What Happens to Public Financing, When Obama Thrived Without It?

By Michael Luo

As Senator Barack Obama spends the last of hundreds of millions of dollars donated to his presidential campaign, the debate over how future campaigns will be financed is set to begin in earnest.

The outcome promises to have a profound impact on future presidential runs, either upping the fund-raising ante irrevocably or forcing sweeping changes to prevent such large amounts of cash from coursing through campaigns again. But just as it has in this election cycle, it is quite likely that politics, as much as principle, will shape the jockeying.

Democrats, in particular, who have traditionally supported limits on campaign spending, are grappling with whether they can embrace Mr. Obama's example without being seen as hypocritical. They are keenly aware that they have developed through the Internet a commanding fund-raising advantage over Republicans, much like the direct mail money machine that conservatives used to lord over them.

"I think there is going to be tremendous reluctance on our side to yield any of that advantage," said Tad Devine, a senior strategist for Senator John Kerry's presidential campaign in 2004.

Bob Kerrey, a Democratic former senator from Nebraska who serves as an honorary chairman of a group that fights for public financing of federal races, wrote an opinion article in The New York Post last week in which he confessed to newfound ambivalence on the issue in light of Mr. Obama's success among small donors and the energy he had seen in the election this year.

Mr. Kerrey said in an interview that part of his change of heart might indeed be because the existing system was benefiting Democrats, and he said he believed that many others in his party were wrestling with the issue anew because of the changed calculus. But he added that Mr. Obama's army of small donors had altered the terms of the debate, causing him to believe that he had been wrong about the need for such limitations.

"I think the reformers' arguments have been substantially undercut by the facts on the ground," Mr. Kerrey said.

Both candidates have campaigned as reformers and declared that repairing the public financing system for presidential campaigns would be a priority in their administration. But Mr. Obama, the Democratic nominee for president, apparently did not absorb much by way of political cost when he broke a pledge to accept public financing if his opponent did as well.

Mr. Obama built a huge financial advantage over the Republican nominee, Senator John McCain, which may have written the epitaph for the current system.

A recent USA Today-Gallup poll found most Americans did not even know who was taking public financing and who was not; only Mr. McCain opted for the $84 million in public financing. But the survey also found most of those polled supported limits on campaign spending.

House and Senate leadership aides said it was highly unlikely that the issue would earn much attention next year, given other priorities like the economy and the war in Iraq. There is also the matter of the brewing debate among Democrats, who will probably control Congress, over whether such limits are even warranted.

"Democrats may decide this is working pretty well," said Representative David E. Price, Democrat of North Carolina, who last year was the lead sponsor of a measure in the House to update the presidential public financing system. "I don't really know what might materialize in the way of views on our side."

Campaign finance reform has been a signature cause for Mr. McCain, though he declined in recent years to sponsor bills updating the presidential public financing system. Yet if Mr. McCain were to win on Tuesday, the resistance in Democratic circles to new financing rules would presumably only grow as they plot another assault on the Republicans' White House grip in 2012.

The existing presidential public financing system began in the 1970s after the Watergate scandal to limit the influence of money in politics, but it has not kept pace with the escalating spending. The 2004 race marked the first time both major nominees, Mr. Kerry and President Bush, decided to bypass the federal matching funds for the primary. Mr. Obama became the first major party candidate to opt out of the system for the general election. The move allowed him to continue raising private donations while Mr. McCain could not.

But advocates for tighter restrictions on campaign finance said they were alarmed by the more than $1.5 billion that had been raised by the presidential candidates in the primary and general elections this year - the first time presidential aspirants have topped $1 billion. (The Obama campaign alone has raised more than $600 million.) The advocates said that they were poised to begin aggressively lobbying for changes to the public financing system and that they hoped the issue would be taken up quickly by the new president and Congress.

The bill they are promoting seeks to offer new incentives to participate in the public finance system by substantially increasing the amount of public money available to candidates. Its provisions include increasing the ratio of public matching funds available in the primary, eliminating state-by-state primary spending limits and increasing the size of the grant for the general election.

Advocates for the bill said they were not convinced of Mr. Obama's argument, now being embraced by many fellow Democrats, that by raising unprecedented sums from small donors he had addressed the problem of big-money influence in politics. Skeptics note that Mr. Obama raised record amounts from large donors as well.

In addition, they said, the presidential campaign this year highlighted new issues, like megadonors to joint fund-raising committees that benefit the candidate and the party. There are also questions about whether Internet donations are being vetted adequately, which has drawn increased scrutiny in recent weeks with regard to contributions to the Obama campaign.

"Whether we get to move this meaningful campaign reform forward is going to depend largely on the leadership of either Obama or McCain," said Craig Holman, a lobbyist for Public Citizen, a watchdog group. "If either one of them decides they don't care, we're going to have a hard time convincing Congress to take up the issue."

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