Has Barack Obama Killed Public Financing?
We are still savoring all of the historical election firsts: First Presidential election of an African-American, first Presidential election dominated by the post-baby boomers, first Presidential election in nearly a half of a century that elected a seated member of Congress, and first Presidential election in which one of the major party candidates chose to opt out of public financing in the general election since public financing became available more than three decades ago.
What are we to make of that last “first”?
Public financing was enacted into law in 1973 when our country was under the dark shadow of Watergate. One Presidential candidate had received substantial sums of money from unknown sources, money that the candidate’s campaign committee laundered through bank transfers and then used to pay for a burglary of the opposing candidate’s national party office. That campaign, the Committee for the RE-Election of the President, or CREEP, used campaign contributions to pay for criminal conduct that ultimately compelled Richard Nixon to resign the Presidency.
Congress essentially offered three legislative remedies to CREEP’s assault on our national electoral integrity: (1) putting limits on the amount that a contributor could give to a federal candidate, (2) compelling federal candidates to disclose the identity of their contributors and (3) offering grants of money to Presidential candidates who demonstrated wide voter support in the general election. The great majority of these grants have gone to the candidates of the two major parties.
It is important to recognize that these laws were controversial when adopted and viewed by many as restraints on their freedom of political expression. Ultimately, however, they were justified by our Supreme Court in 1976 as reasonable checks on the potential of money to exert “undue influence” over candidates.
The first two remedies, contribution limits and disclosure, have become accepted parts of our electoral landscape. The fear that persons would withhold contributions rather than be publicly identified as a supporter of a particular candidate or party has obviously subsided, though it hasn’t completely disappeared. We accept as reasonable that those who seek to participate in elections by giving money must be identified so that the electorate can know the sources of a candidate’s funds, and further that large contributions carry an unacceptable potential of disproportional or “undue” influence. Thus, in 2008, all presidential candidates regardless of public financing were permitted to accept no more than $2,300 per election from a contributor (that is, $2,300 in the primary and $2,300 in the general).
Public financing of Presidential general elections is a remedy beyond contribution limits and disclosure. Its ultimate aim is to remove ALL money except that supplied by government, and thus remove or minimize the potential for influence from all sources in any amount. In a money grant program, such as the one that applies in Presidential general elections, the government is the sole source of candidate funding (with the relatively limited exception of contributions received for the express purpose of defraying a candidate’s accounting and legal compliance costs).
It is doubtful that anyone would seriously suggest that the publicly financed elections conducted since 1976 have removed the potential for undue influence. For many years, public financing did not preclude substantial “soft money” contributions to the candidates’ political parties. Even this year, wealthy contributors could contribute to joint fundraising events that included the Presidential candidate’s committee, the national political party supporting the candidate, and some State political parties in critical states. Further, public financing cannot constitutionally stop wealthy individuals from making unlimited expenditures of their own money independently of the candidate to express their views through purchased media. An even larger question is posed by groups of like-minded individuals that seek to influence the electorate without specifically endorsing a named candidate but purchasing media advertising that promotes or opposes issues closely identified with the candidate.
Putting aside these reservations about its effectiveness, the more fundamental question about public financing is whether or not it is good public policy to prohibit individuals from making even limited contributions.
If there has ever been an election that has demonstrated that the electorate wants to make contributions to their favored Presidential candidates, the Obama campaign must be it. We do not yet have final figures, but as of its October 15 quarterly report the Obama campaign reports that it raised over $280 million in contributions of $200 or less, out of a total of $579 million of contributions from individuals for the primary and general elections. So, small contributions of $200 or less comprised nearly one half of what is a record breaking level of individual contributing.
Contributors are investors, and investors have a special stake in the success of an enterprise. Because of President-elect Obama’s election, we must ask: Wouldn’t the best antidote to undue influence be large numbers of small contributors? Shouldn’t public policy promote wider limited contributing by individuals instead of prohibiting it?
The ability or inability of any candidate to attract limited contributions from individuals throughout a campaign is, it seems to me, a perfectly legitimate measure of a candidate’s continuing political viability. Contrast that with public financing grants, which provide all of the candidate’s public funds ($84.1 million in 2008) at the beginning of the candidate’s general election campaign and limits the amount the candidate can spend to that figure regardless of whether that campaign inspires enthusiasm or antipathy among voters.
Without public financing, individuals can give money when they are inspired to do so. By contrast, public financing is compelled to ignore public sentiment in order to perform even handedly. Is that good public policy?
Apparently, taxpayers are coming to similar conclusions. Because public financing was a controversial program, Congress provided for an annual referendum of sorts. Taxpayers were asked to voluntarily “checkoff” whether they want $3 of public funds to be dedicated for public financing programs without increasing their personal tax amount (that is, taxpayers “checking off” on the $3 box do not pay an additional $3 in taxes). In 1976, the first year of the “checkoff,” 27.5% of taxpayers opted for it. In 2006, the most recent year for which numbers are available, that figure had dropped to 10.9%. The truth is that the program would have ended years ago if it did not receive appropriations beyond the amounts checked off.
Does this mean that public financing in all its varieties, such as matching fund programs for individual contributions as is offered in Presidential primary, New Jersey gubernatorial and New York City elections, or clean election programs in Maine, New Mexico and on an experimental basis in selected New Jersey legislative races, should all be dispensed with? Perhaps even more pressing, now that our President-elect has succeeded without it, will candidates be as eager to participate? Keep in mind that even in 2004, the wining Presidential primary election candidates, John Kerry and President Bush, declined it.
Ultimately, the utility of public financing, if any, must be tested in terms of its success in providing candidates with an opportunity to be heard in the public market place of ideas, especially those candidates who without some prospect of early funding help are discouraged from even seeking elective office. Thus, a program that has a more modest objective to provide only limited “seed” money by matching a relatively low number of initial contributions may have some appeal.
Barack Obama did not have the benefit of public funding for his candidacy. But, without the benefit of the opportunity to give the keynote address at the 2004 Democratic National Convention, he would have been hard pressed to launch a Presidential candidacy as a freshman U.S. Senator. Did I mention that public financing includes grants to the major parties to help them defray the costs of their national conventions? So, ironically, public financing in this case did provide a platform for a previously little known U.S. Senatorial candidate: Barrack Obama.
Gregory Nagy was the Legal Director of the NJ Election Law Enforcement Commission until his retirement from that agency in 2002.