"Money On My Mind" is a monthly column by Jay Mandle. The views expressed here are those of the author, (not necessarily those of Democracy Matters or Common Cause), and are meant to stimulate discussion.

March 2008
By Jay Mandle

In his Cleveland debate in February with Hillary Clinton, Barack Obama backtracked from an earlier commitment to limit himself to public funding in the post-convention campaign should he become the nominee, promising only to “sit down with John McCain and make sure that we have a system that is fair for both sides.”

Obama’s hedging is no doubt influenced by the fact that by the end of January he had raised $134 million for his primary campaign, far in excess of the $55 million secured by his presumptive opponent, McCain. With his prodigious ability to raise money, Obama will probably be able to continue this pattern of financial dominance. So he has a strong incentive to find a way of opting out of public funding and retain his competitive advantage over McCain.

But even if Obama and McCain do agree to forego private donations and accept the $85 million in public funding available to each for the general election, the damage associated with private funding has already been done. Obama, as well as Clinton and McCain are already so deeply indebted to special interests for primary donations that none of them as President can be expected to buck the agendas of their financial patrons.

As a case in point, consider how little the candidates have had to say about the financial sector’s role in the current economic decline.

Why the silence? It turns out that political campaign contributions from individuals attached to Wall Street represent the single largest source of donations for each of these three leading candidates. These donors exercise a powerful influence on the candidates to ignore the reforms needed in financial markets.

As reported by the Center for Responsive Politics (CRP), individuals employed in the Finance, Insurance and Real Estate sector have contributed in excess of $16 million to Clinton’s primary campaign, more than $12 million to Obama’s, and $6.5 million to McCain’s.

However, even these figures may not tell the full extent of this sector’s influence. For all these candidates, the second leading source of funds is a category described as Lawyers and Lobbyists. It is likely that at least some of the more than $14 million than went from this grouping to Clinton, the almost $10 million that went to Obama and the $3 million that went to McCain came from lawyers and lobbyists representing the financial sector.

As CRP Executive Director Sheila Krumholz put it, “No matter who becomes our next president, Wall Street will have an indebted friend in the White House.”

The dominant role played by the financial sector and other big donors should temper enthusiasm concerning the place of small donors in the Obama campaign. It is important to note that donations of less than $200 are not itemized, so the validity of the data that we have concerning small contributions comes from reports from the campaigns themselves.

In the Cleveland debate, Obama stated: “We have now raised 90 percent of our donations from small donors, $25, $50.” But in fact this figure cannot be reconciled with the data his own campaign has provided. As reported by The Campaign Finance Institute, between January 1, 2007 and January 31, 2008 contributions of $200 or less constituted 36 per cent of Obama’s primary election receipts.

Perhaps even more troubling than the limited role played by small donors in each of the campaigns is the timing of the inflow that comes from this source. Contributions of under $200 became important only late in the campaign.

This suggests that in the early days when Obama was not well known, his ability to get up and running depended on a relatively small number or large donors. These contributors – chief among them the finance sector – exerted and will continue to exert a strong influence on him. After all, they were there when he needed them most.

The only way to escape the corrosive influence of big private money is a fully and generously funded system of public funding to cover both the primaries and the general election. Our current system is hardly that. It remains, in real purchasing power, stuck at 1976 funding levels. As such it is little more than a fig leaf for the unconscionable amount of special interest money that distorts our politics.

If we want candidates to be able to produce the change they promise we will have to provide adequate public financing for candidates at all governmental levels. Only that will free them (and us) from the crushing yoke of private donors.