The Matching Funds Dilemma
by CA Pol Junkie
by CA Pol Junkie
Lost amid the confederate flag scuffle is the much more important news of the day: the Dean campaign is asking its supporters whether or not to accept federal matching funds. Any primary candidate can get the first $250 of each person's donations matched by the federal government, up to $18.6 million. The catch is, if any federal money is taken, one must abide by a spending cap of $44.6 million which applies until the party's convention next summer. Bush is not accepting matching funds and is raising $200 million to spend attacking and defining the Democratic nominee. Bill Clinton did this in 1996 and destroyed Bob Dole's general election campaign before it even got started.
In Dean's case, the choice is pretty easy. He has raised over $25 million already, and has enough small donations to get the maximum matching funds, which adds up to about the maximum amount the campaign would be allowed to spend if it accepted matching funds. That means the campaign would have to stop accepting contributions now, win the nomination, and try to coast to the convention on limited funds. The campaign points out that in order to win the nomination, the money will be gone by March, after which the campaign would be outspent by Bush $200 million to $0. Dean has the ability to raise the $18.6 million they'd be missing out on in the next three months or so, and could continue raising and spending money all the way to the convention. The comments on the Dean blog after the announcement of the spending cap vote are running at least 100:1 for not taking the federal funds. Holding the vote was a clever way to get the result the campaign wants, while empowering his grassroots and giving Dean cover for backing out of his original pledge to accept matching funds.
The other candidates will now be under tremendous pressure to reject matching funds as well, to show that they will be able to compete with Bush all the way to the convention. The problem is, those candidates could use a few extra million dollars, since they don't have as much cash or fundraising potential as Dean and need to compete with him until the nomination is settled. Expect the others to give up matching funds as well, but the end result is that the field will be winnowed faster than it otherwise would have. There will be less cushion to get by early defeats and sustain spending needed to run TV ads.