Air America Skirting Campaign Finance Laws?

John Lott and Brad Smith argue in an op-ed in today’s Washington Times that Air America was never intended to be a successful radio network but was instead a rather clever circumvention of campaign finance laws.

When is a campaign donation not a campaign donation? Apparently if you spend the money to run a radio program instead of paying for campaign ads that run on that same program. Just look at Air America. With $41 million in losses since 2004, and $9.8 million owed just to Robert Glaser, RealNetworks chairman, Democrats who bankrolled this “company” weren’t so much investors as campaign contributors. The losses are seen as simple business ineptitude,but Air America effectively, and perhaps intentionally, cleverly avoided the campaign finance limits which Democrats had worked so hard to pass.

With McCain-Feingold’s “hard money” donation limits of $2,000 per candidate and “soft money” limits to party campaign committees of $57,500, there is no way that Mr. Glaser or other wealthy Democratic donors could have legally given such large sums directly to Democrats. But Air America rovided a vehicle for their multimillion-dollar political campaigns.

[…]

Since Air America started, successful radio entrepreneurs — most notably Rush Limbaugh — have argued that Air America never had a business model that made sense. But perhaps it had a model that made political sense. It’s hardly a coincidence that Air America debuted in time for the 2004 presidential campaign or that the bankruptcy filing was put off long enough so that creditors actions won’t stop broadcasts before the Nov. 7 election. As if the willingness to lose money weren’t already obvious, over a year ago the network started asking listeners to donate money to keep the programs on the air.

Air America merely follows a grand tradition of circumvention by the very people who have supported campaign-finance regulation. George Soros donated millions to help pass McCain-Feingold, but was quick to work around it so that his big dollars could keep flowing. During the 2004 presidential campaign,Mr. Soros was prohibited from giving money directly to his preferred candidate, Howard Dean, so he gave $15 million to MoveOn.org so that it could raise the money for Mr. Dean.

The big innovation for Air America was using the bankruptcy laws to turn non-Democrats into involuntary campaign donors. Not only are Democratic “investors” out in the cold, but landlords, limo services, law firms, stations that sold Air America air time and state governments are owed money. Apparently, the network still owes the Gloria Wise Boys and Girls Club, a New York City program for poor kids, a whopping $875,000 — money that was transferred from the club by its former director. But even while these people are being stiffed, since the bankruptcy Air America’s founders brazenly announced they are starting a new left-wing radio network.

Because Democrats love to screw over lawyers, orphans, and limo services? Those sneaky bastards!

The idea that investors started Air America with the idea of going bankrupt is rather absurd. What value is there to getting free air time on a radio network nobody is listening to? Couldn’t they have achieved the same circumvention of the campaign finance laws by creating a successful network consisting of liberal equivalents of Rush Limbaugh, Sean Hannity, and Laura Ingraham? Surely, that would have made more sense.

Here, though, I’m in agreement with Lott and Smith:

More importantly, though, Air America shows what a mess campaign finance regulations are in. As Justice Anthony Scalia noted during the oral arguments on McCain-Feingold’s constitutionality: “if history teaches us anything, [it] is that when you plug one means of expression, the money will go to whatever means of expression are left.” One such means is the press: broadcast stations, magazines and newspapers are exempt from the law.

But the term “news media” is difficult to define. When McCain-Feingold first passed in 2002, the National Rifle Association generated outrage when it talked about buying a TV station, so that like other media, it could mention a candidate’s name during the 60 days before the general election. Sen. John Kerry demanded that the Federal Election Commission block any attempt by the NRA to get a media exemption, stating, “We urge you to prevent the NRA from hijacking America’s airwaves with the gun lobby’s money.” There is no record of Mr. Kerry objecting to Air America’s expenditures.

Unfortunately, the contradictions may soon be getting a lot worse. Recently two Seattle radio talk-show hosts were found guilty of violating the Washington State’s campaign finance regulations. The monetary value of their commentary on an initiative exceeded campaign contribution limits.Their sin was apparently to fight for lower taxes. What’s next? A monetary value assigned to positive news stories in newspapers?

Many of us have argued from the beginning that attempts to stifle political speech were not only unconstitutional but doomed to failure. After all, we’ve had several attempts since 1974 and all we’ve accomplished is to ensure that every major campaign and interest group is in technical violation of the law. More money is going into politics than ever before and, since politicians need to raise tons of cash in tiny increments, they spend most of their time fundraising. Talk about your unintended consequences.

Todd Zywicki has a long post on other pitfalls of campaign finance reform. He notes, with backing from a McCain-Feingold drafter, that Bob Corker’s recent denunciation of an independent RNC ad against Harold Ford could be considered illegal “coordination” under the law.

UPDATE (10/30): Smith writes to clarify:

[O]ur argument is not that Democrats started Air America with the intention of going bankrupt – it’s merely that making money wasn’t what it was all about. Of course the idea was not to fund a network nobody listened to. I think their hope was that people would listen. I think they wanted to create a successful network in that sense, and if they could have found the liberal equivalents of Limbaugh, Hannity, and Ingraham, that’s what they would have done. Indeed, I think that’s what they thought they had done when they started.

I don’t disagree with that. Obviously, Air America was partly a work of passion and partisan activism in addition to a pure business enterprise. That’s presumably true of conservative counterparts like Salem, though.

FILED UNDER: Campaign 2006, Law and the Courts, Media, , , , , , , , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Cernig says:

    Hi James,

    I do believe those partisan hacks journalists just made an argument for saying FoxNews is a scam so that Rupert Murdoch can get around campaign finance rules. (Mind you, we Brits are used to it – his newspapers have endorsed every successful candidate for PM since at least 1979. No Murdoch, no victory.) The real beauty of it is…it makes profits that can then be pumped into even more campaigning! Genius. Why didn’t Air America think of that?

    Regards, C

  2. Michael says:

    since politicians need to raise tons of cash

    So how about we fix the original problem, then we won’t need to worry about campaign finance laws.

  3. Dave Schuler says:

    I think they may have watched The Producers one too many times.

    Here’s my proposal for campaign finance reform:

    1. Eliminate all contribution limits
    2. Re-instate and reupholster the fairness doctrine.
    3. Make it illegal for broadcast media (at least) to take money for political advertising.

    TV could show as much political advertising as they wished but they’d need to give equivalent time in equivalent slots to opposing candidates. And they couldn’t take money for it.

  4. James Joyner says:

    Cernig:

    They’re not journalists.

    John R. Lott Jr., the dean’s visiting professor at SUNY-Binghamton, served as an unpaid expert witness for the plaintiffs in the McCain-Feingold case.Bradley A. Smith, chairman of the Center for Competitive Politics, is a law professor at Capital University Law School and a former chairman of the Federal Election Commission.

    Otherwise, I’ve dubbed their argument “absurd,” although acknowledging that the problems they point out vis-a-vis CFR have merit.

  5. Anderson says:

    What Cernig said. If Republican Pravda Fox News is legit, with a former RNC chair running the show, then poor Air America is unobjectionable. Except for the sucking part.

    (Never heard it, actually, & never had any reason to believe I was missing anything.)

  6. James Joyner says:

    Anderson:

    First, I’d say Fox News and Air America are hardly comparable. One’s a news outlet that merely leans further to the center than its competition while the other is a network that makes no bones about being a liberal propaganda machine aiming at electing Democrats.

    Second, Fox is a profitable business and, indeed, the number one cable news network. Air America has been a dismal failure.

  7. Anderson says:

    Second, Fox is a profitable business

    Well, one would expect that of the Republicans. It’s their free-market improvement on Pravda.

    But your first point doesn’t pass the laugh test. Fox News is all about electing Republicans, and I really don’t think you should put your (ample) credibility on the line by pretending otherwise. I spend plenty of time trapped in public places where Fox is blaring, and it’s a joke.

  8. James Joyner says:

    Anderson: I don’t watch FOX or, frankly, other cable news much these days.

    Its flagship news show, Special Report with Brit Hume, is quite good. It’s morning show is awful but not because it’s propaganda but because the hosts suck. The thing with Shepard Smith is pretty lame, although it’s more tabloidy than GOP propaganda. (At least it was when last I saw it, which was well over a year ago.)

    Its talk shows are a mixed bag, although none my cup of tea. O’Reilly is a pseudo-populist windbag, Van Susteren is a lawyer-cum-gossip-show-host, and Hannity is, well, Hannity. But those are opinionated yell-fests not much different from what one might find on the competition. Certainly, they’re no worse than Hardball or Joe Scarborough or Keith Olbermann.

  9. Wasn’t there a talk show that was sued and found that their shows about some local gas rate hike was a campaign contribution? If I remember right, the case hinged on whether they were discussing the issues of the day or were “aligning themselves” with the campaign. So if they can find anyone who listened to Air America, maybe they could find some instances of Air America “aligning themselves” with some campaigns. I won’t jump to any conclusion if they would have been aligning with democratic or republican campaigns.

  10. Cernig says:

    Fox News ” a news outlet that merely leans further to the center than its competition”?

    LOL!!!!

    But Fox has become what Murdoch’s tabloid “The Sun” is in the UK. You can’t win the big election without their endorsement anymore. Why do you think the Clintons have been sucking up to Murdoch so much?

    Murdoch did it for Thatcher (multiples), Major and then switched teams and did it for Blair (multiples) and can do it for anyone else he sees fit. The Sun will back Cameron next time out – sorry Brown, you’re roasted.

    The McCain/Gulliani ticket may well be headed for a fait accomplis but they’re well behind on Murdoch-smoozing. If they don’t catch up, the GOP will lose in ’08, no matter what else happens.

    Regards, C

  11. James Joyner says:

    Cernig:

    I’m defining “center” in terms of the American electorate. Clearly, CNN and the old-line networks are well to the left of center and Fox is pretty close to it, judging by the ratings.

    I don’t doubt, either, that there’s plenty of power in owning a media outlet and that the politicians want to get the best possible treatment. I disagree, though, that Murdock or anyone else has the power to anoint winners. If he does, he’s being a little too stingy with it given the closeness of the last two presidential elections.