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In 1974 Congress amended the Federal ElectionCampaign Act to provide taxpayer financing forpresidential campaigns. The presidential programhad several goals: reducing corruption, reducingthe appearance of corruption, and easing the rigorsof fundraising for candidates while increasing elec-toral competition, public discussion, and publicparticipation in financing presidential campaigns.Public financing also sought, for partisan reasons,to equalize spending between the major party can-didates in the general presidential election.Defenders and critics of presidential publicfunding agree that the program is now in trouble.By Election Day 2008, the presidential publicfinancing system may be either insolvent or irrel-evant, or both. Proponents of public financingargue for a major overhaul of the program,including large increases in taxpayer financingfor the parties and their candidates.Presidential public financing has failed tomeet its goals. The presidential program has nei-ther increased trust in government nor spurredelectoral competition in the primaries or the gen-eral elections. By reducing the rigors of fundrais-ing, the system has denied the electorate impor-tant information about presidential candidatesand given the major political parties significantsubsides at taxpayer expense. The American tax-payer has rejected the presidential program, asreflected by the lack of interest in the checkoff program. By 2008 about half as many Americansas currently give private donations to candidatesor parties will participate in the presidential pub-lic financing system.
The Failures of Taxpayer Financing of Presidential Campaigns
by John Samples
_____________________________________________________________________________________________________
 John Samples is director of the Center for Representative Government at the Cato Institute.
Executive Summary
No. 500November 25, 2003
 
Introduction
Almost 30 years have passed since Congressadopted the current system of taxpayer financ-ing of presidential elections. By the end of thepresidential election of 2004, taxpayers willhave handed about $2 billion in subsidies to themajor political parties and to candidates for thepresidency.
1
For at least the last 10 years, the sys-tem has experienced serious problems of demo-cratic legitimacy and financial solvency. Nowseveral individuals and groups are calling forsalvaging the presidential public funding sys-tem by increasing its funding (and therebyincreasing everybody’s taxes).
2
Before Congressrushes to the rescue, we ought to ask what thepublic has received for its money. The answer isnot much.
3
The presidential public funding sys-tem has failed and should be killed by Congress.
How the System Works
The presidential public funding system sub-sidizes primary and general election campaignsfor candidates and the presidential nominationconventions of the major parties. The systemalso limits the contributions and expendituresof candidates and requires them to submit to anaudit by the Federal Election Commission andto repay any overpayments to the U.S. Treasury.Candidates seeking a party’s presidentialnomination qualify for matching funds byraising more than $5,000 in each of 20 states.Only individual contributions count towardthat qualifying sum, and only a maximum of $250 of any contribution counts toward thethreshold. Once the threshold is met, the can-didate is eligible to receive matching funds,including the $250 contributions that metthe threshold. Those who seek matchingfunds agree in exchange for public funding tolimit their overall national spending for allprimaries and to constrain their spending ineach state on the basis of its voting age popu-lation. Candidates also agree to limit spend-ing of their personal funds for the campaign.Taxpayer financing in the primaries is a mixedpublic-private program.The nominee of each major party is eligiblefor a grant of public money for the generalelection (in 2000, that grant equaled $67.5 mil-lion). To get the grant, candidates agree tolimit their spending to the sum of the grantand to accept no private contributions for thecampaign. Candidates may, however, spendup to $50,000 of their own money on theircampaign. Minor parties may receive fundingbased on their performance in earlier generalelections or after a general election if theyreceive more than 5 percent of the vote. Theparties also receive a public grant to supporttheir nominating conventions; in 2000 eachmajor party received $13.5 million, and theReform Party received $2.5 million. The gener-al election part of the system relies solely ontaxpayer financing.Unlike most programs, the presidentialpublic funding system does not come from anannual appropriation from Congress. Instead,the funding depends on taxpayers checking abox on their federal income tax form.Originally, a checkoff directed $1 to the presi-dential fund; later, that sum was increased to$3.
4
The Purposes of Presidential Public Funding
The goals of any government program pro-vide a starting point from which to assess itssuccess or failure. The U.S. Supreme Court intheir decision in
 Buckley v. Valeo
(1976) saidCongress created the presidential public fund-ing system to attain four goals:1. To reduce the deleterious influence of large contributions on our politicalprocess,2. To facilitate and enlarge public discus-sion,3. To broaden participation in the elec-toral process, and4. To free candidates from the rigors of fundraising.
5
Of course, those goals are hardly beyond crit-
2
The presidentialpublic fundingsystem has failedand should bekilled byCongress.
 
icism. However, the stated purposes of a pro-gram are a good basis for policy evaluation.After all, if a program cannot fulfill the pur-poses for which it was designed, why shouldit continue to spend taxpayers’ money?
Reduction of Influence
The first goal, reducing the influence of large contributors, requires elaboration. Since1976 all presidential candidates have beenrequired to raise campaign funds under con-tribution limits established by federal law.Those limits, not the presidential fundingmechanism, eliminated contributions largerthan $1,000 by individuals.
6
The presidentialpublic funding system matches only the first$250 of a contribution to a primary campaign,thereby discouraging at the margins presiden-tial campaign contributions from $251 to$1,000. Such sums are hardly “large contribu-tions” by any ordinary standard. The systemand its contemporary defenders seem less con-cerned with corruption than with the size of donations.
7
By offering incentives for matching funds,the system aimed at lowering the proportionof private contributions a presidential candi-date would use for a primary campaign com-pared with a candidate running without thetaxpayers’ help.
8
In the general election, if acandidate accepts public funding, the systemcompletely prohibits private contributions orspending. The creators of the system and itscurrent guardians assumed that privatemoney corrupts candidates for the presidency.Indeed, the moral superiority of public moneyover private informs most advocacy of taxpay-er financing of campaigns.
9
Private Money and Small Donations.
Has thesystem limited private money in presidentialcampaigns? Federal law does not forbid run-ning a presidential campaign funded by pri-vate contributions. The presidential publicfunding system could have failed if a largenumber of candidates had relied on privatecontributions. However, all major party can-didates for the presidency in general electionssince 1976 have used taxpayer financing andaccepted limits on their spending. Only fourcandidates have forgone public funding:John Connolly in 1980, Ross Perot in 1992,Steve Forbes in 1996, and George W. Bush in2000.
10
All except Perot did so during the pre-convention primaries. If we assume that,absent the presidential funding mechanism,all candidates for the presidency in all elec-tions since 1976 would have run with thesupport of private money, it is clear that pub-lic financing has reduced the proportion of private contributions in presidential cam-paigns from what it would have been under apurely private system.
11
That conclusion requires qualification.Shortly after the presidential public fundingsystem started, Congress and the FederalElection Commission decided that the politi-cal parties could raise funds without contribu-tion limits for party-building activities. Such“soft money” grew over the years and hadsome effect on presidential campaigns. Sincesome—though hardly all—soft money contri-butions were well into six figures, we can con-clude that taxpayer financing did not stoplarge contributions from being part of presi-dential elections.The soft money story suggests a larger les-son about campaign finance restrictions:such limits are unlikely to effectively restraincandidates and parties involved in competi-tive elections for high stakes. The two partiesand their candidates do not compete for thepresidency to play fair; they run to win. Toaccomplish that, they will do whatever theycan within the law. That truth, not policyarguments or empty moralizing, will have thegreatest influence on the fate of presidentialpublic funding.Soft money notwithstanding, the presiden-tial public funding system probably reducedthe relative amounts of private donations topresidential campaigns. The real question isnot the effectiveness of the system on thisscore but the propriety of the goal. Do privatedonations harm presidential campaigns?Advocates often argue that private dona-tions should be restricted or prohibited toprevent corruption or the appearance of cor-ruption. Indeed, the
 Buckley
court wrote,
3
If a programcannot fulfill thepurposes forwhich it wasdesigned,why should itcontinue tospend taxpayers’money?
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