A new era for campaign finance

Has the 2008 election signaled the end of public financing for presidential campaigns?

In some ways, yes. Barack Obama, the first major-party nominee to forgo federal funds since the advent of the system in 1976, has raised more money than even his own campaign thought imaginable. The Democratic nominee’s $150 million haul in September alone dwarfs the $84.1 million total that Republican John McCain can deploy for the entire general election season in his public grant. Overall, Senator Obama has raised more than $600 million, nearly twice what Senator McCain has. Party money has supplemented both campaigns’ efforts, but not enough for McCain to keep up with Obama.

“The public system has been dying over time,” says Thomas Mann, a senior fellow at the Brookings Institution.

Certainly, Mr. Mann says, the first part – the use of public funds in the primaries by the top-tier candidates – has been dead for some time. In 2000, George W. Bush started the trend by opting out of public primary money. In 2004, neither eventual nominee took the grant.

Now, Obama has shown how to rake in the cash all the way to Election Day, in both small and large increments, with the maximum donation set by law at $2,300 per donor. Half of Obama’s $600 million-plus haul so far has come in donations of $200 or less, according to the nonpartisan Center for Responsive Politics.

“I think that absent reform, the only role the public funding system will have is to be a funder of last resort for candidates who have difficulty raising money,” says Anthony Corrado, a campaign finance expert at Colby College in Waterville, Maine.

He notes that public funds kept afloat the presidential hopes of John Edwards, Christopher Dodd, and Joseph Biden, at least in the early going of primary season.

In the future, any candidate who opts for public financing will be signaling that he or she is a second-tier candidate hoping to catch fire with a little help from Uncle Sam.

“Future candidates are going to be looking to emulate the Obama experience,” says Mr. Corrado. “But it’s not necessarily the case that he is going to be the model for most candidates.”

This election cycle has been unusual: It has been highly competitive, with wide-open fields in both parties from Day 1, spurring enormous voter interest. Obama’s historic run, as the first viable African-American candidate, gave his candidacy cachet. And the grass-roots nature of his campaign, combined with the reach of e-mail and Web-based social networks, has fueled the giving.

Some longtime watchers of campaign finance are delighted by the massive sums that have poured into the candidates’ coffers, particularly the small donations.

“It’s a sign of health,” says Mann. “If anything, I believe this time what we are seeing is that money raised is an indicator of political strength, not a source of it.”

All told, the 2008 contest for both the White House and Congress will be the most expensive in history, clocking at a projected $5.3 billion, according to the Center for Responsive Politics. The presidential candidates, who have raised more than $1.5 billion since January 2007, are on track to double the fundraising achieved in 2004 and triple that of 2000.

But other advocates of campaign finance reform worry about the ways some high rollers are able to exert their influence by donating to alternate party funds and bundling other donors’ checks.

The group Democracy 21 notes that Obama has 324 supporters bundling $100,000 or more in donations, and 47 people bundling $500,000 or more. The concern is that these bundlers will enjoy unfair access to an Obama administration, if the Illinois senator is elected.

Calls for a revamped public finance system, which could include a matching program to leverage private donations, are unlikely to receive priority when the new administration takes office. With the economy in decline and the nation at war, reform advocates will be hard put to get the issue high on the public agenda – and equally hard put to win additional funding for politicians’ campaigns.

“For this to even have a prospect, you’re going to need significant Democratic strength in the Senate and a willingness to follow with presidential support,” says Corrado.

If Obama wins, having ridden to the White House on a wave of privately raised money, he may have a hard time arguing that public financing is still the way to go.