Campaign 2000 Funding:  can McCain survive the cash primary?

 

Throughout campaign 2000, the media has been awash in stories about how much or little candidates are receiving and spending.   Additionally, given that candidate John McCain has authored important campaign finance legislature, which has thus far failed, candidates Bradley and McCain have offered to eliminate soft money from campaigns, and the fundraising fiasco from 1996 which led to Congressional hearings, campaign finance has been more of an issue during the 2000 campaign than during earlier campaigns, though not a major issue that is foremost in voters’ minds (in fact ranking below concern for international affairs in CNN’s exit polls in New Hampshire).  What I will do in this talk is to briefly outline the rules regulating campaigns and contributors and discuss the state of the current campaigns.  Unfortunately, most recent figures only go back to the FEC filing deadline of October 15.  Candidates were required to turn in information to the FEC on January 31, 2000 but that information will not be available in total until the middle of February.  However, knowledge of the state of the campaigns in October is important since it provides the environment in which candidates contested the election and the resources that they had available to plan and implement their strategy.

 

I.  Brief Overview of Rules Governing Campaign Financing

 

During the 1970s, after recognizing that there was illegal money and exorbitant amounts of money in presidential campaigns, including some recognition that democracy might be undermined by having the Republicans consistently outspend the Democrats in presidential contests, the federal government reformed the campaign finance system.  In 1972, for example, Richard Nixon’s campaign spent $61 million to George McGovern’s $30 million.  With these reforms, though loopholes were rampant, including ‘soft money’ provision, individuals are allowed to contribute only $1000 directly to a candidate for federal office.

 

With the reforms, candidates for the nomination of their party are limited to one of two options.  First, they can choose to limit the amount of money they spend during the primary season (approximately $40 million for 2000).    If they select this option, candidates are entitled to “federal matching funds”.  Candidates receive matching funds from the federal government for the first $250 they receive from individual contributors.  This money is allocated to candidates via the tax check off system (national party conventions and the entire presidential general election campaign is funded this way as well).  Most major party candidates, including Bill Clinton and Bob Dole in 1996 opt for this route. 

 

The second option available to candidates is to forego matching funds and campaign limits.  Two candidates during 2000 have opted for this route.  Steve Forbes and George Bush have opted not to abide by campaign spending limits and not accept matching funds.  George Bush’s decision to forego the matching funds was prompted by three main reasons.  First, his campaign wanted to ensure that it would be able to answer any onslaught of negative campaign commercials from the largely self-financed Forbes campaign.  Forbes, through October 15 had chipped in nearly $17 million into his campaign.  Campaign estimates suggest that Forbes has spent through New Hampshire $30 million.  Second, during the 1996 presidential primaries Bob Dole ran out of money early in the campaign and had almost no money left to spend defending his record against attacks by Bill Clinton’s campaign after the nomination was ensured.  Thus, if Al Gore was not challenged hard by Bill Bradley, the Republicans feared a repeat of 1996.  Third, George Bush has proven adept at raising money, raising record amounts of cash.

 

II.  Campaign Contributions and Campaign 2000

 

Thus far, though detailed information is not available, George Bush has raised a record $68 million through the January 31 filings and had spent  $35 million, leaving him with nearly $31million for the primary season.  To put this in some context, Bush’s nearest competitor, John McCain has raised $15.5 million, though McCain has spent $14 million.  In fact, money is important in not only winning primaries and caucuses, but the lack of ability to raise money has either scared off some candidates, such as 1996 Vice Presidential candidate Jack Kemp, or forced others from the race (including Elizabeth Dole and Dan Quayle).

 

On the Democratic side, Al Gore and Bill Bradley have each raised about $28 million, though Gore has spent considerably more than his opponent and has about $2.5 million less cash on-hand than Bradley.  Focusing on how important matching funds are, with Bradley’s $27 million, he has qualified for over $11 million in matching funds while Gore has qualified for over $12 million.

 

The amount of money the candidates have available has important implications for the presidential contest.  Better funded candidates are better able to get out their message, pay for television commercials, hire staff, last longer in the primary season and overcome initial disappointing outcomes.  Money also dictates the strategies available to the candidates.  For example, though a Bill Bradley loss in New Hampshire is surely problematic for his candidacy since he needs to build momentum for the campaign season, a loss by John McCain in New Hampshire would have been catastrophic.  McCain, with limited funds, decided to make New Hampshire a must-win state and held over 100 town hall meetings in the state to boost his numbers. However, outside of South Carolina and Arizona, McCain has little or no organization in most of the remaining states. Conversely, George Bush’s money has allowed him to adopt a 50 state strategy, an opportunity afforded a candidate with allies in the Republican Party establishment and nearly $30 million in the bank.  Bush has even been able to put together organization in Guam and American Samoa, a luxury most candidates only dream of. 

 

The issue of money is interesting.  However, the sources of campaign funding are very interesting.  The Center for Responsive Politics (http://www.opensecrets.org) has an excellent searchable website that categorizes and analyzes the source of campaign funds.  The following is a sample of interesting finance facts from Election 2000 that may be of interest to voters in Missouri and voters generally.  I encourage anybody who follows the campaign and wants to see who backs which candidate to other go to Center’s website or the FEC Information Website at http://www.tray.com

 

Table 1:  Missouri and Campaign 2000

 

 

Table 2:  Sector and Industrial Comparisons

 

 

*               State, County, Sector, and Industry Numbers include filings through October 15

**             Total Raised and Cash Balance include filings through January 31

Source:  Center for Responsive Politics (http://www.opensecrets.org).