Campaign finance: Deal or no deal?

SUMMARY: Sen. John McCain and Sen. Barack Obama are engaged in a battle on the validity of a March 2007 agreement to accept public financing — and its $84.1-million limit — for the general election.

A year ago, Sen. Barack Obama and Sen. John McCain were two longshot presidential candidates with little money; not front-runners for their party nominations.

So it wasn't surprising that both candidates talked about accepting public financing for the general election, while at the same time leaving themselves wiggle room to switch back to private fundraising if that looked promising.

That was March 2007. Now, it's March 2008 and a fight has erupted between the candidates over whether or not they had promised to abide by public financing limits a year ago. McCain is now the presumptive nominee of the Republican Party and Obama, still locked in a tough race with Sen. Hillary Clinton for the Democrats, has built a lead in the delegate race that has given him the bull's-eye of a front-runner.

McCain says Obama committed to a campaign restricted to public financing and suggests the Illinois senator is reneging on that promise.

"I committed to public financing; he committed to public financing," McCain told reporters Feb. 20, 2008, in Columbus, Ohio. "It is not any more complicated than that. I hope he will keep his commitment to the American people."

First, some basics: When we talk about public financing, we're talking about candidates agreeing to skip private fundraising and instead run their campaigns using a pot of public money that comes from taxpayers who pay a voluntary $3 on their tax returns. The upside is that candidates don't have to spend time seeking contributions, but the downside is that their spending is limited to an amount determined by the Federal Election Commission. This year's general election limit is $84.1-million per candidate, but the spending period is limited to the two months between the nominating conventions in late August and early September, and the Nov. 4 election.

Keep in mind that $84.1-million is less money than Obama raised in January and February 2008 combined, according to campaign estimates. And, given his longshot status in early 2007, this prolific fundraising was not foreseen.

"I don't think Obama had any realistic anticipation of being able to raise money at the magnitude he has raised it and believes he will be able to raise it," said Kenneth A. Gross, a campaign finance lawyer and former associate general counsel of the Federal Election Commission. "It is in fact unprecedented."

To the question of whether Obama committed to public financing as McCain asserts, we have to back up to one year ago, when the two candidates were vying to break out of a crowded candidate field. This is how we got here:

• On Feb. 1, 2007, Obama requested an opinion of the Federal Election Commission on whether he could privately raise money for the general election but still reserve the right to use public financing if he returned what he had raised.

• On March 1, 2007, by a vote of 5-0, the FEC approved an advisory opinion: "Senator Obama may solicit and receive private contributions for the 2008 presidential general election without losing his eligibility to receive public funding if he receives his party's nomination for president, if he (1) deposits and maintains all private contributions designated for the general election in a separate account, (2) refrains from using these contributions for any purpose, (3) refunds the private contributions in full if he ultimately decides to receive public funds."

• The same day, McCain's campaign said he would commit to public financing. "Should John McCain win the Republican nomination, we will agree to accept public financing in the general election, if the Democratic nominee agrees to do the same," Terry Nelson, McCain's campaign manager, told the New York Times.

• And Obama campaign spokesman Bill Burton responded by saying: "If Senator Obama is the nominee, he will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election."

The next key development in this saga is a questionnaire sent to all presidential candidates in the fall of 2007 by the Midwest Democracy Network. McCain didn't respond, but Obama did, and his answer to the question of whether he would participate in public financing was clear:

"Yes. ... In February 2007, I proposed a novel way to preserve the strength of the public financing system in the 2008 election. My plan requires both major party candidates to agree on a fundraising truce, return excess money from donors, and stay within the public financing system for the general election. ... The Federal Election Commission ruled the proposal legal, and Sen. John McCain has already pledged to accept this fundraising pledge. If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election."

It would appear then, from public statements, that Obama and McCain both wanted a publicly funded general election.

In the midst of this developing dispute over the general election fundraising, McCain filed a letter with the Federal Election Commission on Feb. 6, 2008, about fundraising in the primary: "I ... am withdrawing from participation in the federal primary-election funding program." McCain was one of the few candidates to seek public money during the primaries and as such, his spending is limited through the convention in September. His campaign apparently has nearly reached the limit already.

Problem is, the FEC cannot rule on McCain's request because the six-member commission has four vacancies. Chairman David M. Mason sent a letter to McCain on Feb. 19, 2008, saying he needs four members seated to make a ruling.

Against this backdrop, the McCain-Obama dispute has grown hotter. The League of Women Voters and other reform groups wrote to Obama on Feb. 15, 2008, urging him to renew his commitment to public financing.

And Obama wrote an op-ed for USA Today, which his campaign now says is the clearest explanation of Obama's position. "I propose a meaningful agreement in good faith that results in real spending limits," Obama writes in the Feb. 20, 2008, piece. "The candidates will have to commit to discouraging cheating by their supporters; to refusing fundraising help to outside groups; and to limiting their own parties to legal forms of involvement. And the agreement may have to address the amounts that Senator McCain, the presumptive nominee of his party, will spend for the general election while the Democratic primary contest continues."

Then in a Feb. 26, 2008, debate in Cleveland, Ohio, moderators pushed Obama to explain why voters shouldn't consider his position on public financing to have changed. "What I've said is, at the point where I'm the nominee, at the point where it's appropriate, I will sit down with John McCain and make sure that we have a system that works for everybody."

Stephen Weissman, associate director for policy at the Campaign Finance Institute, a nonpartisan, nonprofit institute affiliated with George Washington University, says Obama is hedging his bets.

"The hedges that he's raised are very considerable because he's mentioned two things — outside groups and preconvention spending by McCain," Weissman said.

"I think that what's happening is someone said to Obama, 'We think we can raise $150-million or something, or $200-million, through the election and you never know what the Republican will throw at us, so be careful, don't commit yourself to this. We have a possibility here for really winning this election and restoring the Democrats.' "

Weismann points out that Obama is co-sponsor of a campaign finance reform bill in the Senate, which would require reporting on bundled contributions. And, given how Obama portrays himself as a reformer, Weismann doesn't see why he wouldn't go for public financing.

"If one of his objectives is to be a reformer, to decry the role of lobbyists, to increase the role of public financing ... I just don't see any great risk," Weismann said. "I think they're being too conservative and they risk betraying his reformer impulse."

Gross, the campaign finance lawyer, doesn't think it will make much difference either way things turn out.

"I'm not sure the American people are going to be influenced by that when it comes to the voting process," Gross said of the supposed agreement to accept public financing. "Because if Obama doesn't agree, then I assume that McCain won't agree either, because he would be unilaterally disarming. So both will then be outside the system ... spending away as McCain and Obama will have done for the primary."

Evaluating the truthfulness of McCain's statement, "I committed to public financing; (Obama) committed to public financing," it's clear that McCain committed to public financing in March 2007, and reiterated that commitment in February 2008.

It's also clear that Obama has committed to "aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election." And in answering the question "Will you participate in the presidential public financing system" on the Midwest Democracy Network questionnaire, Obama said, "Yes."

But every comment Obama makes is in the context of reaching an agreement with the Republican nominee. It is not a blanket commitment to public financing.