Public Financing: Presidential Campaigns*
In the aftermath of Watergate, Congress passed the Federal Election Campaign Act, instituting a system of partial public financing for presidential primary candidates and full public financing for general election candidates. Candidates who qualify and agree to abide by certain restrictions receive payments from U.S. Treasury. The federal payments come out of the Presidential Election Campaign Fund, which is filled by the $3 check-off on federal income tax forms.
For primary candidates there is a voluntary system of partial public financing.
After a candidate qualifies by meeting the $100,000 threshold--raising $5000 in 20 states in contributions of $250 or less--his or her campaign becomes eligible to receive matching funds. Contributions from individuals of up to $250 are matched dollar for dollar with payments from the Presidential Election Campaign Fund. Candidates begin receiving payments in January 2004. They must agree to comply with spending limits, based on the 1974 figure of $10 million, adjusted for inflation (in 2000 the limit was $33,780,000; when costs associated with fundraising were included it was actually $40,536,000).1
These limits can pose difficulties; in 1996 a heated primary battle left the Dole campaign with little money for about four months leading up to the convention. Likewise in 2000 Gore had some lean months prior to the convention. DNC Chairman Terry McAuliffe wants to avoid such a situation in 2004 and has emphasized that by the time the Democratic nominee is selected, the party will be ready with a check for the full amount of coordinated expenditures authorized under law, which is two cents times the voting age population of the United States.
A candidate who chooses not to participate in the matching funds program can spend as much as he or she wants, but contributions from individuals still may not exceed $2,000. There is no limit to how much a candidate can spend of his or her own money. In the 2000 Republican primary campaign then Gov. George W. Bush declined matching funds and brought in more than $90 million in individual contributions, a record. In 2004 President Bush again declined matching funds and there were suggestions that he could raise upwards of $200 million although he faced no credible Republican challenger. Faced with this prospect, two of the Democratic candidates, former Gov. Howard Dean (on Nov. 8, 2003) and Sen. John Kerry (on Nov. 14, 2003), opted out of the public financing system as well.
All told during the 2000 primaries, eighteen major candidates raised more than $230 million in individual contributions (that did not include $2.8 million in PAC contributions, $3.5 million in transfers from previous campaigns, and $43.2 million in loans, $42.3 million from Steve Forbes). A total of ten candidates received just over $60 million in matching fund payments. Through Jan. 31, 2004 > the campaign committees of the ten major Democratic candidates raised about $141.8 million in individual contributions compared to $142.2 million for Bush-Cheney '04. (That does not include contributions to compliance committees or the $6.7 million in individual contributions to fringe candidate Lyndon LaRouche).
The major parties receive public funds to put on their national nominating conventions, based on the 1974 figure of $4 million, adjusted for inflation. On June 30, 2003 the FEC certified the Democratic and Republican parties are each entitled to received $14,592,000 in public funds to put on their 2004 national conventions, and sent letters to the Secretary of the Treasury requesting the payments be made; inflation adjustments will be added in 2004. (Third parties whose presidential nominees received at least five percent of the vote in the previous election also can receive funds toward their conventions; none meet this criterion for 2004). Additionally, non-profit host committees are formed to defray expenses connected with hosting conventions, and these can accept direct and in-kind contributions from local businesses, unions and individuals.
The Democratic and Republican nominees receive grants to cover all expenses in the general election campaign, based on the 1974 figure of $20 million, adjusted for inflation. In 2000, immediately after their respective conventions, the Bush and Gore campaigns each received grants of $67.56 million to cover general election campaign expenses. In addition, as mentioned above, the party committees may spend some money on behalf of their nominees, in the amount of 2 cents times the voting age population of the United States; this amounted to $13.68 million in 2000. Third parties whose presidential nominees received at least five percent of the vote in the last election receive funds according to the share of the popular vote obtained.
*Presidential Campaign Finance