2-27-08, 9:12 am

Sen. John McCain tried to prove his ethical good standing Monday, Feb. 25, by claiming to have acted 'exactly' like former Democratic presidential hopefuls Howard Dean and Dick Gephardt. 'We're doing exactly what Howard Dean did in a previous election and what the FEC ruled in the case of Congressman Gephardt,' he told reporters.

McCain likened himself to Dean and Gephardt in order to sidestep charges that his recent flouting of rules related to the Federal Elections Commission (FEC) federal matching funds program, a system he helped create and which benefited him tremendously in this election cycle, is illegal.

A major difference between McCain and Gephardt and Dean, however, is that the FEC approved Dean and Gephardt requests to drop out of the public financing process. This time around writes Democratic National Committee General Counsel Joe Sandler in an e-mail to Democratic Party supporters, 'John McCain decided to break the law by ignoring the rules laid out as part of the federal matching funds program.'

Readers might remember the early days of the McCain campaign late last year when staffers went unpaid and volunteers drove the Arizona senator to his next appearance in front of mere handfuls of Republicans. At that time, McCain sought to use the federal matching funds program to boost his campaign resources.

McCain did so in two ways. According to the Washington Post, McCain used an 'FEC certification to bypass the time-consuming process of gathering signatures to get his name on the ballot in several states, including Ohio.'

More controversial, however, is the fact that McCain also used the promise of an influx of taxpayer dollars into his campaign as collateral when he borrowed heavily from a Maryland bank, reported the Post.

Publicly available FEC reports as well as a draft of the agreement between John McCain and a lender who offered him a line of credit (posted at Talking Points Memo) indicate McCain used the federal matching funds as collateral to get as much as a $4 million line of credit to keep his faltering campaign afloat, of which almost $3 million was spent.

The text of the agreement between McCain and the bank says that McCain will 'grant to the Lender, as additional collateral for the Loan, a first priority perfected security interest in and to all of Borrower's right, title and interest in and to the public matching funds program.' The agreement is basically a promise by John McCain to repay the loan with taxpayer dollars from the federal matching funds program if the campaign could not repay it with other income, the basic definition of collateral.

Despite McCain's early campaign misfires, divisions in the Republican Party propelled him to frontrunner status, and his promise to maintain the Bush doctrine for four more years has nearly clinched the nomination.

After spending millions based on a promise of more taxpayer dollars to follow, McCain changed his mind. On Feb. 6, one day before McCain's toughest rival, multimillionaire Mitt Romney, backed out of the race, John McCain sought to be released from his legally binding contract with the FEC to abide by federal laws overseeing the dispersal of matching funds. Federal law allows a candidate to be released from the agreement only if the candidate has not accepted any taxpayer dollars and if that candidate does not use the promise of federal dollars to borrow cash.

Now that taxpayers unwittingly helped boost the financial fortunes of what was a dismal campaign that couldn't generate the enthusiasm and excitement needed to bring in campaign donations on its own, McCain has gone back on his word and violated federal campaign laws he helped pass.

McCain's use of promised federal matching funds as collateral to borrow millions during the primary season meant that he by default agreed to a spending limit of about $54 million on his campaign until the general election campaign begins next September.

As of the end of January, McCain's campaign reported having spent close to $50 million. By any reasonable estimate, he has surpassed the limit he agreed to when he accepted federal taxpayer funds.

This likelihood led FEC Chair David M. Mason, a Republican, to warn McCain last week that he might have broken the law and that the FEC had not approved his request to withdraw from the federal matching funds program. The criminal offense could carry a prison sentence and stiff fines. Mason further stated that McCain might have to wait until September to spend new money on his campaign.

McCain's spending habits in violation of FEC rules are the basis of a complaint filed by the Democratic National Committee (DNC) on Monday, Feb. 25. DNC lawyers demanded McCain produce FEC approval of his withdrawal from the federal matching funds program.

In response to McCain's claim that he is a paragon of virtue like Howard Dean, on Tuesday, Feb. 26, the DNC released the letter Dean received from the FEC in December 2003 approving his November 12, 2003 request to release his campaign from the federal matching funds agreement.

In sharp contrast to McCain's claims, Dean's request to be released from the FEC program came well before primary elections were held, but most importantly before he accepted taxpayer dollars or other benefits from the program, which McCain had clearly accepted.

'The crucial issue here is John McCain's integrity. John McCain poses as a reformer but seems to think reforms apply to everyone but him,' said DNC Chair Howard Dean responded to McCain's claims in a press statement. 'This is just the latest example of his do as I say, not as I do double standard, and it's unlikely to be the last.'

--Reach Joel Wendland at