The floodgates are creaking

At the NPCU conference this year, I'm giving a paper on the impact the Internet has had campaign fundraising in the US and the UK. In preparation for this and to get some feedback on my ideas, I did a staff-student seminar on this late last year. During the course of the question and answer session, I made what seemed like a very rash prediction - it was very likely that the whole American public funding system would be destroyed in 2008 by the enhanced fundraising capabilities of campaigns.

In order to understand this comment, we need to examine exactly how public funding works in presidential elections in the States. The whole process is grounded on the principle (decided by the Supreme Court in Buckley vs. Valeo in 1976) that absolute spending caps would amount to a breach of the first amendment - the right to free speech. As a result American legislators have been forced to use another regulatory tool, namely voluntarism, to enforce spending caps. The mechanism for doing this has been to make the receipt public funding conditional on limiting spending.

The funding system for presidential elections is a two stage process:

  • The primary system. This is based on matching for small donations of less than $250. Receiving these benefits though is conditional on taking an overall spending cap plus a number of state restrictions. Already, this system has come under siege, and is now widely regarded as defunct. A number of candidates (for example Bush, 2000; Dean, Kerry and Bush, 2004; and Clinton, Obama and Romney, 2008) have got out of the system. For these campaigns, with their huge fundraising capabilities, the benefits of public funding as far outweighed by the spending caps they have to agree to.
  • The presidential campaign. Whereas the primary system is a public/private hybrid with a spending cap, the presidential election is a purely public affair. Candidates are given a bloc-grant. This is the total sum of money they are allowed to spend on the election. In 2004, each candidate was able to spend just over $74 million. As yet, every candidate to run for office since the system was instigated in the seventies has taken public funds for the presidential election (including Ronald Reagan, who actually opposed the system). This element of the public funding system has seemed pretty solid.

But (and this is what I meant with my comment) it is now conceivable that this system is going to come under immense strain. Think about it - Clinton and Obama have already blown $100 million each on their campaigns to entice a relatively small proportion of the electorate. Does it seem likely that campaigns of this sort will be willing to suffer budget cuts when they move to communicating with the wider electorate? 

Especially given Obama's massive level of fundraising since Super Tuesday, it also doesn't seem unlikely he would be able to out-fundraise the public grant he would be entitled to. And the indications are that he is considering it. We could be watching the death of public funding for presidential elections in the US.