Mo Money Mo Problems

Bill Cross taught me an important metaphor when I was an undergrad trying to figure out political science . He described campaign finance regulation like a bucket full of holes and cracks. As soon as you plug one hole the water finds or creates another. It's not any different with C-24, I think. (For an academic cut on C-24, I self-servingly point you here and here).

This is most likely true with the widespread use of loans by Liberal leadership candidates. As I understand the legislation (and I am happy to stand corrected) a candidate can only draw out loans at a rate of prime or higher and must demonstrate intention to pay them back. In other words, the loans are real. However, if the loans remain 18 months after the election's conclusion, they can be forgiven. This is most obviously important, as otherwise a candidate could be permanently indebted, paying all of her or his future donations from here to eternity towards their loan. But there is also a clear problem with this legislation: it clearly allows donations larger than the limit to be made. Indeed, lenders need only forgive the loan after 18 months and forgo a tax credit.

Which brings me to Stephane Dion and Maurizio Bevilacqua. First, in the case of Bevilacqua, I think we should all wonder rather loudly if Bob Rae or members of his team offered to pay off his debts. This can probably be done in the C-24 context with only a minor stretch of the rules. And given the money around Rae, we ought to think it a possibility. But Liberals ought to know prior to the convention.

Now, in the case of Dion, this story suggests that he has borrowed $550,000 from people who have then committed to fundraising to pay off those loans. In other words, John Smith loaned Dion X thousand dollars and will now fundraise in Dion's name to pay this off. First, this is a bad fundraising strategy, as individuals are less receptive to hearing that their money will go to pay off debt rather than going directly to the candidate. Second, if Dion were not of absolutely unimpeachable character, I would seriously question the appropriateness of this scheme. Essentially, he is allowing individuals to fundraise in his name for their own private gain. And, he is risking either having serious personal debts after the race or having to consider the possibility of anxious lenders running around figuring out how to recoup their money following the race. There's not a lot of money in the race right now, and they'll be even less for the 9 losers following the race. Who knows what promises get made when it's time for debts to be forgiven.