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You're running for the presidential nomination and your fundraising effort is
going pretty well. At the same time, you've got eight competing Democratic candidates
crisscrossing the key primary states making the case for themselves and against
you. The problem is that if you stay in the current public campaign finance system,
you can only spend $45 million until the nominating convention in July -- no matter
how much money you raise. And clearly you're going to have to spit the wad by
March, by which time the Democratic nominee will have been determined, leaving
you with nothing in the bank for the five months until your check for the general
election will finally come in.
Meanwhile, President Bush, who will not participate in the public campaign
finance system, is flying all over the country holding huge fundraisers, drawing
in millions of dollars. In 2000, he raised over $100 million for his presidential
run by opting out of the public campaign finance system. He's probably going
to raise double that amount for 2004 - and he doesn't have a bunch of primary
opponents sniping at him. He can spend all those millions throughout the spring
and summer making his case, and defining you, the Democratic nominee -- and
you will have no money and no way to respond. No way to pay staff, no way to
book flights and hotels, and certainly no way to get on television. Then he,
too, will get his taxpayer funded check for the general election campaign after
the Republican National Convention.
This was the scenario facing Democratic candidates Howard Dean and John Kerry.
So who can blame them from taking a page from the president's playbook and getting
out of the public campaign finance system too? It has slowly become clear that
the public campaign finance system, at least as far as the primaries are concerned,
is both going broke and is broken. Under the current rules, candidates can get
federal matching funds on the first $250 of every donation but only if they
agree to an overall spending limit of $45 million. This means a Democratic candidate
remaining in the program will have 20-25 percent of the campaign funds the President
has available to spend up to the conventions.
How to fix this problem? New York City, of all places, has been somewhat of
a testing ground in this area over the past several years, and can provide some
guidance. In New York, candidates for mayor get matching funds for contributions
up to $250 on a 4-to-1 basis - in other words, if the candidate receives a $250
contribution, he or she will get $1,000 from the city. In order to get that
money, however, the candidate agrees to a $4,500 per contributor limit and a
$5,231,000 overall spending limit. When a candidate opts out of the system,
the opposing candidate is freed from the spending limit entirely and his or
her match is raised to a 5-to1 basis.
Although this system was sorely tested when confronted with Mayor Bloomberg's
personal billions, the general consensus after the election was that the city's
campaign finance system allowed his opponent Mark Green to remain competitive
in a way he would not have been otherwise. However, the system still allowed
a wealthy candidate to have too much of an advantage.
The lesson of New York, therefore, is this: to fix the federal campaign finance
system for the primaries, 1) When a candidate has an opponent who opts out of
the system, he or she should be freed of any spending limit at all; 2) Raise
the matching fund ratio, but raise it to a level where it will really make a
difference.
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