Post-Watergate campaign funding reforms fade away

Candidates now rely mostly on private money

Forty years ago this week, five burglars were arrested in the Watergate complex in Washington, touching off a seismic scandal that brought down a president and bared rampant campaign finance abuses. Now, as the nation prepares for its 10th national election since Watergate, the linchpin of reforms enacted in the aftermath — public funding for presidential campaigns — is all but dead.

The system crumbled in recent years because of the successful campaigns of candidates who relied on privately raised funds rather than voluntarily accept spending limits that came with public money.

But before it became irrelevant, public funding provided 104 candidates with more than $1.3 billion. About $375 million of that was in matching funds for candidates seeking their party’s nomination, and $926 million was in grants for the major party nominees and a trio of third-party candidates in general elections.


Until 2008, an average of 11 candidates per cycle — and as many as 15 in two of them — collected primary campaign funds from the federal government.

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“Qualifying for public funding was once considered a sign of a candidate’s viability; it was the first hurdle,” said Anthony J. Corrado, a professor of government at Colby College in Maine who specializes in campaign finance issues. “Now, it’s generally considered a losing strategy. No candidate who hopes to compete meaningfully will accept it.”

This year, the federal Treasury thus far has dispensed only $285,470 to Buddy Roemer, the former Louisiana governor who suspended his candidacy last month after leaving no footprints as a Republican or third-party candidate, and $100,000 to Gary Johnson, the former New Mexico governor, another early washout in the crowded GOP field, who became the nominee of the Libertarian Pary.

Presidents Ford, Carter, Reagan, Clinton, and both Bushes all voluntarily took the public grant in the general election phase of their campaigns. In 2008, Barack Obama was the first major party nominee to opt out of the system, which puts limits on candidates’ spending, and he smashed all fund-raising records in the process.

This year, President Obama and his Republican challenger, Mitt Romney, have both said they will not accept public funding, estimated to be worth $91.2 million for each candidate. None of the top eight Republican contenders for the nomination this year sought federal matching funds.


Congress has made no serious attempt to update the public funding mechanism, nor has Obama, who in 2008 said he intended to. The demise of public funding coincides with the increased deregulation of federal election spending that, because of court rulings, allows corporations, labor unions, and wealthy individuals to raise and spend unlimited amounts independent of the candidates and parties.

Reformers decry the influence of big money in the political system, but Bradley A. Smith, a professor at Capital University Law School in Ohio and former federal election commissioner, recently described campaign finance reform as “a failed 35-year experiment to allow members of Congress to regulate free speech.”

“It’s very hard to point to any concrete benefits from the public funding and you’ve got [reformers] who say it’s functioned well or served the country well, but they can’t point to any way in which it’s served the country well,” Smith said. One of the most flagrant abuses of the Nixon campaign of 1972 was the solicitation of numerous large corporate contributions that went into secret slush funds. They were as illegal before the post-Watergate reforms as they are today, Smith said.

The 1974 changes, however, brought stringent new requirements of public reporting of expenditures and contributions and set limits on the amounts, including the aggregate in a two-year period, that individuals could give to candidates, political action committees, and parties. The Nixon campaign had set up a vast array of political entities that allowed individuals to funnel what were then enormous sums — some of it arriving in cash-filled suitcases — into an array of front committees and secret slush funds.

Public funding functioned well until 1996, when eventual GOP nominee Bob Dole’s campaign exhausted its treasury in the primaries trying to offset the advertising onslaught of self-funded candidate Steve Forbes. This gave Bill Clinton, the incumbent Democrat, a huge financial advantage for several months before the party conventions, at which point the candidates could begin using public funding of $61.8 million apiece for the general election campaign.


With that lesson in mind, four years later Republican George W. Bush bypassed primary matching funds and raised a record amount to defeat Forbes and other challengers, principally John S. McCain, whose candidacy was hamstrung by the state-by-state spending limits that came with accepting public money.

‘Now, it’s generally considered a losing strategy. No candidate who hopes to compete meaningfully will accept it.’

In 2004, Democrats John Kerry, the eventual nominee, and Howard Dean declined matching funds in the primaries, and in 2008, only Democrat John Edwards, among the top candidates in either party, took public money during the nomination process.

“I lived through both McCain campaigns, which were witnesses to and victims of the demise of public funding,” said Trevor Potter, counsel to the McCain presidential campaigns of 2000 and 2008. He is now president of the nonpartisan Campaign Legal Center, which focuses on issues of money in politics.

Four years ago, McCain, a leading advocate of campaign finance reform, bypassed matching funds in the primaries, but as the party’s nominee, was the last nominee to take the public match in the general. He lost after being heavily outspent by the unconstrained Obama in the general election.

“Once a candidate has successfully shown the advantage of raising and spending unlimited funds, it makes no sense to stay in the system when the opponent is outside it,” Potter said. “It could have been fixed, but Congress has done nothing about it. It’s not a hot issue.”

As a result of the dropoff in candidates taking public financing, the fund, which in times past nearly ran out of money, has a record balance of $249 million, according to the Federal Election Commission. It is funded in $3 increments by taxpayers who voluntarily check off a box on their income tax returns. Participation has dropped precipitiously, from a high of 28.7 percent of all returns in 1980 to 6.4 percent last year, Internal Revenue Service data show.

While candidates may no longer be availing themselves of public funding, the Democratic and Republican parties continue to cash in on one of its vestiges — money to help pay for their quadrennial presidential nominating conventions. Over the years, this amount has totaled $183 million, and this year each party will receive more than $18.2 million in federal aid from the presidential fund, the commission reports. That supplements $50 million approved by Congress for each host city to defray security costs, and even larger sums contributed by corporate and individual sponsors.

“If the purpose is to keep out private money because of its corrupting influence, the grant is so small you can’t run a modern party convention on it,” said Smith. “It’s just a subsidy for the party but doesn’t even accomplish what it’s intended to do.”

Senator Tom Coburn, Republican of Oklahoma, is leading a bipartisan effort in Congress with recently introduced legislation that would eliminate the non-security federal aid to future conventions.

Brian C. Mooney can be reached at bmooney@globe.com.