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Inaugural Funds Raise Questions

President Barack Obama’s decision to collect unlimited corporate cash for his inauguration, and to disclose less about donors than he did four years ago, has triggered broad speculation about what he really plans to do with the money.

Theories range from the claim that Obama is getting a jump-start on funding his presidential library to conjecture that leftover campaign cash will prop up his grass-roots organizing operation, reportedly to be renamed Organizing for Action. Some say that it may even line the pockets of loyal campaign consultants.

Any one of those theories could be true, given that inaugural festivities operate largely outside campaign finance rules. There are effectively no restrictions on what Obama may do with leftover inauguration funds, and no requirements that he publicly report how any of the money is actually spent.

The Federal Election Commission requires full disclosure of all inaugural donors, though the reporting deadline is not until three months after the event. But while donations must be disclosed, expenditures need not be.

Four years ago, Obama voluntarily imposed a ban on corporate inaugural funds and set a $50,000 cap on individual donations. His inaugural committee also released the names of donors and their occupations and addresses well in advance.

This time, the president is accepting unlimited corporate funds, and donors in the $75,000 to $1 million range are being rewarded with exclusive concerts, parties and reserved seating. The Presidential Inaugural Committee has posted a bare-bones list of “benefactors” on its website, but it does not include titles or addresses. Contributions from lobbyists and political action committees remain banned, as are donations from corporations that received funding from the government’s Troubled Asset Relief Program but have not yet repaid it.

Still, government watchdogs have harshly criticized the new rules.

“It’s a deeply disturbing move, and a reversal from the positive steps they took in 2009,” said Robert Weissman, president of Public Citizen. “Corporations make donations to events like the inaugural festivities because they get something back in return. It’s not a bribe, but they do expect to get their calls returned faster, their proposals viewed more favorably.”

At least two of the eight corporate donors on the inaugural committee’s list — AT&T Corp. and Microsoft Corp. — are the recipients of millions of dollars in federal contracts, USA Today has reported. Also on the list are several inside-the-Beltway Obama campaign bundlers, according to the Center for Responsive Politics. These include former Securities and Exchange Commissioner Roel Campos, a partner in the Washington offices of the Locke Lord law firm, whom Obama named to his Presidential Intelligence Advisory Board.

“By posting donor information online, the Presidential Inaugural Committee is taking extra steps, beyond what’s required by federal law, to provide the public with fundraising information in a timely fashion,” committee spokeswoman Addie Whisenant said in an email.

PIC officials said this year’s fundraising guidelines are vital to helping the committee meet its target in the wake of the nation’s most expensive presidential campaign on record.

But Obama’s plans to scale back his second inauguration, which reportedly has a target budget of $50 million, make the rules doubly puzzling, some campaign finance experts say.

“This inaugural is accepting more money in higher amounts than ever before,” said Craig Engle, a partner with Arent Fox. “I don’t personally think there’s anything wrong with that, as long as there are expenses that need to be defrayed. My quarrel always is with fundraising that, for lack of a better term, is off the books, that doesn’t have a very apparent purpose.”

In the past, leftover inaugural funds have gone to presidential libraries, according to the Sunlight Foundation. Obama’s more relaxed fundraising rules are laying the groundwork for his post-White House library and philanthropic activities, presidential advisers recently told Bloomberg.

Past libraries and foundations have been lucrative endeavors: The Ronald Reagan Presidential Library raised $41.8 million in 2010, according to its 990 tax form from that year, and had total assets worth $249.4 million. The William J. Clinton Foundation raised $138 million that same year and has close to $190 million in total assets.

Obama’s inauguration money could also help jump-start the group known until now as Obama for America, which organizers will reportedly relaunch Jan. 20 as a 501(c)(4) social welfare nonprofit to be dubbed Organizing for Action.

“The inaugural committee never has to report how it spends its money; the 501(c)(4) would never have to report its donors,” said Kathy Kiely, managing editor of the Sunlight Foundation’s reporting group. “So I could envision a scenario where, if the PIC ends up with a surplus, they could just roll it into OFA.”

Obama’s campaign consultants may also be waiting in the wings, Engle said. Many consultants charge below retail prices during the campaign in the hopes that they will play a role in the inauguration, he said. But he acknowledged that this theory, like all the others, would be hard to prove.

“When there isn’t disclosure, there is unhealthy speculation,” Engle noted. “And you end up having to defend your undisclosed actions, rather than to get on with the business of your administration.”

An earlier version of this article credited the wrong publication for disclosing that some corporate inaugural funders had received government contracts. The newspaper was USA Today.

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