Government and Politics
What's Left of Presidential Campaign Finance Regulation?
by Rory O'Sullivan | April 24, 2009
President Obama’s decision to forgo public financing in the 2008 general election marked the first time a candidate has done so since Congress created the system three decades ago.[1] His choice, though, reflected a predictable trend rather than an unexpected break from past experience. Candidates in the presidential primaries have increasingly ignored public money and its corresponding expenditure limits in favor of raising and spending much larger sums. At this rate, it seems unlikely that even one major candidate will accept any public money in 2012 for the primary or general election. This is surely a welcome sign for opponents of campaign finance laws, but just as troubling to those who believe regulation is necessary to prevent wealthy interests from gaining undue political influence. The latter group will have to muster a serious reform effort for the presidential campaign finance regulations to maintain their relevance.
Currently, the law relies on a system of incentives to entice candidates to limit their total expenditures. Any nominee from a major party in the general election may elect to take a portion of public money to use after his or her party’s convention. In exchange, the candidate must agree not to use any private funds. Congress set the cap at $20 million in 1974, but allowed it to grow with a cost of living adjustment (“COLA”) for each election.[2] This year, McCain received just over 84 million.[3] The primary structure works a bit differently. In order to help lesser-known politicians, it provides matching funds to a candidate who can exceed a certain minimum level of donations. He or she must also agree to limit total primary expenditures. The cap for the primaries plus the COLA in the 2008 cycle was about $42 million.[4]
Several problems exist within this system. First and foremost, the expenditure limits are simply too low. Both Hillary Clinton and Barrack Obama raised well over $200 million in the 2008 primary cycle alone.[5] In an era when campaigns are fought largely through expensive television advertisements, a serious candidate cannot hope to compete with a mere fifth of the money his or her opponents hold. Second, candidates who accept public money do not receive it until too late in the process. The government releases primary matching funds Jan 1st of the election year, leaving little time to use them before the Iowa caucus and New Hampshire primary just days later. [6] In the general election, candidates who win their party’s nomination in February must wait until August to garner public funds – plenty of time for a privately funded opponent to attack him at will all summer long. Finally, the source for the current meager level of funds could dry up soon.[7]
Proposals for reform have come from various quarters. Common Cause, a non-profit that works for open government, advocates for improving on the basic structure. This includes increasing the amount of matching funds, increasing the fund limit, giving more funds to candidates who face better-funded opponents and speeding up the process for receiving public money.
Others point toat point to point the funding structure of Barrack Obama’s successful campaign and argue that it has obviated the need for any system of campaign finance for presidential elections. Robert Frank, an economist at Cornell, contends that Obama’s vaunted army of small donors showed that the people can overwhelm the undue influence of wealthy interest groups.[8]
Not so fast, warns the Campaign Finance Institute, a research organization at George Washington University. Obama’s victory may have had more to do with relatively wealthy people giving lots of money in small increments than lots of average people each giving what they could.[9] By their accounting, Obama received an impressive 49% of his money from contributions of $200 dollars or less. McCain on the other hand garnered only 32% of his funds from this category.[10] However, when totaling each individual’s contributions, Obama’s numbers look less impressive. He received 26% of his money from people who donated $200 or less, only a few points better than McCain’s 21% and on par with George W. Bush who received 25% of his funds from small donors. Obama still gets less money from donors of over $1000 than all recent candidates, but he gets nearly three quarters of all his money from people giving over $200 - not a small sum of cash.
Furthermore, Obama may still have large incentives to help out the students and retired folk who donated heavily as groups, regardless of the individual size of their contributions. If we assume that campaign finance regulation is in part about limiting the unfair influence of interest groups who give money, then a system of many smaller donors could still cause problems. For example, President Obama must soon deal with the soaring cost of entitlements, the vast majority of which go to the elderly. Since he got much of his money from retired persons, large sums or not, he may still have a strong incentive to listen to their voices over others. That might mean higher taxes for everyone to pay for ballooning Social Security and Medicare programs, when a mix of expenditure cuts and modest tax increases provide a fairer alternative. Even a system of millions of small private donors may not address this issue.
Thomas Mann, a scholar at the Brookings Institution, thinks we ought to explore ways of encouraging small donors at every level of government. Since the Supreme Court takes a dim view of efforts to clamp down on campaign spending (on free speech grounds), he suggests we should look towards more incentives like tax credits or matching funds for donors to stem the undue influence of interest groups in our political system. Whatever Congress and the President do, however, they should act relatively soon. Everyone agrees that if we do not do something in the next few years there will be no real limit on campaign finance for the 2012 presidential race.
[1] http://www.npr.org/templates/story/story.php?storyId=95957148
[2] http://www.fec.gov/pages/brochures/pubfund.shtml#7
[3] http://www.usatoday.com/news/politics/election2008/2008-06-19-opt-out-qa_N.htm
[4] http://www.fec.gov/pages/brochures/pubfund.shtml#7
[5] Opensecrets.org
[6] http://www.commoncause.org/site/pp.asp?c=dkLNK1MQIwG&b=1389223
[7] Right now money for the public funding for presidential elections comes from taxpayers who can check a box on their tax return that sends three dollars of the money they already pay in taxes to the public financing account. Common cause reports that due to a lack of understanding of the program (some people think they are paying more taxes) and lack of trust in government that fewer people check the box, reducing the size of the fund.
[8] http://www.nytimes.com/2008/07/06/business/06view.html
[9] http://www.cfinst.org/pr/prRelease.aspx?ReleaseID=216
[10] Note: these numbers are calculated through August 31st, so they may have changed by Election Day.
Email Rory O'Sullivan at rfo5@law.georgetown.edu
