Sounding the Death Knell for Public Financing, Or a New Era of Grass-roots Fund-Raising?

Sen. Barack Obama’s decision to forgo public financing for the 2008 general election appears to be steeped more in pragmatism than it is in putting an end to public financing — it’s about putting an end to this form of public financing. After all, the public financing system, installed in the shadow of Watergate, was open to loopholes enabling funding from so-called 527s, and this year limits the candidates to a paltry $84 million in public financing money following the parties’ respective conventions later this summer.

Instead, the Obama campaign has chosen to raise its own funds with no limits on the amount his campaign can spend. It’s almost a no-brainer for the candidate, who has turned out millions of new voters and donors, to the point where his own fund-raising, when compared to public financing, takes on the look of a high-powered lawyer next to a court-appointed public defender.

From his own Web site, Obama points to existing and forthcoming “smears and attacks” from the Republicans and 527 groups, “who will spend millions and millions of dollars from unlimited donations:

It’s not an easy decision, and especially because I support a robust system of public financing of elections. The public financing of presidential elections as it exists today is broken.”

Further, the senator basically points to a less formal public financing system created by a “grassroots movement of over 1.5 million Americans. We’ve won the Democratic nomination by relying on ordinary people coming together to achieve extraordinary things,” he said in his Web statement released Thursday.

Obama’s decision could spell the end to the public financing system, with some experts indicating that Sen. John McCain, the presumptive Republican nominee, will be the last candidate from a major political party to accept public financing. “Public financing has become a system of last resort, rather than the jewel of the campaign finance system,” Anthony J. Corrado Jr., a campaign finance expert and professor of government at Colby College, told The New York Times in a story published Friday. “Rather than being a source of funds, candidates accept public money kicking and screaming,” he added.

Obama has indicated in the past that he would stay within the system, as long as the McCain campaign followed suit, but the two campaigns, following what was a reportedly terse meeting between campaign attorneys, could not come to terms to arrive at an agreement to refuse fund-raising help from outside groups, discourage cheating from supporters, and to limit the RNC and DNC fund-raising roles.

As expected, McCain blasted the Obama campaign, telling PBS that this “election is about a lot of things, but it’s also about trust.” The Arizona senator went on to say that Obama’s decision should be “disturbing for a lot of Americans.”

Public Citizen, a nonpartisan consumer-advocacy group, was also critical of Obama’s “deeply disappointing” decision. But the organization’s statement went on to call him “a champion of ethics reforms and campaign finance reform, including public funding of elections,” while acknowledging that the “presidential public financing system falls woefully short in providing sufficient funds in the primary election,” despite the $84.1 million grant.

There was reportedly little debate within the Obama campaign to drop out of the public financing system. Look at John Kerry’s 2004 presidential bid: He was doing well on the fund-raising front, but entered the public financing system, and was outspent by the Republicans, and was neatly swift-boated with little ease. (By the way, remember “I’m Not Fonda Kerry”? It was a whole lot catchier than “No CARB Diet: No Cheney, No Ashcroft, No Rumsfeld, No Bush.” Even though we’ve lost the “A” and the “R”, two out of four’s still bad).

The obvious gain for the Obama campaign is that he can raise hundreds of millions of dollars, and invest monies raised from the primary to the general campaign, raising what will likely be far more than McCain’s $84.1 million.

Of course, Obama will still be limited to raising at most $2,300 per individual — primary contributors who maxed out at that amount can repeat their donations in the general. Obama’s campaign no doubt anticipated the fallout from this decision, and was prepared to be tagged as “going back on his word,” as McCain was so quick to do, like an actor being fed a line.

Obama has underlined the “broken system,” stocked with loopholes that don’t limit 527 groups to the $2,300 limit if an ad is worded correctly (read: “legally”), like Kerry’s ride on the swift boat.

Obama, who showed off his community-organizing chops in the primary election by working in caucus states to engage Democrats in even the most interior of the interior states, has also built a powerful grass-roots fund-raising machine from roughly 1.5 million donors, compared to McCain’s few hundred thousand individual donors.

While Obama has willingly created some debate fodder for McCain about “going back on his word” (even though the jury’s still out if that argument will stand), Obama asserts that his existing donors have “already changed the way campaigns are funded” by declaring “independence from a broken system,” running the “type of campaign that reflects the grassroots values that have already changed our politics” — what the folks at Public Citizen are calling for.

A Shelterforce ad seeking donations from readers. On the left there's a photo of a person wearing a red shirt that reads "Because the Rent Can't Wait."

Obama will be held to the fire by his base to continue calling for effective public finance reform. He will have no choice but to respond, and we should expect nothing less.

Matthew Brian Hersh served as senior editor at Shelterforce from March 2008 to October 2012. He studied English at Rutgers University and has spent his professional career in journalism, policy, and politics.

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