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Maxine Waters exploits FEC rules to raise big bucks from California politicians

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Longtime Democratic lawmaker Maxine Waters has perfected an unusual tactic for fundraising over the years – getting candidates, including some of California’s most prominent political figures, running for state and local offices, to pay as much as $45,000 for her endorsement on election mailers. In this election cycle alone, Waters has raised 59 percent of her campaign’s treasury through these “slate mailers.”

The Los Angeles-area representative, who faces ethics charges in the House for intervening on behalf of a bank in which her husband had invested heavily, has found a way to take large sums of money from state and federal political committees that seemingly exceed FEC contribution limits, but are perfectly legal under the federal election law. The Waters campaign did not respond to requests for comment.

Waters, who has been in Congress for more than three decades, routinely sends out mailers endorsing a list of other candidates and ballot initiatives she supports. In the 2010 cycle, she has raised more than $295,550 out of a total of $497,300 through these mailers. And getting on one of her slate mailers doesn’t come cheap—to be featured on the “Citizens for Maxine Waters” slate, candidates pay anywhere between $250 and $45,000.

Friends of Barbara Boxer, the campaign committee for Sen. Boxer, D-Calif., paid $5,000 for an endorsement. Gloria Romero, the former Senate Majority Leader running for State Superintendent of Public Instruction, chipped in $25,000. Gavin Newsom, mayor of San Francisco and a candidate for lieutenant governor, and Kamala Harris, San Francisco’s district attorney and a candidate for state attorney general, have kicked in $45,000 and $25,000 respectively. Dave Jones, candidate for State Insurance Commissioner, invested $25,000.

State assembly candidates, judges, Los Angeles city council members and city attorneys, school board members and insurance commissioner hopefuls have all paid Waters’ campaign to appear on her slate mailers, often far in excess of the amount a political committee could legally contribute to a congressional campaign. In all, Waters has endorsed 46 candidates and ballot measures while collecting fees. She lends her opinion on five candidates and five measures free of charge.

Christian Hill, an FEC spokesperson, said that money paid for slate mailers “…is exempt from the definition of ‘contribution’ and ‘expenditure’ under the Federal Election Campaign Act (FECA).” Like the interest campaigns earn from a bank account or investment income they might receive if they’ve invested in stocks, slate mailers are income to the campaign, usually categorized as “other” in FEC summaries and by other organizations that aggregate contributions data like the Center for Responsive Politics.

By using slate mailers, Waters’ campaign avoids the same contribution limits that apply to individuals, PACs and authorized campaign committees (that is, the reelection committees of other members of Congress). For instance, the campaign of Sen. Barbara Boxer, D-Calif., paid $5,000 to be endorsed on Waters’ slate mailer. Similarly, U.S. House candidate Laura Richardson paid Waters’ committee $8,800 to appear on the mailer. Under federal campaign law, those campaigns would have been limited to $2,000 contributions for each election.

Californian candidates paid the largest sums of money to appear on the slate mail. Newsom, the San Francisco mayor and related through marriage to House Speaker Nancy Pelosi, gave the most at $45,000. Under California election law, candidates can raise funds directly from corporations and unions—neither of which can give to federal candidates—as well as from individuals. Individuals, corporations and unions can give a maximum of $25,900 to gubernatorial candidates, $6,500 to other statewide candidates and $3,900 to state legislative candidates—more than the $2,400 individuals can give to a federal campaign. Under the state's law, there is no cap on how much candidates can pay to be featured on a slate mailer.

According to correspondence between the Waters’ campaign and the FEC, candidates she endorses that do not pay to be on the mailer need to credit their campaigns with an in-kind donation from Waters. The FEC requires that the slate mailers contain an asterisk next to names of the candidates that paid to be on the mailer. This is intended to have the same function as the stand by your ad provision line for political ads.

Data provided to the Reporting Group by the FEC shows that Waters is the only representative who reports raising money using slate mailers. A search for the word slate in records provided by the FEC produced only 26 hits. All of these entries were for candidates from California and only Waters’ reported using slate mailers as a fundraising tool. The others were expenditures for appearing on slate mailers. According to Hill, party committees generally pay for slate mailers.

Waters’ fundraising tactic works best in California

Waters’ unusual fundraising niche has proved lucrative. Most candidates rely on individuals, PACs or their own wallets (called self-financing). Other incumbents from the Los Angeles County Congressional Delegation get 99.3 percent or more of their campaign cash from those three sources of funding, with the balance coming from other sources that include income like interest payments, returns on investments, transfers from other committees and reporting errors.  For her colleagues from Los Angeles that fourth category of money—usually labeled as “other”—makes up between 0 and 7 percent of their campaign cash; Waters comes in at 59 percent.

Waters pays a small amount of the money she receives from people running for office to her daughter Karen’s firm Progressive Connections. In the 2010 cycle so far, the company involved in putting together the mailers was paid $49,000 for its services according to documents obtained from the California Secretary of State through CalAccess. The total cost of producing the mailers was $218,700.

Waters, who is not known to throw lavish fundraisers and comes up with very few hits on Sunlight’s Party Time database, seems to have developed a fundraising niche using this form of political advertising, more popular in California than in any other state. While candidates and committees in other states have tried slate mailers, they have not achieved the same degree of popularity as the California slate mailers.

Joel Fox, blogger for the California based political blog, Fox & Hounds Daily, runs a slate mailer that endorses several candidates. “The reason that slate mailers are on such a larger scale in California, might be that we have so many more propositions and candidates,” he said. Fox’s slate, the Small Business Action Committee Newsletter, made some revenue from their mailer and put it toward the organization, but Fox insists that the most valuable aspect of their slate mailer is being able to get their message out.

California has a notable disclosure process for slate mailers through Cal-Access. According to the database, there are 81 active slate mailer organizations registered in the state. Although, unlike Waters’ mailer, most of the names of their organizations are vague and it is difficult to understand who is funding them. Some are misleading. For example, the “Official Non-Partisan Voter Guide of California,” “California Voter Guide,” and “Election Education Guide” all sound like official, non-partisan advice, but are often endorsements for hire.

According to The Journal of Law and Politics, “If scholars have given too little attention to campaign mail, they have entirely overlooked the particular phenomenon known in California as ‘slate mail.’” Although political ‘slates’ are known in other states typically, they are produced and distributed by the party, on a relatively small scale.

For this analysis, the Reporting Group used documents collected from state level disclosures, campaign finance data from the Center for Responsive Politics (CRP) and additional documents provided by the Federal Elections Commission (FEC). According to the FEC, there is no federal law requiring candidates to “determine the method in which contributions were raised,” CalAccess numbers are used to provide a breakdown of funds.