Future of campaign financing debated

Since the public-financing system was created in the wake of the Watergate crisis, it was viewed as an imperfect way to rid politics of the excesses of special-interest money.

But, with the decision by Sen. Barack Obama to become the first presidential candidate to forgo public money, the system is facing the most critical threat to its survival.

At various times in its three-decade life, the system has been declared close to its demise. Yet, every four years, it has continued to survive, with all candidates since the system began in 1976 accepting public money to run their general-election campaigns — and the spending limitations that come with it.

Despite these limits, large sums of special-interest money have continued to flow through inventive loopholes, which have come in different names and different forms.

In the 1990s, there was "soft money," a flood of unlimited and unrestricted donations given to party committees, leading to influence-peddling excesses that were laid bare in a Clinton-era Senate investigation.

That type of giving was outlawed, and a few years later came the rise of "527 money," named for a section of the tax code that regulates independent spending.

In recent years have come the "bundlers," or wealthy individuals who gather donations from other rich donors.

But Obama's decision to opt out of public financing — along with the ability of the Internet to let candidates raise large sums of money from small donors — may do more to shatter the system than all of the loopholes it has spawned.

As structured, each presidential candidate stands to receive $84 million in public money. This money is gained from the $3 check-off on federal taxpayer returns, which candidates can use to run a general campaign from the end of each party's convention to the November election.

Each party can also raise and spend money to support its candidate. Donors can give up to $28,500 to party committees and often-unlimited amounts to 527s, nonprofits and a bevy of other committees outside the formal party structure.

Sen. John McCain, the presumed Republican nominee, has said he would remain committed to the public-finance system, but he may well be the last major candidate to do so.

"Obama's decision may not be the death knell of public financing, but it certainly is close to it," said Anthony Corrado Jr., a campaign-finance expert at Colby College.

Even the Supreme Court, in a 2003 decision upholding the McCain-Feingold measure that banned soft money from politics, recognized how difficult it is to shut off the spigot." "Money, like water, will always find an outlet," the court wrote.

These days the outlet is the Internet, which at least plays into the spirit of reform, some analysts said, and possibly does more to rein in the influence of big donors and special interests than 30 years of restrictions imposed by federal law.

While collecting contributions through the click of a button has contributed to the record-breaking sums of money raised this election, it also has made it easier for average Americans to participate.

Reformers have long said the current system forces candidates to spend a disproportionate amount of time raising money.

But by showing he could raise large sums from small donors Obama has argued he has achieved online what the public-finance system has been unable to do.

"The reality is that the amount of money that comes from the government is not enough to run a modern presidential campaign," said Larry Makinson, a consultant to the Center for Responsive Politics, a Washington group that tracks campaign donations.