Money and Politics: Howard Dean

GWEN IFILL:

Finally tonight, money, the mother's milk of politics. Over the weekend, Democratic frontrunner Howard Dean announced he will not accept public money for his primary campaign, allowing him to ignore legal constraints on what he is able to raise. In 2000, President Bush became the first national candidate to do this, and his reelection campaign already has raised nearly twice as much as the law would otherwise allow. So is this the end of post-Watergate public campaign financing, and is that a good thing?

We're joined by Larry Noble, executive director of the Center for Responsive Politics. He's also a former general counsel for the Federal Elections Commission. And Elaine Kamarck, she served in the Clinton administration, and was a senior policy adviser to the 2000 Gore campaign. She's now a lecturer in public policy at Harvard University's Kennedy School.

Ms. Kamarck, by choosing not to accept this federal financing, this taxpayer finance system, what is Howard Dean gaining?

ELAINE KAMARCK:

He's gaining two things. First of all, he's gaining the ability to spend unlimited amounts of money in the primary states. The reason that's important is that the Democratic nominee, should it be Howard Dean, will be chosen in the middle of March. Then there's this long period between March and July when the Democrats hold their convention, when for all practical purposes the general election has begun. During that period of time, George Bush, with no opponent, will be spending a lot of money trying to tear down the nominee. The Democratic nominee must be competitive. This was a very wise choice on Howard Dean's part.

GWEN IFILL:

Larry Noble, what is Howard Dean, or the system, losing by this decision?

LARRY NOBLE:

I think this is probably the end of the system as we know it, unless it's changed. What you now have is a major Democratic Party candidate going outside the system, and as Elaine said it makes a certain amount of sense from his perspective, but you really now have two tiers of Democratic candidates, those that can afford to run their own race and do their own fund raising and those that will, quote, have to stay in the public funding system.

They'll try to spin it different ways. But you already see Kerry talking about possibly dropping out of the public fund system and we see Clark talking about the possibility of it. So I think what this means at this point is that in the future a serious Democratic candidate will just, it will just be accepted that they will opt out of the public funding system.

GWEN IFILL:

You keep saying the public funding system. Explain for people who aren't up to date on all the details of campaign finance rules, what is the public funding system?

LARRY NOBLE:

Well, there are actually two public funding systems, there's one for the primary and one for the general election. And the one we're talking about now is for the primary. The way it works is that a qualified candidate can get matching funds from the government, and it's up to $250 of individual contributions can be matched, each individual contribution up to $250 can be matched.

Now, when the contribution limit was $1,000, that meant they could receive $250 for every $1000 raised; well, the McCain-Feingold bill doubled the contribution limit to $2,000; it did not raise the match, so they're still only getting $250 every $2,000 raised. In return for that, though, there's something they give up, and they give up the ability to spend unlimited amounts of money. And in the primaries now it will be about $45 million, that will be the limit.

GWEN IFILL:

Elaine Kamarck, why is $45 million not enough? It sounds like a lot of money for a primary campaign.

ELAINE KAMARCK:

When you're running against somebody who has no opposition and therefore has to spend no money against another Republican and who already has $100 million and will probably have $200 million, the general election begins in March. And therefore being limited to $45 million in the period from March through July, if Howard Dean becomes the nominee, means that you are, he will be working at a severe disadvantage against George Bush. Once a major party candidate, the president of the United States decides not to accept federal funding, it's really insane for the other party to accept federal funding. They're handcuffing themselves, they're not competitive.

GWEN IFILL:

It's the old playing field football metaphor we're talking about?

ELAINE KAMARCK:

It sure is, and let me add another point. The whole purpose of the campaign finance law was to get rid of the influence of big money in politics. Howard Dean has made a revolution in politics, he's got average contributions of $77. Nobody is going to buy a presidential campaign for $77. I think he's exactly the kind of candidate that we who supported public funding have always said was the way the system should run, with lots and lots and lots of small contributions. Having achieved this breakthrough, he should not be penalized.

GWEN IFILL:

The president is also doing this. Is he also doing this with small contributions, is that's the way it's working?

LARRY NOBLE:

No, the president –

ELAINE KAMARCK:

Absolutely not; absolutely not. The president is bundling money, big corporate interests are bundling $2,000 checks, $4,000 a couple. This is a big money operation versus a small money operation.

GWEN IFILL:

Let me direct that to Larry Noble then, why shouldn't someone be able to level the playing field in this way?

LARRY NOBLE:

Well, the reason for the public funding system was to limit the influence of large money, but there were other reasons for it. One of the other reasons was to limit the amount of time the candidates have to spend fund raising. What Congress thought at the time is if you limit the cost of the campaigns and you give them public funding and in the general election, by the way, it's full public funding if they opt into that, they can spend more time connecting with the people and not having to fund raise.

By going outside the system, the candidates have to spend a lot more time fund raising. Now I understand what Elaine is saying and it is true that Dean is going to face what I've been calling this campaign finance desert between March and the convention where he will not have a lot of money, or any money, if he stays within the system and is limited to $45 million. But it does mean we're back to the system now where the candidates outside that system, President Bush, Howard Dean, possibly John Kerry, will be spending a lot more time fund raising, because now they're not going to be just looking for that $45 million, they'll be looking for $100 million and maybe more.

GWEN IFILL:

But every time — I'm sorry, you wanted to respond first?

ELAINE KAMARCK:

I was just going to say, but that really misunderstands the nature of the Dean campaign. He isn't spending a lot of time away from the people fund raising. His fund raising is part and parcel of his entire campaign. He's not spending an enormous amount of time in the living rooms of Park Avenue and Fifth Avenue raising money and big dollar amounts. The way he is raising money is precisely the way we always said candidates ought to raise money, which is part and parcel of their campaigning. It's not taking him way from talking to the people.

GWEN IFILL:

But Ms. Kamarck, you have suggested, you have also said that this is not the way other people are going to take advantage of this, this maybe is what Governor Dean is doing, it's not necessarily what the president is doing. It just seems that every 20 years or so somebody makes an effort to fix the campaign finance system after Watergate and again last year with McCain-Feingold law, and it has often unintended effects.

ELAINE KAMARCK:

That's absolutely right. And I think that, as Larry said, one of the things we really have to do is in the Internet Age, in the age where we with mobilize lots and lots of people at very low cost, political campaigns ought to naturally move away from big dollar fund raising, towards small dollar fund raising and at that point we have to rethink what the system is like, what kind of controls and what kind of disclosure we want to have as we move from the big dollar to a small dollar system.

GWEN IFILL:

You said the system as we know it when this happens is basically exploded, Larry Noble. So how do you go about seizing the optimistic view that Elaine Kamarck has that this is all going to work out on its own without these kinds of limitations that have been put, that have been invented in the past in order to fix this system?

LARRY NOBLE:

Well, we're really in uncharted waters to a certain extent. Elaine is right, we're seeing with the Dean campaign something we haven't really seen before which is a very much Internet-driven campaign with a lot of small contributors. Now one of the things we're going to be watching is to see that if this catches on and if Dean really goes out there and raises the $100 million, whether he's going to be able to do it all with small contributions, or whether he's going to have to resort to the bundlers, the people who collect the $1,000 and $2,000 contributions, whether he's going to have to look for bigger money.

I think this election is really a watershed in terms of how the campaigns are going to go. I think it's interesting when Dean made the announcement on his Web site he really talked about this being a way to connect with the people. What he's talking about is raising $200 million by raising, I think it was from two million people $100 each. If he can do that, that is a very different type of campaign. However he may find himself in the position where he has to go to some of the bigger donors, the ones that give $1,000, or give $2,000 if he truly wants to be competitive.

GWEN IFILL:

But isn't the problem, Elaine Kamarck, often been that the playing fields were not level and by choosing, by having the ability to raise the money outside of the system, as George W. Bush has and Howard Dean hopes he has and perhaps John Kerry will hope he has, that leaves all the other people who think they might be a good president at a disadvantage.

ELAINE KAMARCK:

Well, yes and no. The advantage of raising money in this new way is that it shows real grassroots strength. It's a real connection to real people. I'm amazed that the other campaigns didn't start to do this earlier. Dean started in January with 434 people in his database, he now has 500,000 contributors. If he does anywhere near that kind of growth from now until next November, he will far exceed his $200 million. So we really are in a brand new world. I'm astonished that other candidates didn't do it, and I don't think in the future any candidate will pass up the Internet fund raising model. That is what is going to make the whole way we've thought about controlling campaign finance obsolete and we're going to have to go back to the drawing board.

GWEN IFILL:

Mr. Noble, for years we have seen on our tax returns that little box that you check off to support the public financing system. Does that now potentially just all go away?

LARRY NOBLE:

Well, it's in existence now, but the system's has had structural problems for a number of years. The payout for the campaigns is indexed to inflation. The check-off never was so, it was running out of money. They raised it to from the dollar to $3, it's still running out of money. Also, there has been a decline in participation; I think we're down to about 10 percent of the people check off. And there are a number of reasons for it. At its height, right after Watergate it was about 27, 28 percent checked off.

GWEN IFILL:

So what's the fix?

LARRY NOBLE:

Well, there are people now, and our organization doesn't call for any legislation, but there are people now who are calling for a revamping of the system. And there are different approaches. Some are calling for what I call an incremental approach and that would be the approach where they increase the match, so you would match maybe $500 of it or you focus on smaller contributions, you obviously raise the expenditure limit, everybody acknowledges that the $45 million is unrealistic in today's campaigns. Other people are talking about full public funding.

GWEN IFILL:

Elaine Kamarck, which one of those sounds to you like the ultimate fix?

ELAINE KAMARCK:

Well, the first one sounds more reasonable. I can't imagine we'll ever get to full public funding. No Congress I know of has ever been enthusiastic about, that I got a real firsthand experience with that when it was an issue in the Clinton transition back in '92 and '93. But I think there's another thing to put on the board. The Internet just as it revolutionizes fund raising, should also revolutionize transparency in the political system. We ought to be able to move to a system where no matter what the contribution, it is put on the Internet in real time, so that contribution received the day before election day can be looked at by anybody who is following that race, can be reported on, et cetera.

We ought to have real time reporting of who is making contributions to political campaigns. It was never before practical to do. It is practical these days with the Internet. And it's one way we would dramatically increase the transparency of political campaigns.

GWEN IFILL:

All right. Elaine Kamarck and Larry Noble, thank you very much.