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Senator Obama and the Decision to Opt Out of Public Financing

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Today's NY Times editorializes that Senator Obama, should he be the Democratic nominee, should opt into the public financing system in the general election:
    Earlier in the campaign, Mr. Obama vowed to accept the tighter alternative of public subsidy and its spending limitations -- a not-so-shabby $85 million for the general election -- providing the Republican nominee does the same. Mr. McCain seems ready to do that, and we hope he does. Should Mr. Obama renege, he would become the first presidential candidate to reject the general-election limits.

    Should he honor the pledge, Obama campaigners fear being overpowered in a parallel money assault waged by way of the Republican Party's deep coffers in battleground states and well-financed shadow-party attack groups.

    Facing such a dilemma is the stuff of political leadership. As a candidate running against money-driven Washington, Mr. Obama should follow his initial instinct to defend the public alternative. Otherwise, the 2012 campaign will become an even less inhibited chase after special-interest donors. Even with the Obama Web boom, a good half of all primary money -- some $366 million -- still comes from individuals giving $1,000 or more.

    It seems to me that this editorial makes a number of points, none of which likely will (or should) compel Senator Obama to take public financing in the general election:

    1.The Pledge. I've argued in detail in this Findlaw piece that it is fair to characterize both Sens. McCain and Obama as having gone back on forth on opting into public financing as their political fortunes changed. I conclude that neither candidate can be faulted for changing his mind. The public financing system is broken, and even candidates with an ideological commitment to public financing generally will have problems with the current campaign financing system.

    Let's put this in perspective with some numbers. In the 2004 primary season, President Bush raised over $258 million for the primary, and Sen. Kerry raised $241 million. If they would have opted in during the primary season, they both would have faced a $50.4 million cap on their spending. It would have been political suicide for Kerry to have opted in, even if he believed in public financing, in the face of President Bush's decision to opt out.

    That lesson was learned by all the serious candidates in 2008. The only candidates who opted in were candidates who had weak fundraising potential. So far, according to the latest Campaign Finance Institute report (all the rest of my figures in this post are from that report), Sen. Obama has raised $263 million so far in the primary period (and will no doubt set a record for the amount of financing raised in this period). Senator Clinton has raised $198 million so far (though she has $19 million + in debt), and Sen. McCain has raised $97 million so far. Again, even a candidate committed to revitalizing the public financing system would be committing suicide to have opted in in the 2008 primary season.

    2. $85 million is shabby The Times writes that this amount is "not so shabby," which explains why Senator McCain is opting in. I think that's wrong. I think Senator McCain is opting in because he figured (1) he is likely not to be able to raise as much as Sen. Obama if they both opt out, and by opting in he can try to embarrass Sen. Obama into opting in; and (2) opting in is not a big deal for Sen. McCain, because he is likely to raise a ton of money with the RNC, which is subject to more generous contribution limits. So he's not planning on running his campaign on just $85 million. To speak of the decision to opt in today as a decision to decline private financing fails to recognize the reality of the situation.

    3. The Obama "web boom" is a big deal The Times focuses on the fact that half the primary money overall has come from donations "above $1,000." Of course, thanks to McCain-Feingold, these donations are capped at $2,300. Let's look what has happened with small donations so far this year. Overall, in 2004 donations of $200 or less (what I've termed "micro-donors") made up 28% of the total of donations raised by all candidates in the primary system.

    This primary season so far, these micro-donors have made up 35% of the total donations. (On the Democratic side, it has been 40%, on the Republican side, 27%). Sen. Obama alone, however, has raised nearly half of his donations (47%) from small donors giving under $200, and about one-third in donations from $1,000 to the $2300 maximum. This is a big deal. I think it is a misnomer to call it "partial public financing but I think it is fair to say that this "web boom" of small donations gives egalitarians something to cheer. If there is going to be a revitalization of public financing in the future, it likely will build on this kind of micro-donor enthusiasm through generous matching funds which would give candidates who have greater private support some greater public support. (That's much like the voucher plan I've long championed.)

    In sum, I don't think either candidate at this point should be castigated for opting out of the public financing program or praised for opting into the broken system that is easily circumvented through party donations. Instead, those committed to a working public financing system should praise the candidate or candidates who pledges to fix the system when he or she gets into office with a plan that harnesses the power of the micro-donors.

    Cross-posted on The Election Law Blog.