“The scandal isn’t what’s illegal, the scandal is what’s legal” has long been associated with American political journalist Michael Kinsley. “The scandal isn’t what’s illegal, the scandal is what’s legal” was written by Kinsley in June 1986, in a story about Wall Street insider trading. “New Republic editor Michael Kinsley calls it ‘Kinsley’s Law.’ He says the scandal in Washington is not what’s illegal, it’s what’s legal” was cited in July 1988.
 
However, “Often the real scandal isn’t what’s illegal, but what’s legal” was cited in the Baltimore (MD) Sun in November 1984. The saying is usually applied to the money in Washington politics, but it’s been used in local politics as well. “Esposito proved once again that the real scandal in New York politics was what’s legal, not what was illegal” was cited in the book City for Sale: Ed Koch and the Betrayal of New York (1988).
 
   
Wikipedia: Michael Kinsley
Michael Kinsley (born March 9, 1951) is an American political journalist, commentator, television host, and pundit. Primarily active in print media as both a writer and editor, he also became known to television audiences as a co-host on Crossfire. Kinsley has been a notable participant in the mainstream media’s development of online content.
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Quotes
“I have a saying: the scandal isn’t what’s illegal, the scandal is what’s legal.” — from Crossfire, CNN, Nov. 15, 1990.
 
12 November 1984, the Sun (Baltimore, MD), “Queasiness about Sleaziness,” pg. 11A:
Often the real scandal isn’t what’s illegal, but what’s legal.
 
Google News Archive
11 June 1986, Pittsburgh (PA) Post-Gazette, “Taking stock of Wall St.” by TRB from Washington (Michael Kinsley), pg. 11, col. 1:
WASHINGTON—The growing revelations about insider trading on Wall Street are another illustration of my rule of scandals: The scandal isn’t what’s illegal, the scandal is what’s legal.
 
Google Books
City for Sale:
Ed Koch and the Betrayal of New York
By Jack Newfield and Wayne Barrett
New York, NY: Harper & Row
1988
Pg. 319:
Esposito proved once again that the real scandal in New York politics was what’s legal, not what was illegal.
 
10 July 1988, Aiken (SC) Standard, “Solons To Remain Mute As To Taxpayer Ripoffs” (editorial), pg.1D, col. 1:
New Republic editor Michael Kinsley calls it “Kinsley’s Law.” He says the scandal in Washington is not what’s illegal, it’s what’s legal.
 
Google Books
The New Official Rules:
Maxims for muddling through to the twenty-first century
By Paul Dickson
Reading, MA: Addison-Wesley Pub. Co.
1989
Pg. 210:
When wrongdoing is exposed, the real scandal is what’s legal. — Timothy Noah, The New Republic, July 11, 1988.
 
Google Books
Nothin’ But Good Times Ahead
By Molly Ivins
New York, NY: Random House
1993
Pg. 205:
Still, it was technically legit. That’s Texas ethics for you. The real scandal isn’t what’s illegal — it’s what’s legal. 
 
Google Books
Man’s Greatest Fear:
The Final Phase of Human evolution
By Tim Marshall
Gilroy, CA : Athena Books,
1995
Pg. 128:
Time magazine reported (June 1989):
 
The real scandal in Congress is not what’s illegal; it is what’s legal: the blatant, shameless greasing of congressional palms that violates good sense, good taste and good government.
 
Time magazine
THE CONSPIRACY OF TRIVIA
By Michael Kinsley Monday, Mar. 17, 1997
It’s often said, in trying to sort out the rights and wrongs of some public controversy, that the scandal isn’t the illegal behavior—the scandal is what’s legal. The press understandably tends to concentrate on whether laws were broken. This is a bright line that relieves journalists of the need to make (or, worse, be seen making) moral judgments. But in this world of sinners, the fact that some people choose to cross the line is less interesting and important than the question of where society chooses to draw the line.
 
Google Books
Do the Right Thing:
Inside the Movement That’s Bringing Common Sense Back to America
By Mike Huckabee
New York, NY: Sentinel (Penguin Books)
2008
Pg. 67:
As the waggish pundit Michael Kinsley always says, “The real scandal in Washington isn’t what’s illegal. The real scandal is what’s legal.”
 
Boring Old White Guy
Wednesday, May 22, 2013
As the old saying goes, “The real scandal…
...in Washington isn’t what’s illegal—the real scandal is what’s legal.”
 
The Maddow Blog 
Holding Congress accountable for NSA excesses
By Steve Benen
Mon Jun 10, 2013 9:58 AM EDT
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Michael Kinsley, referencing campaign-finance laws, once argued that in Washington, the scandal isn’t what’s illegal; the scandal is what’s legal. I’ve been thinking a lot about this adage in recent days.
 
Twitter
Katrina vandenHeuvel
t‏@KatrinaNation  
Michael Kinsley had a saying, “the scandal isn’t what’s illegal, the scandal is what’s legal.” Apt for this moment.
12:13 PM - 11 Jun 13 (GMT-07:00)