Kari Andren
5 November 2008
Public Financing: A Critical Necessity for Third Parties
Since the inception of a presidential election public financing system in 1974, political scientists have debated the effectiveness, practicality and sustainability of the system. When critics and proponents look at the program, they must evaluate it through two different lenses: how it works for Democrats and Republicans and how it works for third parties. This paper will briefly describe how the public financing system works for both candidate groups and then focus on how its existence affects the campaigns of minor party candidates, looking specifically at Ross Perot’s 1992 and 1996 presidential bids and what the earned access to public financing meant for him as well as its importance for the future Reform Party candidates, both in theory and in practice. Perot and the Reform Party here are used as a case study, an illustrative example that can be applied generally to any third party. While access to public financing is not, in and of itself, a guarantee of electoral success for third party candidates, one can argue it is a crucial equalizer in the money-driven contests of presidential campaigns.
Background: The Federal Election Campaign Act
The system of presidential election public financing that exists today was established as part of a group of amendments, passed in 1974, to the 1971 Federal Election Campaign Act (FECA). The amendment created a plan to use a voluntary check-off box on federal income tax returns to divert (at the time) $1 of an individual’s taxes to the Presidential Election Campaign Fund, a special fund maintained by the U.S. Treasury, that would be used to offer presidential candidates federal funding with which to run their campaigns. If candidates opt into the program, they can receive a 50-50 funding match from the federal government in the primary election and a block grant in the general election. In exchange for this federal aid, however, candidates must pledge not to fundraise or accept any private donations and must limit their personal spending to $50,000. Candidates who decline the public money face no spending or fundraising limits. The public financing program also provides national political parties with a block grant for use in funding their nominating conventions (Background, pars. 1-3).
The public financing system as described above pertains to both major party and minor party candidates, though the requirements for eligibility and the amounts of money awarded for each are different. Since the 1976 presidential election, the first contest for which the financing system was available, only the Republican and Democratic parties have qualified as “major parties,” or those which received at least 25 percent of the vote in the previous election. The candidates for these parties, then, have always been eligible for the maximum grant, which for the 2008 general election was $83 million (General, par. 2; Mann, par. 1). Minor party, or third party, candidates, can qualify for a portion of the general election grant so long as their party received at least 5 percent of the popular vote in the previous election. Third party grants, then, are proportional to the percentage of the popular vote their party received as compared to the average vote received by the major parties. Third party candidates who accept the public funding may also raise additional private donations, in accordance with federal contribution limits, up to the grant amount received by the major party candidates (General, par. 5).
The public financing system, formed to curb candidates’ dependence on big donors without violating the Supreme Court’s protection of political spending as a means of free speech, was intended to infuse “clean” money into the electoral system (Kirkpatrick, 12). Initially, many people believed the financing system would encourage third party candidates who would not normally have felt empowered to run for the presidency to do so. Specifically, some felt the 50-50 matching funds in the primary election would level the playing field for lesser-known candidates and enable them to be more competitive by balancing out the value of incumbency among other obstacles electoral challengers face. The public financing system is said to be the “great equalizer” in American presidential politics (Michaelson).
Ross Perot: the two campaigns
Henry Ross Perot was a self-made billionaire-a successful business executive and entrepreneur-when he decided to run as an independent for president of the United States in 1992. The announcement of his candidacy came, inadvertently, during a Feb. 20 appearance on CNN’s Larry King Live where Perot said he would run for president if supporters could get his name on the ballot in all 50 states. Since Perot had not run for president before and because he was not running as the nominee of a party that had garnered any percentage of the popular vote in 1988, he was not eligible for any public financing for either his primary or general election campaigns. Given his personal wealth, however, this did not present an obstacle for Perot, who ended up spending about $60 million of his own money to finance his presidential bid (Bloomquist, par. 1).
Perot’s independent wealth enabled him to actually spend more money on his campaign than either of the major party candidates could spend. In 1992, both Gov. Bill Clinton and incumbent President George H.W. Bush accepted the public financing for the general election-a grant of about $54.9 million that year-and thus could not raise any outside funds (AP, par. 8). Perot spent more than $18 million before he officially declared his candidacy and only campaigned in 16 states (Howlett-Perot, par. 12). The majority of his campaign spending went to television advertisements. It wasn’t until September 1992 that Perot was on the ballot in all 50 states and not until early October, after a campaign hiatus, that he was an official independent candidate. Perot’s ability to spend as much money on his campaign as Clinton and Bush was crucial in promoting his positions and letting his platform be heard. He advertised extensively; in October, a partner in the advertising agency with whom he was working said the candidate had 20 TV spots, ranging in length from 30 seconds to 30 minutes, ready to air (Howlett-Perot, par. 13). Perot used his 30-minute television ads to outline what he saw as the nation’s economic problems and to show family and friends praising him with warm, fuzzy messages (Howlett-Texas, par. 14). The expense of airtime, often a prohibitive factor for third party candidates, did not present a problem for Perot who could easily fund enough advertisements to keep pace with his major party counterparts.
Another important factor in increasing Perot’s visibility was his inclusion in the presidential debates-the only time a third-party candidate was allowed into a nationally televised contest with both major party candidates. In addition to adequate funding, this was essential to his being taken seriously as a contender. Perot’s spending and his participation in the debates made him an unusual third party candidate and led to relative electoral success; he made the strongest showing by an independent candidate since Theodore Roosevelt in 1912. On Election Day, Perot garnered more than 19.7 million votes, or 19 percent of the total votes cast (Graham 429).
In September 1995, gearing up for the next presidential election, Perot again appeared on CNN’s Larry King Live, this time announcing the establishment of the Reform Party. Although there was some debate over whether the nominee would be Perot or former Colorado Gov. Richard Lamm, Perot accepted the nomination in August 1996 (Graham 433). The most important aspect of Ross Perot’s 1992 presidential bid was the percentage of the popular vote he won and the implications that carried for the 1996 election. Not only did Perot enjoy easier ballot access the second time around, but he also qualified for a portion of federal public funding for his campaign since he won more than 5 percent of the vote in the previous election. Despite criticizing other candidates for accepting the financing in 1992, Perot chose to take the $29.1 million in public money for which he was eligible in 1996. That year, major party candidates Democratic President Bill Clinton and Republican challenger Bob Dole received $61 million for their general election campaigns (Blomquist, pars. 1, 7). Comparatively, however, Perot did not do well; he won only about 8 percent of the popular vote in 1996 (Graham 433).
Many factors contributed to Perot’s poorer showing in the second election, even if his performance was the highest recorded repeat vote total by a third party candidate in history (Lacy 410). One major component of his smaller vote margin, inevitably, is the substantially smaller amount of money he spent on the campaign. In spending approximately half of what he spent in 1992, Perot garnered about half the percentage of votes he won then. It is too simplistic to draw a direct causal relationship between less money and fewer votes, though it is not unreasonable to expect some correlation. A New York Times article from October 1996 described the difference in campaign efforts on the ground in Maine, one of two states in which Perot came in second place in total votes in 1992, between the two elections:
In 1992, when Mr. Perot spent up to $70 million of his own money on his
campaign, Maine and other states had campaign offices and telephones. This year,
Mr. Perot is spending the $29 million he has received in Federal campaign
financing primarily on infomercials and his own campaign travels. And a check of
directory assistance found no Perot ‘96 or Reform Party offices in Waldo County,
or in Portland, Bangor or Augusta (Tollerson, par. 14).
In having less money to spend, Perot was more limited in how and to what extent he could campaign. This obviously was one factor in his poorer 1996 electoral showing.
On balance, journalists and political scientists list a number of other factors as key reasons Perot failed to perform as well in 1996 as he did in 1992. First, his selection of the relatively unknown Pat Choate, a political economist from California as his running mate, did not help the visibility and name recognition of his candidacy (Tollerson, par. 4). Second, some say the harsh scrutiny to which his life and career were subjected in 1992 led to a series of unresolved questions about his life that made voters wary of supporting him again.
Additionally, his pattern of independent behavior and temperament, while in some ways his biggest strengths, made voters and other elected officials concerned Perot would not be able to build consensus or effectively govern in a system in which his actions would be constrained by Congress, public opinion and international diplomatic relations. Still others cite a less invigorating campaign message and waning anti-incumbency public sentiments as other reasons Perot failed to garner a percentage of votes in the double digits in 1996 (Graham 429; Tollerson, pars. 4, 7).
It may seem counterintuitive to this paper’s thesis to describe how Perot’s second campaign, the one for which he accepted public financing, did so much poorer than his first, personally funded campaign. One might rightfully think a third party candidate eligible for public financing would do better, not worse, with the aid. It is too simplistic, though, to say that a candidate’s choice to accept public financing causes electoral success or defeat; it is more appropriate to link winning or losing with how much money is spent-be it privately raised or federally granted. The Ross Perot example is not a perfect on. He was unique in funding his campaign himself, thus in comparison, accepting public financing appears to have been one force that actually hurt Perot’s campaign rather than help it. Focus should not be placed, however, on the fact that funding did not help him win but rather that he still waged a campaign successful enough to guarantee the next candidate from his party would receive funding that, for the next candidate, could mean the difference between running a modest campaign or not running at all.
The legacy of Perot’s election showing in 1996, then, is the same as it was in 1992: he garnered more than 5 percent of the total vote, the magic number which, upon reaching, greatly helps in the next general election. Because Perot surpassed this threshold, he or any nominee the Reform Party decided to run in 2000, would be guaranteed access to $12.6 million in public financing for the general election (Antle, par. 4). Perot did not choose to run in 2000, but his ability to secure that funding made it possible for the Reform Party to run a viable candidate once again. Ultimately, very few people who want to run for the presidency can afford to finance a competitive, $60 million campaign like Perot did in 1992, thus any amount of public financing is a major help to third party candidates who are not independently wealthy.
Lasting implications: third parties and public financing
In four of the eight presidential elections between 1968 and 1996, a third party candidate won at least 5 percent of the popular vote (Lacy 409). Third party candidates, generally, are at a disadvantage compared to major party candidates because of campaign finance laws, rules that dictate their entrance into debates and a lack of media attention. Because of the eligibility prerequisites for minor candidates to receive public financing, third party candidates usually must fund their own campaigns. With less media coverage, they often struggle to find other means of gaining exposure in order to fundraise the millions of dollars required to run a successful campaign (Nwazota, pars. 18, 22). Public presidential funding has been credited with helping several contenders from 1968 onward through today, including Ralph Nader and Pat Buchanan in 2000 (Samples 7).
Public financing, long touted as an electoral equalizer, is an indispensible election component for third parties both in theory and in practice. In theory, funding candidates essentially funds discussion, enables freedom of expression and shows voters an election is competitive and truly challenged. In practice, the importance of public funding was shown in Richard Lamm’s wariness to run for president without it and Pat Buchanan’s maneuvers to ensure he was the Reform Party’s nominee and thus entitled to the party’s share of public financing.
First, in the theoretical realm, John Samples argues in the journal Policy Analysis, that when taxpayers fund candidates, they are thereby funding public discussion. He states:
Money can enlarge public discussion by increasing the number of candidates who make a serious run for the presidency. When new candidates enter the fray, they may well raise new issues and provoke public debates. The public discussion criterion is thus quite similar to a competition criterion. The same could be said of political parties (6).
Here, Samples makes the theoretical link between money and the ability to enter public discussion, or in this case, a public election. While third parties are often relegated to the sidelines, they frequently are the parties that act as political gadflies, raising issues that have long been neglected. Sean Wilentz, Princeton University’s director of American Studies, said “It’s kind of a bitter sweetness…Third parties are the ones that raise the issues that no one wants to raise and in the process they change the political debate and even policy, but they themselves as a political force…disappear” (Nwazota, pars. 2, 11-12).
Second, Samples’ statement echoes a fundamental principle established in the opinion of the Supreme Court in the 1975 case, Buckley v. Valeo, which examined the law that created the public financing system. The Court ruled that money affects the quantity of expression and the number and depth of messages that can be discussed (Michaelson). Although the finding was actually stated in relation to spending limits, another component of the law litigated in that case, the principle holds true generally for the necessity of money to adequately disseminate campaign messages. Here again scholars affirm the theoretical link between money and the ability to run a competitive campaign.
Furthermore, in theoretical terms, voters need to believe there is some level of financial and political equality among candidates to take the contest seriously. Richard Briffault, in his treatise of public funding and elections for the University of Pennsylvania Law Review, argued that a campaign marked by “grossly unequal resources or by the inability of some candidates to raise enough money to effectively communicate with the electorate” would place in doubt the fairness of the contest and the legitimacy of the outcome (569). Finance systems must assure that challengers have sufficient funds to present an actual test to incumbents and other major party contenders. Briffault argues that challengers are better able to mount campaigns when public financing at least supplements private fundraising (571).
The goal of sufficiently financing challengers, even third party ones, does not necessitate an absolute parity in public funding in raw dollars; rather it requires enough for a challenger to be a real player in the contest. Briffault states: “Voters need to know they have a real alternative to the incumbent and incumbents need to know there is a real possibility they may lose” (569). Credible challengers are the only way to convey to incumbents and voters that an election is fair and open; credible challengers, though, need adequate funding. Public financing provides political newcomers and outsider candidates with the resources to offset the built-in edge incumbents and major party candidates already have (Briffault 571-2).
Third party candidates have, as we established, a theoretical need for adequate public financing to make them viable presidential candidates. Some practical examples from Reform Party candidates will further drive home the importance of third party public financing. When Ross Perot was unsure if he would run for and/or accept the 1996 Reform Party nomination, a debate swirled through the media at first as to whether or not another nominee would qualify for the funding since the party itself was not created when Perot ran in 1992. The Federal Election Commission would have to decide if only Perot personally was eligible for the $29.1 million in federal funding or if another nominee could receive it in his place. Richard Lamm, while he was considering running, expressed concern about running without public funds (Blomquist, par. 2, 6). The issue was moot once Perot accepted the nomination, but Lamm’s hesitation in running without being sure he would receive funding was legitimate and underscored the critical value of the financing, especially for a third party candidate.
Perhaps an even stronger example of the practical need for a third party candidate to receive financing comes from the Reform Party’s 2000 nominee Pat Buchanan. In what some have described as a Faustian bargain, Buchanan left the Republican Party to run as the Reform Party’s nominee. This way, Buchanan could be the nationally known candidate he felt the Reform Party needed and, since it was unlikely he would be competitive as a Republican, he would be eligible for the Reform Party’s $12.6 million share of public financing (Antle, par. 6). Buchanan ran as President George H.W. Bush’s only primary challenger in 1992 but was not very successful. His so-called deal-with-the- devil to secure the nomination, which he made against the support of many long-time Perotista Reform supporters, was motivated by his understanding of his need for money to be competitive. Money is a unique campaign resource: it buys goods, services, human skills and energy, airtime, campaign mailings, transportation costs, salaries and rent (Briffault 574).
As the Reform nominee, Buchanan was in the position financially to contest the general election for the first time (Antle, par. 4). Buchanan, though, did not live up to expectations in the 2000 election; he won less than 1 percent of the popular vote. His defeat not only hurt his own political career, but it lost the ever-important status of the Reform Party as one that qualified for public financing. Since Buchanan failed to earn 5 percent of the popular vote, the Reform candidate in 2004, Ralph Nader, did not receive any public funding. This inevitably contributed to Nader’s weak showing of winning only about 1 percent of the vote in 2004, although there were certainly other factors that also contributed to his loss.
Public financing in 2008 and beyond
The landscape of the public financing system changed dramatically with the 2008 election. First, Sen. Hillary Clinton announced more than a year and a half before Election Day that she would decline public financing for both the primary and general elections, should she be the Democratic Party nominee. Her January 2007 declaration warranted headlines that read: “Death knell may be near for public election funds” from The New York Times and ” Clinton bid heralds demise of public financing” from The Washington Post. Clinton did not end up as the nominee and thus was not in the general election, but her opponent, Sen. Barack Obama, also refused the $83 million in public funding for which he was eligible. What some see as the erosion of the system, though, began more than a decade ago when Republican primary candidate Steve Forbes declined to accept federal matching funds. In recent elections, most major candidates have declined the primary election funding, but 2008 marked the first general election in which a candidate from a major party did not take the election grant.
What, then, is the future of public financing and how will the system-in whatever form it ends up taking-affect third party candidates? Dan Balz, a Washington Post political writer, predicted that Clinton’s (now read: Obama’s) decision:
… will put pressure on other candidates in both parties to follow suit, and if they do, the 2008 campaign will complete what has been the rapid disintegration of a system designed to rein in unlimited spending in presidential
campaigns. One effect is to put lesser-known candidates at a further disadvantage in competing with rivals who have the capacity to raise huge amounts of money (pars. 5-6).
It is obviously too early to tell if Obama’s decision to privately fundraise really does signal the end of public financing. As Balz noted, lesser-known candidates (the category into which most would argue nearly all third party candidates fit) would be at an even bigger disadvantage than they already are if candidates go back to privately funding elections.
David Kirkpatrick of The New York Times said that by announcing her confidence that she could raise more money than the roughly $150 million the system would provide, Clinton “makes it difficult for other serious candidates to participate in the system without putting themselves at a significant disadvantage” (par. 2). Kirkpatrick’s assumption, though, hinges on the idea that candidates would be able to raise enough to be competitive and that the issue would simply be their having to do so. Third party candidates, as mentioned earlier, face a number of obstacles that affect-and limit-their ability to fundraise. Had Ross Perot not been independently wealthy, he probably could not have privately fundraised $60 million (in 1992 money) to be as competitive as he was against George H.W. Bush and Bill Clinton.
FEC commissioner Michael Toner predicted the 2008 race would be the longest and most expensive in history and that serious candidates would have to raise $100 million by the end of 2007. He stated: “We are looking at a $100 million entry fee” (Kirkpatrick, pars. 9-10). For major party candidates, it may be possible that in the future they are more successful without limiting themselves to spending the amount of the federal grant. However, for minor party candidates for whom fundraising is much harder, any amount of public financing, if they qualify, is a significant help to their campaign.
Most of the criticisms of public financing revolve in some way around the idea that the amount of money offered has not kept pace with the actual cost of campaigning, thus candidates feel their efforts are better served if they raise funds privately without limit. Briffault argues that public funding can only work if levels are based on the costs of competitive contemporary campaigns that account for the increase in television advertising costs as well as increasingly longer campaign periods (586; Balz, par. 20). Regardless, though, of how major party candidates choose to fund their election efforts, the system should not be allowed to become extinct as it provides third parties with a potential means of funding a campaign they may otherwise be unable to afford. Toner expects that even if Republicans and Democrats bypass the fund, dark horses and other outsiders will still use public financing (Kirtkpatrick, par. 26).
While it is too soon to tell what the future of the public financing system will be and who will choose to participate, it is clear that the system does serve important functions, especially for minor party candidates. Financing is a highly sought after perk for presidential candidates who find themselves aligned with an alternative party and who, without the funding, could not run a campaign. Even if major party candidates view the system as restrictive and choose not to participate, the principle of access to public money is a sound one that must continue in order to promote competitiveness and attempt to level the playing field, if only a little.
American government and society was founded on the idea of equality of opportunity if not equality of outcome. It is unreasonable to expect that just anyone could or should win the post of the nation’s chief executive, so it is ill advised to assert that third party candidates should be treated like their major party counterparts. It is, however, plausible to demand that provisions designed to increase opportunity be protected so that a one-dimensional campaign factor like financing is not the deciding issue. Ross Perot had equality of opportunity because of his financial successes in business and although he did not win either election in which he ran, he bestowed upon his successor the qualifications necessary so that he might enjoy the opportunity to run for president. Public financing has been called the great equalizer in American politics and we should do whatever is necessary to maintain it.
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