The Moral High Ground On Federal Financing

Barack Obama is likely to opt out of the federal public financing system for the general election and instead embrace a variant of Joe Trippi's general election funding idea: tap your massive donor base and cap contributions. Once the decision is formally handed down, the McCain campaign is likely to protest massively. Obama, they will say, simply broke his word for the sake of political convenience. But the reality is that John McCain, by spending money right now on the general election -- polling Obama exclusively, running ads in swing states, opening offices in states, sending staff to states -- is spending money raised for the primary period. Had McCain opted to take public financing for the primaries, he would have blown past the caps months ago. Did Obama break a promise? Yes. Does McCain have grounding to criticize him for it? It's not so clear.

Rick Hasen makes the following points:

$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.)

What do you think?

Comments

It's a relatively esoteric process issue that the public won't care about, and I fully expect Salter and Co. to wildly overplay their hand. I can picture the next 1,000 page incoherent, foaming-at-the-mouth rant from him right now.

Posted by Bill | May 28, 2008 10:18 AM

I don't think the moral high ground matters here. The only question worth asking is who has the political advantage, and it's basically a wash.

When are you going to post about Gramm and UBS??? That's a much bigger political issue for McCai at the moment.

Posted by Jake | May 28, 2008 10:22 AM

The public financing system is broken. Professor Hasen is a reformer -- often with opinions anathema to campaign finance practitioners -- but he's hit the nail on the head with his comments here.

If Obama can raise $150,000,000 from donors under the $2,300 cap, how is that NOT public financing? Why should he tie one hand behind his back (as Trippi advises) just to take the "moral high ground"?

McCain wants to push this sham public financing argument because he knows he has little hope of small-donor fundraising, as he has a small pool of donors capable of giving big money way beyond the $2,300 FECA caps. So, McCain wants to funnel his big donors' money into the RNC, while at the same time holding Obama to the artificially low public money caps. He's talking out of both sides of his mouth.

The McCain of 2000 would've railed against such a devious scheme, calling it "funny money." It just shows how much he's changed.

Posted by election lawyer | May 28, 2008 10:29 AM

I completely agree with you. I surprised no one is questioning the hypocrisy of John McCain, the person who brought in McCain-Feingold for campaign reform. What about the $30,000 a plate dinners that he is attending nearly daily is campaign reform? Every dollar that he is raising for RNC will be spent on the GE, so what about those donation limits? And lest we forget, he opted in for public financing for the primary, used those funds as a collateral for obtaining a loan, used up that loan and then opted out of public financing for the primary. All this while the FEC didn't have enough members to censure him. The one FEC guy who did, got removed. John McCain, the paragon of campaign reform indeed.

Posted by Abhinav | May 28, 2008 10:39 AM

If Obama caps his contributions at a low enough amount, say $250 and puts his faith in the American people responding and millions contributing to his campaign -- his campaign will be by definition funded by the American public -- if he does this it will be THE great step forward to real reform -- the American people changing the system for themselves and diminishing the power of special interest money on our politics.

Joe Trippi

Posted by Joe Trippi | May 28, 2008 10:41 AM

A pox on both their houses! But Obama is slightly more holier-than-thou, plus he outright lied. This bs about "my large donor base is the same thing as public financing" makes me gag, as-if there aren't "unofficial bundlers" out there. More importantly, the point of public financing is to erase all doubt of favortism AND level the playing field: if Obama protested the latter point (he needs the money to fight the indie groups) he'd be more believable.

That said, once he said he was going to interfere with the Justice Department's monitoring of the Teamsters, I gave up on him being a "new type of politician."

Posted by Rusty | May 28, 2008 10:43 AM

I'm opposed to campaign contributions limitations, period (although I do think strict disclosure requirements are a must), so I naturally think Obama should raise and spend as much money as it takes to keep John McCain as far as possible from the nuclear button.

Posted by Jasper | May 28, 2008 10:54 AM

Obama made a promise to take public financing in the general if his opponent did. McCain made no such promise about his financing in the primary. McCain is not breaking his word, Obama is.

The question is not "can Obama legally take back his word". Of course he can. The question is: if Obama is willing to so flippantly take back his word, after proudly claiming that public financing for elections is an issue of great importance to him, what message does that send about him?

The message, of course, is that Obama is like any other politician. When he says something is important to him, he is likely lying. When he says he will do something, he will keep his word only so long as it is useful for him to do so.

Running as an agent of change is hard when you keep to the orthodox route. Has anything, so far, has been unorthodox about Obama?

-Ben

Posted by Ben | May 28, 2008 10:55 AM

I fail to see how small donations from the american public is any different than public financing. Check off a box on my tax returns or check off a box on the candidate's website, same thing.

Posted by GG | May 28, 2008 11:12 AM

Who cares.. What matters is keep John McCain from the white house. That man is a psyco and people in the republican party and DC know it.

Posted by Ann | May 28, 2008 11:31 AM

Who cares.. What matters is keep John McCain from the white house. That man is a psyco and people in the republican party and DC know it.

Posted by Ann | May 28, 2008 11:31 AM

I respect John McCain for his military service, and I think he's a decent guy compared to many of GOP friends, although, sadly, that's not saying much (e.g., McCain sort of opposed torture, but since when was that even something one would even consider supporting?).

That said, I'm disappointed to see McCain continue a signature tradition of the Bush administration--that, is, "When I do something shady, it's OK because my motives are so pure." The most disturbing examples of this concern McCain's "no lobbyist left behind campaign"--starting with his top advisor Charlie Black who was a lobbyist for the Burmese junta and several dictators throughout the world. (Black explained that what he did was okay because the US government didn't tell him to stop.)

Now we learn that not only did McCain have Phil Gramm advising him while still a registered lobbying for UBS, one of the big players in the subprime scam, but that McCain then went on to give his "tough luck for homeowners but it's good to bail out banks" speech in April.

For McCain to nitpick about Obama's "promises" while tihs stuff is going on is totally hypocritical and a distraction (which I think is the intent).

What's really needed is a sense of proportion. It reminds me of the coverage of the 2000 campaign. The press was obsessing about some small exagerrations Al Gore made while campaigning while completely ignoring George Bush's history of running businesses into the ground and then leaving shareholders with the bill (which he of course has now done with the whole country).

Don't expect Obama to keep his "promise" when McCain has used every trick in the book to get around the campaign finance laws he himself wrote, and will clearly continue to do so. McCain took out a loan from a bank in the primary, but cleverly left the window for the general open, knowing that if he lost the primaries the taxpayers would pick up the tab but if he won the primaries he would be free to raise money. That is clearly unethical and possibly illegal. Unfortunately, the FEC hasn't been able to investigate the matter because Bush's nominee, a professional vote suppressor, was hung up in committee.

Posted by DM | May 28, 2008 11:36 AM

I was unaware of Obamas comments to stick to public funds if his opponent did.

If he said something so basic and straight forward as that and went back on it, then his word is useless.

Surely he was aware that other groups (RNC, DNC, 521s etc) would also be spending money in addition to his public funds. If he didn't think that through when he made his promise he's not very bright. And I think he is actually pretty smart, so he must have realized it.

These are extenuating circumstances, there's nothing major that's changed. He was just positioning himself to take the moral high ground before and now that he's being called on it, he's repositioning himself as being in the new moral high ground by pointing out some justification about the other side.

I can't believe he would really do this, because it's a quick one-liner for McCain in future debates. Why should be believe you now when you wouldn't even keep your word for something as simple as public financing?

Posted by sam | May 28, 2008 11:46 AM

"These are extenuating circumstances"

should read

"There are no extenuating circumstances."

Posted by sam | May 28, 2008 11:50 AM

Yes, Obama's going back on what he said before, if he doesn't take public financing. But he's got something even better than public financing going - millions of individual Americans deciding to send small amounts of money. The reason they had the contributions caps in the first place is to prevent a handful of billionaires and CEOs stealing the election from the people at large. But this time the people at large actually showed up and contributed. He's achieved the goal of public financing (democratizing the election process) through different means.

Posted by Tel | May 28, 2008 11:52 AM

Sam,

Help me understand. You're saying that Obama should not have given his word because he should have known that his then unnamed GOP opponent would break his word?

It seems to me that if I give my word to someone but they break their word, I am no longer obligated.

See the posts above. McCain has used and is using every trick in the book to get around the campaign finance laws he himself wrote. His campaign is full of the lobbyists he professes to despise, including Phil Gramm of UBS. One would hope McCain would be more straight than that, but he hasn't shown himself to be (except possibly in his own mind).

The time of applying different sets of moral standards to different candidates should be long gone. If you're a republican, stop being a hypocrite. If you're a democrat, stop being a coward.

Posted by DM | May 28, 2008 12:13 PM

Psst, DM, that lobbyist talking point is a bit out of date.

In case you missed it: Obama takes money from state and local lobbyists, he takes money from lobbyist employers, he takes money from lobbyist employees, he takes advice from lobbyists, he takes money from lobbyist family members, and he takes money, advice and employs past and future lobbyists. Obama's anti-lobbyists rhetoric is hollow and meaningless.

Moving on to the broader point, McCain never made a public promise. Obama did. Obama broke his word to the American people. McCain did not. You cannot spin this away. It is a big deal and shows Obama for who he is.

-Ben

Posted by Ben | May 28, 2008 12:32 PM

Anyone notice the lack of references to what Obama actually promised? For those saying he broke his word, you need to provide full quotes in context.

Posted by bjd | May 28, 2008 12:36 PM

McCain himself has played fast and loose with public financing over the last year helped by chaos with the FEC commisioners. Regardless, Obama is in this fight to win not to help McCain win.

McCain is showing himself to be a pathetic whiner. No wonder he is against "appeasement." Imagine him whining to the Iranian President - "you promised me we could have bacon and eggs for breakfast since we had khoresht for dinner."

Posted by ndm | May 28, 2008 12:57 PM

Public financing hasn't worked ever. The 527s should be reigned in so we don't have such pollution of the airwaves.

The Republicans are correct to be frightened of Obama's small-dollar, large number, donor base. We are trying to take the country back.

Posted by Beth in VA | May 28, 2008 12:57 PM

Ben,
You WANT "that lobbyist talking point" to go away. Unfortunatley for McCain (and apparently for you) it won't go away.

Phil Gramm, McCain's top ecomonimc advisor, was a registered lobbyist for UBS, one of the main players in the subprime fiasco. I see a slight problem with this, given that Gramm's advice would have a direct bearing on McCain's policy proposals. It is interesting the double standard McCain proposed--bail out banks but homeowners are on their own. Similar to the double standard he has applied to his campaign--lobbyists are bad but not my lobbyists. Trying to get around campaign finance laws that I wrote is bad, but not when I do it.

Posted by DM | May 28, 2008 1:04 PM

I can only think of instances where a lack of resources has cost votes in an election. It's extremely rare where bountiful resources has cost a candidate votes.

The upside to opting out is to have a wave of resources McCain can't match or deploy as freely as Obama can inhouse.

The Downside is mitigated by the source of these funds - His voters not Lobbiests.

Obama has no obligation to abide by the former pledge and will lose not a single vote by breaking it. He could however be out gunned should he chose to hem himself in.

You won't find a democrat alive who wouldn't want unlimited resources in a general.

Posted by Steven R | May 28, 2008 1:36 PM

Marc,

you forget that McCain already opted for public financing for the primary. He used a guarantee of opting into the public financing system to secure a large bank loan. In essence, telling the bank: "If I lose in New Hampshire I will opt into public financing so I can repay the loan, if I win, however, I will generate enough private funding so I will be able to repay the loan". Completely breaking, at a minimum, the spirit of his own law.

He, more or less, promised the bank that he would deceive the American public if he lost the New Hampshire primary. that's some Straigh-talkin Mavericky goodness. And you are going to let him get away with accusing Obama of breaking his word, when Obama's promise was to "discuss" a public financing system with his opponent.

Posted by jjmckim | May 28, 2008 1:38 PM

I think opting for public finace helps McCain focus his limited resources on a message oriented and upbeat campain plus he gets the benefit of pointing out Obama's hypocrasy and his own fidelity to principle. The McCain people no doubt are also aware not only of the RNC's ability to raise money but probably more comfortable with it doing the dirty work with the "issue ads" while they stay about that kind of politics. Feeding press perceptions of McCain the maverick and principled candidate is important to them as is Obama's image of the change agent. Trying to dicredit the others image will be a big part of the campaing message and spin for both campaigns.

Posted by Vlad | May 28, 2008 1:43 PM

Ben - You are entitled to your opinion, but not your own facts. Sen. Obama did not agree to opt into public financing simply if his GOP counterpart did. He agreed to SIT DOWN with his opponent to discuss the option and how they both could keep 527s and other outside groups out of the race should they both opt in.

Being that John McCain has already broken his pledge to public financing in the primary, being that John McCain has already broken his pledge not to tap into his 2nd wife's vast personal wealth, being that John McCain has already broken the spirit of his campaign finance law by hosting $85,000 a plate fundraisers for "the RNC", and being that John McCain has already been proven impotent in getting his own state parties to drop tasteless ads, I think Sen. Obama would be wise to pass and continue his ground breaking, record shattering, grassroots fundraising.

Democrats aren't bringing a knife to the gunfight this year. The Republican brand is imploding, Tom Delay's and Denny Hastert's seats flipped to blue, deep red districts in Mississippi and Louisiana turned blue (in spite of massive GOP spending for around the clock, Jeremiah Wright-laden attack ads)... all because of the policies and politics of President Bush, no longer seen as teh Great Action Hero President, but mired in Nixon esque approval numbers. And, behind closed doors, Senator John McCain has shown his true colors and has chosen to embrace those failed policies and politics.

As Jeff Spicoli stated so succinctly, Aloha Mr. Hand.

Posted by Other Ben | May 28, 2008 1:44 PM

Like most Obama supporters, I say that his system of web "micro-donors" obviously constitutes a form of public financing. But I'm honest enough to know that if McCain attempted this, I'd be dead set against it. Only thing that saves my soul is that McCain, in his current incarnation, couldn't possibly raise enough from small donors to even attempt a similar act.

Posted by jdobson | May 28, 2008 4:28 PM

For those concerned about Obama not taking public financing--e.g. Ben--you're equally concerned about McCain violating spending limits in the primary, right? The fact that he may already be breaking the law?

Posted by Greg | May 28, 2008 8:18 PM

Not only should Obama opt out of public financing he should do so with no caps or compromises.

McCain has violated Federal election law in multiple ways...not only spending primary money on the general, but opting in originally to secure that bank loan, and then backing out.

McCain deserves no consideration, just exposure for his hypocrisy.

He deserves to go down the tubes for selling his soul out to get the nomination. Right now he is the puppet of the multiple lobbyists and special interests who control his campaign. Whether he realizes it or not, they are just using him.

Posted by cm | May 28, 2008 10:52 PM

With his Houdini loan, McCain broke the public financing word from the very beginning. So, Obama has no obligation to Public Financing.

He had 1.5 MILLION DONORS on May 6h...

That IS Public Financing.

Posted by rikyrah | May 29, 2008 1:46 AM

Obama's online donations from millions of small donors could be a seismic shift in American politics – one towards a more democratic system and is a serious threat to big money politics. The fact of the matter is: these online donations may very well succeed where years of public financing law machinations have failed, after all, the whole point of public financing is to get rid of the disproportionate political influence of wealthy donors and millions of $20, $50, and $100 donations will do just that. The Republicans should be worried, Obama's online fund raising success shows that a whole lot of ordinary people care enough to part with their hard earned cash – a lot more serious show of support than simply telling a pollster who you're going to vote for. These are people that are more likely to get their butts off the couch and into a polling booth come November.

Posted by Chris | May 29, 2008 2:06 AM

Oh and by the way, I just put my $100 in the Obama kitty.

Chris.

Posted by Chris | May 29, 2008 2:18 AM