Not technically corruption?

Paul Kiel points to quite a clever little campaign financing hack. (þ Josh Marshall). To prevent outright bribery, there are all sorts of restrictions on what candidates can do with the money they raise. But of course your campaign can hire consultants:
Rep. John Doolittle's (R-CA) wife, acting as his fundraiser, was getting a 15% cut of contributions coming into his campaign. That sounds sketchy to us, but you never know in D.C., so we asked around to people who do know. The verdict: it sounds as bad to experts as it does to you. And a strong case can be made that Doolittle broke the law.

Neither Fred Wertheimer of Democracy 21 nor Naomi Seligman of CREW could think of another example of a lawmaker's wife or other family member getting a cut of contributions, and it's not hard to figure why: because it sets off all sorts of warning bells. It is against the law for lawmakers to convert campaign money to personal use. And that's just what was going on here.

Now, as with all matters legal, it's more complicated than that. The FEC ruled on a matter very similar to this one back in 2001, when Jesse Jackson, Jr. was seeking to use his wife for consulting work. And what the FEC said back then was that it was OK as long as his wife was paid the "fair market value" for her services.

In that case, Jackson's wife had plenty of experience. In this case, Doolittle's wife had no experience. And she was being paid a 15% commission, which sounded high to Naomi Seligman.

So, obviously this sounds bad, and as Kiel says, it's quite possibly illegal. And even if it's not, it's fairly straightforward to make this exact thing illegal, but trying to draw a firm line here is harder than it looks.

Let's start by asking what's objectionable about this arrangement: the limitation on converting funds to personal use serves two purposes. First, it acts as a brake on the extent to which donors can incentivize politicians, since they can only use those funds for politically-related expenses, as opposed to say, buying a new car. Now, actually the incentive effect there seems pretty strong, especially since money is fungible and there are a bunch of ways for campaign funds to be used to benefit you personally. However, in order for any attempt to limit direct payments to make sense we need to assume that the incentive effects of direct payments are greater. So, the problem here is that Doolittle's incentives are now greater by 15% of the difference between campaign and direct incentives.

Seen in this light, it's not clear that a restriction to "fair market value" or experience makes that much difference, since if your spouse happens to be a lobbyist, you're still getting the same incentive effect to the tune of the fair market value. To make matters worse, what if two lawmakers swap: my spouse is your fundraiser and your spouse is mine. As long as we're not in competition and generally inclined to vote the same way, then donors can incentivize us fully--unless we're prepared to require that everyone hire only experienced people and pay them market value (and how do we determine that if this sort of thing becomes widespread?).

On the other hand, if we look at this as an incentive issue, it may be possible to remove the incentive: forbid fund-raisers to take a cut and make them take a flat salary. That would mostly leave the candidate with only the ordinary interest in raising a lot of money. Of course, that leaves us with the second purpose of this legislation: to prevent politicians from enriching themselves via the public purse. (Note: you can argue that these are private donations, but of course a major reason that these donations are given is to influence candidate behavior, which only applies because of their position). If we want to make that harder, we would probably need to ban politicians from employing anyone in any way related to them or related to any of their co-officeholders. I doubt that's going to happen any time soon.