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The Future of Public Campaign Finance Following Barack Obama’s Decision to Opt Out of System

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By turning down $84 million in federal money, Barack Obama will be allowed to raise and spend an unlimited amount during the election. Obama is the first major party candidate to reject public funds since the system started in 1976. The decision marks a reversal for Obama. Last year, he had pledged to accept public financing if his opponent did as well. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We turn now to a local issue, to campaign news here at home. Democratic presidential candidate Barack Obama announced Thursday he’s opting out of the federal public financing system in the general election. By turning down $84 million in federal money, Obama will be allowed to raise and spend an unlimited amount during the election.

    SEN. BARACK OBAMA: We’ve made the decision not to participate in the public financing system for the general election. This means we’ll be forgoing more than $80 million in public funds during the final months of this election. It’s not an easy decision, especially because I support a robust system of public financing of elections. But the public financing of presidential elections as it exists today is broken, and we face opponents who have become masters at gaming this broken system. John McCain’s campaign and the Republican National Committee are fueled by contributions from Washington lobbyists and special interest PACs. And we’ve already seen that he’s not going to stop the smears and attacks from his allies running so-called 527 groups, who will spend millions and millions of dollars in unlimited donations.

AMY GOODMAN: Senator Obama is the first major party candidate to reject public funds since the system started in 1976. The decision marks a reversal for Obama. Last year, he had pledged to accept public financing if his opponent did as well.

McCain confirmed he will stay in the public financing system. McCain spokesperson Jill Hazelbaker said, “Obama’s decision will have far-reaching and extraordinary consequences that will weaken and undermine the public financing system.”

The senator’s announcement has met with a mixed response from Democrats. Senator Russ Feingold said it was “not a good decision” and that “while the current public financing system for the presidential primaries is broken, the system for the general election is not.”

We’re joined now by two guests for a discussion on campaign finance reform and Obama’s decision to forego public financing. Massie Ritsch is the communications director for Center for Responsive Politics, joining us from Washington, D.C. And John Rauh is the founder and president for Americans for Campaign Reform, which is a nonpartisan group that supports public funding for congressional and presidential elections, joining us on the phone from New Hampshire.

We welcome you both to Democracy Now! Massie Ritsch, your first response to Obama’s reversal of his position to participate in public financing?

MASSIE RITSCH: Well, it was a reversal of position, Amy, but it, I think, also reflected a reversal of fortune for Obama. When he made the pledge that was fairly clear about over a year ago that he would aggressively pursue an agreement to take public financing, he, for one thing, didn’t think probably that he could raise nearly $300 million in the primary. And I think, more significantly, he probably didn’t expect John McCain to be his opponent. He was thinking maybe Mitt Romney, Rudy Giuliani, people who hadn’t really expressed any support for public financing or even for John McCain’s campaign finance reforms, the McCain-Feingold bill. And so, Obama thought maybe he was in the clear to take a higher road on this and then, lo and behold, John McCain, whose name is on landmark campaign finance reform legislation and is a supporter of public financing, ends up being the nominee and essentially may have called his bluff, and Obama’s fundraising improved to a level that we’ve never seen before.

AMY GOODMAN: John Rauh, your response?

JOHN RAUH: Well, I think Obama’s mistake was the commitment that he made a year or so ago. It’s been clear all along that $84 million in the general presidential election is not sufficient, particularly for a new candidate. In this case, we have a candidate, quite new, not known by most Americans, wins Iowa, starts to bring in a lot of support post-Iowa, but his background is unusual for a presidential candidate, his name is unusual, and so clear if you go back to when he made this commitment, I think that’s where the mistake was made.

We at the Just $6 campaign, Americans for Campaign Reform, have for some time now, Amy, estimated that it would cost about $125 million, not $84 million, for a presidential campaign. And frankly, with the twenty-four/seven cable, with all the attack ads that have been going on in the ‘04 presidential, and we presume will happen again, we’re going to take a fresh look after November to even see if the $125 million is high enough.

AMY GOODMAN: Can you explain, Massie Ritsch, Barack Obama’s reference to 527s and how they fit into this picture?

MASSIE RITSCH: Well, these are the outside issue groups that we really — I think most people became aware of in 2004, though they’ve existed long before that. The Swift Boat Veterans who helped sink John Kerry’s candidacy by questioning his war service, that was an example of 527s. At the time, on the left was a 527. These are groups that can raise unlimited amounts of money from just about anybody, including directly from corporations, from labor unions, from industry groups, even from foreigners, can contribute to these outside organizations. And then they can run advertising or do other things that, to most of us, would seem to be campaigning. In the case of the Swift Boat Veterans, they ran ads where they said John Kerry was, quote, “unfit for command.” Now, since we have a nickname for our president or another name that we call the presidency of commander-in-chief, it was pretty clear that they were saying, “Don’t vote for John Kerry,” but because they didn’t explicitly say, “Do not vote for John Kerry,” at the time, they were within the bounds of the law.

Now, the Federal Election Commission decided and ruled that the Swift Boat Vets and some other groups that were active in 2004 behaved illegally, that they were explicitly, overtly and expressly advocating for or against a candidate and that they should have only been able to do that using limited campaign dollars as a campaign or a political action committee could do. Now, they didn’t reach that decision until almost two-and-a-half years after the election was over, and they fined these groups what amounted to about one percent of their overall receipts. So it wasn’t a particularly strong deterrent.

The question is, for 2008, will we see these groups popping up? On the right, so far, there’s really not a whole lot of activity suggesting that independent groups are going to go after Obama or other Democrats. But these groups can spring up overnight. They are like weeds. Because they can rely on unlimited donations, someone could pump $10 million in overnight to an organization, and they could have a very quick impact. So it remains to be seen just how active they’ll be on both the right and the left.

AMY GOODMAN: John Rauh, you ran for Senate yourself in New Hampshire. I know that you’re a Barack Obama supporter, but are you critical at all of what he has done?

JOHN RAUH: Well, first, a full disclosure: my wife is one of Obama’s four chairs here in New Hampshire. I haven’t taken a public position, because Americans for Campaign Reform is very bipartisan.

Before getting to your question, let me just point out, Matthew describes quite well the 527 situation, but let’s be frank. Recognizing the beauty of the First Amendment, the freedom of speech in our Constitution, private money, whether it’s 527s or, if they’re eliminated, direct checks sent to ABC television or what have you, private money will always impact elections in the United States, as long as we respect the most beautiful value we have, the freedom of speech. Therefore, for those of us who support voluntary public funding, Amy, it’s vital that the amounts be high enough not only to get one’s message out, but also to answer attacks from 527s or independent expenditures.

Now, as far as Obama’s decision and how I see that, let me just say, as I said before, the mistake that was made was a year ago. $84 million was not going to be enough for Senator Obama’s campaign. How one looks at the decision — he’s put himself between a rock and hard place. There was not a good decision. If he violated his commitment, obviously there are problems for that. If he stuck to his commitment, he probably doesn’t have the resources he needs to answer the attacks that will probably be coming. So I think it’s a very personal decision. I think different people would have made this decision versus that decision. He was in a very difficult position once he made that pledge a year ago.

AMY GOODMAN: I have to say, it’s interesting to hear campaign finance groups be so uncritical of this decision when this is the very issue that, for example, you, John Rauh, have set up your organization around, Americans for Campaign Reform, and particularly around the issue of clean money and elections and cutting down the role money plays in elections. But, Massie Ritsch, one of the points that —

JOHN RAUH: But let me just respond to that, Amy. We strongly support, as does Senator Obama, voluntary public funding, as long as — as long as the amounts are enough. Publicly funding too low, forget it; it will not work. The voters won’t get to understand the candidates, their values and their perspectives. The amounts must be high enough.

AMY GOODMAN: But if Senator McCain agrees to the same limits?

JOHN RAUH: But Senator McCain is in a somewhat different situation. He didn’t start this presidential election unknown; well known, well defined. I’m not suggesting that $84 million is going to be enough for McCain, but I do make this point: it’s more probable that it’s enough for McCain than for the new candidate Obama.

AMY GOODMAN: Massie Ritsch, one of the points that were made is that it was never considered that there would be so much money raised from the grassroots and in little amounts, and so that the spirit of campaign finance continues, because it’s not big money that is coming in, but the breakdown that you’ve done that shows big money and lots of smaller amounts of money contributed.

MASSIE RITSCH: Well, Obama, when you look at the number of donors he has, and he claims almost a million-and-a-half donors, the vast majority, 90 percent or more, maybe 98 percent, have given him small amounts, maybe less than $200. By our measure, though, when you look at the amount of money that those small donors account for, it’s still the minority of the money. 45 percent of his money comes from donors who have given less than $200, 55 percent comes from people who have given more than $200 dollars, and 30 percent comes from those who have of given $2,300 dollars or more, $2,300 being the maximum contribution you can give for the primary. So he’s still fueled in large part by bigger donations. But if you look at his donor base, it is far more vast than any candidate has ever amassed.

Let me address the spending, too, because John makes a good point that $84 million may not be enough for McCain, not enough for Obama and really not enough for any other presidential candidate in this modern era. When you average that out over the period that it will cover, from the conventions to Election Day, it’s about $1.2 million a day. You’re going to spend that on travel, staff and, very importantly and significantly, advertising. General Motors spends $9 million per day every year on just advertising alone, to advertise cars and trucks. So when you compare that to what we will be spending on something that I consider far more important than advertising cars and trucks, advertising presidential candidates and getting their messages out, it really isn’t a whole lot of money to work with, if you’re taking the public financing.

JOHN RAUH: Amy, I’d like to comment, if I might.


JOHN RAUH: I’d like to comment, Amy and Massie, on the tremendous number of small donations that Obama has gotten off of the internet. And I believe the media is missing a very key point. Prior to Iowa, prior to Obama’s win in Iowa, his first win, 67 percent of his money was coming in donations of $200 or more, and one-third of his money prior to Iowa was coming from those who maxed out at $2,300, some of which husband and wife were going $4,600. The point I’m trying to make is this: if there were only small donations and no public funding, it is probable Obama does not win Iowa. If he does not win Iowa and get all the free media and attention that brought, it is improbable, almost impossible, that he would have started to gain the number of small donations.

The point I’m making is, small donations alone won’t do it. There’s got to be voluntary public funding for those candidates who want to take it, so that those candidates who are not well known, the voters have a chance to get to size them up. In this case, pre-Iowa, it took bundled big money for him. We’re suggesting it should have been public money. He gets well known after Iowa if he wins, and then we see the beauty of the internet. In other words, if we don’t have public funding with small donations, you’re going to have celebrity elections. You’re going to have to have huge name recognition before you get started.

AMY GOODMAN: Massie Ritsch, your response?

MASSIE RITSCH: Well, that’s an interesting proposal that I think would allow more candidates to get their messages out at the beginning. When we started this election, I think we had about twenty candidates, and very quickly we were down to three or four. And the reason for that was money. Even before there was a primary vote, there was a money primary. And the candidates who didn’t have enough going into Iowa were essentially shut out; they could not be heard. And that’s the downside to this system, is that you can have a message that could be popular with the people, with the voters, but unless they have an opportunity to hear you through advertising, through media coverage — and those two play together, they go hand-in-hand — unless you have that money, you’re just going to be completely ignored. And that was true in this election, and unless there’s a change in how elections are financed or how long candidates have to run for elections, then we will continue to see this again and again.

AMY GOODMAN: Massie Ritsch, how much do the networks stand to gain? This is not something they emphasize very much, how much the candidates are expected to pay for TV advertising.

MASSIE RITSCH: Well, the candidates and then the political parties and the outside issue groups will spend billions on advertising, presumably, in this election. Overall, this is probably a $5 billion election when you include the presidential race, congressional races and other attendant issues at the federal level. And a very large proportion of that is going to advertising. And commercial TV and radio stations around the country are going to benefit from that. Every four years, every two years even, they have a windfall from political advertising. And so, the reasons for the cost of campaigning are not addressed very often. You will see a lot of stories about where the money is coming from, but not a whole lot about where it has to go. And a lot of it has to go to stations.

AMY GOODMAN: We can put out a challenge to the corporate networks for them to do a special: how much do we make?

MASSIE RITSCH: Well, we’re putting that out now on public radio, and we’ll see if they’re listening.

AMY GOODMAN: And television, and television.

MASSIE RITSCH: And watching, yes.

AMY GOODMAN: And finally, what does this mean for third party candidates? Let me put that question to John Rauh.

JOHN RAUH: Well, I think for third party candidates, obviously voluntary public funding is going to be a plus, and I think those of us who support public funding have to be sure that the qualifying — that what it takes to qualify for public funding is tough and high enough, so we just don’t have too many candidates qualifying to pull on the public treasury. Certainly independent candidates and third party candidates must be eligible to qualify for public funding, and we may with public funding see somewhat more of those candidacies. But I think it’s very key that the qualifier for public funding be high enough so that we’re fiscally responsible but not ruling out those candidates.

AMY GOODMAN: David Brooks had an interesting piece in the New York Times called “The Two Obamas.” He said, “God, Republicans are saps. They think that they’re running against some academic liberal who wouldn’t wear flag pins on his lapel, whose wife isn’t proud of America and who went to some liberationist church where the pastor damned his own country. They think they’re running against some naïve university-town dreamer, the second coming of Adlai Stevenson.

“But as recent weeks have made clear, Barack Obama is the most split-personality politician in the country today. On the one hand, there is Dr. Barack, the high-minded, Niebuhr-quoting speechifier who spent this past winter thrilling the Scarlett Johansson set and feeling the fierce urgency of now. But then on the other side, there’s Fast Eddie Obama, the promise-breaking, tough-minded Chicago pol who’d throw you under the truck for votes.”

JOHN RAUH: Amy, if you don’t mind, marital harmony is kind of important to me, so since my wife Mary is one of his co-chairs in New Hampshire, I’m going to pass on that.

AMY GOODMAN: Massie Ritsch?

MASSIE RITSCH: Well, let me go back to something that John had said. I think if we’re going to have a public financing system that’s viable and we’re asking taxpayers to pay into it, we need to do a better job educating them about what that system entails and where their money goes. Less than ten percent of American taxpayers, Amy, pay into our presidential financing system. So, when you have one major candidate saying it isn’t enough money to run a viable campaign in the twenty-first century and you have 90 percent of Americans saying, I either don’t understand this or I don’t support putting my money toward supporting politicians in their campaigns, then we need to come up with a solution that’s better, that’s more viable and that can reduce the role of money in campaigning.

AMY GOODMAN: Massie Ritsch, thank you for joining us, spokesperson for the Center for Responsive Politics, website And John Rauh, founder and president of Americans for Campaign Reform in New Hampshire.

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