Funding The White House Campaign

The road to the seat of power in the White House is not easy, and certainly not cheap. This year's US presidential race is on track to be the most expensive in history.



Money in the 2008 Elections: Bad News or Good?

Thomas E. Mann, Senior Fellow, Governance Studies

The Chautauquan Daily


The decision by presumptive Democratic presidential nominee Barack Obama to decline the public grant of $84 million for his general election campaign has been widely viewed as, and harshly criticized for, administering the final death blow to the presidential public financing system. That system, rightly considered the crown jewel of public financing in American elections, was set up in 1974 as part of extensive amendments to the Federal Election Campaign Act and has been a central feature of presidential elections ever since.

In 2000, George W. Bush became the first successful major party candidate to opt out of the nominating season matching funds section of the law and thereby free himself of the spending limits that are linked to acceptance of the public funds. President Bush repeated that practice in his 2004 re-election bid and was followed by Democratic candidates Howard Dean and John Kerry. Bush and Kerry each raised around $250 million before their party’s convention, compared with the $37 million they would have been limited to had they accepted the public matching funds. By 2008, opting into the public finance system was widely viewed as a sign of weakness. Early in 2007, Obama and Hillary Clinton announced their decision to forego public funding in the nominating season and all of the major Republican candidates followed the same path (although, in the case of John McCain, only after the revival of his candidacy in early 2008). While the nomination component of public financing fell into disrepair over a number of years, the general election grant was accepted by all of the major party candidates between 1976 and 2004. Obama’s decision to reject the public grant for the 2008 general election campaign appears to have set an ominous precedent for the entire program.

To many supporters of campaign finance reform, this was only the latest in a series of discouraging developments in the financing of the 2008 elections. The amounts of money raised by the presidential candidates ($296 million for Obama, $238 million for Clinton, and $122 million for McCain through May) shattered all previous records. The money primary in 2007 once again sharply narrowed the field of candidates before the first delegate selection event was held. The Supreme Court, under new Chief Justice John Roberts, moved in a decidedly deregulatory direction, with one decision potentially undercutting a major provision prohibiting corporate and union treasury funding of electioneering communications of the Bipartisan Campaign Reform Act of 2002, known widely as McCain-Feingold. An extended political deadlock between Senate Democrats and Republicans left the Federal Election Commission with only two members (two short of the majority required for formal action) in the heat of a hotly contested presidential election. And, as in 2004, outside groups threatened to play a prominent independent role in attacking the presidential candidates.

This litany of problems associated with money in the 2008 elections conjures up an image of a broken system that is much more pessimistic than the evidence warrants. The large amounts of campaign funds raised are indicative of the extraordinarily high level of public interest in the stakes of the election and the choices being offered. Fundraising by the candidates appears more an indicator of their electoral appeal than a cause of it. In a political environment hostile to Republicans, it is no surprise that Democratic candidates have enjoyed a distinct advantage. Large soft-money contributions to parties from corporations, unions, and wealthy individuals (often arranged through intense pressure from elected and party officials) are no longer a part of the picture. Presidential candidates have focused on hard-money contributors, which are limited to $2,300 per donor. Several of the candidates, Obama in particular, have attracted a huge number of small donors via the Internet. Money has not been the decisive factor in either party’s nomination contest. Although falling short of Obama’s fundraising, Clinton raised enough money to give her a fair shot at winning the nomination. She won a number of primaries in which she was greatly outspent by Obama. Her problems stemmed more from campaign strategy and choices regarding the allocation of her resources. John McCain won the Republican nomination in spite of his fundraising shortfall. And the efforts of outside groups to shape the election outcome have thus far constituted more talk than action. Give the potential legal liabilities and questions about the efficacy of independent advertising campaigns, many wealthy donors have decided to stay on the sidelines this election season.

Even the seeming collapse of the public financing system has a silver lining. The extended and highly competitive contest between Clinton and Obama, which mobilized millions of new voters and riveted the attention of publics across the globe, would not have been possible if either had opted into the public matching program. Moreover, Obama’s decision to reject the public general election grant is unlikely to substantially alter the balance of resources that would have resulted if both candidates had opted in. That is because the public grant constitutes only a part (and clearly less than a majority) of the funds spent on behalf of the presidential candidates. The Supreme Court has ruled that political parties may spend unlimited sums on behalf of their candidates as long as they do so independently, while the presidential candidates can assist their parties by transferring unspent funds from their nomination season coffers, sharing donor lists, and engaging in joint fundraising activities. The McCain campaign and the Republican National Committee together might raise and spend as much as $300 million in the general election campaign. Obama and the DNC could have well have matched or exceeded that sum even if he had chosen to remain within the public funding system.

What Obama gains by opting out is not a huge new fundraising advantage, but instead strategic control over his resources, allowing his campaign to control his message, define the electoral playing field, and allocate resources in a way consistent with his campaign strategy.

There are virtues to public financing that merit a reconsideration of the design of existing law in light of new developments and recent practice. In the meantime, there is no particular virtue for candidates remaining within that system.

What's Next For Campaign Finance?

TAP talks with campaign-finance guru Thomas Mann, a key advocate for McCain-Feingold who now says reform should focus more on public funding of candidates and less on contribution limits.

Both Barack Obama and John McCain have dealt blows to the presidential public campaign financing system -- John McCain by opting in, then opting out of nomination funds and Obama by rejecting public funds for the general election outright.

Thomas Mann, the W. Averell Harriman chair of Governance Studies at the Brooking Institution, has been an outspoken advocate of campaign finance reform for well over ten years. During the debate over McCain-Feingold in 2002, a bill that eliminated soft money, Mann frequently appeared in the media to offer comprehensive analysis of and justification for the proposed contribution limits and other fixes to the existing campaign finance structures. Over the last six years, Mann has continued to stand by contribution limits and other regulations. But now, as the Obama campaign continues to shatter assumptions about fundraising, Mann discusses how new efforts at reform might have to get creative, and whether public financing has a future.

Abby Rapoport: Now that soft money has been eliminated is the sheer amount of money spent something to be concerned about or is the steady growth in spending a sign of involvement?

Thomas Mann: I've never worried about the overall amount of money in campaigns. We're a huge country, a public not much engaged in politics or public affairs. It's hard to get through the din of advertising for commercial products. ... The problematics come with how it's raised and how it's spent, how it's allocated among candidates. But in this cycle, it seems to me that [the high amount of money came from] the high level of interest, the competitiveness between Clinton and Obama and basically the fact that the public financing system fell into disrepair.

AR: You were very involved in the passage of McCain-Feingold back in 2002. That bill tried to close off loopholes in an existing campaign finance system. Do you think there are more loopholes that have exposed themselves this cycle?

TM: My inclination is not to go back in and say what can we regulate now? Mine is to say, let's acknowledge two big things happening. One, the courts have made it absolutely clear that parties, political parties, can spend as much as they want as long as they do it independently, on behalf of their candidates. Which means there's no way now that you can control spending. That's an important point to keep in mind. The second one is that we've seen just the first evidence of the possibility of a very different source of funding for campaigns -- namely small donors.

And therefore my inclination is to acknowledge the first and therefore don't get confused about what public financing can or cannot do. Rethink public financing in light of what parties can do independently and secondly begin to think creatively about building the small donor base for campaigns, not just at the presidential level, but the congressional level, state legislative level. See what it takes, maybe new public policies for tax credits, for matching funds. But I'm more inclined to think less in a regulatory restrictive way, than saying, "Hey, a new dimension is opening, campaigns are changing, more people are entering as small donors. Are there ways we can build on that?"

AR: Do you feel like you've switched, over time from a more regulatory position? Or did the dynamic in campaigns change?

TM: I try to keep myself open to new information. I began in this field as a traditional political scientist that was skeptical of the reformers, that argued that money will find its outlet, that generally believed there were limits to what you could accomplish in terms of restricting money. Then as a I did research and I viewed the real world and saw what was happening out there, I came to embrace some ways of getting existing law to work where it had been undermined, and that's what the whole McCain-Feingold thing was about. But I was never a champion of spending limits for their own sake, I always believed contribution limits ought to constantly be increased to reflect the cost of campaigning. So now I see new opportunities presenting themselves by changes in technology and I see new limits in place from the courts that you've got to reckon with. So that leads me to look into some other ways to grapple with campaign finance.

AR: Many have called Obama's decision to forgo public funds the deathblow to the public financing system. You wrote back in April that the system had been "largely irrelevant" in the nominating cycle. Should legislators work to fix the existing public financing system or should they get rid of it?

TM: It's sad. It has for the most part died in the nominations phase. It began with Bush opting out and winning the election in 2000. Followed by Bush, Dean and Kerry in 2004. So as we approached 2008, it was clear any really serious candidate was going to opt out and raise as much money as he or she could. Now I think that's unfortunate. There is something to be said for having some seed money, some opportunity for lesser known candidates to raise some amount of money, to have it matched in some way, so the field of candidates is not limited to those who can either self finance or who have access to huge amounts. I continue to believe it's important to update that system. It needs much more generous matches but I guess I'm open to the possibility that we disconnect it from spending limits. Because I think almost any kind of spending limits will lead the major candidates to opt out.

I'm beginning to think we may want to refashion that program as a matching system for small contributions, up to a certain limit of public matches that would effectively make it easier for lesser known candidates to get enough money at the outset to keep a campaign alive at least through Iowa and New Hampshire. The way it is now, many drop out a year before.

AR: What about in the general election?

TM: As far as the general election is concerned, there it's a real dilemma. The fact that Obama is opting out does not mean that he will naturally have more spent on his campaign than McCain. With party independent spending, the public financing only becomes only a part of the expenditures, and a small part. I mean you could have argued it made sense for him to take the public grant, the 84 million dollars, but raise money like crazy between now and the end of the democratic convention, raise two, three four hundred million dollars, transfer it to the party, and then let the party spend it independently on behalf of his campaign. Now he didn't do that because he wants to run his own campaign. He wants to control the message control where the playing field is, and make those decisions so there's a consistent message.

We set it up to be full public financing and for a number of years that's just how it worked. It stopped working that way in 1996 with soft money. Now soft money was eliminated but the court sort of reinforced its view that even for candidates that accept public funding, their party can then spend independently all they want and the candidate can help them raise that money at the beginning. So that leads me to question the structure of public financing in the general election. Maybe it should be a floor that's made available to candidates but doesn't limit other money they can raise and spend on behalf. But why are we doing that? I mean the public may not be real thrilled about that if they're ponying up these public dollars but it doesn't limit the overall amount or what's involved in raising the other amount. So I'm puzzled. I'm not sure what to do about the public financing system in the general election.

AR: Is there a future for public financing at other levels, like congressional and state races?

TM: I've long supported public financing at all levels of government but I think the courts interpreting the constitution have put up real obstacles to systems as we once defined them as full public financing. I'm now inclined to look for other ways of using public subsidies to enrich to resources available to candidates, to foster greater competition, to try to reduce the money chase. To see if we can't build on new forms of campaigning that might reduce the cost of campaigns.

I just feel that campaigns are not the same as they were forty years ago when the current structures were put in place. And we need to acknowledge that, to see the changes that are coming and to try think creatively about how to manage this.



Obama Tops in Donations from Troops

By Matthew Mosk
An analysis of political contributions from soldiers on the battlefield has produced some unexpected results.

The Center for Responsive Politics has found that the presidential candidate with a record as a bona fide war hero is garnering far less financial support from the troops than the Harvard-trained lawyer.

"Democrat Barack Obama has received nearly six times as much money from troops deployed overseas at the time of their contributions than has Republican John McCain, and the fiercely anti-war Ron Paul, though he suspended his campaign for the Republican nomination months ago, has received more than four times McCain's haul," the report said.

The report also included this surprise: "Members of the armed services overall -- whether stationed overseas or at home -- are also favoring Obama with their campaign contributions in 2008.... Although 59 percent of federal contributions by military personnel have gone to Republicans this cycle, of money from the military to the presumed presidential nominees, 57 percent has gone to Obama."

The analysis of campaign records found Obama has raised more than $60,000 from 134 military service men and women who are deployed overseas. McCain has raised $10,665 from 26 donors.

Books

The New Campaign Finance Sourcebook
Anthony Corrado, Daniel R. Ortiz, Thomas E. Mann and Trevor Potter, Brookings Institution Press 2005 c. 292pp.

Inside the Campaign Finance Battle
Anthony Corrado, Thomas E. Mann and Trevor Potter, eds., Brookings Institution Press 2003 c. 333pp.