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Follow the Money

The 2012 presidential campaign will be awash in dollars—much of it unregulated.


At issue: Like other potential GOP candidates, Haley Barbour will have to decide whether to accept public financing.(AP Photo/Jim Cole)

The 2012 election could see the collapse of the campaign finance system that has been in place since the Watergate scandal nearly four decades ago.

One pillar of post-Watergate reforms—public financing for presidential elections—has been teetering for years, and this election cycle could mark its fall. Two other pillars—limiting the amount of outside money in politics and disclosing its sources—have been significantly weakened by last year’s landmark Supreme Court ruling in Citizens United v. Federal Election Commission, which rejected a ban on corporate and union spending. The decision has allowed independent groups with virtually no disclosure requirements to become magnets for big money from anonymous donors. Such organizations are poised to wield unprecedented influence in 2012.


“It’s fair to say the campaign finance regulation is now at its weakest point since the middle of the 1970s,” said Anthony Corrado, a campaign finance expert at Colby College in Waterville, Maine. “And I think that what we now have is a system that puts a premium on fundraising in a way that we have never seen before.”

Consider the raw numbers: Independent groups, which operate separately from candidates and political parties, spent nearly $300 million last year, according to the Center for Responsive Politics. That’s a jaw-dropping amount for a midterm election. It was three times the amount of money spent in 2006 and 10 times more than the outlay in 2002. In fact, it was nearly as much as independent groups shelled out in the 2008 presidential election, a race that normally attracts far more money.

Perhaps more significant than the amount of money is the source. Forty-seven percent of independent expenditures were funded anonymously in 2010, compared with less than 10 percent in 2006, according to the Center for Responsive Politics. The effect on campaigns was clear. Aided by a 2-to-1 edge in spending, conservative groups helped Republicans win historic victories in November. The GOP, of course, would have had a good year regardless, but the new spending unquestionably allowed the party to seize on a favorable political climate and expand its number of victories.


Still, for everything that happened in 2010, it might have been little more than a warm-up act for next year’s races. Aware that they were outgunned last year, Democrats have fervently worked not just to match conservative outside groups but to surpass them. “The campaign finance story of 2010 was big money,” said William McGinley, a Republican campaign finance lawyer. “The 2012 story will be even bigger money; 2010 was only the precursor.”

N2K: Rules of the Game Unclear for 2012
(Reid Wilson, video by Theresa Poulson with photos by Getty Images)

The Primary

Perhaps no race will feel the effect of the changes more than the Republican presidential nominating contest, where the rise of influence among outside groups and the desertion of the public-financing system will be felt acutely, shaping the tactics of each candidate.

Public financing for presidential primaries goes back to 1976. It provides candidates with matching federal funds for the first $250 they raise from each donor. Through the decades, that system has allowed lesser-known candidates or those with a national network of small donors—from Jimmy Carter in 1976 and Gary Hart in 1984 to Pat Buchanan in 1996 and John McCain in 2000—to mount viable campaigns. But the money comes with strings: Candidates who accept public financing must agree to limits on how much they can spend in each primary or caucus, as well as an overall cap on expenditures for the entire primary season (which legally extends up to the moment the person accepts his or her party’s nomination at the national convention). If the election had been held in 2011, for instance, candidates would have been eligible to spend a little more than $44 million in the primary campaign, according to the Federal Election Commission.



Cracks first appeared in the public system in 1996 when wealthy businessman Steve Forbes opted out of public financing in the Republican primaries. Four years later, George W. Bush did the same. In 2004, both Bush and John Kerry rejected public financing in the primaries but accepted it in the general election. In 2008, Barack Obama and Hillary Rodham Clinton each refused to enter the system during the primaries, as did Republicans John McCain, Rudy Giuliani, and Mitt Romney. Second-tier Democrats John Edwards, Christopher Dodd, and Joe Biden did accept public financing in the primaries. In the general election, Obama opted out, while McCain used it.

Facing concerns both practical and ideological, all of the 2012 Republican candidates will face formidable pressure to reject public financing in the primary race. “We had this discussion on the Pawlenty campaign,” said Vin Weber, a former House member from Minnesota who is advising former Minnesota Gov. Tim Pawlenty. “You’re just not going to be seen as a serious candidate if you accept public financing.”

This article appears in the April 23, 2011 edition of National Journal Magazine.

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