John McCain has spent nearly $50mil so far seeking the Republican Presidential nomination. Late 2007 his campaign was not doing as well as it is now, so he applied for a $6mil loan from Fidelity Bank and Trust of Bethesda Maryland. He needed the additional money to gain automatic ballot access in all states, as opposed to paying several million dollars to gain access to the ballots. In order to secure the loan, John McCain used the prospect of obtaining Federal Matching funds.

According to election law, any candidate using Federal Matching Funds is bound to limitations.  The limitation that John McCain is running up against is the $54mil limit on spending.  Considering he has reported spending nearly $50mil and more money since then, it is possible that he will not be legally allowed to spend any more money.

John McCain thought he was free and clear of this limitation, since a couple weeks ago he wrote to the FEC to withdraw his application for matching funds.  The commission responded (PDF) stating that he provided the prospect of Federal Matching Funds as collateral for the loan, which prevents termination of the contract.  According to election law, a candidate may withdraw an application as long as they have not received any of the funds or used the prospect of funds as collateral on a loan.  John McCain has until March 7, 2008 to file a response before the commission votes on rescinding the contract.

As it stands, the FEC is not likely to rescind  the contract.  The impact to the McCain campaign will be staggering.  Although McCain already appears to have the nomination locked up, he still needs another 200 delegates to win the nomination.  If he is not able to spend any more money, he may not be able to compete with Mick Huckabee and Ron Paul in some of the upcoming states.  Combine that with the potential scandal if he has indeed broken election law and the accusations of an affair with a lobbyist, McCain could lose out on additional delegates and potentially many of the unbound delegates.  If he is able to secure the nomination, he will not be able to campaign until he gets the nomination in September.

A McCain campaign blackout until September will virtually end his chances to win the Presidency.  Hillary Clinton and Barak Obama will be campaigning heavily in the months leading up to John McCain’s nomination, and they will surely use McCain’s inability to respond against him.  Events are shaping up in a way to ensure McCain will not be our next President; but then again, this election cycle is the most unpredictable election cycle in memory.