Senator Obama's $150-Million September and $600-Million Campaign: Signs that Our Campaign Finance Laws are Broken or Working?

Last week, the Obama campaign revealed that it had raised $150 million in September and another $36 million in the first half of October, and that it had spent more than $100 million in the first half of October alone. Do these figures indicate that our campaign finance system needs to be repaired before the 2012 elections, or that the system is a resounding success?

The answer, it turns out, depends upon what role you think money should play in politics and upon how you think campaign finance laws should be structured. From the point of view of political equality, there is much to celebrate about the Obama fundraising juggernaut, but there are some reasons to be cautious as well.

The Basic Rules: Who Can Raise What and When

Under current federal election law, individuals can contribute up to $2,300 to presidential candidates in the primary, and another $2,300 in the general election. (Political action committees, or PACs, can give $5,000 to each candidate, but these groups have not played an important role in presidential elections in recent years.) During the primary season, a candidate can get the first $250 of each individual contribution matched by the federal government, provided she agrees to abide by a strict spending limit (around $54 million in this election). During the primary, neither Sen. McCain nor Senator Obama participated in this program.

In the general election, Senators McCain and Obama each faced the choice between private fundraising and public financing. Under the public financing plan, a candidate receives $84.1 million in exchange for agreeing to do no private fundraising for the campaign. Senator McCain opted into public financing, but Senator Obama, after initially indicating he would try to reach agreement with Senator McCain to participate, decided to opt out.

Meanwhile, though Senator McCain is barred from raising funds (except about $20 million for legal and accounting expenses) for his own campaign, he has been raising money for the Republican National Committee (RNC) and for state parties for their federal election activities. Individuals can give much more to these party committees and, indeed, in this election many donors have given up to $70,000 for these joint fundraising committees, which Senator Obama has promoted as well to the Democrats' high rollers.

How Much Money Has Sen. Obama Raised, and How?

During the primary season (which runs up to the party convention, and therefore includes much of what we'd consider to be the general election), Senator Obama raised over $414 million in individual contributions. This compares to about $216 million raised by Senator McCain. (In 2004, President Bush raised $258 million during this period, and John Kerry $241 million.) In the general election, during September Senator Obama raised $150 million and the DNC raised another $42 million. Senator McCain in the same period received his $84.1 million in public financing, while the RNC raised a little over $67 million.

Senator Obama's fundraising has been driven in large part by people giving small donations. Nearly half the money that he has raised has been donated in amounts under $200, and much of it has come in through the Internet. Many of these donors giving small amounts are repeat donors, who end up giving significant amounts to the campaign in small chunks. Still, it looks like about one quarter of donations to Obama's campaign, totaling about $150 million, have come from donors giving less than $200 total, with an average reported donation of around $86. But there are still plenty of donations coming into the campaign from $2,300 donors, and, like the McCain campaign in the primary, the Obama campaign has relied on "bundlers" who collect $2,300 checks from friends and business associates.

Assessing the Obama Fundraising Machine from the Perspective of the Goals of Campaign Finance Law and Political Equality

Some people look at the numbers for the Obama campaign-over $600 million and counting-and say that this is just too much money spent on politics. Indeed, the candidates during the primary collectively raised over $1.1 billion. But the idea that this is too much money doesn't wash. As USA Today recently pointed out, the cost of the entire presidential race is "less than the $2.6 billion Coca-Cola spent on advertising in 2006." Elections matter, and so we should not be concerned that lots of money is being spent to convince the public who is the best presidential candidate.

Nor do I believe that these large figures are inherently corrupting. Speaking on "Fox News Sunday," Senator McCain remarked "that history shows us where unlimited amounts of money are in political campaigns, it leads to scandal." Contribution limits were enacted precisely to keep big money and its corruptive potential out of politics. But the possibility of corruption is slight given the nature of the donations Senator Obama has received: Though he has raised massive sums of money, they have not come from a small group of donors who could have undue influence over the candidate. So the concern over large amounts of money per se as corrupting seems misplaced.

The most potentially persuasive concern raised regarding the Obama fundraising is one about notions of political equality. Here, there are two competing conceptions of equality. In one, we give both candidates the same pot of money and ask them each to make their best case to the American public. Some think that this equality of arms insures a fair fight. That's how public financing in the general election is supposed to work, by giving each candidate the same pool of money. In practice, though, in this election the unprecedented fundraising by both candidates for national and state party committees undermines the possibility that the public grant really equalizes resources and takes the candidates out of the money chase.

The other notion of equality is what I've termed barometer equality. It says that candidates should receive funding to run their campaigns that is roughly in proportion to the support they can garner in society. A proponent of this view would contend that the Obama fundraising appropriately expresses the intensity of preference that many voters feel toward his candidacy. On this theory, democracy is promoted, not undermined, when millions participate through making their contributions.

Though the second goal may sound great in theory, it does lead to the possibility of one candidate's drowning out the other. As Sen. Obama spends $100 million in one month and Senator McCain starts to run out of public funds, it means there's a danger that the public Richard L. Hasen is the William H. Hannon Distinguished Professor of Law at Loyola Law School in Los Angeles and writes the Election Law blog.