Andrew Yang Said He Would Give 10 People $1,000 Each Month. Is That Legal? – The New York Times

Andrew Yang, the entrepreneur who has promised to provide every American adult with $1,000 a month if he is elected president, announced at the Democratic debate on Thursday that he would distribute such payments to 10 people for the next year.

“It’s time to trust ourselves more than our politicians,” Mr. Yang said during his opening statement as he made the announcement. “This is how we will get our country working for us again, the American people.”

But unlike earlier in his campaign, when Mr. Yang paid what he calls “freedom dividends” out of his own pocket to three families, his advisers said the money for the latest round of payments would be funded by campaign donations, raising questions about whether such a giveaway violates federal election law.

Campaign finance experts said that while federal rules prohibit campaigns from giving people anything of value as an incentive to vote, Mr. Yang would not be breaking the law in that area if he did not ask for people’s votes in return.

But Federal Election Commission rules do prohibit the use of campaign funds on personal expenses. To differentiate legitimate campaign expenses from personal expenses, regulators must determine whether the expense would exist even if the candidate were not running for office.

Mr. Yang’s campaign said late Thursday that the planned payments would pass legal muster because they would not exist if not for the campaign. The payments, his advisers added, were part of a broad effort to educate the public about Mr. Yang’s signature policy — a function directly tied to the campaign and allowed under the law.

“Normally when you give money to presidential campaigns, it goes to expensive consultants and ads,” Mr. Yang’s campaign said in a statement. “For the first time in history, a presidential campaign is going to give money back to the people.”

However, F.E.C. rules specify that the personal use of campaign funds by “any person” is prohibited. And the families that would receive $12,000 over the course of a year from Mr. Yang would almost certainly spend the extra money on such expenses, which experts said could be problematic.

“Campaign donors give their hard-earned money to fund campaign activities, and the law makes clear that paying personal expenses is not a campaign activity,” said Adav Noti, former associate general counsel at the F.E.C. “When donors give, they have a reasonable expectation that their money will be used on a campaign and not on somebody’s car payment.”

Mr. Yang’s advisers said Thursday it was their understanding that the personal use statute applies only to a candidate and his campaign.

The $1,000 payments would begin sometime in the fall and would continue once a month for a year, regardless of whether Mr. Yang remained in the race for president, his campaign said. Advisers said they would ask people to apply for the dividends on the campaign website and would select the recipients based on their applications.

Mr. Yang’s campaign has framed the planned payments as an original idea never previously undertaken by a presidential candidate. One expert in campaign finance law said he could not recall a time when the F.E.C. had been forced to consider the legality of a stipend like the one Mr. Yang is proposing.

“Andrew Yang’s use of campaign funds to give ‘freedom dividends’ to supporters would push the boundaries of, and perhaps break, campaign finance law,” said Paul Seamus Ryan, a vice president at Common Cause, a nonpartisan organization that promotes government accountability. “This unprecedented use of campaign funds would give rise to a bunch of novel legal questions.”

Mr. Yang’s advisers raised a similar point Thursday, noting that the unusual nature of the giveaway means that federal agencies have not yet issued a definitive ruling on its legality. However, they asserted that those agencies would find their arguments convincing.

[We fact-checked what the candidates said at the Democratic debate.]

Experts noted that every person who gets paid by a campaign in exchange for goods and services, or both — like caterers at a campaign event — eventually cashes their paycheck and uses the money for personal expenses, exercising a sort of “conversion” that the F.E.C. does not prohibit. They suggested that to bolster his legal argument, Mr. Yang’s campaign could potentially ask the dividend recipients to perform tasks as a condition of getting the money and then argue that the payments are permissible because they represent compensation at market value. (Mr. Yang, however, has repeatedly said that the dividends he is proposing would be given out with no strings attached.)

Under normal circumstances, experts said, Mr. Yang’s campaign could have requested an advisory opinion from the F.E.C., but the resignation of one of its members last month left the agency one person short of a quorum. As a result, it is unable to take basic actions, including issuing opinions and levying fines for campaign finance violations.

But the F.E.C. will not be frozen forever, and if Mr. Yang’s payments run afoul of the rules, the agency could eventually investigate them.

Mr. Yang previously awarded a “freedom dividend” to an Iowa man caring for his mother, a family in New Hampshire and a Florida woman who retweeted one of his messages. His team has labeled the payments “trial runs” and has made clear that they were funded by Mr. Yang himself.

Mr. Yang has centered his campaign on the idea of providing Americans with a universal basic income of $1,000 a month as a way to soften the financial blow of what he refers to as the “fourth industrial revolution.” In essence, he argues that the automation of common jobs like truck driving and call center work will soon cause mass unemployment. And he believes that many of the stresses Americans feel — grievances he says caused them to vote for Donald. J. Trump in 2016 — are a result of deep insecurity about their jobs becoming obsolete and of being unable to afford basic living expenses.

His message has had enough staying power that Mr. Yang was one of only 10 candidates in the 20-person field to poll high enough and attract enough donors to qualify for Thursday’s debate. While he had not gotten as much speaking time as other candidates during earlier debates, he told The New York Times before Thursday night’s event that he would use whatever time he got to be “impactful.”

[Here’s how much speaking time each candidate got at the debate.]

In the hours and days leading up to the Houston debate, Mr. Yang hinted on Twitter at a “#YangsDebateSurprise,” and a spokesman for Mr. Yang promised that he would make an announcement that would “break the mold of presidential politics.”