[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Pages S15411-S15413]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself and Mr. Feingold):
  S. 1913. A bill to amend the Internal Revenue Code of 1986 to reform 
the system of public financing for Presidential elections, and for 
other purposes; to the Committee on Finance.
  Mr. McCAIN. Mr. President, along with Senator Russ Feingold, I am 
proud today to introduce the Presidential Funding Act of 2003. This 
legislation will improve and reform the presidential public financing 
system. With major presidential candidates opting out of public 
financing for their 2004 primary campaigns, reform of the system of 
financing presidential nominations is needed more than ever.
  The presidential public financing system has been in place for three 
decades and has achieved broad public acceptance. From 1976 to 2000, 
every major party presidential nominee has accepted public financing 
for the general election and, nearly all of the nominees have also 
accepted it for their primary elections. A total of 46 Democrats and 29 
Republicans have accepted public financing for the presidential 
primaries during this period.
  Since its creation, the presidential financing system has worked non-
ideologically, with victories for three Republicans and two Democrats. 
It has also provided for competitive elections. In the five races that 
have been run under the system involving an incumbent president, 
challengers have won in three of those elections. This system of 
voluntary spending limits in exchange for public funding has been a 
nonpartisan success.
  Last year's enactment of a ban on soft money addressed what had 
become a basic problem for the effectiveness and credibility of the 
presidential system. For the system to continue serving the nation 
effectively, its remaining problems now must be solved. This 
legislation will repair and revitalize the presidential campaign 
finance system in the following ways.
  First, our legislation increases the overall spending limit for the 
presidential primaries and provide more public matching funds for 
presidential primary candidates.
  The overall spending limit in the primaries for publicly financed 
candidates has failed to keep pace with reality. This was demonstrated 
when in 2000, public financing and spending limits for the primaries 
were rejected and a record $100 million in private contributions was 
spent to gain the Republican party's nomination--more than twice the 
amount that the publicly financed candidates were allowed to spend. 
During the 2004 presidential primary period, it is expected that 
Republicans will raise and spend as much as $200 million.
  Our legislation increases the individual contribution limit from 
$1,000 to $2,000. Therefore, it will be easier over time for other 
candidates to reject public financing and raise private money in excess 
of the overall primary spending limit, thereby worsening the 
competitive disadvantage of publicly-financed candidates.
  In addition, the ``front-loading'' of presidential primaries has 
created a much shorter nominating period--now likely to end by early 
March--and a longer actual general election period than existed when 
the presidential financing system was created in 1974. As a result, a 
potential ``gap'' exists in funds available for a publicly financed 
nominee to spend between gaining the party nomination in March and the 
party's summer nominating convention, when the nominee receives public 
funds for the general election. This creates a further competitive 
disadvantage.
  To address these problems, our legislation increases the overall 
spending limit for the presidential primaries to $75 million from the 
$45 million limit in effect for the 2004 presidential election. This 
would equal the $75 million spending limit in effect for the general 
election, which applies to a much shorter period than the primaries.
  The amount of public matching funds for individual contributions in 
the primaries is also increased from the current one-to-one match to a 
four-to-one match for up to $250 of each individual contribution. This 
would greatly increase the value of smaller contributions in the 
presidential nominating process, as was intended by the presidential 
financing system. It would decrease the reliance on larger 
contributions, provide more public funds to meet the higher spending 
limit, and improve the ability of publicly financed candidates to run 
competitive elections.
  When the $1000 individual contribution limit was doubled last year, 
increasing the potential role of private contributions in the 
presidential financing system, no similar adjustment was made to 
increase the role of public matching funds. A new four-to-one multiple 
match for up to $250 of each individual contribution would accomplish 
that goal.
  In addition, the threshold for qualifying for matching public funds 
in the primary has not changed since the system was established. Our 
legislation increases the qualifying threshold should be increased by 
more than doubling the threshold to require candidates to raise $15,000 
in each of 20 states in amounts of no more than $250 per individual 
donor. Although the existing threshold has worked well during the 
history of the current system, a higher qualifying amount is 
appropriate for the future, especially since candidates would now be 
eligible to receive greater amounts of matching funds.
  Second, our legislation requires a candidate to opt in or out of the 
public financing system for the entire presidential election, including 
both the primary and general election.

[[Page S15412]]

  The purpose of the presidential public financing system is to allow 
candidates to run competitive races for the presidency without becoming 
dependent on or obligated to campaign donors. That purpose is 
undermined when a candidate opts out of the system to raise and spend 
large amounts of private money for a primary or general election race. 
Such candidates should not be able to reject public financing and then 
get the system's benefits when it suits their tactical advantage. A 
candidate should have to opt in or out of the system for the whole 
election.
  Third, our legislation repeals the state-by-state primary spending 
limits and allows publicly financed primary candidates to receive their 
public matching funds before January 1st of the presidential election 
year.
  The State-by-State primary spending limits have not worked. The 
limits have proven to be ineffective and have served to unjustifiably 
micromanage presidential campaigns.
  Under current law, primary candidates can begin to raise private 
contributions eligible to be matched beginning on January 1 of the year 
before a presidential election year. They are not eligible, however, to 
receive any of the matching public funds until January 1 of the 
presidential election year. With the current ``front-loaded'' primary 
system, and with the nomination likely to be decided in the early 
months of a presidential election year, primary candidates need to be 
able to spend more funds at an earlier period than before. As a result, 
under our legislation, presidential primary candidates will be eligible 
to start receiving matching public funds on July 1 of the year before a 
presidential election year.
  Fourth, our legislation provides additional public funds in the 
presidential general election for a publicly financed candidate facing 
a privately financed candidate who has substantially outspent the 
combined primary and general election spending limits.
  As more wealthy individuals decide to spend their personal wealth to 
run for public office, the potential grows for an individual to spend 
an enormous amount of personal wealth to seek the presidency. There 
already have been candidates for the U.S. Senate and in mayoral races, 
for example, who have spent as much in personal wealth on their races 
as each major party presidential nominee received in public funds in 
2000 to run their general election campaign.
  In addition, with the increased individual contribution limit, a 
presidential candidate could decide to forgo public funding and raise 
and spend private contributions far in excess of the spending limits 
for publicly financed candidates.
  To address this potential problem, our legislation makes a publicly 
financed major party nominee eligible to receive an additional $75 
million for the general election race, when a privately financed 
general election candidate has spent more than 50 percent above the 
total primary and general election spending limit for the publicly 
financed candidate.
  In other words, once a presidential general election candidate has 
spent more than a total of $225 million to seek the presidency, a 
publicly financed major party nominee, subject to a spending limit of 
$75 million for the primaries and $75 million for the general election, 
would receive an additional $75 million for the general election race.
  Fifth, our legislation increases the funds available to finance the 
presidential public financing system.
  Currently, the public financing system is funded by a voluntary $3 
check-off available to taxpayers on their tax forms on an annual basis. 
This mechanism will not raise sufficient resources in the long term to 
finance the costs of a revised presidential system.
  The $3 tax check-off is increased to $6 and indexed for inflation to 
help ensure there are sufficient funds available for future 
presidential elections. In addition, the Federal Election Commission 
(FEC) is authorized to conduct a public education campaign to explain 
to citizens why the check-off exists and how it works, including the 
fact that it does not increase the tax liability of taxpayers.
  The current presidential public financing law creates a priority 
system that allocates available public funds from the check-off to the 
nomination conventions, the presidential general election and the 
presidential primaries in that order. This order of priority does not 
make sense.
  Our legislation revises the order of priority for use of public funds 
to make funding of the general election candidates the first priority, 
funding of the primary election candidates the second priority, and 
funding of the nomination conventions the third priority.
  Furthermore, a U.S. Department of the Treasury ruling prohibits 
taking into account the tax check-off revenues that will be received in 
April of the presidential election year in determining at the start of 
each presidential election year the total amount of funds available to 
be given to eligible candidates from the fund. This has had the effect 
of artificially lowering the amount of funds available and creating 
temporary shortfalls for primary candidates during the opening months 
of the presidential election year at the time when they need the funds 
the most.
  Our legislation revises the law to require the U.S. Department of the 
Treasury (as it used to do) to estimate at the end of the year prior to 
a presidential election year the amount of check-off funds that will be 
received in the presidential election year and to take these funds into 
account in determining the total amount of funds available under the 
presidential system.
  Finally, our legislation implements the soft money ban to ensure that 
the parties and federal officeholders and candidates do not raise or 
spend soft money in connection with the presidential nominating 
conventions.
  Despite the passage of the new campaign finance law and its ban on 
soft money, federal officeholders and national party officials have 
continued to raise soft money to finance the national nomination 
conventions on the fictional premise that such funds are not in 
connection with a ``federal election'' but rather are for municipal or 
civic purposes.
  The reality is that a presidential nominating convention is defined 
as a ``federal election'' election under the campaign finance law. 
Furthermore, federal officeholders and candidates and national party 
officials who raise soft money for the conventions are subject to 
precisely the same kind of problems of corruption and the appearance of 
corruption that the new law prevents by banning soft money.
  To reaffirm that the soft money ban applies to the presidential 
nominating conventions, our legislation explicitly prohibits the 
national parties and federal officeholders and candidates from raising 
and spending soft money to pay for the presidential nominating 
conventions, including for a host committee, civic committee or 
municipality.
  The highly expensive, front-loaded, nationalized, primary system 
requires that we more than ever fix the presidential public funding 
system. We must continue to promote competition in order to give voters 
choices. Our legislation not only saves the existing system but 
improves it as well. It not only shores up the financial foundations of 
the system but it would also bring more donors into the system, making 
financial participation more democratic. It would give our citizens a 
stake in their government. It is our hope that with the enactment of 
this legislation, candidates will no longer take small donors for 
granted and finally hear their voices. In return, all of our citizens 
will feel reconnected to the presidential financing process that at 
times, has left them behind.
  Mr. FEINGOLD. Mr. President, it is pleasure to join my friend and 
colleague Senator McCain in introducing a bill to repair and strengthen 
the presidential public financing system. The Presidential Funding Act 
of 2003 will ensure that this system that has served our country so 
well for over a generation will continue to fulfill its promise in the 
21st century.
  The presidential public financing system was put into place in the 
wake of the Watergate scandals as part of the Federal Election Campaign 
Act of 1974. It was held to be constitutional by the Supreme Court in 
Buckley v. Valeo. Every major party nominee for President since 1976 
has participated in the

[[Page S15413]]

system for the general election. The system, of course, is voluntary, 
as the Supreme Court required. In the last election, then-Governor 
George W. Bush opted out of the system for the presidential primaries, 
but elected to take the taxpayer funded grant in the general election. 
He appears ready to make the same choice in this election, and so far 
two of the Democratic presidential candidates have decided not to seek 
federal matching funds in the primaries. Before 2000, almost all 
serious candidates for President had participated in the system.
  It is unfortunate that the matching funds system for the primaries is 
becoming less viable. The system reduces the fundraising pressures on 
candidates and levels the playing field between candidates. It allows 
candidates to run viable campaigns without becoming overly dependent on 
private donors. The system has worked well in the past, and its 
advantages for candidates and for the country make it worth repairing 
so that it can work in the future. If we don't repair it, the pressures 
on candidates to opt out because their opponents are opting out will 
increase until the system collapse from disuse.
  At the outset, I want to emphasize that this bill is not designed to 
have any impact on the ongoing presidential race. It will take effect 
only after the 2004 elections. Therefore, there is no partisan purpose 
here. Once again, Senator McCain and I are working together to try to 
improve the campaign finance system, regardless of any partisan impact 
that these reforms might have. Second, we do not expect Congress to 
take action on this bill during an election year. Instead, our hope is 
that by introducing a bill now we can begin a conversation with our 
colleagues and with the public that will allow us to take quick action 
beginning in 2005 so that a new system can be in place for the 2008 
election.
  The bill makes changes to both the primary and general election 
system to address the weaknesses and problems that have been identified 
by both participants in the system and experts on the presidential 
election financing process. First and most important, it eliminates the 
state-by-state spending limits in the current law and substantially 
increases the overall spending limit from the current limit of 
approximately $45 million to $75 million. This should make the system 
more viable for serious candidates facing opponents who are capable of 
raising significant sums outside the system. The bill also makes 
available significantly more public money for participating candidates 
by increasing the match of small contributions from 1:1 to 4:1. Thus, 
significantly more public money will be available to those candidates 
who choose to participate in the system.
  One very important provision of this bill ties the primary and 
general election systems together and requires candidates to make a 
single decision on whether to participate. Candidates who opt out of 
the primary system and decide to rely solely on private money cannot 
return to the system for the general election. And candidates must 
commit to participate in the system in the general election if they 
want to receive federal matching funds in the primaries. The bill also 
increases the spending limits for participating candidates in the 
primaries who face a non-participating opponent if that opponent raises 
more than 33 percent more than the spending limit. This provides some 
protection against being far outspent by a non-participating opponent.
  The bill also sets the general election spending limit at $75 
million, indexed for inflation, which is about what it is projected to 
be in 2008. And if a general election candidate does not participate in 
the system and spends more than 33 percent more than the combined 
primary and general election spending limits, a participating candidate 
will receive a grant equal to twice the general election spending 
limit.
  This bill also addresses what some have called the ``gap'' between 
the primary and general election seasons. Presumptive presidential 
nominees have emerged earlier in the election year over the life of the 
public financing system. This had led to some nominees being 
essentially out of money between the time that they nail down the 
nomination and the convention where they are formally nominated and 
become eligible for the general election grant. For a few cycles, soft 
money raised by the parties filled in that gap, but the Bipartisan 
Campaign Reform Act of 2002 thankfully has now closed that loophole. 
This bill doubles the amount of hard money that parties can spend in 
coordination with their candidates, allowing them to fill the gap once 
the party has a presumptive nominee.
  Fixing the presidential public financing system will obviously cost 
money, but our best calculations at the present time indicate that the 
changes to the system in this bill can be paid for by doubling the 
income tax check-off on an individual return from $3 to just $6. The 
total cost of the changes to the system is projected to be around $175 
million over the four-year election cycle. Of course, these projections 
may change as we get more data from the 2004 elections. But even a 
somewhat larger cost would be a very small investment to make to 
protect the health of our democracy and integrity of our presidential 
elections. The American people do not want to see a return to the pre-
Watergate days of unlimited spending on presidential elections and 
candidates entirely beholden to private donors. We must act now to 
preserve the crown jewel of the Watergate reforms and assure the 
fairness of our elections and the confidence of our citizens in the 
process.
                                 ______