Campaign-Finance Breakdown

Is 2008 the last hurrah for public-that is, taxpayer-financing of presidential campaigns? Since 1976, taxpayers have shelled out about $3 billion in current dollars to pay for presidential campaigns, including campaigns by John Hagelin, Lyndon LaRouche, Lenora Fulani, Ralph Nader, Sen. Alan Cranston, Milton Schaap, Ruben Askew, and other also rans. Funds have also paid for balloon drops at the party's conventions, negative TV ads, robocalls and more.

But this year, most leading presidential contenders refused to take the public subsidy-and accompanying spending limits-during the primaries. One exception has been Sen. John McCain. But faced with certain campaign realities, he too is now looking for a way out and is arguing that he has a constitutional right to withdraw from the public funding system for the primaries and, instead, rely on private money. Sen. Barack Obama said last year that he would accept taxpayer financing in the general election if the Republican nominee did too, but he has backed away from that promise.

All this is happening despite the fact that Republicans are nominating their champion of campaign finance reform, Mr. McCain, and a year ago Mr. Obama was lauded in the headlines and media coverage for his dedication to saving public financing of presidential campaigns.

But it was always just a matter of time before the system broke down. No one seriously argues that Mr. Obama's policy, or Mr. McCain's integrity, is determined by their participation in the tax financing system. No one thinks that tax financing has given us better campaigns, or better candidates, or better presidents than we had before taxpayer financing.

Rather, what taxpayer financing has done is to distort campaigns. For example, when an incumbent president doesn't face a serious challenge during the primaries, he can sit on the public funds obtained during the primaries until the nominee from the other party has been determined, and then use those primary funds to attack his general election opponent.

The non-incumbent party's nominee must usually battle for the nomination and typically has reached the spending limit imposed by the taxpayer funding system by March. These challengers are then severely limited in their ability to campaign until their nominating conventions in August. Challengers Walter Mondale in 1984 and Bob Dole in 1996 were pummeled for months with little financial means to respond.

This year, Mr. Obama's vacillation on whether to honor last year's promise to stay within the public financing system comes only after it became clear that he could raise more in voluntary contributions than Mr. McCain could. At first Mr. Obama argued that he was already meeting the spirit of the public financing by relying on small donors instead of corporate leaders. More recently, he has hinted that he would again agree to public financing if "loopholes" that allowed third parties to spend money were eliminated.

Yet anyone who has studied campaign finance knows that closing loopholes is an impossible task. As Supreme Court Justice Antonin Scalia once noted, "if history teaches us anything, \[it\] is that when you plug one means of expression, the money will go to whatever means of expression are left."

Suppose that all third party expenditures were banned-no campaign ads, no issue ads, no independent efforts to register voters, no independent studies released to try to influence public opinion. Would that really remove all third party voices? Not likely. The National Rifle Association could still operate a satellite radio station, as it does. George Soros could still buy a television station or newspaper. And General Electric would still own NBC, which could, at least in theory, allow it to support a favored candidate with positive news stories.

And then there is the issue of campaign books. Has anyone noticed how candidates come out with books around election time? The advertising for these books and attendent book tours are all paid for by the publisher. Are these expenditures that should come under campaign finance regulations? But it doesn't have to be a candidate who comes out with a new book at the right time. Candidates' supporters also tend to write books. They even produce movies for commercial release such as "Fahrenheit 9/11."

Campaign finance regulations and public financing don't promote fairness. They twist and distort. As both Mr. Obama's and Mr. McCain's changing positions indicate, the regulations advantage different candidates at different times. The obvious point here is that no one, even the most ardent campaign finance reformers, can agree on how to limit the loopholes in campaign finance regulations.

The ultimate irony is the tax financing system, and all the other campaign finance laws, haven't prevented claims of corruption from emerging. In fact, they often create the appearance of corruption where it did not exist before. Democrats are attacking Mr. McCain for what they regard as a violation of campaign finance laws based on his decision to withdraw from the tax financing system. Republicans accuse Mr. Obama of a conflict of interest for placing a "hold" on nominations to the Federal Election Commission. Neither has done the types of things that people think of when they think of government corruption, but both are placed under a vague ethical cloud. And instead of freeing up candidates to talk about issues, stories about candidates' compliance with arcane points of campaign finance law are sucking up time and space that could go to talking about the war or the economy.

Is 2008 the last hurrah for tax financing of campaigns? We can only hope.

*Mr. Lott is the author of Freedomnomics and a senior research scientist at the University of Maryland. Mr. Smith, a former Federal Election Commission commissioner, is chairman of the Center for Competitive Politics and Professor of Law at Capital University in Columbus, Ohio.