Inconvenient News,
       by smintheus

Monday, June 25, 2007

  John Edwards' bait-and-switch

I really would like to be able to like John Edwards. He more than any presidential candidate carries the banner of economic populism and speaks to the issues I care most about. But he also seems just a tad too slick about making excuses. That's been very much on display after a recent NY Times investigation of a DC-based non-profit he created in 2005. Rather than just explain the financial dealings that had been brought into question, Edwards rallied his supporters to denigrate the reporter's integrity. He has erected such ridiculous straw-men that you'd think you were listening to a Fox News commentator.

I haven't been buying Edwards' huffing and puffing. In fact, I had a strong hunch from the outset that Edwards tried and failed to play a cheesy game of bait-and-switch with the Times...and he was using that failed stunt to rally his supporters. This evening, I discovered that my original hunch was exactly right. It doesn't exactly redound to Edwards' credit.

This whole matter is becoming increasingly shabby. Left-wingers are so sick of seeing Democrats smeared by the big right-wing Noise Machine that many sprang instinctively to Edwards' defense, unwisely I believe. Certainly the epithets you see flying around the internets are unwarranted. The facts don't look very good for the candidate, and perhaps that is why he has concentrated instead on pounding the table.

In May, Eamon Javers of BusinessWeek reported on Edwards' "Convenient Nonprofit":

During periods when they're out of office, many politicians arrange jobs for loyal former aides. After his unsuccessful 2004 Vice-Presidential bid, John Edwards came up with a creative approach: He started a nonprofit dedicated to fighting poverty. Rather than recruiting outside poverty experts, the Center for Promise & Opportunity became a perch for several once and future Edwards staff members.

The line between an ordinary nonprofit and a group formed to test the political waters can be blurry. But legally there's a big difference. Ordinary nonprofits aren't subject to rules on disclosing donors and limiting contributions; exploratory political groups are. No one has challenged the status of the Edwards center, and experts in the field say it may technically pass muster as an ordinary nonprofit. But at a minimum, it appears to have helped Edwards prepare for the 2008 Presidential race.

Javers then gives details of the finances of the DC-based Center for Promise & Opportunity (CPO) for 2005 (the only year so far for which it has filed the required documentation): CPO raised $1.3 million, and spent some on Edwards' speaking engagements and also on travel that clearly is related to the Center's stated goal of raising the public profile of poverty in America. However, the CPO also spent $259,000 (nearly 20% of its budget) on consultants, whom it refuses to disclose.

There is just enough in this report to suggest that there was a whiff of the nascent presidential campaign about this Center.

Javers adds this striking detail:

Edwards' team defends the center. "Obviously, some of the people who had worked for Senator Edwards in government and on his campaign continued to work with him in this effort," says spokesman Eric Schultz. "John Edwards and everyone involved is proud of the organization's work." That work included running a foundation that awarded $300,000 in college aid to 86 North Carolina students in 2006. The Edwards campaign put BusinessWeek in touch with recipient Tony Tyson, 18, who finished his freshman year at North Carolina Agricultural & Technical State University. Tyson calls the scholarship "a golden opportunity." When he returns to campus this fall, he adds, he'll volunteer for Edwards' campaign.

It's very strange that the Edwards campaign foisted the testimony of a scholarship recipient upon Javers. The Foundation in North Carolina that awards those scholarships is a separate nonprofit from the DC Center. It bears nearly the same name (Center for Promise & Opportunity Foundation), so perhaps, just perhaps, the confusion between the two nonprofits is the fault of Javers alone.

More likely though, I think, the Edwards campaign took advantage of the similarity in names to suggest that the scholarships are evidence that the Center is not squandering "poverty" money by feeding Edwards' presidential campaign.

This needs to be stated firmly: The scholarships in North Carolina are evidence of nothing regarding the DC Center's finances. It was the latter issue that Javers was investigating, and thus it was misleading to put him in touch with that student.

The evidence produced by BW was fairly slight, however, and the article got relatively little attention (though blogger Newsie8200 was on top of it).

* *

Then on June 22 Leslie Wayne of the NY Times published a much more substantial investigation of the Center's finances. Immediately, left-wing bloggers such as Greg Sargent rushed to Edwards' defense, wielding more heat than light.

Sargent was taking his cue from Edwards and reproduced the candidate's main counter-charge:

But we've just learned something new and surprising about the story. The Edwards campaign has just told us on the record that The Times refused the chance to talk to any real, live beneficiaries of Edwards' programs.

A pretty weak attack on the Times. Anybody with the slightest familiarity with investigative journalism knows that the subjects of investigations will often try to pawn the testimony of all kinds of supporters onto reporters, and that often these people have no knowledge at all about the actual issue the reporter is looking into. Reporters learn not to let these "friendlies" distract from their job.

My reaction to the Times article was very different, then. I surmised that the "real, live beneficiaries of Edwards' programs", whom the Times had refused to give a hearing to, probably were the recipients of scholarships from the NC Foundation. If that surmise was right, I argued, then Edwards was trying to change the subject or confuse the issue.

Then, having discovered the older BusinessWeek article, I became more convinced that that was precisely Edwards' game. He wanted the Times to confuse the spending of the Center in DC with the scholarships from the Foundation in North Carolina. And when the Times refused to take the bait, Edwards waved that "evidence" of negligence to his partisans like a red flag.

I smelled a rat for the simple reason that Edwards was failing to explain how his Center had spent its money, the most obvious way to defuse any allegations of impropriety.

Yesterday, Sargent provided further evidence that the surmise was right. The Times sent him a response to his accusation that they failed to interview the people Edwards wanted them to talk with:

We gave the Edwards camp ample opportunity to respond, and we quoted their full response in the article.

The article focused on the activities of the Center for Promise and Opportunity, and how that benefited Mr. Edwards; it did not focus on the sister charity that provided the scholarship money. In fact, when it did mention that sister charity, it cast it in only a positive light, and noted how much it had given out in scholarships.

You don't have to read very far between the lines to see that the Times was indicating that Edwards had tried to get away with the bait-and-switch using North Carolina scholarship recipients. But, oddly, though Sargent now possessed pretty clear evidence that Edwards had played him for a sucker, none the less he let Edwards off the hook. Instead, Sargent barged ahead again and concentrated his anger on the Times for allegedly failing to find iron-clad proof that the Center's finances were funky.

And Sargent keeps returning to attack the Times, rather than asking some hard questions of Edwards. Today comes this obtuse post, which discusses a fundraising email just sent out by Edwards' campaign. The email includes this decisive passage:

Last week The New York Times ran a story suggesting that it was wrong for John to have spent the last three years raising awareness of poverty and advocating for solutions. As if there's any way to draw attention to poverty without publicity! And to make matters worse, the reporter just refused to even talk with any of the people who benefited—like any of the 200 young people who got scholarships through the College for Everyone program, or the 700 students who went to New Orleans with John to help rebuild. So we really need your help to get our message out; please, give what you can today.

Could you want clearer evidence that Edwards had tried to fob the Times off with irrelevant testimony from NC scholarship recipients? And as for Edwards' description of the allegations in the Times' article, it's a laughable straw-man. That is the extent to which Edwards has responded thus far to revelations about the finances of the Center. In other words, Edwards continues to avoid addressing the issues entirely.

Edwards' supporters appear to be content with his tactics of evasion and equivocation; straw-man bashing; bait-and-switch game playing; falsification; and ad hominem attacks on the candidate's critics. However, I'm drawing what I believe is the logical conclusion from all this:

Edwards doesn't think he can explain satisfactorily all the Center's spending.

* *

So what is at issue in the Times' story? Leslie Wayne found that a significant proportion of the moneys spent by the Center in DC during 2005 went toward things that don't really look like they have much to do with raising the profile of poverty in the national debate. Wayne's findings ought to be read in conjunction with the earlier article in BusinessWeek.

Wayne has nothing but praise for the NC Foundation, and does not dispute that Edwards has done useful work to promote issues of poverty through the DC Center.

The reporter concentrates, however, on the considerable part of the Center's finances that appear to be directed largely or primarily toward keeping Edwards' campaign team from 2004 intact and on salary, and toward preparing the ground for his 2008 presidential bid. Since this nonprofit is a so-called 501 (c) 4, it "can engage in advocacy but cannot make partisan political activities [its] primary purpose without risking loss of [its] tax-exempt status".

Here are some of the details that suggest that the Center was at least partly a vehicle for funding Edwards' prep work for a presidential campaign.

While Mr. Edwards said the organization’s purpose was “making the eradication of poverty the cause of this generation,” its federal filings say it financed “retreats and seminars” with foreign policy experts on Iraq and national security issues. Unlike the scholarship charity [in North Carolina], donations to it were not tax deductible, and, significantly, it did not have to disclose its donors — as political action committees and other political fund-raising vehicles do — and there were no limits on the size of individual donations. was his use of a tax-exempt organization to finance his travel and employ people connected to his past and current campaigns that went beyond what most other prospective candidates have done before pursuing national office. And according to experts on nonprofit foundations, Mr. Edwards pushed at the boundaries of how far such organizations can venture into the political realm.

...The money paid Mr. Edwards’s expenses while he walked picket lines and met with Wall Street executives. He gave speeches, hired consultants, attacked the Bush administration and developed an online following. He led minimum-wage initiatives in five states, went frequently to Iowa, and appeared on television programs. He traveled to China, India, Brussels, Uganda and Russia, and met with Prime Minister Tony Blair of Britain and his likely successor, Gordon Brown, at 10 Downing Street.

...The $1.3 million the group raised and spent in 2005 paid for travel, including Mr. Edwards’s “Opportunity Rocks” tour of 10 college campuses, consultants and a Web operation. In addition, some $540,000 went for the “exploration of new ideas,” according to tax filings.

Nonprofit groups can engage in political activities and not endanger their tax-exempt status so long as those activities are not its primary purpose. But the line between a bona fide charity and a political campaign is often fuzzy, said Marcus S. Owens, a Washington lawyer who headed the Internal Revenue Service division that oversees nonprofit agencies.

“I can’t say that what Mr. Edwards did was wrong,” Mr. Owens said. “But he was working right up to the line. Who knows whether he stepped or stumbled over it. But he was close enough that if a wind was blowing hard, he’d fall over it.”

Many of Edwards' supporters argue that his use of the Center's funds is not demonstrably and overtly tied to a political campaign, and therefore the Times article cannot be anything other than a "smear". I disagree.

He staffed the Center with his political operatives rather than experts in poverty, and these then jumped directly into his presidential campaign. Their salaries were one of the largest items in the Center's budget.

He disbanded the Center as soon as he ramped up his presidential campaign. How now? If it was successful, why not find some other anti-poverty crusader to keep the Center going?

He spent $540,000 on "exploring new ideas", and $259,000 on un-named "consultants". He must have spent quite large sums on what appear to be events that would boost his foreign policy profile.

There could of course be perfectly legitimate explanations for most or even all such expenses. We would know that if Edwards were to come clean about the Center's expenses for 2005—and even more so, for 2006. The Center has continued to delay filing its 2006 report.

All in all, it looks pretty suspicious that Edwards has sidestepped the real issues, and instead denounced the Times for daring to question his purity. And as far as I'm concerned, it's even more suspicious that Edwards plays bait-and-switch games with scholarship recipients.

I don't want excuses from a candidate, and I certainly won't be patronized.

crossposted from Unbossed

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  • Besides your entry, the only substantive discussion of this I've seen in on Obsidian Wings.

    It's disturbing how this behavior is being defended, because it truly does have a terrible impact on campaign finance reforms.

    Thanks very much.

    By Anonymous Anonymous, at 1:34 PM  

  • You're welcome. I took part in the Obsidian Wings discussion the other day, in fact.

    I don't see that ignoring the issues, or worse, parroting Edwards' evasive responses, does anybody any good. Certainly it gives the candidate the impression that he can play fast and loose and, perhaps, get away with it.

    And as you say, it harms the integrity of campaign financial limits.

    I don't think that Edwards' use of the Center (should the worst be true) is even remotely close to the largest political scandals of the day.

    But Edwards' reponses to the allegations appear disingenuous and slick. That's even more troubling in the long run.

    By Blogger : smintheus ::, at 2:50 PM  

  • Incidentally, there's very good reporting on the issues surrounding Edwards' use of the Center in this article from the Associated Press. It is in many ways much more solid than the NYT article that has drawn all the attention/ire.

    >>>The center wasn't subject to the limits imposed by federal election laws on a presidential exploratory committee, the first major step in raising money toward a bid. Meanwhile, it may have stretched the limits of tax law, which prohibits political nonprofits from having a primary purpose of supporting or opposing candidates.

    "It's possible that the 'opportunity' the center was promoting was only John Edwards' opportunity -- his opportunity to run for president," said Massie Ritsch, a spokesman for the nonpartisan Center for Responsive Politics, a Washington-based research group that tracks money in politics...

    Edwards' nonprofit filed its 2005 annual report with the Internal Revenue Service in November 2006 and has yet to file its 2006 report, having asked for an extension beyond the May deadline.

    The campaign declined to release the figures that will be in the 2006 report to The Associated Press...

    The nonprofit had five officers in 2005: Miles Lackey, a senior Edwards adviser; Peter Scher, an Edwards adviser and former campaign manager; David Ginsberg, a senior campaign adviser; Ed Turlington, Edwards' former campaign chairman and current adviser; and Alexis Bar, Edwards' former scheduling director.

    All worked for the Edwards campaign in 2004, and all but Bar now work for his 2008 campaign. About 20 percent of the nonprofit's budget went to unnamed consultants, according to IRS filings. Another 37 percent went to salaries and wages.

    Tax laws, however, raise different issues.

    "The tax definition for 'candidate' is a lot fuzzier than the campaign definition of a candidate," said Lloyd Mayer, a Notre Dame law professor and nonprofit tax expert who has represented major advocacy groups, including the NAACP National Voter Fund.

    "For tax law, it's more of a 'walk like a duck, talk like a duck' rule," he said. "If you look like a candidate and act like one, the IRS may consider that the nonprofit is doing too much political advocacy."...

    He took care not to say he was running until late 2006, after a year in which he spent much of his time traveling in early primary states, particularly Iowa. He visited the Hawkeye State more than a dozen times before announcing his candidacy.

    Because the nonprofit has yet to file its IRS report for 2006, its not clear how much it supported Edwards or his staff that year. Much of his travel was funded by the One America Committee, a political action committee that spent $1.56 million to fund travel officially aimed at supporting Democratic candidates in the months leading up to the 2006 election.<<<

    By Blogger : smintheus ::, at 3:07 PM  

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