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.