By DICK MORRIS

January 17, 2007 -- Presidential hopeful Sen. Barack Obama (D-Ill.) made his first misstep a few days ago when he joined only a handful of Democrats in opposing a Senate reform banning the increasingly widespread practice of legislators hiring their family members on their campaign or PAC payrolls. Obama has not heard the last of this vote.  Sen. Hillary Rodham Clinton (D-N.Y.), who opposes wives cashing in on their husbands' positions, voted righteously in favor of the reform and will probably use the Illinois senator's vote against him in the presidential primaries.

When a legislator hires his or her spouse on the campaign or PAC payroll, he is effectively converting contributions to his campaign committee into personal income that flows into the family's checking account, blurring the line between contribution and bribe.

In the past, senators and House members routinely hired their spouses and other family members on their public payrolls. In the early 1940s, for example, Harry S. Truman hired his wife, Bess, to work on his Senate staff. She got $2,500 a year in salary at a time when senators themselves only earned $8,500. But nepotism on the public payroll is now banned. So inventive congressmen and senators have filled the void by hiring family on their campaign or PAC payrolls.

Hiring family members and paying them with campaign donations is, if anything, more pernicious than doing so with public funds. Where tax money is involved, the sin is against the taxpayer for wasting his funds. But where campaign contributions are involved, the congressman is profiting personally from the largesse of special interest donors. In plain English, that's a payoff.

There is, of course, a certain hypocrisy in the Senate action since very few senators, in fact, hire their families on their payrolls. It is, though, widely practiced in the House of Representatives, where 30 members have their families on their payrolls. But senators are much less likely to do so. Sen. Barbara Boxer (D-Calif.), who voted "present" on the reform, hired her son, Douglas, a lobbyist, to manage her PAC, paying him $130,000 over a four-year period. Connecticut Sen. Joe Lieberman, then a Democrat, hired his son, Matthew, for $34,000 and his daughter, Rebecca, for $36,000 to work on his 2004 presidential campaign.

So the congressional ethics reform of 2007 boils down to this: The House banned the use of corporate jets but the Senate did not, even though senators are more likely to avail themselves of the luxury than is the average House member. The Senate banned hiring family members but the House did not, even though House members are far more likely to hire their significant others to work for them.

Obama's inexplicable pro-nepotism vote may have been cast in sympathy with Rep. Jesse Jackson Jr. (D-Ill.), whose hiring of his wife, Sandi, to work on his campaign prompted an FEC ruling allowing the practice. Jackson might be afraid that the Senate action will catalyze a similar reform in the House, which could cut way back on his disposable family income.

But whatever the reason for his vote, Obama has screwed up.  The public will not take kindly to a senator who pledged to clean up the political process voting to allow wives to be hired with special-interest campaign funds.

The FEC required, in allowing the practice, that the contract for the services of the family member contain the language customarily used between campaign committees and consultants.  The FEC also ruled that any payment to a family member in excess of the fair market value of the services would be considered to be a "personal use of campaign funds."

But, as usual, the FEC has missed the point. Any payment from campaign money to a spouse is, in fact, an appropriation of campaign funds by the member of Congress for his own personal use, however camouflaged or disguised. The Senate was right to ban the practice and the House should follow suit.

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***Copyright Eileen McGann and Dick Morris 2006***