Public Financing System for Presidential Elections Broken and Needs to be Fixed

by David Tamasi

WASHINGTON - The recent decisions by former Vermont Governor Howard Dean and Massachusetts Senator John Kerry to opt out of public financing in the Democratic race for President have prompted two prominent Kerry supporters to sponsor legislation to reform the current system.

Congressmen Martin Meehan, D-Lowell, and John Tierney, D-Salem, said they intend to file campaign finance bills before the end of the year to encourage presidential candidates to stay within the public financing system. Meehan said he was still working on the details of the bill, while Tierney said he would reintroduce legislation that he has submitted every session he has been in Congress.

Under current law, presidential candidates are eligible to receive $19.1 million on Jan. 1, 2004, if they agree to spend no more than $45 million until their party officially nominates a candidate at their national conventions.

Tierney said that he hoped the decisions by Dean and Kerry would be the "stimulus to get serious about public financing."

Dean said two weeks ago that he was declining public funds because the Democratic nominee would have no money from March, when a nominee is expected to emerge, until the Democratic National Convention in July, while President Bush would have $200 million to spend with no primary opponent. The President has also declined public financing.

"A Democratic nominee with no money is exactly what the Bush campaign is hoping for," said Dean, who has raised more money than any other Democrat. "Ours is the only campaign with a chance to defend itself during those five months."

Last Friday, Kerry followed suit, saying that Dean had "changed the rules of the race, and anyone with a clear shot at the nomination must play by those rules." Kerry challenged Dean to stay within the $45 million primary spending cap, but acknowledged that he would retain the option to dip into his personal funds.

In light of Dean's and Kerry's decisions, political analysts said presidential public financing was finished.

"The system is dead," political analyst Stuart Rothenberg said. "When the front-runner in the Democratic race and the Republican nominee opt out, something is wrong. It is time to start over."

"I think that the system is in serious trouble," said Larry Noble, executive director of the Center for Responsive Politics, a nonpartisan group that monitors campaign money. "It is probably the end of it if you are a viable front-runner." The consensus is that $45 million is no longer enough to wage a viable presidential campaign, he said.

Meehan said that while it was too late to reform the system for the 2004 election, he had spoken to Senator John McCain, the Arizona Republican who helped spearhead campaign-finance reform last year. Their "discussions were a benchmark" to work on legislation next year that would increase the spending limit for those who stay within the system in future presidential races.

"We need a system to encourage candidates to raise small contributions," he said. Under the present system, the federal government matches, dollar for dollar, the first $250 of each individual donation. Dean has said he needs 2 million supporters to donate $100 each to match the amount Bush is expected to raise.

Meehan and McCain, along with Congressman Chris Shays, R-Conn., and Senator Russell Feingold, D-Wisc., authored legislation in 2002 that banned the unlimited contributions known as soft-money and raised individual contribution limits $1,000 to $2,000 per election. Opponents of the measure filed a lawsuit calling the law a violation of the First Amendment right to free speech. The case is currently before the U.S. Supreme Court.

New Hampshire Republican Congressman Charles Bass suggested Congress "hold hearings to examine the public financing system for presidential campaigns."

Congress created the presidential public financing system in 1974 in response to Watergate, and it has been effect since the 1976 election. At the time, proponents said taxpayer-financed presidential campaigns would restore public faith in national elections and reduce presidential candidates' reliance on big donors.

As the Democratic front-runner, Dean made his decision with an eye toward the general election, hoping to avoid the position 1996 Republican nominee Bob Dole found himself in that summer. Dole emerged from the Republican primaries in April of that year out of funds and unable to respond to a barrage of advertising on behalf of President Clinton.

Kerry's rationale for declining public funds is different from Dean's. The odds-on favorite last winter to win the Democratic nomination, he has found himself eclipsed by Dean in New Hampshire, a state that is vital to Kerry's electoral success. By opting out of the public financing system, Kerry no longer must adhere to state spending caps and can also spend his own money.

Federal law prohibits Kerry from tapping his wife's $500 million fortune, but he could use their joint assets as collateral to secure a personal loan from a bank. The couple jointly owns a $10 million home in the upscale Louisburg Square section of Boston's Beacon Hill. Kerry secured personal loans totaling $1.7 million in his 1996 Senate reelection campaign against then-Gov. William Weld.

The spending cap in New Hampshire is $700,000, but campaigns are granted a "fundraising exemption" that brings the cap to $1.4 million. Other exempt categories include salaries for campaign staff, direct mail and media.

For example, a campaign that buys advertising time on Boston television stations, which reach southern New Hampshire, need count only 15 percent of the advertising buy against the cap. By opting out of the public financing system, Kerry will be free to spend as much money as he wants in the Granite State. The most recent poll conducted by WMUR-TV and the University of New Hampshire showed Kerry trailing Dean by 22 points.

State spending limits are "an older idea that was no longer workable" and would probably be "scrapped" in any new legislation, the Center for Responsive Politics' Noble said. But political analyst Rothenberg said he did not think Congress would address the issue in a presidential year. "It is hard to believe that they would," he said. "I think that they will wait until after the campaign."

Meehan suggested that public funds be made available to candidates earlier than Jan.1. "These candidates have been campaigning since April," he said. "The actual campaign begins way in advance of when they receive the money."

Congressman Jeb Bradley, R-Wolfeboro, without saying whether he believed the system was broken, said, "It's up to each individual candidate to decide what's right for their campaign."