In the Weeds: Where McCain's Public Funding Meets Fundraising

Just over a week ago came the remarkable news that the McCain campaign had raised some $7 million almost immediately after the announcement of Sarah Palin as his running mate, and some $4.5 million of it reportedly poured in online. Palin continues to be a big fundraising draw, including sending out emails with cash asks in the wee hours after her convention speech. If you're not a campaign finance geek, you might think that John McCain's opting into the public financing system for the general election actually limits his campaign to the $84 million provided by the public and otherwise ties his hands when it comes to aggressive online fundraising, through both his email list and his official website at JohnMcCain.com that's paid for by "McCain-Palin 2008." But as it turns out, you'd be wrong. Nothing having to do with money in politics is that simple. (Barack Obama, of course, opted out of public funding altogether back in late June.) McCain's online fundraising operation is a lesson in the complex and, frankly, downright convoluted way American politics is paid for today.

Need proof? Just visit the contribution page on JohnMcCain.com. Linked to from the campaign's official site, it's actually hosted offsite and paid for by an entity called "McCain-Palin Victory 2008." And there, you'll find this wordy disclaimer:

McCain-Palin Victory 2008 is a joint fundraising committee by the McCain-Palin Compliance Fund, Republican National Committee, and Michigan, Missouri, Ohio, and Pennsylvania Republican Parties. Because the McCain-Palin Campaign is participating in the presidential public funding system, it may not receive contributions for the any [sic] candidate's election. However, federal law allows the McCain-Palin Campaign's Compliance Fund to defray legal and accounting compliance costs and preserve the Campaign's public grant for media, mail, phones, and get-out-the-vote programs. Contributions to McCain-Palin Victory 2008 will go to the Compliance Fund, and to participating party committees for Victory 2008 programs.

What the huh? To make sense of it, I rang up David Donnelly, National Campaigns Director at the non-partisan non-profit Public Campaign Action Fund and the director of its Campaign Money Watch project. "The public financing system is full of loopholes," he says. "It's basically broken. We're going to see a whole lot of money spent this fall, and only a fraction of it is going to come from the public money that John McCain and Sarah Palin get." Let's see if we can spotlight the broad outlines of how that might work.

What McCain can legally do with his fundraising online and off, explains David, is to say to potential donors, "write us one check and we'll split it up." While the individual limit on contributions to the McCain-Palin campaign tops out at $2,300, donors can contribute up to $68,000 through the campaign. Under public funding, that first chunk of change goes to the campaign's compliance fund, which pays for the costs -- legal and otherwise -- for participating in the system. The next $28,500 to the RNC. And then the rest gets handed out to the "victory funds" (i.e., the local Republican party offices) in the four key swing states of Michigan, Missouri, Ohio, and Pennsylvania.

Think of it like using a water pitcher to fill up row of cups. New water/money tops off each cup in order, filling one and then the next. If, for example, you've already kicked in $5,000 to the RNC's coffers, then just $23,5000 more can go to the national party. It's a system that leaves the McCain campaign, says David, "like a distribution center."

All of which raises the question, who ultimately controls how that money is spent? When it comes to the RNC, there's a certain amount that can be directly coordinated with the McCain-Palin campaign. To make it a bit more complicated, the cost of a single ad can paid by some blend of the McCain campaign and the national party. But beyond that amount, advertisements paid for by the RNC must reach beyond just McCain and Palin to include a wider slate of local and national candidates. (The state parties, for their part, have to run state candidates.) That's why we're beginning to see ads that tout McCain-Palin and the Republic agenda or candidates.

"The RNC will raise much more money than the DNC," predicts David. "And Obama will raised much more money than John McCain. In the end, it will probably be a wash." So why then, I ask, did Obama opt out of public funding? David suggests that Obama and his team were eager to keep control over their bid within the campaign itself. But again, things get messy in the details. As far as McCain goes, says David, "the reality is that he'll place some people at the RNC to run it for him."

[NOTE: Updated to flesh out some context.]