By Paul Steinhauser, Rob DiRienzo
Published September 17, 2019
Andrew Yang insisted to Fox News this week that his “small army of very, very, smart lawyers” assures him his pitch to give 10 random families $1,000 per month -- to spotlight his plan for a universal basic income for all adult Americans -- “is perfectly legal.”
But some leading campaign finance experts are taking issue with the Democratic presidential candidate’s provocative promotion and say it’s likely Yang’s breaking campaign finance laws.
The problem for the tech entrepreneur, who’s seen his once long-shot bid for the White House gain traction this summer thanks to the buzz generated by his so-called ‘Freedom Dividend,’ is that federal law prohibits campaign contributions from being used for personal purposes. Those uses include such things as paying the mortgage or rent, buying groceries, purchasing clothes or filling up the car with gas -- basically any expense that could be made without a campaign purpose.
Larry Noble, a former Federal Election Commission general counsel, tweeted that “a lottery to give money to potential supporters may violate law and is a slippery slope.”
The nonpartisan Campaign Legal Center, which works to minimize the influence of big money in politics, tweeted "Before @AndrewYang starts handing out campaign money, he might want to ask an election law expert to explain 52 USC 30114(b), the section of the Federal Code that bans the conversion of campaign funds to personal use."
And former U.S. attorney Preet Bharara, an anti-corruption crusader, questioned whether Yang “vetted his $1000/month to voters from campaign funds with an actual lawyer.”
Campaign finance expert Craig Holman, who serves as Public Citizen’s Capitol Hill lobbyist on ethics, lobbying and campaign finance rules, told Fox News that federal law “defines personal purposes as any expense that [is] irrespective of the campaign. In other words, if it’s an expense that could be made without any campaign purpose, that’s a personal purpose.”
Holman said it would likely be a “violation of the federal campaign finance law” if Yang uses campaign funds to pay the 10 families $1,000 per month.
But Yang’s campaign says the payments are considered a campaign expense because they’re being made “to further the goals of the campaign.”
In a bout of showmanship, Yang announced in his opening statement at last week’s third round Democratic presidential debate that “I'm going to do something unprecedented tonight.”
The candidate then highlighted that his campaign “will now give a freedom dividend of $1,000 a month for an entire year to 10 American families, someone watching this at home right now. If you believe that you can solve your own problems better than any politician, go to yang2020.com and tell us how $1,000 a month will help you do just that.”
Yang – in front of millions of people watching the debate – emphasized that “when you donate money to a presidential campaign, what happens? The politician spends the money on TV ads and consultants and you hope it works out. It's time to trust ourselves more than our politicians.”
Yang was the CEO of the test-prep education company Manhattan GMAT. In 2011, he launched Venture for America, a New York City-headquartered organization that trains entrepreneurs. Since declaring his candidacy for president a year and a half ago, the central theme of his campaign is that automation is increasingly displacing the country’s workforce and that a cash payment will be needed for people to afford to live through the automation evolution.
The candidate argues that his ‘Freedom Dividend’ of $12,000 per year to each adult American “would help people improve their health, nutrition, pay off some debts and bills that have been hanging over them, reduce their stress levels.”
Yang explains that his plan would be paid for by a value-added tax, known as a VAT. He’s estimated a 10 percent VAT would raise some $700-800 billion.
To publicize his universal basic income proposal, Yang’s already paying $1,000 a month to three families, in the early voting caucus and primary states of Iowa and New Hampshire, as well as another in the key battleground state of Florida. But Yang’s been bankrolling those contributions from his own personal funds.
“I talked to the FEC and they said as long as it’s my personal funds, and it’s a personal gift with no strings attached, they have no issues,” Yang told Fox News in February, when the first family began receiving their monthly payments.
He added that he was “optimistic” the families receiving his personal cash payments this year “will come out for me, but I have no expectations and certainly no obligations.”
He described the payments as gifts on his campaign finance reports to the FEC.
But using campaign funds to bankroll 10 more families is a whole new ballgame.
However, there's a twist: The FEC basically has been paralyzed by partisan gridlock and dysfunction in the nation’s capital. It doesn’t have enough commissioners to make rulings or punish violators of election law anyway.
“The FEC has closed its doors. It’s gone defunct,” Holman emphasized.
He questioned whether Yang “could be banking on the fact that there is no campaign finance cop on the beat. There is no enforcement agency to enforce the law. The Department of Justice could step in if it wanted to. But they usually only step in if it’s an egregious criminal violation of the law. This would be a civil violation.”
Yang’s campaign announced on Monday they received $1 million in donations and 450,000 email entries from his announcement on Thursday through the weekend of what they call the “Freedom Dividend Pilot Program.”
The candidate – speaking with Fox News and other news organizations after a campaign rally Monday evening in Boston--pushed back against the criticism of the legality of his pilot program.
“I want people to reflect for a moment on the system we’re in the midst of," Yang said. "If I had $1 million in campaign funds and I gave them to a media company like your employers, no offense, or consultants, or an army of canvassers, then everyone would be like that’s A-OK, but if I give them to Americans to do whatever they like in positive ways that something problematic.”
“I want everyone to reflect on that and how bizarre that is,” he said.