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Will Bush And Dean Kill Public-Financed Races?

On Nov. 8, when democratic front-runner Howard Dean joined George W. Bush in kissing off the spending limits attached to federal matching funds, pundits predicted the demise of the system that has funded Presidential primaries since Watergate. Amid the rush to the exits -- wealthy Massachusetts Senator John F. Kerry could be next -- it's clear that the taxpayer-subsidized nomination process is in trouble.

Here's why: Spending limits for publicly financed candidates haven't kept pace with the exploding costs of modern campaigns. What's more, there is an unintended effect of the McCain-Feingold campaign-finance law of 2002, which doubled individual contribution limits, to $2,000: Because it's easier for candidates to rake in more money, they now have an increased incentive to opt out of the system instead of accepting the spending limits that come with taxpayer subsidies.

Bush is expected to raise and spend a record $200 million-plus before the Republican convention begins next Aug. 30, despite the fact that he has no primary opposition. Dean has already raised more than $25 million; he hopes to collect $200 million more before the general election. The other Democratic challengers, if they take federal money, will be limited to a $45 million primary spending cap.

If Dean has irritated proponents of publicly funded campaigns, he also has galvanized the reformers who last year won congressional passage of a ban on soft-money contributions. They are planning a push to revitalize the public-financing system.

Led by Senators John McCain (R-Ariz.) and Russ Feingold (D-Wis.), reform advocates are mulling a number of ideas. They want to lure candidates back into the system and level the playing field by raising the primary spending limit as high as $75 million -- the same as for the general election. Another proposal: Encourage public participation in the political process by increasing the one-to-one match for small donations to two-to-one or even four-to-one.

To fund the system, reformers propose hiking the $3 check-off on income-tax forms to $5. They also are jawboning makers of tax-preparation software to rewrite their programs, which now default to the "no" box. And they want candidates who opt out of public financing during the primaries, such as Bush and Dean, to lose their $75 million windfall in the general election. "Candidates shouldn't be able to reject public financing and accept it when it suits their tactical advantage," says Fred Wertheimer, CEO of Democracy 21, a nonpartisan campaign-finance reform group.

It's more than tactics, though, that are roiling the public-financing system for Presidential campaigns, and reformers are bucking the winds of change. Because of the front-loaded primary season, candidates must raise lots of money in a few months. The Internet is lowering the cost of fund-raising and making it easier for voters to have their voices heard through online donations. And more important, fewer taxpayers -- only 11% in 2002 -- are contributing to the public-financing system by checking off a donation on their Form 1040. The public, it seems, is voting with its tax returns. Free-traders are cheering the World Trade Organization's Nov. 10 ruling slapping down President George W. Bush's three-year tariffs on imported steel. But there's reason for them to fret, too: The decision is fanning the flames of bipartisan anti-WTO sentiment in Congress that could ultimately lead to America's departure from the 148-nation body.

Senator Max S. Baucus (D-Mont.) has renewed his call for a commission of U.S. judges to review the reasons behind the WTO's string of anti-U.S. decisions. Baucus says the cases are "under-mining confidence" in the Geneva-based organization. Many Republicans have long warned that the WTO threatens U.S. sovereignty. Moderate Representative Phil English (R-Pa.) calls its recent decisions "extraordinarily arbitrary."

A General Accounting Office report finds the U.S. is the biggest loser in WTO rulings and faces the highest penalties. Recent WTO decisions have authorized Europe to levy penalty tariffs on up to $6 billion in U.S. exports.

The WTO still has its defenders, including Senate Finance Chairman Charles E. Grassley (R-Iowa). But even he is angry that it allows judges to receive documents, hear arguments, and deliberate entirely in secret. Congress must vote in 2005 on whether to stay in the WTO.

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