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Tuesday, December 16, 2008


Why does public campaign financing matter?

posted by Aziz P. at Tuesday, December 16, 2008 permalink View blog reactions
An editorial in the Washington Post argues, counter-intuitively, that Barack Obama's fundraising success over the internet is not a death-knell for the public financing system, but rather all the more reason to reform it:

According to an analysis by the nonpartisan Campaign Finance Institute of the fundraising totals through August 2008, the percentage of people whose total donations to Mr. Obama aggregated to $200 or less was 26 percent. That almost matches President Bush's 25 percent in the 2004 election. But Mr. Obama relied less on donors who gave $1,000 or more (47 percent) than Mr. Bush (60 percent).
Mr. Obama must lead a serious conversation about the role of the public financing system and how Internet fundraising should affect its structure. In an op-ed last month in The Post, Democracy 21 President Fred Wertheimer championed a new campaign finance system centered around the Internet. He proposed matching funds for small donations up to $200 per donor, increasing the campaign spending limit to $250 million, reducing the individual contribution limit and closing the loophole for joint fundraising committees, which allowed supporters of Mr. Obama and his Republican opponent, Sen. John McCain (Ariz.), to skirt the current $2,300 limit.

A few notes here. First, Obama's percentage of small-dollar (sub-$200) donors may have been comparable to Bush's, but in absolute dollars Obama raised far more, because Obama attracted so many more new, first-time donors overall. Obama's campaign really was The Perfect Storm predicted by Joe Trippi and prototyped by the Howard Dean campaign.

Second, the requirement that sub-$200 donors be made public, and also forcing bundlers to be public, is a good one. But that has very little to do with the public finance system; these are general reforms that would apply regardless of where a candidate is getting their money from. The need for more donor transparency is essentially orthogonal to the question of public finance.

But finally, why exactly do we need to have any public financing system at all? As John McCain can attest, any candidate who submits to the system will be at a severe financial disadvantage, and what's more will be forced to run a much less internet-aware campaign (Obama's lavish spending on Internet outreach, especially the crown jewel of his YouTube channel, was only because he could afford to spend money and take that risk. McCain had a much more modest online operation partly because he simply needed to hoard his funds for the expensive media markets). Even putting into place all of Wertheimer's proposed reforms would still leave a candidate who accepted public funding at a severe disadvantage.

The one truly innovative idea though is small-dollar matching of donations under $200. However, this has the potential to balloon out of control, and really is not compatible with the proposed spending limit of $250 million (Obama raised $750 million total; if %25 of that was small-dollar donations, then we are talking about $188 million right there!). A better solution would be for candidates who accept public funding to be restricted to sub-$200 donations online. That way, a candidate who opts into teh system would not be prevented from raising organic money to compete, but would also not be chasing after the bundlers.

There is a role for public finance, but it can never again be the sole source of a viable candidate's funding. Every candidate must be free to raise money online directly from the people. There's simply no better expression of free speech and personal democracy than the principle of the Perfect Storm that such online donations represent.

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About Nation-Building

Nation-Building was founded by Aziz Poonawalla in August 2002 under the name Dean Nation. Dean Nation was the very first weblog devoted to a presidential candidate, Howard Dean, and became the vanguard of the Dean netroot phenomenon, raising over $40,000 for the Dean campaign, pioneering the use of Meetup, and enjoying the attention of the campaign itself, with Joe Trippi a regular reader (and sometime commentor). Howard Dean himself even left a comment once. Dean Nation was a group weblog effort and counts among its alumni many of the progressive blogsphere's leading talent including Jerome Armstrong, Matthew Yglesias, and Ezra Klein. After the election in 2004, the blog refocused onto the theme of "purple politics", formally changing its name to Nation-Building in June 2006. The primary focus of the blog is on articulating purple-state policy at home and pragmatic liberal interventionism abroad.