Campaign rewrites fundraising playbook

  • Article by: KEVIN DIAZ , Star Tribune
  • Updated: November 2, 2008 - 10:44 PM

Barack Obama's success while bypassing public money likely marks the end of the system in place since the '70s.

WASHINGTON - No matter who wins the first $1 billion presidential race on Tuesday, the campaign landscape has been changed forever.

Barack Obama's staggering success raising money on the Internet, combined with the Democrat's decision to forgo public financing, has forced campaign analysts of all stripes to reexamine how to pay for future presidential campaigns.

Not least among them is Republican hopeful John McCain, who was being outspent 3 to 2 in the final weeks of the campaign. He lamented Wednesday on CNN: "You tell me the next time ... a presidential candidate will take public financing when Senator Obama has shown you can raise millions of dollars."

Obama, the first major candidate since 1972 to use only private money in the general election, termed his decision "difficult" and blamed it on a public financing system that he says is "broken."

Critics say his record $639 million fundraising total so far -- compared with McCain's $360 million -- could very well be the end of a public financing system that has prevailed for the past 34 years.

"It's a mess," said John Samples, a campaign finance scholar for the Cato Institute, a libertarian think tank in Washington, D.C, speaking of the public financing system. "It's certainly not serving any of the purposes it was supposedly set up to do."

Minnesotans, who rank 24th in donating to presidential candidates, have contributed a total of $10.5 million to all candidates throughout the primaries and the general election, according to the Center for Responsive Politics. Of that, more than $5.4 million has gone to Obama, compared with $2.3 million to McCain.

McCain, who has been limited to an $84.1 million public financing grant in the general election since the Republican National Convention, has managed to stay close to Obama in overall financial backing. That's been largely because of a number of legal loopholes on joint committees and the fundraising success of the Republican National Committee, which, like its Democratic counterpart, can raise and spend money for ads geared to the presidential race.

A new public system?

But if some see Obama's private fundraising advantage as the death of public financing, others see it as a model for the future -- a future of ever-larger campaign war chests, but built from a far greater number of small, individual contributors.

"Sen. Obama's campaign made an extraordinary breakthrough in small donor fundraising on the Internet," said Fred Wertheimer, president and CEO of Democracy 21, which has been involved in drafting campaign finance reform legislation with Obama's backing. "That is the pathway to the future."

As Republicans have accused Obama of breaking a pledge to abide by public financing limits, he has talked of creating a "parallel public financing system" of turbocharged Internet contributions.

The Illinois senator has raised nearly $300 million from a list of more than 3 million ordinary donors giving less than $200 each, much of it over the Internet. While that sounds like "small-d" democracy, it represents less than half of his total haul. He's also raised about $200 million in contributions of $1,000 or more, the type that are often associated with influential bundlers, expensive fundraisers, and special access to the candidate.

Reform advocates see the potential for a system that would emphasize donations of less than $200 by matching them with public dollars at a ratio of 4 to 1 or more. Combined with spending limits for opting into public financing, that could produce large numbers of small contributions on the Internet that would quickly crowd out bigger donations from the rich.

"If the incentives are strong enough, the system will focus on the small donor and move away from the bundlers," said Wertheimer, who is working on a bill with Sen. Russ Feingold, the Wisconsin Democrat who teamed up with McCain after the 2000 elections to pass a ban on unlimited campaign contributions by corporations, unions and rich donors to political parties.

While Obama has signed on as a co-sponsor of Feingold's new public financing bill, McCain has not. And it remains to be seen what kind of support it would garner in the next Congress.

Feingold, in a statement Thursday to the Star Tribune, said he expects bipartisan support for his bill, adding that the public financing system "clearly needs to be updated if it is to remain viable."

'An unusual candidate'

Opponents of campaign finance reform point to Obama's fundraising success as evidence that the whole idea of limiting campaign cash has become obsolete.

Bradley Smith, a former Federal Election Commission chairman, wrote in the Washington Post last week that Obama's effort should "put to rest all the shibboleths about campaign finance reform -- that it's needed to prevent corruption, that it equalizes the playing field, or that tax subsidies are needed."

Some of Minnesota's biggest political contributors fall on opposite sides of the debate. Former U.S. Sen. Mark Dayton, an heir of the department store owning family, said in a recent interview that the influence of big money "warps the decision-making process in Washington on behalf of the moneyed and special interests."

But Twin Cities businessman and Democratic political strategist Vance Opperman believes that campaign giving, as long as it's transparent, should be unlimited. Funding restrictions, he said, "signal to people that there's something awful and dirty and terrible about giving to political campaigns and parties. The reverse ought to be true."

Between January 2007 and Election Day, more than $2.4 billion will have been spent by all the presidential campaigns in this race, according to the Center for Responsive Politics. Not everyone agrees that's too much money.

But if Obama maintains his current lead in the polls and wins the election, some critics say, his private fundraising advantage over the publicly financed McCain could become a prelude to the future.

"In the next couple of election cycles, [accepting public financing] could just be a signal that your campaign is dead, and the media will report it that way," Samples said.

Reformers say that could be fixed by raising the spending limits for candidates who accept public financing, something they blame Congress for not doing in recent years.

But even advocates of a system that encourages small donations say it remains to be seen if Obama's success on the Internet is an aberration or a harbinger of elections to come.

"Obama is an unusual candidate," said Steve Weissman, a researcher with the Campaign Finance Institute, a Washington-based watchdog group. "Others equally worthy may not have the charisma to generate the enthusiasm he's developed."

For Samples, the worst-case scenario is that the system is neither changed nor abolished: "The great danger is that it becomes a typical government program, in which it doesn't function, but it also doesn't go out of existence. It just sort of stays there."

Kevin Diaz • 202-408-2753

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