The $200 Campaign Finance Fix

By Fred Wertheimer
Thursday, November 13, 2008

The presidential public financing system, created in 1974 in the wake of the Watergate scandal, has served the country well for most of its existence. The system became outdated and outmoded, however, as Congress failed for more than three decades to modernize it. Today it is no longer viable.

Luckily, the pathway to the future, and to a revitalized public financing system, has been provided by President-elect Barack Obama. First, there is Obama's astonishing breakthrough in raising small contributions on the Internet. He has also recognized the need for a new presidential public financing system, stating in June that he was "firmly committed to reforming the system as president." His campaign reiterated this commitment on Oct. 31.

A recent USA Today-Gallup Poll found "wide support for public financing of presidential campaigns," noting that more than 70 percent of respondents supported public financing for presidential elections and that only one in five said the system should be eliminated.

While the number of people using the tax-form check-off to fund the public financing system has shrunk over the years, the check-off results are not a poll. They do not indicate whether citizens believe the country needs the presidential public financing system. The answer to that question lies in real polls such as the one cited above.

During his campaign, Obama raised more than $300 million in contributions of $200 or less through mid-October, according to the Campaign Finance Institute, with most of those donations coming in online. (This total includes multiple small contributions made by a donor that aggregated to more than $200.)

His remarkable success, however, was the exception in the presidential race; for other major candidates, bundlers and the larger contributions they raised were the rule.

Obama himself raised more than $200 million in contributions of $1,000 and more, with bundlers playing the principal role in soliciting these funds. Nevertheless, Obama's breakthrough in small-donor Internet fundraising provides the path to a future in which small donors become the main source of private contributions for presidential candidates.

Internet fundraising promotes democracy. It allows candidates to raise large amounts of small, broad-based contributions -- not those that are tied to influence-seeking -- at almost no expense and with little or no time required from the candidates. It increases citizen involvement in the political process.

We should build on this opening by implementing four measures to create a new public financing system that presidential candidates would again see as advantageous.

ยท Move the small donor to center stage for all candidates. Presidential primary candidates should receive a match of $4 in public funds for each dollar raised, up to a maximum of $200 per donor, with no matching funds provided for contributions from a single donor that aggregate to more than $200. This would create powerful incentives for donors to give and candidates to raise small donations online. A $200 contribution, matched 4 to 1, would become just as valuable as a $1,000 contribution, and the importance of bundlers would significantly diminish.

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