Campaign Financing

2008 Race Could Be the First Billion Dollar Campaign

Thanks to record-setting fundraising efforts by several Democrat and Republican candidates for president in 2008, the presidential race could become the first billion-dollar race in U.S. history. This phenomenon has been due largely to the ability of Democratic front-runners Hillary Rodham Clinton and Barack Obama to acquire substantial funds, even during the early stages of the campaign. A number of commentators have suggested that the system for using public election funds may come to an end with this election, and critics have noted that many candidates will not be able to compete simply due to financial constraints.

The Federal Election Campaign Act Amendments of 1974, Pub. L. No. 93-443, 88 Stat. 1263 established a public financing system for presidential elections designed to avoid the corruption often associated with money that is used for such a campaign. The voluntary system that the act created establishes spending limits for those candidates who rely on public money to run their campaigns. This system has been hailed as a means to level the playing field for the major candidates and to limit the influence that individual donors can have on the political process.

Since the program was first implemented in 1976, no candidate has forgone public money for both the primary and the general election. However, the fundraising efforts of George W. Bush began to change the landscape for presidential hopefuls. Despite having limitations on the total amounts that individual donors could give, Bush's supporters helped him to raise a record $296.3 million between 1998 and 2004. In both the 2000 and 2004 elections, Bush's funds gave him a major advantage over Democratic opponents Al Gore and John Kerry, although Kerry's camp raised an estimated $235 million for the 2004 campaign. According to some estimates, at least a third of Bush's money came from a total of 631 people. Both Bush and Kerry refused to accept public funding for the 2004 primaries due to the spending limits, but they did accept this money for the general election.

Unlike the past two elections, the Democratic hopefuls have led the charge in terms of raising money for the 2008 campaign. Clinton has been the leader since she announced her candidacy, and she announced that she would not accept public financing for either the primary or the general election. Accepting public funds would have limited her spending to roughly $150 million. Many believed that Clinton would pull away with the Democratic nod early the process due to the amount of funds that she has been able to raise.

Obama, however, had a strong showing on the fund raising front for the first quarter of 2007 and very nearly overtook Clinton in terms of the total number of dollars raised. Even though he did not begin his fund raising efforts until mid-January in 2007, between that time and March 31 he had twice as many individual donors and raised about $3.5 million more than Clinton. Some insiders said that the Clinton camp has simply been too aggressive and too arrogant, and some of Clinton's early supporters have moved over to the Obama camp. Moreover, some of the consultants on whom the Clinton camp expected to rely have said that they will support both Clinton and Obama. According to statistics supplied by the Federal Election Commission, Clinton had raised $26.1 million as of March 31, compared with $25.7 by Obama. The next closest competitor is John Edwards, who had raised $14 million.

Unlike the aggressive Clinton, Obama has challenged opponents to limit fund-raising and spending for the campaign. Although Obama stated that he would not accept public funding, he also left open the possibility that he could return the money at a later date in order to accept the public funding. Commentators noted that if Obama should win the election, he could strike a deal with the Republican nominee to ensure that both sides use only the public financing. According to a filing by Obama with the Federal Election Commission, "Should both major party nominees elect to receive public funding, this would preserve the public financing system, now in danger of collapse, and facilitate the conduct of campaigns freed from any dependence on private fund-raising."

Republican nominees have also been aggressive on the fund-raising front, though they have not been as successful. Former Massachusetts Governor W. Mitt Romney led the pack for the Republican candidates, according to the FEC, by having raised $21 million. Former New York City Major Rudy Giuliani had raised $16 million. Even former campaign finance reformer John McCain (R.-Ariz.) has been actively pursuing funds, having raised $13.7.

McCain has been criticized in some circles for relying on donors who were the subjects of some of his attacks when he was a leading spokesperson for campaign finance reform. He led the charge in Congress to end the so-called "soft money" donations by co-sponsoring a bill in 2002 that also placed strict limits on donations. Moreover, he has introduced legislation that would prevent nonprofit political groups, known as 527s, from using their unlimited donations to spend money on elections. Despite these efforts, however, McCain himself is relying on certain big donors and these 527 groups to fund his own campaign.

The race for the candidacies in both parties most likely will continue to focus more on fund-raising that on other substantive issues. According to Michael E. Toner, a commissioner with the FEC, "The 2008 race will be the longest and most expensive presidential election in American history. Top-tier candidates are going to have to raise $100 million by the end of 2007 to be a serious candidate. We are looking at a $100 million entry fee."