Howard Dean raised more than a few eyebrows over the weekend when the Democratic presidential candidate told Wolf Blitzer of CNN that his campaign was seriously considering rejecting federal matching campaign funds during the Democratic primaries. If so, he would join President Bush, whose money-gushing re-election campaign long ago decided to forgo matching funds in order to raise far more money than the campaign would be permitted to raise if it took that route.
For the Dean campaign, what seemed like an utterly fanciful notion less than two months ago has suddenly become a potentially momentous strategic decision under serious consideration. Back-of-the-envelope calculations explain why. In pursuit of the nomination, Democratic presidential candidates who accept federal matching funds for the 2004 primary season will be limited to spending about $44.6 million through late July, when the Democratic convention begins. That amount includes nearly $7.5 million that can be used to underwrite fund-raising expenses. Although individuals may contribute up to a maximum of $2,000 to a presidential candidate (whether or not the candidate accepts matching funds and the concomitant spending limits), only the first $250 of any individual’s contribution is “matchable” with federal funds. The maximum matching funds a candidate can receive will be about $16.8 million.
In Mr. Dean’s case, a disproportionately large amount of the $10.5 million he raised during the first two quarters arrived in increments below $250. For example, 30,000 of the 42,000 second-quarter online contributions (totaling about $3.5 million) were for less than $100. Thus, a much larger share of Mr. Dean’s contributions, compared to the donations to other candidates, would be eligible to be matched.
By itself, that would be a big incentive for him to accept matching funds. However, if he continues to maximize the financial benefits of his recent boomlet, the $44.6 million spending limit may severely curtail how much he can accept in matching funds.
The Dean campaign blew away fund-raising expectations last quarter, when it led the Democratic field with $7.6 million, finishing with an Internet-led flourish. The campaign, which surpassed its $1 million Internet fund-raising goal during the just-completed “sleepless” tour, expects to raise more than $10 million during the third quarter. It is unlikely the campaign would have announced that goal this week if it did not know it would smash it. An easily conceivable $12 million quarter would bring the year-to-date total to $22.5 million.
That three-quarter total would virtually guarantee that the campaign could spend the $44.6 million pre-convention maximum if it accepted matching funds. But it might also set the stage for a fourth-quarter fund-raising marathon that could — conceivably, if the doc’s “big mo” continues to build upon itself — insure that the campaign’s ultimate take would blow past that limit. Crazier things have happened in Democratic presidential politics. (Recall George McGovern and Jimmy Carter.)
A horrifying prospect awaits any Democrat who wins the nomination after accepting matching funds. Having likely spent every dime before the end of March, he will expose himself to the Bush advertising juggernaut financed by more than $200 million in contributions. The Democratic nominee would remain broke until his convention in late July, when about $75 million in federal funds for the general election campaign will finally be available. If Mr. Dean can somehow manage to capture the de facto nomination in March without accepting matching funds, he could immediately begin raising a lot of money in $2,000 increments to at least mount a defense against the White House’s March-July assault. He would not be helpless. “The doctor” would still be “in.”