When President Obama travels to Texas later this month to help dedicate the George W. Bush Presidential Library and Museum, he will spend the night before at a fundraiser in Dallas, a move that significantly cuts the cost of the travel for the Democratic Party as it builds its 2014 campaign war chest.
The president and first lady Michelle Obama will travel to Dallas on April 24 and that evening will headline a fundraising event for the Democratic National Committee.
The first couple will be on hand for the grand opening ceremony for the Bush library the following day along with four other living presidents expected to attend.
If Mr. Obama were heading to Texas solely to raise funds for his party, it would be deemed a “political” trip and the DNC would be forced to pick up the tab for his Air Force One travel. But because Mr. Obama is attending the Bush library opening in an official capacity, federal election law allows his campaign to pay for at least some of the travel at a fraction of the cost — the equivalent of flying aboard a chartered 737 jet.
The president used this provision in election law to piggyback major fundraisers onto official trips during his re-election campaign, despite a series of negative press articles about the practice. His move to add a partisan event to a clearly bipartisan display of respect for his Oval Office predecessor is his boldest use yet of mixed travel benefit.
Figuring out the details of how much the Obama campaign and the DNC must reimburse taxpayers for the mixed trips is complicated and opaque, confounding presidential scholars and federal election law analysts alike.
Brendan J. Doherty, a political-science professor at the U.S. Naval Academy and the author of “The Rise of the President’s Permanent Campaign,” has been unable to figure out the cost of presidential campaign travel for Mr. Obama, as well as the presidents that preceded him, because the formula isn’t publicly available and the White House has done little to clarify it.
Whenever there’s official travel coupled with fundraising, the taxpayer foots most of the bill, Mr. Doherty said.
“The law mandates that taxpayers pick up most of the cost of fundraising travel since the president is always on the job no matter where he is or what else he is doing,” he said.
The Dallas dinner, which will charge $10,000 per person, will take place at the home of Naomi Aberly, a top bundler for Mr. Obama’s 2012 campaign.
The event is Mr. Obama’s third fundraiser for Democrats’ 2014 election efforts. He appeared at two others last week in California’s Silicon Valley, and has agreed to headline 10 more for the Democratic Senatorial Campaign Committee and Democratic Congressional Campaign Committee, seven of which will be outside of Washington, D.C.
Since President Reagan’s time in office, federal candidates’ campaign expenses have dramatically increased as candidates have increasingly relied on expensive television ads to deliver their message to voters.
“Presidents Reagan, Clinton, George W. Bush and Obama have devoted themselves to fundraising for fellow party members in their second term, even though each president would never be on the ballot again,” Mr. Doherty said.
The White House hasn’t commented on the Texas fundraiser, but deputy press secretary Josh Earnest last month said Mr. Obama’s fundraising this year is part of his duties as president and isn’t in conflict with his outreach to Republicans on key agenda items, such as immigration reform and budget matters.
“The president has some responsibilities, as the head of the Democratic Party, to support other Democrats. I don’t think that’s particularly surprising,” he said.
Ms. Aberly is married to hedge-fund manager Larry Lebowitz and has donated time and money to groups such as Planned Parenthood, serving as a board chairwoman of its North Texas chapter. She raised more than $1 million for Mr. Obama’s re-election and raised approximately $400,000 for his 2008 election.
Mr. Obama is relying on Ms. Aberly despite his past criticism of hedge funds and the tax benefits they enjoy. In an interview with CBS News earlier this year before the Super Bowl, he singled out “carried interest,” which refers to the reduced tax rate hedge funds and private equity firms pay on a substantial part of their income as one such benefit.
In the interview. Mr. Obama said the United States could reduce the deficit in a balanced way. He said he doesn’t want to increase tax rates but pushed for more spending cuts, as well as ending deductions that are not available to all Americans, singling out “carried interest” as a tax break ripe for targeting.
“We just want to make sure that the whole system is fair, that it’s transparent and that we’re reducing our deficit in a way that doesn’t hamper growth,” he said.
Mr. Obama’s budget, released last week, would end the “carried interest” tax break. The tax code right now allows the general partner of a hedge fund to treat income gained from the profits as investment income subject to the capital gains tax rate, which tops out at 20 percent, rather than ordinary income that can be taxed at a top rate of 39.6 percent.
Relying on this reduced rate, hedge fund and private equity managers take cuts from their investors’ profits instead of charging traditional management fees, reducing the amount they need to pay in taxes without reducing their income.
Republican presidential candidate Mitt Romney used the tax break to pay a lower tax rate on a good portion of his nearly $13.7 million in income in 2011.
• Susan Crabtree can be reached at scrabtree@washingtontimes.com.
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