2020 Election

Bloomberg Exploits Campaign Finance Loophole to Funnel $18 Million to DNC

Former Democratic presidential candidate Michael Bloomberg / Getty Images

Michael Bloomberg announced he will transfer $18 million from his failed presidential campaign to the Democratic National Committee—a move experts say exploits a loophole in campaign finance laws.

Individual donations to the DNC are capped at $35,500, and donations to its convention, legal proceedings, and building funds are capped at $106,500 each. But Bloomberg, by pouring nearly a billion dollars of his own fortune into his presidential efforts, found a way to bypass those restrictions. The massive contribution to the DNC will not flow directly from Bloomberg himself but from his largely self-funded campaign. Campaigns can make unlimited transfers to other committees.

Experts are assailing the move, which they say allows Bloomberg to bypass individual donor limits. "Incredible. Candidates may transfer leftover campaign funds to the party, but I don't believe that loophole has ever been exploited in this way and to this degree," said Brendan Fischer, program director at the Campaign Legal Center. "It guarantees that Bloomberg will retain enormous influence over the Democratic Party."

Lee Goodman, former chairman of the Federal Election Commission, referred to the multimillion-dollar transfer as a "legal two-step."

"Although the funds originated with Mr. Bloomberg, the contribution from the Bloomberg campaign to the party is a legal two-step," Goodman told the Washington Free Beacon. "It helps that the funds Mr. Bloomberg contributed to his campaign were bona fide contributions given for the purpose of winning the presidential election. The law might treat this transfer of funds differently if Mr. Bloomberg had merely passed funds through his campaign committee for the purpose of evading his personal contribution limits to the party."

Kendra Arnold, executive director of the Foundation for Accountability and Civic Trust, said Bloomberg's transfer violates the intent of campaign finance laws.

"The logic behind the unlimited transfer from a campaign to a national party committee is that a campaign raised the funds in compliance with the federal legal limits, namely the $2,800 individual donation," Arnold told the Free Beacon. "But in the case of a self-funded campaign, a candidate could simply use their campaign as an intermediary to make a massive contribution in excess of the individual limit. In this case, an $18 million contribution is extremely far afield from the intention of the law."

The $18 million injection will benefit the DNC's battleground states program and follows years of financial troubles for the party. In addition to being routinely outraised by the Republican National Committee, the DNC reported more than $6 million in debts in its February monthly report released on Friday. Bloomberg's transfer is twice the amount the committee raised in its best fundraising month this cycle.

Bloomberg also decided to forgo plans to form a super PAC in support of the Democratic nominee.

"While we considered creating our own independent entity to support the nominee and hold the president accountable, this race is too important to have many competing groups with good intentions but that are not coordinated and united in strategy and execution," the billionaire's campaign said on Friday.

The RNC pounced on Bloomberg's transfer to the DNC.

"In transferring $18 million of his own money (reminder he didn't take any donations), [Bloomberg] is funneling almost $17.7 million more than the legal limit to the DNC, a clear violation of the spirit of campaign finance law," said RNC rapid response director Steve Guest.

Following a dismal showing on Super Tuesday, Bloomberg suspended his campaign on March 4. He began dismissing staffers across the country, beginning with those in non-battleground states. Now he's laying off staffers in battleground states and encouraging them to find employment with the DNC.

The multibillionaire had promised staffers employment on "Team Bloomberg" through November, even if he didn't win the Democratic nomination. Bloomberg offered aides unusually high pay to lure them to his campaign, which didn't launch until November 2019. He paid state field organizers $6,000 a month—nearly double the amount offered by some of his primary rivals—and offered comprehensive health benefits and perks like laptops and iPhones. Even if the DNC hires the staffers, it is unlikely to pay nearly as much.

Politico reported dozens of laid-off staffers at Bloomberg's New York office have been informed they were exposed to coronavirus. They will lose their health insurance from the job on March 31.

Despite not launching his campaign until months after his opponents, Bloomberg's more than $500 million in advertising spending made him a major player in the Democratic race. The billionaire achieved top-three polling finishes by January and participated in two primary debates, even while not appearing on the ballot in the first four primary and caucus contests. His Super Tuesday-focused campaign was overcome by a late surge by Joe Biden, however, whom Bloomberg endorsed the day he dropped out.