Presidential Public Financing Primer

Markos asked me if I could review just how this will work for the Edwards campaign and anyone else who chooses to opt in to public financing for the primaries.  As most of you know, I've picked my candidate for this race, so I've tried to focus on just the application of the law here and not what I think of the decision.  I believe I've got this all correct, but if not, let me know or ask questions.

To qualify for public funding, Presidential candidates must first meet various eligibility requirements, such as agreeing to limit campaign spending to a specified amount, and showing broad-based public support by raising in excess of $5,000 in each of at least 20 states (i.e., over $100,000). Only a maximum of $250 per individual applies toward the $5,000 threshold in each state, but Edwards shouldn't have any trouble meeting this requirement.  

Once you do that, you can receive matching funds for each contributor of up to $250.  (Contributor, not contribution -- if you made eight $250 contributions in a row, only the first is matched.)  I'm trying to figure out how much Edwards for which has already qualified -- coming into this quarter, Edwards raised $5.3M from contributors of $200 or less, all of which is matched dollar for dollar.  But of the $7.1M raised from contributors of $2300+, for example, $1.2M reflects general election money, so for the remaining $5.9M at $2300/each (about 2550 contributors), he can obtain another $637K in matching funds (2550 times $250).  And then there's $250/each for the contributors between $250-$2300, and I can't tell easily how many contributors that reflects.

Bottom line: he's not at $10,000,000 in matching funds yet -- he's probably closer to $7M or so in matchable contributions as of 6/30/07.  After the 10/15/07 FEC filing, we can guesstimate again how much he'll receive in January.  To get to the $10M goal, Edwards needs more contributions from new contributors, or from existing contributors who haven't given the full $250 yet.  (Obviously, every contribution will help him, but it's only those of $250 and below that get matched.)

Then come the expenditure caps, and on this there's been confusion because there are two sets of caps.  There is a cap on per-state spending which appears bizarrely low ($1,486,433 for Iowa?) and is not what it seems -- the caps only apply to television and radio advertising, or to direct mail that is sent within 28 days before the vote, and if you're buying time on Quad Cities, IL tv, knowing that it reaches into Davenport, IA, well, that doesn't count. (Corrected: see below.)

No, the real cap issue is the overall spending cap for the primaries, which lasts from the start of your campaign through the end of the Convention in late August (when you're no longer seeking the nomination), and it's believed to be around $50M $43M for 2008.  And that sum includes almost everything -- only "certain fundraising expenses (up to 20 percent of the expenditure limit) and legal and accounting expenses incurred solely to ensure the campaign's compliance with the law" are exempt from that limit, and it's those figures which bring you to the $50M+ cap generally quoted.

As to that sum, Edwards spent $9.8M over the first six months, and is estimated to have spent about $8M more this quarter.  Subtract from that the exempt expenditures, and he's got $33-35M left to spend between now and next August.  (Obviously, if he is the nominee, he'll have no problem raising the rest of that.)

By way of comparison, by eschewing the public financing program John Kerry was able to raise and spend $175,335,576 prior to the end of the 2004 Convention, and transferred an additional $40 million or so to various Democratic party entities.  (This was so successful, you may recall, that his campaign floated the idea of not "accepting" the nomination until after the Convention, so he could keep raising and spending that money.)

Yes, the DNC is out there to spend raise and spend money on his behalf (though they have little cash on hand right now, and there's also the coordination rules), and 527s can cut ads ... but the rules constitute substantial limits on their activity, given that a 527 cannot expressly advocate for the election or defeat of a federal candidate, or coordinate with a campaign.  (For what it's worth, many of the big Democratic 527s from 2004 no longer exist.)

Then there's the general election.  If a candidate were to opt into that system, s/he would receive $82 million or more, legal and accounting costs again exempted.

Sen. Feingold has introduced the Presidential Funding Act of 2007, which would increase the primary spending limit for each participating candidate from ~$50 million to $150 million (with only $100 million of that expenditure permitted before April 1 of the election year), get rid of the state caps and do a bunch of other cool things.  If you believe this system is worth preserving, it's a good start.

Whew.  That's it.  Any questions?

Edited for Corrections on the state allocation issues: 1.  Under 11 CFR 106.2(b)(2)(B), spending on out-of-state television markets does count towards the in-state totals, based on the percentage of in-state audience reached.  2.  It appears that state polling, overhead, and phone programs (paid calls, robocalls, etc) are also included in the in-state totals.  Overhead includes rent and utilities (including phones).