or through their employers' political action committees.

Of those who testified, 473 represented industry. Only 37 represented consumer groups. Witnesses for industry accounted for all of the contributions.

" Donors who've given more than $1.2 million to McCain's past two campaigns do not list an occupation or employer: Federal law requires a candidate to make a best-faith effort to learn and disclose the information. Even when disclosure rules are met, it is often impossible to identify what a donor's interests might be. At least $506,174 in contributions to McCain came from donors identified as "self," "retired" or "housewife," who often are aligned with special interests. Scores of contributors identify their employers with arcane acronyms. Contributions of $200 or less need not be disclosed at all.

" Another generous industry: gaming ($103,177). The Mashantucket Pequot tribe, which owns the Foxwoods Casino in Connecticut, has, through employee and PAC contributions, given McCain $28,400. McCain is also a member of the Senate Indian Affairs Committee, which regulates Indian gaming.

If these findings raise concerns about influence peddling, none of those concerns would be addressed by McCain's campaign-reform platform, which is narrow in scope. He wants to ban "soft money," the hundreds of thousands of dollars that large corporations and other special interests pour into political party coffers each campaign cycle. Once the parties have the soft money in hand, they spend it on "independent," third-party ads that buttress party favorites in hotly contested races.

A soft money ban would be a good start toward reforming the campaign-finance system, but it would by no means stop the influence of special interests. Charles Keating did not become famous donating soft money to political parties; instead, he and his employees wrote stacks of individual checks for $250 or $500 or $1,000.

So do employees of the airlines, railroads, and phone companies under the purview of Commerce Committee Chairman McCain.

"Hard money" donations made directly to candidates are limited to $2,000 per individual, per election cycle ($1,000 for the primary, $1,000 for the general) and $10,000 ($5,000 primary, $5,000 general) per PAC per election cycle. Corporations are prohibited from donating unlimited amounts of cash directly to a campaign, but they can, for example, host a fund-raiser for the candidate and collect dozens of checks from employees, as some McCain donors have. This is known as "bundling." Companies are not supposed to reimburse employees who contribute to the firm's favorite politicians, but there's no way to monitor whether this occurs.

About The Author

Amy Silverman

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