Next for CFR Backers: Fixing the Presidential Campaign System

Posted June 24, 2003 at 2:52pm

Campaign finance reform is back in the news, as the Supreme Court has put arguments for the Bipartisan Campaign Reform Act of 2002 on a fast track, and ruled in a related case on limits to nonprofits’ contributions to candidates in a way that provided encouragement to reform supporters. [IMGCAP(1)]

But another area of campaign finance is not much in the news: financing of presidential campaigns. It should be. The presidential campaign financing system, crafted a quarter-century ago, is broken. It is short of money and operating on antiquated principles that desperately need revamping. It would be easy for Congress to ignore the problem — and tempting especially for Republicans, who have a different presidential financing problem (where to put all the money that is streaming in). But ignoring it would be wrong.

The presidential funding system was put in place through the campaign reform act of 1974, and its framework of public monies in return for candidates’ voluntary acceptance of spending limits survived Supreme Court muster in the 1976 Buckley decision. That campaign reform was an effort to squeeze out the kind of money laundering that was a key part of Richard Nixon’s 1972 campaign (and a factor in the Watergate scandal) and the shameless pandering for campaign cash that gripped all the presidential candidates of both parties.

The system involves matching funds for contributions of $250 or less during the nomination phase of the campaign, once candidates pass a threshold of raising $5,000 in small contributions in each of 20 states. As a condition of receiving the matching funds, though, candidates must abide by spending limits for each of the states as they select their delegates and prepare for the convention, along with an overall limit. It also includes money for conventions, and a grant of public funds for the general election campaign, contingent on the candidates’ pledge not to spend any additional money over and above the public grant.

This system worked reasonably well for several elections after it was instituted. No more. The numbers haven’t been raised to take into account either inflation or higher campaign costs. Candidates are increasingly hamstrung by the dollars and the limits. And the system, funded by a “checkoff” on income tax returns that has dwindling numbers of Americans participating despite the fact that it actually costs them no additional taxes, is close to running out of money. It will probably have payment gaps in the primary system that will force hapless candidates to borrow money from banks in the short term while they wait for their matching grants. More and more, candidates will be tempted to bypass the system and remove all restraints; more and more, candidates who can bypass the system will have huge comparative advantages.

Last Wednesday, word emerged that former Vermont Gov. Howard Dean will spend $300,000 over the next few weeks on commercials in Iowa, trying to define himself and stake out his rhetorical and policy turf before the other Democratic candidates do so. It was a bold move, but one fraught with danger — because the presidential funding system puts spending caps on all the states. Money spent now will seriously crimp a candidate’s opportunity to spend money in the same state later, meaning Dean could find himself tapped out in such a crucial state before its caucuses, even though he has enough money to compete in the process.

The other Democratic candidates are not now pouring large sums into Iowa, so they will not have that problem. But they all share a related and bigger headache: If the primary and caucus process beginning in Iowa next January drags on into March or April, all the candidates will find themselves tapped out and facing the broader spending cap — maybe leaving the eventual nominee penniless and thus speechless for months until the nominating convention.

Also last Wednesday, I had my own headache — getting my car out of my parking lot at 7 p.m., through the gridlock caused by a limo backup at the major Bush fundraiser at a nearby downtown hotel. President Bush is the most active fundraiser in history, vastly outdistancing Bill Clinton in the time he is spending on fundraising and the success he is having bringing in the bucks. Those are hard-money bucks, which most experts now estimate can reach $200 million or more for the Bush campaign in the current election cycle, at least double what he raised in 2000 and perhaps quadruple what his opponent may have.

With no likely primary opponent, Bush could easily spend $50 million next spring and summer, using a blitzkrieg of commercials to define the campaign and his opponent before it starts and he or she can catch a breath. The money advantage conceivably could be even greater in the fall.

No one should begrudge the president’s fundraising skills and popularity as an incumbent. He is raising the money in $2,000 increments, through the system, and that is fine. But the skew in the system, including especially the ineffectuality of the public funding mechanism and the likelihood of months with only one voice speaking and one hand clapping, is not fine. Any way you look at it, this is not healthy for the presidential selection system.

Fortunately, some sensible ideas are in the policy stream. Doubly fortunately, they are coming from a bipartisan direction. Stunningly, given recent history, that direction is from the Federal Election Commission, via two thoughtful commissioners spanning the spectrum, Republican Michael Toner and Democrat Scott Thomas. They make it clear that reform of the presidential financing system should not be a partisan issue, regardless of one’s partisan preferences.

Toner and Thomas suggest increasing the primary spending ceiling enough to ensure that candidates can mount effective campaigns through the party conventions, while eliminating the outdated state-by-state spending limits. They suggest doubling the matching amount from $250 to $500, paralleling the increase in individual contribution limits in Bipartisan Campaign Reform Act from $1,000 to $2,000. They also suggest simultaneously increasing the threshold to qualify for matching funds to make sure the public funds are accessible to broad-based and serious candidates of any party. And they propose fully funding the presidential program — for 2004 and beyond — through a series of sensible accounting and financing changes.

When it comes to elections, and when it comes to the FEC, partisan gridlock is the norm. The agency, with its current sharply ideological leadership, has lost credibility from an already-low base. This bipartisan effort by Toner and Thomas is a great chance to enhance the commission. But even more so, it is a chance for Congress to take an important step to restore confidence in the election system.

I hope Sens. Mitch McConnell (R-Ky.), Trent Lott (R-Miss.), John McCain (R-Ariz.), Chris Dodd (D-Conn.) and their House counterparts, along with the four top Congressional leaders, will take the initiative on this issue, well before the Iowa caucuses.