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  West Wing: Big Business for President

West Wing Big Business for President

By Gabor Steingart

Part 2: Campaign Finance - A History of Scandals

The candidates have also figured out how to globalize themselves, as the promise of adventure and the need for new sources of campaign funding drives them abroad. Giuliani recently attended a fundraising dinner at London's Mandarin Oriental Hotel to convince American financial executives working there to support his campaign. Democratic candidates Hillary Clinton and Barack Obama plan to travel to London in November "to shake the overseas money tree," as the Washington Post derisively wrote. And Obama was the first presidential candidate to solicit contributions from US executives in Beijing via videoconference.

The candidates' combined contributions from abroad totaled $551,000 at the end of June, compared with $31,525 at the same point in time during the last presidential campaign in 2003. Half of the foreign money comes from England, followed by France, China, Japan and Switzerland. "Every opportunity to raise money counts," says Giuliani. A ticket to the London fundraising dinner went for $1,000, while a photo-op with a potential president cost $2,300.

For most of the candidates in the 2008 presidential race, raising money is little more than a break-even proposition. The burn rate, that is, the rate at which campaigns burn up money, is significantly higher for many than the fundraising rate -- which explains why a number of candidates are already seriously in debt. Obama, Clinton and Giuliani are the only contenders with funds in the double-digit millions left in their campaign coffers. Four of the seven Republican candidates are deeply in the red, while second-place Mitt Romney has been forced to dig into his own savings to keep his campaign afloat.

Fundraising Talent No Guarantee for Nomination

But a look back into election history can be comforting for some. In most cases it was not the candidates with the biggest war chests in the early phase of the campaign that ended up securing their party's nomination. In the 2004 race, Democrat Howard Dean was several lengths ahead of John Kerry, and yet Dean lost the nomination. As it turned out, Dean was a savvier fundraiser than a political candidate. Former President Ronald Reagan was also chronically short of funding in both of his election campaigns. Even the gregarious Bill Clinton, a largely unknown politician from Arkansas before his first nomination, was significantly behind incumbent George H.W. Bush when it came to raising money in the 1992 presidential campaign.

An Unending History of Scandals

Despite extensive legal documentation requirements, the identities of major campaign donors remain largely unknown. The big spenders hide behind their underlings, family members or one of more than 500 political action committees like America Votes or Progress for America, organizations that are supposedly pursuing noble goals but also seem to be extremely adept at political fundraising. The history of campaign finance in the United States is one of endless scandals. Companies like Bechtel, Lockheed and Halliburton were later richly rewarded for their donations with government contracts. Today's Wall Street donors also make themselves clear when stating what they expect from their candidates -- and what they don't want, including proposals to enact any new regulations on financial markets or to create a special tax on earnings from stock options, which are part of their income but are taxed at a significantly lower rate than regular earnings.

So why is it that such a wealthy country seems incapable of introducing a clean, public campaign finance system untainted by the odor of corruption? Senator Edward Kennedy once called for replacing the currently privately funded system with public funds for election campaigns. "It would be the smartest investment the American taxpayer could make in the future of his country," Kennedy said. His plan failed when it was voted down by a then Republican-dominated Congress. But why did it fail?

This was the question I asked Republican presidential candidate Ron Paul on Friday at Washington's Mayflower Hotel. Having garnered little support from private industry, he has every reason to call for public campaign funding. A physician and congressman from Texas, Paul is running far behind the pack when it comes to the size of his campaign war chest. It would be a fair guess to say that Ron Paul will not be the next president of the United States.

A Few Dollars Every Three Years

And yet Paul remains plucky in the face of adversity. He says that he doesn't even like the phrase "public financing." What exactly does that mean, he asks? It's his money and it's his money, he says, pointing to people hurrying past us in the hotel lobby. "It's their money, taxpayers' money, and why should the taxpayer pay for my election campaign?" Paul believes that something former President Ronald Reagan once said is equally valid today: Government is not the solution to our problems; government is the problem.

Nevertheless, this additional expense would hardly impose a financial burden on the government. President George W. Bush's 2004 campaign against Democratic candidate John Kerry cost $881 million, which is equal to 0.008 percent of the US national product or 0.04 percent of the government's total budget. Based on these numbers, public campaign financing would weigh in at a cost of $3 per US citizen, once every few years.

By comparison, US per capita spending on pet food amounts to $47 -- a year.

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