Clinton Bid Heralds Demise of Public Financing

By Dan Balz and Matthew Mosk
Washington Post Staff Writers
Tuesday, January 23, 2007

The public financing system designed to clean up presidential campaigns in the wake of the Watergate scandal may have died on Saturday when Sen. Hillary Rodham Clinton (D-N.Y.) announced her bid for the White House.

Little noticed amid the announcement rollout was a page on her Web site in which she asked potential contributors to give her campaign checks of up to $4,200. That figure signaled not only that she plans to forgo public funds for primary season but also that, if she becomes the nominee, she will not take public money for the general election.

By opting out of the system, Clinton will be able to spend as much money as she can raise, both for the primaries and for the general election, rather than being forced to abide by strict spending limits imposed by the Federal Election Commission on candidates who accept public financing.

Others have opted out of public financing for the nomination campaigns, but Clinton is the first since the current structure was created in 1974 to declare she will forgo public financing in the general election as well.

Clinton's decision will put pressure on other candidates in both parties to follow suit, and if they do, the 2008 campaign will complete what has been the rapid disintegration of a system designed to rein in unlimited spending in presidential campaigns.

One effect is to put lesser-known candidates at a further disadvantage in competing with rivals who have the capacity to raise huge amounts of money.

"It's going to be a tremendous test of whether this system survives," Robert Lenhard, chairman of the Federal Election Commission, said of the pressure building on the existing system. Michael Toner, his predecessor, was less restrained. This election, he predicted, will be "basically the death" of public financing.

Under the current system, candidates raise money for the nomination battle and can qualify for public funds. For the general election, however, the federal government underwrites the entire cost of the campaign but limits candidate spending to a fixed amount, meaning the nominees have never raised money for that part of the campaign. By starting to raise funds for both the primary and general elections, Clinton made it clear she plans to opt out of the entire system.

The 2008 campaign will be the most expensive in history. Candidates may be raising $2 million a week or more between now and early next year, and the eventual nominees of both parties will raise tens of millions between the time they clinch the nomination and the national conventions in late summer 2008.

Clinton is one of several candidates believed to have the capacity to finance their entire campaigns without any federal money, along with Sens. John McCain (R-Ariz.) and Barack Obama (D-Ill.). A campaign plan for former New York mayor Rudolph W. Giuliani indicated he would try to raise $100 million by early next year to win the nomination. Former Massachusetts governor Mitt Romney (R) attracted contributions and pledges worth $6.5 million in one day earlier this month.

President Bush built the new primary-season system in the past two campaigns, designating his most prodigious fundraisers -- those who raised $100,000 or $200,000 -- Pioneers and Rangers. The trend gives greater influence to wealthy fundraisers who can tap rich friends.

Campaigns are learning to tap into smaller contributors using the Internet, but Meredith McGehee, policy director at the Campaign Legal Center, said the breakdown of the system ultimately will put more distance between politicians and the people they are seeking to represent. "The pool of people that you're going to to finance the presidential election, the very nature of that pool of people is changing, and it's changing for the worse," she said.

A Clinton campaign official, defending her decision to opt out of all public financing, said the escalating cost of campaigns makes it difficult to stay within the current limits. "These dramatic increases make it clear that the current public financing system is in need of an update," said campaign spokesman Phil Singer, "and Senator Clinton would support modernizing it."

Among the presidential candidates, McCain has long championed the importance of campaign finance laws. Yesterday, his spokesman, Danny Diaz, said the senator thinks the current public finance system "is not fulfilling its original goal" and is also contemplating opting out.

The Watergate scandal helped produce a new system for financing campaigns, one that established limits on individual contributions to presidential candidates and disclosure requirements for campaigns to provide greater transparency about how money is raised and spent.

That system provided a carrot and stick for candidates designed to limit spending. For the primary season, the federal government agreed to match the first $250 of any individual contribution. In return, candidates agree to abide by strict state-by-state and overall spending limits during their nomination campaigns.

The system began to break down in 2000, when Bush decided to give up federal matching funds during his campaign for the nomination. That allowed him to raise and spend as much money as he could to win the nomination -- putting his rivals at a distinct disadvantage. He raised almost $100 million, breaking all previous records.

In 2004, Democrats John F. Kerry and Howard Dean joined Bush in opting out of public financing for the primaries. Bush and Kerry, the two nominees, both swamped Bush's 2000 campaign spending record. Kerry raised almost $235 million, Bush $270 million.

Both, however, chose to accept more than $80 million in public funds for their general election campaigns, though Kerry gave serious consideration to opting out. Few experts believe that either nominee will remain within the public financing system in 2008.

The system has broken down for several reasons, including the growing length of campaigns and escalating costs, especially for television advertising.

Public financing for the general election was designed to create a level playing field for the two nominees and relieve candidates of the need to raise money during the final months of the campaign. But candidates still see imbalances that can favor the party that holds the later convention, and the costs of both television and state-by-state organizations have strained what seem like generous allotments from the federal government.

Under new threshold limits adopted yesterday, individuals will be able to contribute up to $2,300 to a presidential candidate for the primaries and up to $2,300 for the general election. The limits are similar to those governing candidates for the House and Senate, but there is no public financing component for congressional candidates.

Clinton now will be raising money simultaneously for the presidential primaries and a possible general election campaign. Under federal rules, money for the general election cannot be spent until the candidate secures the nomination. If the candidate fails to win the nomination, the money must be returned.

Her campaign has another wrinkle in its fundraising plan. Like others before her, Clinton will have a group of big-time fundraisers tap their networks to help assemble hundreds of thousands of dollars for the campaign. But she also is recruiting what the campaign calls "Hillraisers."

Supporters can set up accounts on their Web sites and encourage friends to contribute to Clinton's campaign. Those contributions will be credited to the Hillraiser's account, and the campaign Web site will maintain a running total of how much each person produces. staff writer Chris Cillizza contributed to this report.

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