Why the debate over the legality of Andrew Yang’s $120,000 UBI pilot doesn’t really matter

Andrew Yang following the second Democratic presidential debate in July 2019. | Brendan Smialowski/AFP/Getty Images

Yang’s UBI pilot might violate campaign finance law, but there’s no one to stop it from going forward.

Democratic presidential candidate Andrew Yang promised to spice up September’s primary debate by doing “something no presidential candidate has ever done before in history” live on television.

He kept that promise by announcing in his opening statement that he would give away $1,000 a month — $120,000 a year — to 10 randomly selected people as part of a pilot program for his universal basic income proposal. It’s a ploy that is in equal parts a self-serving voter recruitment push, an eye-catching pilot for his signature universal basic income proposal, and a campaign finance law minefield.

“It’s time to trust ourselves more than politicians,” Yang said. “My 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.”

He went on to tell all viewers who “believe you can solve your problems better than any politician” to visit his website to sign up for a chance to receive the money.

According to his campaign, that call has already been answered by more than 450,000 people and could attract far more; entries close on September 19. And those who enter won’t have long to wait to find out whether they will soon have $1,000 more a month to work with; the campaign says the 10 recipients will be notified by November 30.

Yang’s campaign centers on his proposal for a universal basic income, which the candidate refers to as a “freedom dividend.” As Vox’s Sigal Samuel explained, it would work like this:

Yang says that if he becomes president, the government will send a check for $1,000 per month ($12,000 annually) to every American adult above the age of 18. (Whether Congress cooperates is another matter.) Again, no strings attached: You don’t get less money if you score a high-paying job, for example. And if you’re already getting housing assistance or food stamps, you can choose between keeping your current setup and switching over to Yang’s UBI program.

The new pilot would work the same way but on a more limited scale. As a campaign aide told Vox ahead of the debate, Yang sees his version of UBI as being about “everything but the money.” The candidate argues that it is actually a tool Americans can use to combat growing automation and help spur homeownership, empower budding entrepreneurs, and reduce stress caused by financial insecurity.

Recipients of the money will be able to use it for anything they like, and Yang hopes the newly announced pilot will serve as a proof of concept that will both sway the idea’s detractors and shift his party toward supporting the idea in full, similar to how Sen. Bernie Sanders’s advocacy for Medicare-for-all during the 2016 election season made that proposal a mainstream platform among Democrats.

Before it does, however, it’ll bring huge swaths of new voters into his campaign’s orbit, and possibly some extra scrutiny from the federal government.

Campaign finance experts have raised concerns the new pilot breaks FEC rules

Yang has already begun testing his version of UBI on a small scale, giving $1,000 a month of his own money to families in early voting states Iowa and New Hampshire. In June, he announced the winner of a Twitter contest would be joining those families.

Those early experiments with UBI did not raise any red flags with the Federal Election Commission (FEC) or other experts both because he funded them with his own money and made it very, very clear recipients could and should vote for whomever they’d like.

But the expansion of the pilot program will work a bit differently: Yang’s campaign will be making the new payouts directly. That fact raised concerns the candidate was breaking federal election rules. Yang’s campaign has argued it has done nothing wrong, given it’s made clear recipients of the money are not expected or required to vote for Yang — essentially, that they are not buying votes. The campaign has also stressed that recipients don’t have to do anything at all, which former FEC commissioner Ann Ravel claims is exactly the problem.

“If it’s just given for no work done, for nothing at all, just a gift, that is inappropriate,” Ravel told Time. “You can’t just give cash.”

Erin Chlopak, director of campaign finance strategy for the Campaign Legal Center and former acting associate counsel at the FEC, agreed, telling Vox the pilot “seems like an illegal prohibited personal use” of campaign funds.

FEC rules state “using campaign funds for personal use is prohibited.” Personal use is defined as any expenditure a candidate would have even if they were not running for office — think things like family groceries, gym memberships, or mortgage payments.

Yang’s press secretary told Time that experts who believe the pilot breaks personal use rules are mistaken, because although Yang is obviously personally a believer in UBI, he is not a big enough believer that he would give away $120,000 of his own money as a private citizen. They argue he is disbursing the money only because he is running for president.

The campaign has some support from experts in this view. Rick Hasen, a UC Irvine professor of law and political science, for instance, tweeted that as long as no restrictions are placed on who can get the money, the pilot ought to count as a creative form of campaign advertising.

But Chlopak disagrees. She told Vox that while it may be true that UBI is central to Yang’s campaign, the pilot can’t count as advertising because there is no requirement that recipients contribute to Yang’s candidacy. To get the money, they do not have to tweet or post or in any way advertise for Yang. They don’t have to tell anyone they are receiving the money at all (although the random drawing’s rules do state recipients must allow the campaign to use recipients’ images royalty-free in promotional materials).

“If they were providing some sort of advertising service, perhaps it would be different,” Chlopak said, but recipients are not.

Yang himself is very confident he is on firm legal ground. He told CNN his campaign has “an army of lawyers who have signed off on it. And we’re sure that this is perfectly legal.”

Ordinarily, there would be a very easy way to find out who is correct: Ask the FEC.

But these are not ordinary times.

America’s elections watchdog is hamstrung

Yang and his critics can’t settle the matter immediately with the FEC because, as the Center for Public Integrity has pointed out, the FEC technically does not exist at the moment.

The agency’s rules state that no meetings can be conducted without at least four commissioners present. FEC Vice Chairman Matthew Petersen resigned in August, leaving the agency with just three commissioners. The agency was last fully staffed with six commissioners in 2017. The three commissioners remaining have all completed their terms (Chairwoman Ellen Weintraub’s term expired in 2007), but are serving until they can be replaced.

President Donald Trump has nominated one candidate, a lawyer from Texas named Trey Trainor, but despite being put forward two years ago, Trainor has not had the Senate hearing necessary for confirmation. Senate Republicans reportedly want to use the vacancies to appoint commissioners they favor (although no more than three commissioners affiliated with a given political party can serve at one time and there is already one sitting Republican, Caroline Hunter) and have put forward lawyer Shana Broussard, aide to current independent commissioner Steven Walther, as a top choice. But the Trump administration has yet to respond to this suggestion.

Chairwoman Weintraub has said the group that remains will continue to work as best it can and that it will work to create a queue that can be speedily addressed once a fourth commissioner is confirmed. But without a quorum, the agency can’t issue any rulings, including any decisions on whether Andrew Yang is following the rules.

According to Chlopak, those concerned Yang has broken FEC rules have little recourse. She says in a case like this, the judiciary would likely be involved only after someone had filed a complaint to the FEC that went ignored. That person could then sue the FEC for failing to act on their complaint. But even should a court find in favor of the plaintiff, the FEC would just be ordered to make a decision on the complaint.

Even if the FEC were to suddenly begin functioning as normal, however, there could be little clarity on the question of the pilot; even before the agency shut down, decisions were rarely rendered speedily. Now that it has a backlog, a final decision on a complaint filed about the pilot could come after the election was finished. And since by that time the money would have already been distributed, even if the FEC found Yang to be in the wrong it would be too late to really do anything about it.

Therefore, while questions about the legality of the pilot remain, there’s nothing to stop it from going forward. While it may not exactly be the paid advertising his campaign claims, the announcement of the program alone has indeed won Yang a great deal of publicity through press, and it will certainly energize the Yang Gang to further spread the universal basic income gospel online.

Yang’s $120,000 investment could pay huge dividends

Beyond energizing his base and gaining fresh publicity, Yang’s campaign says his pilot has already paid for itself: It credits the announcement with helping to raise $1 million in the days following the debate.

Perhaps even more valuable than that immediate influx of cash, however, is the data Yang has been able to collect. To enter the drawing, one has to submit an email address and zip code. In the four days following the debate, the campaign says it has collected some 450,000 email addresses, 405,000 of which it says it didn’t already have.

According to Roll Call, a candidate looking to access that many new emails from a database could expect to pay at least $180,000 (and as much as $1.3 million). And those prices are just to rent a list of emails — for $60,000 less, Yang now owns not only those emails, but knows where their users live, allowing for geographically tailored email marketing and fundraising.

These email addresses are key because they are seen as a good way to fundraise and as a particularly good way to pick up smaller donations, something that is key to getting into the Democratic debates. To make it into the September debate, for instances, candidates needed to have 130,000 unique donors across at least 20 states. The same threshold exists for the October debate.

For those not willing to rent or buy emails, the traditional way to net new ones has been through digital advertising — specifically through buying Facebook ads.

“Facebook ads are a really valuable source for building your email list, and the more emails you have on your list, the more money you’re going to raise online,” Eric Wilson, a Republican digital strategist, told the New York Times. “There’s a direct through line to resources for the campaign.”

President Trump has embraced this strategy, spending more than $12.5 million on Facebook ads. His Democratic rivals have as well, but large Facebook spends do not always translate into fundraising or campaign success. Democratic candidate Tom Steyer, for instance, spent more than $4.7 million on Facebook ads ahead of the September debate, and while that number just managed to win him 130,000 donations, it failed to get him on the debate stage.

With his $120,000 outlay, Yang has avoided this sort of massive advertising spend and now has the potential to reap more rewards. If even a quarter of his new email addresses were to each lead to a $1 donation, he’d just about break even, and should some of them return $5 or $10, he’d be well ahead.

Even if the users behind the addresses give nothing, Yang’s name will now be a constant presence in their inboxes, raising his name recognition, keeping him in their minds ahead of primaries and caucuses.

All of this means that although Yang’s pilot was somewhat risky given FEC rules, it is ultimately a very smart play, especially given how hamstrung America’s elections watchdog is. For a relatively small outlay of money (in campaign terms, at least), Yang has simultaneously energized his base, gathered the contact information of potential donors, created a wave of press, and advertised his signature proposal. And should Yang fail to win any primary contests, he’s still helped his party: He could turn over his email list to party officials, allowing them to help fundraise whoever the party’s nominees are in both the national and local races.

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