Obama, Money, and a Campaign Finance Proposal

Just to calm your tempers a bit, let me state from the start that my intention here is neither to endorse nor criticize Barack Obama's decision to opt out of public campaign financing. So relax. What I want to do instead is raise a couple of points about the role of money in the Obama campaign, their implications for the future, and then propose a different sort of campaign finance reform that would be more in tune with the reality of American politics in the world of Web 2.0.

The first thing to note, as I have done before, is that though progressives have excitedly focused on the fact that just under 50% of Obama's money has come from small donations, the flip side of the coin, obviously, is that the majority of his money is coming from large donations. Here are the numbers from the Federal Election Commission, in millions:

$200 and Under $122

$200.01 - $499 $25
$500 - $999 $22
$1000 - $1999 $34
$2000 and Over $64

That makes for $122 million in small donations, and $145 in big money. For Hillary Clinton the numbers are $59 million in small donations and $134 in big money.

In other words, while the perception is that the Clinton campaign was funded by a bunch of fat cats while the Obama campaign was funded by the little guy, in fact, the Obama campaign raised $23 million more fat cat dollars than did Clinton.

It is true that Obama is raising more money via the Internet in small donations than any candidate in history. Hooray! But it is just as true that he is raising more money from fat cat donations than any candidate in history.

What are the implications for this? Progressives across the blogosphere argue that Obama will not be beholden to big money like previous candidates because of his huge base of small donors, 1.5 million of them as of now. I wonder if this is true. Just think through the basics: if on one side you have over a million people giving you little donations that make up 45% of your budget, and on the other side you have a handful of people giving you big donations that make up 55% of your budget, whose telephone calls are you going to take?

(If your answer was the little guys, you might want to read up on today's news that Obama is supporting giving giant telecom corporations legal immunity when they spy on Americans and get back to us.)

Now let's shift gears for a minute and consider what all this money is accomplishing? Obama outspent Clinton more than 2 to1 in Pennsylvania and lost by 10 points. Similar numbers were put up for several other late primaries in which Obama outspent Clinton by a significant margin but was trounced nonetheless. On the Republican side, McCain emerged as the nominee despite serious early problems with fundraising.

The point I am trying to make here is that in the age of YouTube, it is far from clear what expensive ad buys accomplish. Now this is a good thing -- a clear-cut, undiluted, in-your-face, no-way-around-it good thing. While the amount of cash politicians raise continues to spiral into the stratosphere, the amount of money required to run an effective campaign might actually be falling. This paradoxical notion is also supported by several key House and Senate races in 2006, where long-shot Democratic candidates were far outspent by their Republican rivals yet won anyway, in large part through creative use of the Internet.

All of which leads me to my proposal: let's scrap public funding of presidential campaigns, and instead limit all contributions to $100. Or to put it another way, the next time around let's take that fat cat portion of campaign contributions and just lop it off.

There will still be plenty of money left. The amount of money that candidates raise from small donations is only going to go up as social networking on the Web integrates further into our culture, while the cost to a candidate of reaching the public with his or her message will go down. We don't need matching money from tax payers any longer. Skip it.

Heck, let's drop the maximum contribution to $50. There would still be plenty of money to run an effective campaign in the age of YouTube, MeetUp, MySpace, text messages, and so on. As Jay Mandle points out in today's Washington Post, a 2005 study of $100 contributions to state campaigns found that more than half of donors earned between $75,000 and $250,000 a year. The median U.S. income that year was $46,000.

So why not? Cap donations at $50, forget about public financing, and get politicians out of their big ticket parties and into the community. Instead of using new information technologies to tack on yet another layer to a fundamentally flawed system, let's change the system to make the best use of the technology.

Comments

[RoloTomassi]

Ostertag's numbers may be accurate, but is logic concerning the threshold of what constitutes large contributions from fat cats is laughable.

There's no story here; this yet another attempt at making an issue out of nothing.

[Zogtastic]

Wow... apparently 1 penny can mean the difference between being a fat cat or not.

I stopped reading at that point. Logic like that doesn't deserve attention.

[batchick]

$50 a month for the past six months makes me a fat cat??? That's less than my cable bill . . . does that make my cable company beholden to me, too???

[JimR]

I support Obama, but let's be real here... like any other politician, he has ties to certain special interests.

http://www.msnbc.msn.com/id/25324195/

[BLinCincinnati]

Ties? Of course there are "ties", the issue is the nature of the "ties".

From the article you reference:

"Ethanol industry executives and advocates have not made large donations to either candidate for president, an examination of campaign contribution records shows."

So lets not be insinuating anything here....

[SamiNJ]

I had no idea I was a fatcat! I am so proud... and here I thought I was the "little gal" just trying to do what I can to make a difference. I had absolutely no idea that I have influence over my candidate because my contributions added up since December to over ... wait a second.... the $200 mark? that's your guide? are you out of your mind!? Over $200.00 makes you a fatcat? Did I misread the article? I gotta go back and check that out. Ridiculous.

[BLinCincinnati]

Lets look at some real numbers, not your rediculous math on what is a "big donor" or not.

Contributions to Obama by Through 05/31/2008

$200 and Under: $135,684,173 (46.6%)
$200.01 - $499: $28,095,714 (9.6%)
$500 - $999: $24,202,573 (8.3%)
$1000 - $1999: $36,539,292 (12.5%)
$2000 and Over: $66,841,762 (22.9%)

Contributions to McCain Through 05/31/2008

$200 and Under: $32,332,812 (29.3%)
$200.01 - $499: $5,311,440 (4.8%)
$500 - $999: $9,367,921 (8.5%)
$1000 - $1999: $18,233,489 (16.5%)
$2000 and Over: $45,239,157 (40.9%)

"But it is just as true that [Obama] is raising more money from fat cat donations than any candidate in history."

Wrong. The only reason John McCain isn't raising "more" in fat cat donations is he's simply not raising as much overall. Trying to compare in total dollars is rediculous. Compare the percentages if you want to be fair, but despite your claim at the very beginning that was never your intention.

Donors giving $1000 or more:
35.4% of Obama's
57.4% of John McCain's

Now... who is the one that is really being funded by fat cats? That would be John McCain.

Donors giving $499 or less:
56.2% of Obama's
34.1% of McCain's

Oh.. .and Clinton?

52.6% of Clinton's donations came from people giving $1000 or more.

So please... drop this rediculous notion that Obama is being funded largely by "fat cats" more than any other candidate.

[uvymopkq]

Change you can beleive? Looks like more of the same!

[CJGibson]

I don't think you can count everything over $200 as a "Large donation."

The FEC tracks donations by individual. This means that a working housewife who's donating $50 dollars a month to Obama is in your "Large Donors" category as soon as she's donated for more than four months.

There's a lot of people who have been making small, *regular* donations to Obama's campaign. They are not Fat Cats or "Large Donors."

My father, who has rarely made a political donation at all, has been contributing 100 a month to Obama's campaign for going on six months now. This puts him in your "$500-$999" category, but he's just a middle-class business man who's decided he can spare some money on a monthly basis to see some change in our government.

[LA2000]

This is a lovely notion on the surface, but how is a candidate to raise enough money to shout down a 527 "Swift Boat" style defamation campaign that has unlimited resources and isn't capped by the $50 donation?

[vernonbc]

"(If your answer was the little guys, you might want to read up on today's news that Obama is supporting giving giant telecom corporations legal immunity when they spy on Americans and get back to us.)"

Not only is your whole thesis on the donations Obama received ridiculous, this statement also isn't true. Obama is NOT supporting immunity. The HOUSE passed a bill. Obama is a senator and votes in the SENATE, and he has publicly said he's unhappy about the immunity in the House bill and will try to have it taken out of the Senate bill. Please. If you're going to rant, please do a little research and try and get your facts straight.

[Countdown09]

Fat cat my ass. I'm truly sick of the media and republicans thinking we're all fools. Sen. Obama's cash has come for working people, who I add just might happen to have $2,300 to donate -- $2,300 is a long way away from being a fat cat!!

[Countdown09]

Frankly I wouldn't care if he was stealing money, that's how desperate I am to see the end of republican rule over this country.

[rzan]

I work as a typist. I guess I'm a fat cat. By the way, fat cats are Americans too.

[Halsey]

rzan...good one!...If someone gave $50...a year ago...$50..six months ago...then­..$101...y­esterday..­THEY are fat cats...hell..that's a month of gasoline IF you don't drive an SUV..

Bob (author)..you wrote:
"Now let's shift gears for a minute and consider what all this money is accomplishing? Obama outspent Clinton more than 2 to1 in Pennsylvania and lost by 10 points. Similar numbers were put up for several other late primaries in which Obama outspent Clinton by a significant margin but was trounced nonetheless. On the Republican side, McCain emerged as the nominee despite serious early problems with fundraising
"

Umm..McCain was running against huckabee, some buy from colorado, ron paul and a stiff Romney (who will be his VEEP)... so...duh? your comparison was silly...

and yes..HRC won PA inspite of less spending...your point? no one expected Obama to take every state...regardless of money spent.

I agree with the $50 a person...no bundling..NO corporates...NO Unions (like the teamsters!..may as well be the pharma).... nice and simple $50 max a person.... now...click your heels together three times...

[sf94127]

His insistence that he is not beholden to special interests is the biggest lie of the campaign.

[Roses]

My mother will be so pleased that she has raised a "fat cat". And to think I did it all on a therapists' salary. Or do I speak for big Pharma?
Get real.

Obama/? '08