For other versions of this document, see http://wikileaks.org/wiki/CRS-RL34534
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   ข

  
ข                                           








                                                    

                                                         
                                                     
     
Prepared for Members and Committees of Congress
                                     ข        



ข
The presidential public campaign financing program is funded through "checkoff" designations
on individual income tax returns. Choosing to participate (or not) in the checkoff does not affect
one's tax liability or refund. Candidates who choose to participate may receive taxpayer-funded
matches of privately raised funds during primary campaigns, and grants during the general-
election contest. Public funds also subsidize nominating conventions. The public financing
system has remained largely unchanged since the 1970s. However, there is general agreement
that, if the program is to be maintained, updates are necessary to provide greater financial
resources and higher spending limits to participants.

This report discusses current controversies and arguments for and against public financing of
presidential campaigns, legislative history, elements of the program, taxpayer and candidate
participation, financial status of the program, current legislation, and analysis of various policy
proposals. If Congress chooses to alter the program, consensus will be necessary in what has
historically been a particularly complex and contentious area of campaign finance policy.

Four bills introduced in the 110th Congress (H.R. 776, S. 436, H.R. 4294, and S. 2412) would
update the program. Those bills, which are substantially similar, would greatly increase the
financial resources available to candidates, particularly through "escape hatch" provisions
designed to allow candidates to respond to high-spending opponents. That feature does not
currently exist. Overall, under the proposed increases, publicly financed candidates could spend
as much as $450 million, compared with approximately $126 million today (plus approximately
$14 million in exempt fundraising, legal, and accounting costs). Part of the increased benefits to
participants would be funded by increasing the checkoff designation from $3 for individuals to
$10, and from $6 to $20 for married couples filing jointly. It is unclear how taxpayers would
respond to this change, particularly because the effects of a proposed public education program
cannot be predicted. Taxpayer participation in public financing declined the only previous time
that Congress increased the checkoff amount, but the higher designation amounts nonetheless
substantially raised the balance in the Presidential Election Campaign Fund, at least in the short
term.

Finally, two bills (H.R. 72 and H.R. 484) would curtail part or all of the public financing
program. These approaches are likely to be attractive to those who believe that public financing is
unnecessary, an improper use of taxpayer resources, or both. However, removing the option of
public subsidies would leave presidential candidates entirely dependent upon private donations or
personal resources. As this report discusses, various options, each with potential strengths and
weaknesses, exist for revisiting the presidential public financing system.

This report will be updated as events warrant.




   
                                                   ข        



    
Current Issues and Arguments in Brief............................................................................................ 1
Brief Legislative History ................................................................................................................. 2
    Buckley v. Valeo ....................................................................................................................... 3
How Public Financing Works.......................................................................................................... 3
    Elements of the Program........................................................................................................... 3
    The Role of Taxpayers .............................................................................................................. 4
    The Role of Federal Agencies ................................................................................................... 5
    Amounts Participants May Receive .......................................................................................... 5
    Qualifying for Public Financing................................................................................................ 6
        Conditions on Participation................................................................................................. 6
Participation Over Time .................................................................................................................. 7
    Taxpayer Participation............................................................................................................... 7
    Candidate Participation ............................................................................................................. 9
        Participation in 2008........................................................................................................... 9
Financial Status of the Presidential Election Campaign Fund........................................................11
    Shortfalls and Potential Shortfalls During the 2008 Cycle ..................................................... 13
Recent Congressional Activity ...................................................................................................... 14
    110th Congress Legislation ...................................................................................................... 14
        Bills that Would Curtail Public Financing ........................................................................ 14
        The Presidential Funding Act of 2007 (H.R. 776, S. 436, H.R. 4294, and S. 2412)......... 14
Analysis of Policy Options for Maintaining Public Financing...................................................... 18
    Providing the Presidential Election Campaign Fund With More Money................................ 18
        Increasing the Checkoff Amount ...................................................................................... 18
        Changing the Qualifying Requirements to Limit Candidate Access to Funds.................. 19
        Reconsidering Funding Priorities ..................................................................................... 20
        Other Revenue Sources..................................................................................................... 21
        Congressional Appropriations........................................................................................... 21
    Making Public Financing More Attractive to Candidates ....................................................... 22
    Taxpayer Awareness of, and Participation in, Public Financing ............................................. 23
        Issues Regarding Tax-Preparation Software ..................................................................... 24
Analysis of Policy Options for Curtailing or Eliminating Public Financing................................. 24
Concluding Comments .................................................................................................................. 25



  
Figure 1. The Checkoff Designation on IRS Form 1040................................................................. 4
Figure 2. Taxpayer Participation in Public Financing, 1976-2006 .................................................. 9
Figure 3. Presidential Election Campaign Fund Balances, 1973-2007 ......................................... 12
Figure 4. Annual (Calendar Year) Percentage Change in Checkoff Designations ...................... 19




    
                                                   ข        




Table 1. Checkoff Designations, 1973-2006 ................................................................................... 7
Table 2. Primary Matching Funds Certified by the FEC for the 2008 Election Cycle as of
  August 31, 2008 ......................................................................................................................... 10
Table 3. Presidential Election Campaign Fund Balances ...............................................................11
Table 4. Summary of Spending Limits Under Status Quo and H.R. 776, S. 436, H.R.
  4294, and S. 2412, 110th Congress ............................................................................................ 17
Table A-1. Major Provisions of Bills Proposing to Maintain the Presidential Public
  Financing Program, 110th Congress ........................................................................................... 28



   ก
Appendix. Major Provisions of Bills Proposing to Maintain the Presidential Public
 Financing Program, 110th Congress ........................................................................................... 28



   
Author Contact Information .......................................................................................................... 35




    
                                           ข        




                                                  
The principal justification behind presidential public financing has been to reduce the need for
private money in politics.1 Public financing proponents argue that the program has increased
competition in presidential elections by permitting those without personal wealth or substantial
private fundraising resources to seek the office.2 Public financing therefore relieves candidates
from at least some of the burdens of time-consuming private fundraising. Finally, public
financing is attractive to some because it can encourage candidates to limit their campaign
spending in exchange for public subsidies.

Nonetheless, even those who support the presidential public financing program generally agree
that it needs to be updated before the 2012 elections.3 Except for increasing the checkoff amount
in 1993, Congress has essentially left the program unchanged since its enactment in 1971. Many
of the concerns surrounding public financing highlight financial competitiveness among
candidates. As this report discusses, publicly financed candidates must adhere to spending limits,
unlike their privately financed opponents. Those limits, however, are increasingly regarded as too
low to permit effective campaigning. Since 2000, some major candidates have chosen to forgo
public financing during the primary campaign.

The 2008 campaign cycle is regarded as perhaps the final one in which the program, as it
currently stands, will remain a viable option for the most competitive candidates. As one scholar
has noted, "By 2008, it was clear that the public financing system, with its relatively paltry
spending limits, was a luxury no serious candidate could afford, at least in the primary season."4
Nonetheless, and despite that sentiment, several candidates chose to participate in public
financing during the 2008 election cycle.

The eventual Republican nominee, Senator John McCain, initially applied for public funds in the
primary, but later withdrew from the system. Senator McCain will, however, receive public funds
for the general election.5 The Democratic nominee, Senator Barack Obama, announced in June
2008 that he would not participate in public financing for the general election; he also did not


1
  This report supercedes CRS Report RL32786, The Presidential Election Campaign Fund and Tax Checkoff:
Background and Current Issues, by now-retired CRS Specialist Joseph E. Cantor. Parts of this report are adapted from
the previous report.
2
  For an overview of arguments in favor of presidential public financing, see, for example, Campaign Finance Institute,
Task Force on Financing Presidential Nominations, "So the Voters May Choose ... Reviving the Presidential Matching
Fund System," April 2005, at http://www.cfinst.org/president/pdf/VotersChoose.pdf.
3
  See, for example, Robert D. Lenhard, "A $3 Vote for Competitive Elections," Washington Post, March 8, 2008, p.
A15; Campaign Legal Center and Democracy 21, "Presidential Public Financing: Repairing the System," conference
report, December 9, 2005, at http://www.campaignlegalcenter.org/attachments/1614.pdf; and Democracy 21, "Reform
Groups Urge House Members to Co-Sponsor Legislation to Fix Presidential Public Financing System," press release,
February 7, 2007, at http://www.democracy21.org/index.asp?Type=B_PR&SEC={91FCB139-CC82-4DDD-AE4E-
3A81E6427C7F}&DE={92F0FA14-AED0-4153-A1F4-28645410CB25}.
4
  Richard L. Hasen, "Political Equality, the Internet, and Campaign Finance Regulation," The Forum, vol. 6, no. 1, art.
7; at http://www.bepress.com/forum/vol6/iss1/art7. This electronic journal is not paginated.
5
  Letter from Donald F. McGahn, II, chairman, Federal Election Commission, to Senator John McCain, September 5,
2008, at
http://www.fec.gov/press/press2008/McCainLetterCert.pdf.




      
                                          ข        


accept public funds during the primary.6 Senator Obama is the first major-party nominee since the
program's 1976 inception to decline public financing for the general election.

Although much of the recent debate over public financing has focused on how to save the system,
some suggest that Congress should end the program. For those who oppose presidential public
financing, the declining taxpayer participation rate (discussed later in this report) provides
evidence that the program lacks public support. Opponents also contend that the program has
failed to improve competition.7 Some also object in principle to government-funded campaign
subsidies, question whether truly competitive candidates need public financing, or both.8

Finally, the Federal Election Commission (FEC) was unable to administer parts of the public
financing program between January and June 2008.9 Due to a Senate stalemate over nominations
to the Commission, in January 2008 the agency lost the quorum required to make most policy
decisions. That included certifying candidates' eligibility to receive primary matching funds or
general-election grants. (Convention grants were certified before the Commission lost its
quorum.) The Commission was also unable to consider enforcement actions or advisory-opinion
requests related to public financing. On June 24, 2008, however, the Senate confirmed five
nominees to the FEC.10 Those five will join a sixth commissioner who had remained in office.
The Commission now stands at full operating strength.


     
ข
Despite calls for publicly financed presidential campaigns early in the 20th Century, Congress did
not actively consider the idea until the 1950s. In 1966, Congress first enacted legislation
authorizing taxpayer support for presidential and vice-presidential candidates and political
parties. However, legislation enacted the following year essentially terminated the original
program before it took effect.11

The current presidential public financing system was established in the 1971 Revenue Act, which
permitted individual taxpayers (except nonresident aliens) to designate $1 ($2 for married couples
filing jointly) to the Presidential Election Campaign Fund (PECF).12 Amounts in the PECF are
diverted from the Treasury's general fund for use by qualified presidential candidates (or party
nominating conventions). Although Congress enacted the program in 1971, due to objections


6
  Shailagh Murray, "Obama Opts Out of Public Financing," Washington Post online, June 19, 2008, at
http://blog.washingtonpost.com/the-trail/2008/06/19/obama_opts_out_of_public_finan.html?hpid=topnews.
7
  For an overview of arguments against presidential public financing, see, for example, John Samples, "The Failure of
Taxpayer Financing of Presidential Campaigns," in John Samples, ed., Welfare for Politicians? Taxpayer Financing of
Campaigns (Washington: Cato Institute, 2005), pp. 213-249; and Bradley A. Smith, Unfree Speech: The Folly of
Campaign Finance Reform (Princeton: Princeton University Press, 2001), pp. 103-105.
8
  See, for example, John Samples, ed., Welfare for Politicians?.
9
  For additional information on the FEC's operating status with and without a quorum, see CRS Report RS22780, The
Federal Election Commission (FEC) With Fewer than Four Members: Overview of Policy Implications, by R. Sam
Garrett.
10
   For additional discussion, see CRS Report RL34324, Campaign Finance: Legislative Developments and Policy
Issues in the 110th Congress, by R. Sam Garrett.
11
   See 80 Stat. 1587 and 81 Stat. 57 respectively.
12
   On the presidential public financing portion of the Revenue Act, see 85 Stat. 573.




   
                                        ข        


from President Richard Nixon, the statute called for a delay in beginning checkoff designations.13
Candidates did not begin receiving funds until the 1976 election cycle.

The Federal Election Campaign Act (FECA), enacted in 1971 and amended throughout the 1970s,
expanded the scope of the public financing program and set various criteria for participation.14 In
particular, the 1974 FECA amendments extended public financing, originally reserved only for
general-election candidates, to presidential primaries and nominating conventions. The 1974
amendments also established the FEC and charged the agency with certifying eligible candidates,
authorizing payments from the PECF, and conducting audits related to public financing.

Despite relatively minor changes, the presidential public financing program has essentially
remained unchanged since the 1974 FECA amendments.15 Congress most recently altered the
program in 1993, when it tripled the checkoff designation from $1 to $3 for individuals and from
$2 to $6 for married couples filing jointly.16 The 2002 Bipartisan Campaign Reform Act (BCRA),
the most recent major change to the nation's campaign finance laws, did not affect public
financing.17


     ข  
The U.S. Supreme Court addressed public financing in its landmark 1976 Buckley v.
Valeo decision, which considered various constitutional challenges to FECA. The Court upheld
spending limits associated with public financing because candidates voluntarily accept the
limitations in exchange for receiving taxpayer support. Those who are not publicly financed
candidates, however, may spend unlimited amounts, provided that their campaign funds come
from lawful sources. Under Buckley's reasoning, spending of non-public campaign funds is
generally considered protected political speech.



    

        
The presidential public financing program provides funds for three phases of the campaign: (1)
grants to nominating conventions; (2) matching funds for qualified primary candidates; and (3)
grants for general-election nominees. Convention funding goes to the Democratic and Republican
parties' (or qualifying third parties') convention committees; funding for the primary and general
elections goes directly to qualifying candidates' campaigns.19 Under federal law, convention

13
   85 Stat. 574
14
   FECA is 2 U.S.C. ง 431 et seq. Public financing requirements are discussed later in this report.
15
   P.L. 93-443; 88 Stat. 1263
16
   26 U.S.C. ง 6096(a). On the increase, see P.L. 103-66; 107 Stat. 567-568.
17
   BCRA is P.L. 107-155; 116 Stat. 81. BCRA amended FECA.
18
   424 U.S. 1 (1976). For additional discussion, see CRS Report RL30669, Campaign Finance Regulation Under the
First Amendment: Buckley v. Valeo and Its Supreme Court Progeny, by L. Paige Whitaker.
19
   For additional discussion of convention funding, see CRS Report RL34630, Federal Funding of Presidential
Nominating Conventions: Overview and Policy Options, by R. Sam Garrett and Shawn Reese.




       
                                            ข        


funding receives priority, followed by general election grants and primary matching funds.20 In
other words, primary matching funds are distributed only if sufficient amounts remain after first
providing convention grants and general-election grants. Prorated amounts may be distributed in
the event of shortfalls (insufficient balances in the fund), which have been of increasing concern
in recent years.21


   กข
Taxpayers determine how much money is available for presidential public financing through a
"checkoff" provision on individual federal tax returns, as shown in Figure 1 below. Checkoff
designations are the only revenue source for the public financing program, even if the Treasury
Secretary projects that the fund will become insolvent.22 Under current law, Congress makes no
appropriation to the PECF.

                      0401 mroF SRI no noitangiseD ffokcehC ehT.1 erugiF




     .0401 mrof SRI fo noitatpada SRC :ecruoS
Individuals may choose to designate $3 of their tax liability to the PECF, a separate fund
maintained by the U.S. Treasury solely to fund publicly financed presidential campaigns and
nominating conventions.23 Married couples filing jointly may designate a total of $6 to the fund,
although, as the figure shows, separate response options are listed for each spouse.24


20
   On prioritization of convention funding, see 26 U.S.C. ง 9008(a). Duane Pugh, director, congressional affairs, FEC,
also provided a telephone consultation on this point, April 10, 2008.
21
   Prorated funds are distributed under the so-called "shortfall rule," which requires the Treasury Secretary to "seek to
achieve an equitable distribution" among competing members of the same political party. See 26 U.S.C. ง 9037(b).
Therefore, in the event of a shortfall, those competing for matching funds receive approximately the same amounts.
The IRS revisited these provisions in early 2008, when it issued temporary regulations permitting payments as soon as
funds become available (rather than on the monthly basis specified in Title 26 of the U.S. Code) in the event of a
shortfall. See Department of the Treasury, Internal Revenue Service, "Payments From the Presidential Primary
Matching Payment Account," 73 Federal Register 8608, February 14, 2008.
22
   See, for example, 26 U.S.C. ง 9006(c).
23
   On the PECF, see 26 U.S.C. ง 9001 et seq.
24
   Taxpayers may also contribute to the fund through tax-preparation software, a topic discussed in more detail later in
this report.




   
                                           ข        


Although taxpayers may believe that how they answer the checkoff question affects the amount
of tax they owe or the refund they receive, "[d]esignating the allowed amount does not affect the
amount of an individual's tax liability or tax refund; it simply directs the Treasury Department to
allocate a specific amount from general revenues to the PECF."25 In short, participating (or not) in
the checkoff designation does not affect a taxpayer's liability or refund. Rather, it allows
taxpayers to direct a small portion of the taxes they pay ($3 for individuals or $6 for married
couples filing jointly) to the PECF instead of the Treasury's general fund.26


                                      
The Treasury Department and the FEC share responsibility for administering presidential public
financing, although the FEC is the lead agency shaping program policy. Based on FEC
certifications of candidate eligibility, the Treasury Secretary has responsibility for disbursing
public funds. The Internal Revenue Service (IRS) administers the checkoff designations through
individual tax returns.


     ข 
Public financing benefits (amounts) are set by statute and vary by type of candidate and phase of
the campaign.

    ท    For their nominating conventions, each of the two major parties may qualify for
         grants of $4 million as adjusted for inflation (approximately $16.8 million each
         in 2008).27 Based on their nominee's performance in the preceding election,
         existing third parties may qualify for lesser amounts, although none has done so
         for the 2008 election cycle. New third parties may receive limited public
         financing retroactively if they receive at least 5% of the popular vote in the
         general election, meaning that they are ineligible for funds until after the
         campaign concludes. (Funds received after the election could be used to pay
         remaining debts.)28
    ท    For the general election, the Democratic and Republican presidential nominees
         are eligible for $20 million grants, as adjusted for inflation (approximately $84.1
         million each in 2008).29 Third parties may qualify for lesser amounts.

25
   Anthony Corrado, "Public Funding of Presidential Campaigns," in Anthony Corrado, Thomas E. Mann, Daniel R.
Ortiz, and Trevor Potter, eds. The New Campaign Finance Sourcebook (Washington: Brookings Institution Press,
2005), p. 182.
26
   However, those who pay no taxes would not contribute to the program. See Department of the Treasury, Internal
Revenue Service, "Payments From the Presidential Primary Matching Payment Account," p. 8608, which notes that
"individuals whose income tax liability for the taxable year is $3 or more may designate $3 for the [PECF] on their tax
returns." Emphasis added.
27
   Ibid., 26 U.S.C. ง 9008(b); 26 U.S.C. ง 9008(b)(2). On application procedures, see 11 C.F.R. 9008.3. The 2008
figures were aggregated by the author from $16,356,000 in Federal Election Commission, "FEC Approves Matching
Funds for 2008 Candidates," press release, at http://www.fec.gov/press/press2007/20071207cert.shtml and $464,760 in
an inflation-adjustment figure provided by Wanda Thomas, deputy assistant staff director for public financing, FEC (e-
mail correspondence with author, April 9, 2008). Conventions also receive additional federal funding for security.
28
   See, for example, 26 U.S.C. ง 9004(a)(3).
29
   2 U.S.C. งง 441a(b)(1); 441a(c). The 2008 amount appears in Federal Election Commission, "FEC Approves
Matching Funds for 2008 Candidates."




   
                                            ข        


     ท    Publicly financed primary candidates may spend up to $42 million in 2008 (plus
          approximately $14 million in fundraising, legal, and accounting costs, which are
          exempt from the base spending limit), but the amount of funds participants
          receive depends on their ability to secure government matching payments based
          on private fundraising. Participating candidates' individual contributions of up to
          $250 may be matched at a rate of 100% each. For example, a privately raised
          contribution of $200 would be matched for $200, bringing the candidate's total
          receipt of funds to $400. On the other hand, contributions of more than $250 are
          matched only for the first $250.30 For example, a contribution of $1,000 would
          only be eligible for $250 in matching funds.31 The primary matching fund
          program, which was designed to magnify small donations, applies only to
          individual contributions. PAC or party contributions are ineligible for matching
          payments.

ข   
Candidates who wish to receive public funds must meet various qualifying criteria and agree to
certain conditions designed to decrease the need for large contributions while also demonstrating
the candidates' viability. To qualify for public financing in the primary, candidates must raise at
least $100,000 in specific amounts and across various states. Specifically, candidates must raise at
least $5,000, through individual contributions of no more than $250 each, in at least 20 states.32

If they choose to participate, the Democratic and Republican nominees are automatically eligible
for public financing in the general election. Nominees of third parties (called "minor parties" in
FECA) whose candidates earned at least 5% of the popular vote in the previous general election
are eligible for lesser amounts than major-party candidates.33 However, third-party candidates
rarely meet qualifying criteria.


    
Publicly funded primary candidates must adhere to overall and state-specific spending limits. The
aggregate limit is approximately $42 million in 2008 (plus approximately $14 million in
fundraising, legal, and accounting costs, which are exempt from the base spending limit). State-
specific limits in 2008 range from $841,000 in sparsely populated states and territories, to
approximately $18.3 million in California. These amounts are determined by a formula
established in FECA (the greater of 16ข multiplied by the voting-age population (VAP) of the
state, or $200,000, as adjusted for inflation).34 Publicly financed candidates in the general
election must agree not to raise private funds for their campaigns. In exchange for the taxpayer-

30
   The $250 cap applies to any single contribution or to small contributions from the same individual that aggregate
more than $250. For example, a series of six $50 contributions (aggregating $300) would only be matched at $250.
31
   The base amount, without the inflation adjustment, is $10 million. On primary spending limits, see 2 U.S.C. งง
441a(b)(1); 441a(c).
32
   26 U.S.C. งง 9033(b)(3); 9033(b)(4).
33
   The 5% threshold appears in the relevant definition applying to "minor parties." See 26 U.S.C. ง 9002(7). On
eligibility for general-election payments, see 26 U.S.C. งง 9004(a)(2); 9004(a)(3).
34
   The base limit (before the inflation adjustment) is $10 million. See 2 U.S.C. ง 441a(b)1(A). For the 2008 limits, see
Federal Election Commission, "Presidential Spending Limits for 2008," at http://www.fec.gov/pages/brochures/
pubfund_limits_2008.shtml.




   
                                              ข        


funded grant, their spending is limited to approximately $84.1 million in 2008.35 Finally, all
publicly financed campaigns must: agree to various record-keeping requirements, submit to FEC
audits, and limit spending from the candidate's personal funds to no more than $50,000.36


  
Participation in the public financing program can be considered on two fronts: (1) taxpayer
participation; and (2) candidate participation in the program. This section discusses both in more
detail.


กข 
Taxpayer participation has never been particularly strong. Even at the height of the program's
popularity more than a quarter-century ago, less than one-third of taxpayers chose to support
presidential public financing. As Table 1 and Figure 2 (below) show, checkoff participation
reached a high point in 1980, when 28.7% of filers designated funds for the PECF. With minor
exceptions, participation has fallen steadily since that time. Fewer than 15% of taxpayers have
made public financing designations every calendar year since 1993. Taxpayer participation
reached a low of 9.1% in 2005. However, the checkoff rate increased slightly to 10.9% in 2006;
this 1.8% change represented the largest one-year increase in the checkoff rate since 1979.37 The
"Analysis of Policy Options" section at the end of this report provides additional discussion.

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       1891             %0.72                                            0.14$                       5.39$


       2891             %2.42                                            0.93$                       8.38$




35
     The base limit (before the inflation adjustment) is $20 million. See 2 U.S.C. ง 441a(b)1(B).
36
     26 U.S.C. งง 9003(a); 9033(a). On the $50,000 limit, see 26 U.S.C. ง 9006(d).
37

The IRS provided CRS with aggregate tax-year 2006 data, from which CRS calculated a percentage. CRS calculated
the percent changes based on the data in Table 1.




       
                                                                                          
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              1.16$                          7.55$                                              %2.9              4002
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              0.67$                          1.16$                                              %8.11             9991
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              7.34$                          6.92$                                              %9.81             2991
              1.94$                          3.23$                                              %7.71             1991
              6.15$                          5.23$                                              %5.91             0991
              0.45$                          3.23$                                              %8.91             9891
              8.75$                          0.33$                                              %1.02             8891
              5.16$                          7.33$                                              %0.12             7891
              7.76$                          8.53$                                              %7.12             6891
              9.66$                          7.43$                                              %0.32             5891
              8.96$                          0.53$                                              %0.32             4891
              1.47$                          6.53$                                              %7.32             3891
        )snoillim                      )snoillim                           snoitangiseD                             a   raeY
    ni srallod 7002(              ni srallod lautca(             gniniatnoC snruteR fo egatnecreP
      detangiseD                     detangiseD
    tnuomA latoT                   tnuomA latoT
ข        
                                                          ข        


                                       6002-6791 ,gnicnaniF cilbuP ni noitapicit raP reyapxa .2 erugiF
                                                                                            T



                                      35.0%
          Returns with Designations
                                      30.0%

                                      25.0%

                                      20.0%
                                      15.0%
                                      10.0%

                                      5.0%

                                      0.0%


                                            88
                                            76

                                            78

                                            80

                                            82

                                            84

                                            86



                                            90

                                            92

                                            94

                                            96

                                            98

                                            00

                                            02

                                            04

                                            06
                                         19




                                         19
                                         19

                                         19

                                         19

                                         19

                                         19

                                         19



                                         19

                                         19

                                         19

                                         19



                                         20

                                         20

                                         20

                                         20
                                                                         Years


     emocnI dnuF gnihctaM laitnediserP" ,noissimmoC noitcelE laredeF ni detic atad SRI no desab hparg SRC :ecruoS
       htiw SRC dedivorp eciffo secivreS noitamrofnI lacitsitatS SRI ehT .7002 yaM ,eruhcorb ",sutatS ffO-kcehC xaT
                                                  .egatnecrep a detaluclac SRC hcihw morf ,6002 rof atad etagergga

      
Almost every major presidential candidate since 1976 has participated in the public financing
program. Exceptions were rare until the 2000 election cycle. Democrats and Republicans have
participated in the public financing program on a roughly equal basis. Until 2008, every major-
party nominee since 1976 had accepted public financing for the general election.

Historically, only a few wealthy, self-financed candidates have declined to participate in public
financing.38 Beginning during the 2000 election cycle, however, some major candidates began to
opt out of primary matching funds, apparently believing that bypassing required spending limits
would be strategically advantageous. That year, George W. Bush participated in public financing
during the general election but not during the primary. Then-candidate Bush was the first person
elected president without having participated in public financing during both the primary and
general phases of the campaign. In 2004, President Bush and Democratic nominee Senator John
Kerry both declined public financing during the primary campaign.39 Both accepted public funds
for the general-election campaign.


 
The FEC certified eight candidates as being eligible for matching funds in the 2008 primary
campaign, as shown in Table 2 below. The Democratic and Republican parties also received

38
  Examples include Ross Perot (1992) and Steve Forbes (1996).
39
  Federal Election Commission, "FEC Approves Matching Funds for 2004 Presidential Candidates," final
certifications, press release, April 1, 2005, at http://www.fec.gov/press/press2005/20050401cert.html. See also Anthony
Corrado, "Public Funding of Presidential Campaigns," p. 184.




       
                                                                                          
 financing, FEC, April 9, 2008.
 from e-mail correspondence between the author and Wanda Thomas, deputy assistant staff director for public
 also certified an additional payment, to cover inflation, of $464,760. Information on the inflation adjustment comes
 20, 2007, at http://www.fec.gov/press/press2007/20071207cert.shtml for a base certification of $16,356,000. The FEC
 40
    See Federal Election Commission, "FEC Approves Matching Funds for 2008 Candidates," press release, December
                              .yfilauq ton did ro sdnuf cilbup rof ylppa ton did rehtie elbat eht ni raeppa ton od ohw
   setadidnaC .troper siht fo epocs eht dnoyeb si yramirp eht gnirud margorp gnicnanif cilbup eht ot tcepser htiw
  sutats s'ngiapmac niaCcM ehT .sdnuf gnihctam yramirp deviecer reven ngiapmac niaCcM ehT .ngiapmac yramirp
       eht gnirud gnicnanif cilbup morf werdhtiw retal tub sdnuf gnihctam yramirp rof deilppa yllaitini ohw ,niaCcM
      rotaneS rof deifitrec noillim 8.5$ edulcni ton seod elbat eht ni latot noillim 3.12$ yletamixorppa ehT :setoN
                                                                                             .deifitrec tnuoma latot eht
  detaluclac SRC .)8002 ,11 rebmetpeS ,rohtua htiw ecnednopserroc liam-e( ecivreS tnemeganaM laicnaniF ,sriaffa
  cilbup dna evitalsigel fo eciffo ,olleinatnaS samohT yb SRC ot dedivorp ,8002 ,13 tsuguA ",382-49 .L.P ,stnemyaP
          detaleR dna dnuF ngiapmaC noitcelE laitnediserP eht morf stnemesrubsiD" ,ecivreS tnemeganaM laicnaniF
,tnemtrapeD yrusaerT .S.U ni dna ;lmths.gnihctam41708002/8002sserp/sserp/vog.cef.www//:ptth ta ,8002 ,61 yluJ
  ,esaeler sserp ",setadidnaC laitnediserP 8002 rof sdnuF gnihctaM sevorppA CEF" ,noissimmoC noitcelE laredeF
        ;lmths.trec70217002/7002sserp/sserp/vog.cef.www//:ptth ta ,8002 ,61 yluJ ,esaeler sserp ",setadidnaC 8002
      rof sdnuF gnihctaM sevorppA CEF" ,noissimmoC noitcelE laredeF ni raeppa snoitacifitrec laudividnI :ecruoS
                                        *51.876,362,12$                                   sdnuF gnivieceR esohT rof latoT
                                          05.521,541,2$                                                 odercnaT samohT
                                           23.535,357$                                                        redaN hplaR
                                         *53.791,218,5$                                                       niaCcM nhoJ
                                          50.125,070,1$                                                   hcinicuK sinneD
                                           23.725,354$                                                    retnuH nacnuD
                                         24.778,288,21$                                                      sdrawdE nhoJ
                                          17.147,169,1$                                                ddoD rehpotsirhC
                                          38.943,699,1$                                                       nediB hpesoJ
            CEF yb deifitreC tnuomA                                                   etadidnaC
                               8002 ,13 tsuguA fo sa
 elcyC noitcelE 8002 eht rof CEF eht yb deifitreC sdnuF gnihctaM yramirP .2 elbaT
Senator McCain will accept public funds for the general election.
announced that his campaign will not participate in public financing during the general election;
approximately $16.8 million each in convention grants.40 As noted previously, Senator Obama has
ข        
                                                                           
                          3.09$                                  9.96$                 7991
                          9.4$                                   7.3$                  6991
                          9.991$                                 9.641$                5991
                          3.241$                                 7.101$                4991
                          2.44$                                  8.03$                 3991
                          1.6$                                   1.4$                  2991
                          5.391$                                 1.721$                1991
                          1.381$                                 4.511$                0991
                          6.831$                                 9.28$                 9891
                          0.29$                                  5.25$                 8891
                          7.423$                                 9.771$                7891
                          9.503$                                 7.161$                6891
                          6.242$                                 9.521$                5891
                          0.581$                                 7.29$                 4891
                          1.963$                                 3.771$                3891
                          8.923$                                 5.351$                2891
                          9.062$                                 4.411$                1891
                          7.581$                                 8.37$                 0891
                          1.683$                                 2.531$                9791
                          0.913$                                 3.001$                8791
                          4.802$                                 9.06$                 7791
                          7.68$                                  8.32$                 6791
                          7.922$                                 6.95$                 5791
                          1.611$                                 6.72$                 4791
                          2.11$                                  4.2$                  3791
     )snoillim ni srallod 7002(           )snoillim ni srallod lautca(        raeY radnelaC
           ecnalaB dnuF                         ecnalaB dnuF
                 secnalaB dnuF ngiapmaC noitcelE laitnediserP .3 elbaT
limits for participants--were too low to make the program attractive to candidates.
has been widespread concern that the amount of money available in the fund--and spending
years, as taxpayer designations have declined and campaigns have become more expensive, there
during off years and then drops sharply during presidential election years. For the past several
3 and Figure 3 below show, and as would be expected, the balance in the fund typically builds
The amount of money in the PECF depends on taxpayer designations and candidate use. As Table
                  
                      
ข        
                                                                                         
  discussion appears below.
  but the fund has nonetheless struggled with shortfalls for primary matching funds. Additional
  for 1993 tax returns. Increasing the checkoff amount did infuse additional money into the PECF,
  amount from $1 (or $2 for married couples filing jointly) to $3 (or $6). That change took effect
  In an effort to avoid a projected shortfall in the PECF, in 1993 Congress increased the checkoff
                                                                  .7002 yaM ,eruhcorb ",sutatS ffO-kcehC xaT
emocnI dnuF gnihctaM laitnediserP" ,noissimmoC noitcelE laredeF ni detic atad SRI no desab hparg SRC :ecruoS
                                                Years
           2005      2001      1997      1993       1989      1985      1981      1977       1973
                                                                                                      0.0
                                                                                                     20.0
                                                                                                     40.0
                                                                                                     60.0
                                                                                                     80.0
                                                                                                    100.0
                                                                                                    120.0
                                                                                                    140.0
                                                                                                    160.0
                                                                                                    180.0
                                                                                                    200.0
                                                                                                            Balance in millions (actual $)




            7002-3791 ,secnalaB dnuF ngiapmaC noitcelE laitnediserP .3 erugiF
                                                                            .dednuor era elbat eht ni serugiF :etoN
                     .srallod detsujda-noitalfni lla detaluclac SRC .SRC ot atad 7002 dedivorp CEF ehT .7002 yaM
   ,eruhcorb ",sutatS ffO-kcehC xaT emocnI dnuF gnihctaM laitnediserP" ,noissimmoC noitcelE laredeF :ecruoS
                              3.661$                                           3.661$                                             7002
                              6.351$                                           5.441$                                             6002
                              0.401$                                           0.89$                                              5002
                              4.94$                                            0.54$                                              4002
                              5.881$                                           3.761$                                             3002
                              9.751$                                           0.731$                                             2002
                              8.78$                                            0.57$                                              1002
                              5.91$                                            2.61$                                              0002
                              0.602$                                           5.561$                                             9991
                              4.961$                                           2.331$                                             8991
      )snoillim ni srallod 7002(                     )snoillim ni srallod lautca(                 raeY radnelaC
            ecnalaB dnuF                                    ecnalaB dnuF
ข        
                                           ข        


Although fund balances have been sufficient to pay the convention grants and general-election
grants, shortfalls in primary matching funds occurred in 1996 and 2000.41 A shortfall also
occurred briefly in 2004, but major shortfalls were avoided, as eventual nominees George W.
Bush and John Kerry, among others, declined to participate in public financing during the
primary.42


                                                                                              ข
The balance in the PECF appears to be sufficient to cover current obligations, but the fact that one
candidate has chosen not to accept the general-election grant provides the fund with substantially
more money than it would have otherwise. Even with sufficient resources to cover current
obligations, shortfalls occurred previously during the 2008 cycle. Additional discussion appears
below.

In December 2007, the FEC projected that the approximately $166.2 million balance in the PECF
(as of November 30, 2007) would be insufficient to permit matching payments scheduled to begin
in January 2008.43 By the spring of 2008, however, the PECF had accumulated a sufficient
balance to permit matching fund payments. Although the FEC was unable to certify matching
funds between January and June 2008, the Commission certified an additional $7.4 million in
primary matching funds in July 2008.

According to Treasury Department data, as of September 11, 2008, the PECF balance was
approximately $107.1 million.44 That amount is more than sufficient to cover remaining PECF
obligations for the 2008 election cycle (apparently now limited to relatively small primary
matching-fund payments). If, however, both major candidates had accepted public funds for the
general election, the amount available in the PECF would have declined substantially.45 In
particular, the additional $84.1 million general-election grant would bring the available PECF
balance to approximately $23.0 million. Therefore, if candidates had more fully participated in
the public financing program, or if they did so under the current structure in 2012, the PECF
balance may have been, or may be, insufficient to meet the fund's obligations. These
circumstances suggest that if the presidential public financing program is not altered before
2012--and if candidates choose to participate in the program during the primary and the general,
and assuming that taxpayer designations remain near current levels--shortfalls could be a
continuing challenge.



41
   For additional discussion, see Anthony Corrado, "Public Funding of Presidential Campaigns," pp. 183-184.
42
   Federal Election Commission, "FEC Approves Matching Funds for 2004 Presidential Candidates." See also Anthony
Corrado, "Public Funding of Presidential Campaigns," p. 184. Information on the brief 2004 shortfall (which occurred
between February and March of 2004) was provided by Wanda Thomas, deputy assistant staff director for public
financing, FEC (e-mail correspondence with author, May 21, 2008). When shortfalls occur, candidates sometimes use
certifications of their eligibility for public financing to secure private bank loans, which are subsequently repaid with
public funds.
43
   Federal Election Commission, "FEC Approves Matching Funds for 2004 Presidential Candidates."
44
   This figure was provided by the Treasury Department's Financial Management Service staff via Thomas Santaniello,
office of legislative and public affairs, Financial Management Service (e-mail correspondence with author September
11, 2008).
45
   Specifically, another general-election grant of approximately $84.1 million would have to be reserved before
matching payments could be made.




       
                                          ข        



                                                    ข
Recent attempts to revisit presidential public financing date to at least the 102nd Congress (1991-
1992). As is noted elsewhere in this report, the most recent significant change to the program
occurred in 1993, when Congress increased the checkoff amount. Since that time, various
attempts to curtail or bolster the program have been introduced in both chambers, but none has
been successful.

     
            
Four bills introduced in the 110th Congress would essentially maintain the current structure of the
public financing system, but with some substantial financial changes. Two other bills would end
all or part of the system. The following discussion provides additional details.

          
Although most recent attention to the public financing program has focused on maintaining the
system, some Members of Congress and others wish to curtail or end presidential public
financing. In the 110th Congress H.R. 72 (Bartlett) would end subsidies for nominating
conventions. H.R. 484 (Doolittle) would end the public funding system entirely. In addition,
under a unanimous consent agreement regulating floor consideration of the FY2008 Financial
Services and General Government (FSGG) appropriations bill (H.R. 2829, Serrano),
Representative Neugebauer could have offered amendments limiting collection or certification of
public financing funds.46 However, the Legislative Information System and Congressional Record
show no sign of those amendments being offered on the floor. Implications of these and other
approaches are discussed later in this report.

                                                        
                       
               
The Presidential Funding Act of 2007 was introduced at two different points in each chamber:
initially in January 2007 and again in December 2007. The December 2007 versions of the bills
include slight changes to the original legislation and, in some cases, have different sponsors or
original co-sponsors.47 Appendix at the end of this report provides a detailed comparison of the
bills' major provisions versus the status quo. Table 4, which follows the bill summaries below,
provides an overview of total spending possibilities for publicly financed candidates under the
status quo versus the four versions of the Presidential Funding Act of 2007.

The additional funds and higher spending limits the four bills would provide are perhaps the most
notable aspect of the legislation. In particular, participants would be eligible for base amounts and
46
   See Honorable Jos้ Serrano, "Providing for Further Consideration of H.R. 2829, Financial Services and General
Government Appropriations Act, 2008." Remarks in the House. Congressional Record, daily edition, vol. 153 (June 27,
2007), p. H7296.

47
  For a discussion of the reintroduction of the Senate bill, see Senator Russell Feingold, remarks in the Senate,
Congressional Record, daily edition, vol. 153 (December 5, 2007), pp. S14790-S14797. A statement from Senator
Susan Collins, a co-sponsor, appears on p. S14797. H.R. 776 was introduced by Representatives Meehan and Shays.
H.R. 4294 was introduced by Representative Price of North Carolina. Senator Feingold introduced S. 436 and S. 2412.




       
                                        ข        


additional installments (called "escape hatch" funds, also known as "rescue funds") based on non-
participating opponents' spending or fundraising. Overall, a publicly financed candidate could
spend as much as $450 million under the proposed changes to the program, if the candidate
participated in public financing in the primary and general phases of the campaign and if all
escape-hatch options were exhausted. Under that scenario, the primary spending limit would be
$250 million; the general spending limit would be $200 million.

With respect to primary elections, all four bills would:

     ท   raise the base spending limit from approximately $42 million for the entire
         primary (currently) to $150 million (of which $100 million could be spent before
         April 1 of an election year);
     ท   make up to an additional $100 million (two $50 million installments) in "escape
         hatch" funds available if non-participating opponents raise or spend more than
         120% of the participant spending limits ("escape hatch" funds do not currently
         exist);
     ท   eliminate current state-by-state spending limits.
In all four bills, major changes to the primary matching fund program would:

     ท   lower the threshold for federal matching of eligible contributions from $250
         (currently) to $200;
     ท   increase the percentage at which those contributions are matched from 100%
         (currently) to 400% before March 31 of an election year; candidates still in the
         race after March 31 would be eligible for an additional 100% match, raising the
         total match amount to 500%.
Benefits and spending limits in the general election would also be revised. Major proposed
revisions in all four bills would:

     ท   raise the base funding allocation from approximately $84.1 million (in 2008) to
         $100 million;
     ท   make up to an additional $100 million in "escape hatch" funds available if non-
         participating opponents raise or spend more than 120% of the participant
         spending limits ("escape hatch" funds do not currently exist);
     ท   make the Friday before Labor Day the uniform release date for general-election
         funds (currently based on nomination date).
Limits on coordinated party expenditures--purchases political parties may make on behalf of
candidate campaigns--would also be altered.48 Major revisions in all four bills would:

     ท   raise the coordinated party expenditure limit from approximately $19 million
         (currently) to $50 million (two $25 million installments, one before and one after
         the nomination);


48
  On coordinated party expenditures, see CRS Report RS22644, Coordinated Party Expenditures in Federal Elections:
An Overview, by R. Sam Garrett and L. Paige Whitaker.




       
                                    ข        


    ท   permit unlimited coordinated party expenditures (currently prohibited) if non-
        participating opponents raise or spend more than 120% of the participant
        spending limits.
Other major provisions in all four bills include:

    ท   changing the threshold to qualify for public financing in the primary by requiring
        candidates to raise $25,000 in amounts of $200 or less in at least 20 states
        (compared with $5,000 in amounts of $250 or less in at least 20 states currently);
    ท   requiring candidates who choose to participate in public financing to do so in
        both the primary and general elections (candidates may currently participate in
        either or both phases);
    ท   increasing the checkoff amount on individual tax returns to $10 for individuals
        and $20 for married couples filing jointly (currently $3 and $6 respectively);
    ท   requiring the Treasury Secretary to issue regulations to prohibit tax-preparation
        software from automatically accepting or declining participation in public
        financing;
    ท   authorizing the FEC to undertake a public education campaign about presidential
        public financing (with up to $10 million from public financing funds);
    ท   permitting appropriation of funds, to be repaid with interest, to cover public
        financing obligations for the first election after enactment.
Although the four bills are substantially similar, major provisions differ on how or whether to:

    ท   repeal the existing prioritization of convention funding over candidate funding;
    ท   restrict fundraising or spending money that is not regulated under federal
        campaign finance law (i.e., "soft money") for nominating conventions;
    ท   amend bundling disclosure required of presidential campaigns;
    ท   require offset provisions to fund increased public financing benefits.




   
                                                                                                                                                                                         
                         .eriuqer dluow 2142 .S dna ,4924 .R.H ,634 .S ,677 .R.H sa ,sngiapmac lareneg dna yramirp eht htob gnirud gnicnanif cilbup ni noitapicitrap semussA .b
                                                                                                                                                             .stsoc gnitnuocca dna
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            troppus dluoc dnuf eht ni elbaliava stnuoma taht semussa osla elbat ehT .noitalfni rof stnemtsujda erutuf ton ,stnuoma desoporp ro tnerruc stcelfer elbat ehT :etoN
                                                                                                                     .snoitaluger dna ,wal tnerruc ,stxet llib fo sisylana SRC :ecruoS
                         )noitanimon
)lawardhtiw ro(                  retfa
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                                                                                                                                                    lis/bdquery/z?d110:S.2412:
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    fo etad ro( 1     lirpA neewteb           noillim                  noillim              noillim          05$ owt ot pu(                                                                  .S
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                                 8002                         b8002 ni                     8002 ni                                         8002
                       ni noillim 91$                    noillim 621$                noillim 1.48$                             ni anoillim 24$
      --             yletamixorppA       --           yletamixorppA --             yletamixorppA                 --            yletamixorppA                                       ouQ sutatS
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                                   ข        




  ข  ข    
  
Various policy options exist for updating the public financing system. Some of those options are
contained in current legislation. Others discussed below present alternatives for addressing
concerns surrounding presidential public financing, but are not components of current legislation.
The following sections discuss possibilities for increasing the amount of money available in the
PECF and options for increasing the program's attractiveness to candidates. Taxpayer
participation is also discussed. None of the policy options discussed in this report and elsewhere
are likely to be considered in isolation, as the public financing program has always contained a
combination of benefits and requirements.


       
ข
As noted previously, the chief concern surrounding presidential public financing is the amount of
money available to candidates. Shortfalls in recent elections have delayed matching-fund
payments during primaries--a critical time for candidates to establish their viability and
recognition among the electorate. General-election subsidies are also a concern, although
generally not viewed as pressing as primary funds. Regardless of the phase of the election, a
higher balance in the PECF could facilitate higher spending by candidates, provided that
Congress raised spending limits.


                                
The four bills introduced in the 110th Congress that would maintain public financing (H.R. 776, S.
436, H.R. 4294, and S. 2412) would all increase the checkoff amount (from $3 for individuals to
$10, or from $6 to $20 for married couples filing jointly). Although it is unclear precisely how an
increased checkoff amount would affect the PECF, the one previous increase in the checkoff
amount did not result in greater taxpayer participation in public financing. Rather, the checkoff
rate fell by almost one-quarter (23.3%), from 18.9% in 1992 to 14.5% in 1993. As Figure 4
(below) shows, that 4.4 percentage-point decline was the largest calendar-year change in taxpayer
participation in the program's history. Participation stabilized beginning in 1994.




   
                                            ข        


                        4 erugiF    egnahC egatnecreP )raeY radnelaC( launnA .
                                                snoitangiseD ffokcehC ni

                     3.0%
                     2.0%                                           Final returns
                     1.0%                                           reflecting $1
                     0.0%
                    -1.0%
                    -2.0%
                    -3.0%                                             First returns
                    -4.0%                                             reflecting $3
                    -5.0%
                          77

                          80

                          83

                          86

                          89

                          92

                          95

                          98

                          01

                          04

                          07
                       19

                       19

                       19

                       19

                       19

                       19

                       19

                       19

                       20

                       20

                       20
       ,noissimmoC noitcelE laredeF ni detic atad SRI no desab egnahc egatnecrep launna fo snoitaluclac SRC :ecruoS
                                    .7002 yaM ,eruhcorb ",sutatS ffO-kcehC xaT emocnI dnuF gnihctaM laitnediserP"
However, even with the decline in participation, increasing the checkoff amount did substantially
bolster the fund balance (as shown in Table 3 and Figure 3). The fund balance grew from
approximately $4.1 million in 1992 (the final year of the $1 checkoff) to more than $30.8 million
in 1993 (the first year of the $3 checkoff). Decreases in the fund balance are to be expected
during election years (when most disbursements are made, thereby depleting much of the
balance). However, the percent increase in the fund balance between 1992 and 1993 was far more
than in the increase in the post-election years that preceded the checkoff increase (1977, 1981,
1985, and 1989). The median percent increase in the fund balance between those years and those
that preceded them was 56.5%, compared with an increase of more than 650% between 1992 and
1993.49 Even with that infusion of funds, and as is typical, the fund balance decreased sharply
during the 1996 election cycle.

Overall, the 1993 change suggests that, if taxpayers respond as they did when Congress last
raised the checkoff amount, the participation rate will fall if Congress raises the amount again. As
noted elsewhere in this report, in 2006, 10.9% of taxpayers made designations. Although the 2007
checkoff percentage is not yet available, a decline from the 2006 rate commensurate with the 4.4-
point percentage drop in 1993 suggests that fewer than 10% of taxpayers (6.5%) would make
designations to the PECF if the checkoff amount is increased. However, the designations that do
occur, because of the higher dollar amounts, could nonetheless increase the amount of money in
the PECF. It should also be noted that the proposed public education campaign could either
encourage or discourage participation.


       ข                                                                                       
Rather than providing more money to the PECF, or in addition to doing so, Congress could
choose to make it more difficult for candidates to qualify for public financing. The four bills
introduced in the 110th Congress that propose maintaining the system (H.R. 776, S. 436, H.R.
4294, and S. 2412) would require a five-fold increase in fundraising to qualify for matching

49
     CRS calculated annual percentage change rates based on the FEC data cited in Table 1.




       
                                           ข        


funds. Currently, to qualify for matching funds, candidates must raise at least $5,000 (in
contributions of $250 or less) in 20 states, for a total of $100,000. By contrast, H.R. 776, S. 436,
H.R. 4294, and S. 2412 would require candidates to raise at least $500,000 to qualify for
matching funds. The 20-state threshold would be maintained, although the matching-fund amount
would decrease from $250 to $200.

Those requirements would make it harder for some, but not most, candidates who have recently
met the primary qualifying criteria to do so again. As shown in Table 2 above, the FEC certified
only two candidates (Duncan Hunter and Dennis Kucinich) for matching funds in amounts less
than $500,000 in 2007. In the entire 2004 cycle, only one candidate (Alfred C. Sharpton) was
certified for less than $500,000.50 This suggests that increasing the qualifying threshold to
$500,000 would not have had a great effect on the number of publicly financed candidates during
the current and immediate past presidential election cycles, assuming that those candidates could
meet the higher state-by-state fundraising thresholds ($25,000 instead of $5,000). Raising the
qualifying threshold to $500,000 also would not prevent any candidates from receiving public
funds, if those candidates were able to meet the qualifying criteria. (Indeed, candidates who could
meet the new criteria would receive more matching funds than they do currently.) However,
increasing the qualifying threshold could preserve some money in the PECF, at least until
candidates met the new criteria (assuming they could do so).

Of course, Congress could consider other options to increase qualifying criteria beyond those
envisioned in the current system or the legislation introduced in the 110th Congress. This assumes,
however, that Congress wishes to limit the number of candidates who may receive public funds
(to preserve money in the fund or for other reasons).

  
As noted previously, public funds are currently disbursed in the following priority: (1) convention
grants; (2) general-election grants; and (3) primary matching funds. Prioritization of the
convention grants has been criticized recently because these events are heavily subsidized by
local host committees.51 Some observers have contended that conventions also benefit from "soft
money" (funds not regulated under FECA) that is otherwise banned in federal elections.52

If Congress believes that funding candidates should be the top priority in the public financing
program, de-prioritizing convention funding could be an attractive option. Two of the bills
introduced in the 110th Congress (S. 436 and S. 2412) would remove the convention-priority
language from current law. Doing so could help avoid future shortfalls in primary matching funds
by preserving money in the PECF that would currently go to conventions first. Nonetheless,


50
     Federal Election Commission, "FEC Approves Matching Funds for 2004 Presidential Candidates."
51

For an overview, see Anthony Corrado, "Public Funding of Presidential Campaigns," pp. 190-193.
52
   As noted previously, for additional discussion of convention financing, see CRS Report RL34630, Federal Funding
of Presidential Nominating Conventions: Overview and Policy Options, by R. Sam Garrett and Shawn Reese. See also
Steve Weissman and Ruth Hassan, "The $100 Million Exemption: Soft Money and the 2004 National Party
Conventions," Campaign Finance Institute, July 2004, at http://www.cfinst.org/books_reports/pdf/
full_partyconventions.pdf; and Campaign Finance Institute, "Inside Fundraising for the 2008 Party Conventions: Party
Surrogates Gather Soft Money While Federal Regulators Turn a Blind Eye," n.d. [released June 2008], at
http://www.cfinst.org/books_reports/conventions/2008Conventions_Rpt1.pdf.




       
                                         ข        


shortfalls might then shift to general-election grants or convention grants (unless they were
eliminated entirely).

More generally, Congress could also consider eliminating one or more segments of the public
financing program. For example, if Congress felt that convention funding were no longer
necessary, these subsidies could be eliminated entirely. However, those concerned about the
influence of private money, particularly soft money, in convention financing could object to
conventions that are completely dependent upon private funds. In addition, given recent concerns
about the viability of primary public financing, Congress could choose to eliminate matching
funds and shift remaining amounts to the general election, convention grants, or both. These
options could facilitate maintaining public financing in some form, and even bolster remaining
portions of the program, without allocating new funds.

  
Current law requires that support for the program be limited to checkoff designations specified at
$3 or $6. Congress might also consider allowing taxpayers to contribute to the PECF in ways
beyond the checkoff mechanism. Currently, taxpayers are not permitted to determine how
much they wish to designate toward the presidential public financing program. Rather, they may
only indicate whether they wish to designate the fixed amount displayed on the 1040 form.
Instead, Congress could permit additional taxpayer donations to the fund, allow taxpayers to
specify a designation amount, or expand the number of designation choices.53 If taxpayers chose
to make larger contributions than the $3 amount, revenues in the fund could increase. They could
also decrease if taxpayers chose to make smaller designations than the current $3 rate.

                        
Congress has structured the public financing program such that checkoff designations have been
solely responsible for the fund's resources. If it chose to do so, however, Congress could
appropriate some or all funds necessary to cover public financing needs. All four bills introduced
in the 110th Congress that propose to maintain the program would permit appropriations to cover
increased benefits for the first election after the new law's enactment. The PECF, however, would
have to repay those amounts, with interest, to the Treasury.54

Congressional appropriations could have the advantage of supplementing or replacing declining
checkoff designations. If regular and sufficient appropriations could be secured, the financial
stability of the public financing program might also be more predictable than is the case today.
However, some Members could find appropriations objectionable. Appropriations are also subject
to being reduced or eliminated. In short, the PECF does not currently benefit from appropriations,
but it also is not dependent upon the annual appropriations process.




53
  Caps would be necessary, however, to prevent taxpayers from designating their entire tax liability for the PECF.
54
  Both Treasury funds and PECF funds are generated by tax revenues, meaning that one form of public funds would be
used to repay another.




       
                                          ข        



                                                            
If candidates are to be convinced to accept public financing, they must be persuaded that the
program's benefits outweigh its constraints. This calculation often depends on opponents'
behavior, particularly whether they, too, are expected to accept public financing. When two
opposing candidates choose to participate, even low spending limits or benefits are likely to be
sufficient because both sides are equipped with the same financial resources and face the same
constraints. If, on the other hand, candidates believe that they can fare better outside the system--
or that their opponents are likely to opt out--participation is less likely. Those scenarios seem to
have discouraged participation during the primaries in recent elections.

The additional benefits to candidates (and associated increases in spending limits) proposed in
H.R. 776, S. 436, H.R. 4294, and S. 2412 would dramatically increase publicly financed
candidates' resources. As Table 4 shows, in 2008, the maximum a publicly financed candidate
could spend under the current system is approximately $126 million (plus about $14 million in
legal, fundraising, and accounting fees).55 Under the four 110th Congress bills that would maintain
the system, maximum candidate spending could increase to as much as $450 million if facing an
opponent who had opted out of public financing and with maximum escape-hatch funding.

Additional funds provided through the escape hatch could be particularly attractive to candidates
and could dissuade candidates from opting out of public financing unless they expect to privately
raise funds that exceed the higher escape-hatch amounts. Potentially unlimited coordinated party
expenditures (currently limited to about $19 million) are also likely to be attractive to candidates.
Increased matching-fund amounts (and spending limits) could also be attractive to primary
candidates who choose to participate in public financing. Under the four bills that would maintain
the system, primary candidates would see small contributions matched not at the current 100%
rate, but at 400%. Those who remained in the primary race beyond March 31 of the election year
would receive an additional 100% match, for a total match of 500% of the donor's original
contribution (up to $200). Under that structure, a contribution of just $200, if matching at the full
rate, could facilitate a $1,000 benefit to the candidate after a 500% match.

The proposed matching-fund changes arguably democratize presidential campaigns by placing
renewed emphasis on small donors (perhaps even more so than now, as the maximum matched
contribution would be $200 rather than $250).56 The extra 100% match is apparently designed to
provide additional money to publicly financed candidates between the end of the primaries and
the nominating convention. Some publicly financed candidates have struggled financially in the
past between the end of primaries and conventions because general-election grants are not
released until after the candidate is nominated.

It is also possible that offering the additional 100% match to candidates who remain in the race
after March 31 might prolong the nomination contest. Even if the contest were essentially decided
before March 31, candidates who have no hope of winning the nomination might choose to

55
   This assumes candidates participate in public financing during both the primary and general elections.
56
   Some preliminary evidence suggests that small donors are already enjoying renewed clout, particularly in light of
some candidates' successful Internet fundraising during the 2008 cycle. See, for example, Campaign Finance Institute,
"April Presidential Reports: Small Donations Continue to Fuel Democrats; McCain Has His Best Month; Clinton's
Debts Rise to $19.5 Million," press release, May 22, 2008, at http://www.cfinst.org/pr/prRelease.aspx?ReleaseID=191;
and Richard L. Hasen, "Political Equality, the Internet, and Campaign Finance Regulation," The Forum, vol. 6, no. 1,
art. 7; at http://www.bepress.com/forum/vol6/iss1/art7




       
                                         ข        


remain in the race until after March 31 to receive the additional matching payment to retire
campaign debts. Candidates may currently receive matching funds well after the primary (or even
the general election) to retire debts, but there is no additional match.

Finally, public financing cannot control for all spending or fundraising that occurs in campaigns.
Whether during the primary or general campaigns, candidates may be dissuaded from
participating if they fear inadequate resources to respond not only to opponents, but also to
opposing political action committees (PACs), 527 organizations, and other outside groups, some
of which are arguably not regulated by campaign finance law.57 In the absence of a constitutional
amendment restricting the political speech of these and other organizations, curtailing campaign
spending--except voluntarily--is unlikely.

To summarize, increased benefits and spending limits are likely to be attractive to candidates,
especially if both opponents participate. Even if candidate spending and resources are equal,
however, publicly financed candidates could continue to face opposition spending from outside
groups. Nonetheless, the proposed benefits and higher spending limits would provide publicly
financed candidates with more resources than they would receive today.


กข        
There is little current information about how well taxpayers understand the public financing
program.58 FEC focus groups conducted nationwide in 1989 found that "citizens may not know
why the public funding program was implemented or how it works. The [FEC research] also
revealed, however, that taxpayers would like to know more."59 In response, the FEC conducted an
educational campaign in 1991 and 1992 that featured public-service announcements and media
appearances by commissioners.60 Taxpayer participation has nonetheless generally declined,
especially in 1993 when Congress increased the checkoff designation amount.

In opinion polling, support for public financing (at various levels) fluctuates with question
wording.61 Although respondents tend to favor limiting the influence of private money in politics,
they often react negatively to references to taxpayer funds or government support for campaigns.
It is possible, therefore, that Americans support an alternative to private campaign financing as
we know it, but nonetheless object to subsidizing campaigns through tax dollars, even though the
checkoff designation does not change one's tax liability. Without updated research on how

57
   On 527 organizations, see CRS Report RS22895, 527 Groups and Campaign Activity: Analysis Under Campaign
Finance and Tax Laws, by L. Paige Whitaker and Erika Lunder. See also CRS Report RS21716, Political
Organizations Under Section 527 of the Internal Revenue Code, by Erika Lunder. For an overview of 501(c)
organizations, see CRS Report RL33377, Tax-Exempt Organizations: Political Activity Restrictions and Disclosure
Requirements, by Erika Lunder.
58
   See, for example, Campaign Legal Center and Democracy 21, Presidential Public Financing: Repairing the System,
conference report, December 9, 2005, at http://www.campaignlegalcenter.org/attachments/1614.pdf, p. 9. A CRS
search of scholarly literature also confirmed the point.
59
   Federal Election Commission, Report on the Presidential Public Funding Program (FEC: April 1993), p. 75. An
HTML version of the report is available at http://www.fec.gov/info/pfund.htm.
60
   Ibid. See Appendix 5 of that report for scripts of the public-service announcements.
61
   See, for example, CRS Report RL33814, Public Financing of Congressional Campaigns: Overview and Analysis, by
R. Sam Garrett; and Stephen R. Weissman and Ruth A. Hassan, "Public Opinion Polls Concerning Public Financing of
Federal Elections 1972-2000: A Critical Analysis and Proposed Future Directions" (Washington: Campaign Finance
Institute, 2005), pp. 2-3, at http://www.cfinst.org/president/pdf/PublicFunding_Surveys.pdf.




       
                                            ข        


Americans feel about public financing and the checkoff, it is unclear whether the low
participation rate is due to a lack of knowledge, objection to the program, or other factors. It is
also unclear whether more taxpayers could be persuaded to make checkoff designations, and if so,
how. The public education campaign proposed in the four 110th Congress bills that would
maintain the system, however, could address these and other questions.

  ก   
One possible explanation for the low checkoff rate is the popularity of tax-preparation software.
Some such software has been criticized for setting "no" as a default response to the checkoff
question.62 All four 110th Congress bills that would retain public financing would require the
Secretary of the Treasury to issue regulations requiring that tax-preparation software not
automatically accept or decline public financing designations. It is unclear what effects this
requirement could have on the checkoff rate, although voluntary changes in the past appear to
have had little effect.

In November 2005, H&R Block and Intuit, major vendors of tax-preparation software, reportedly
agreed to requests from then-FEC commissioners Michael Toner and Scott Thomas and the
Campaign Finance Institute to revise some software to not automatically select "yes" or "no"
options in response to checkoff question, and to revise instructions to more accurately reflect IRS
descriptions of the program.63

IRS data do not clearly address the effects of those changes, but the changes appear to have had
little, if any, effect on the overall checkoff rate. As Table 1 and Figure 2 above show, the
checkoff rate fell slightly in 2005 compared with 2004 (from 9.2% to 9.1% respectively), but rose
to 10.9% in 2006. It is possible that the increase between 2005 and 2006 was a result of the
software changes, but it is impossible to know for certain with currently available data. IRS data
do not isolate returns filed with particular commercial software, nor do they contain information
about taxpayer knowledge or intent with respect to commercial software.


     ข  ข    
       
For those who are either philosophically opposed to public financing or who view the system as
unnecessary, curtailing or repealing public financing could be desirable. In the 110th Congress,
two bills would do so. H.R. 72 would repeal public financing for nominating conventions. H.R.
484 would repeal public financing entirely.64 Whether Congress chose to pursue those approaches
or others, repealing or curtailing public financing could be a straightforward matter of time-


62
   For additional discussion, see Campaign Finance Institute, "Leading Tax Software Firms Alter Their Presidential
Fund Check Off Questions to Promote Fair, Informed Choices," press release, November 10, 2005, at
http://www.cfinst.org/pr/prRelease.aspx?ReleaseID=6.
63
   Ibid.
64
   See section 5 of H.R. 484; the rest of the bill would repeal various other campaign finance regulations. Also, as noted
previously, amendments to the FY2008 FSGG bill proposed by Representative Neugebauer, which could have curtailed
the program, would have been permitted. However, there is no record that they were offered on the floor.




       
                                    ข        


limiting or striking the relevant sections of law, as opposed to considering various options and
amending relevant law to change the program.

The preceding section on reconsidering funding priorities explains that repealing convention
funding could preserve remaining amounts for primary matching funds and general-election
grants. This option could also provide a financial boost to the PECF overall without allocating
additional funds to the program. In 2008, convention grants account for approximately $33.6
million of the PECF's obligations. That same amount, if not obligated for conventions, could
reduce the threat of shortfalls for matching funds or, if necessary in the future, general-election
grants. On the other hand, those concerned about the role of private funds in convention financing
could object to repealing public funds.

H.R. 484 would terminate the PECF entirely and return the remaining balance to the Treasury.
For those who object to public financing, repealing the program could provide tens of millions of
dollars annually for other purposes. (As of 2006, almost $1.5 billion had been designated for the
PECF, as shown in Table 1.) Repealing the program would also remove taxpayer funding from
presidential elections, a role that some lawmakers and others believe private contributions should
fulfill. On the other hand, repealing public financing completely would leave presidential
candidates entirely beholden either to self-financing or to private contributions. Even strong
candidates may have difficulty raising enough funds to be competitive or may be uncomfortable
with the notion that their candidacies are beholden to donors.

For those who believe that candidates should be able to financially support their own campaigns
or garner private contributions to do so, ending public financing would likely be acceptable.
However, for those who believe that private contributions or personal wealth should not
automatically include or exclude otherwise qualified presidential candidates, public financing
remains an important resource. In addition, if public financing and its required spending limits
were no longer options, the pace of private campaign fundraising, and unlimited spending, are
likely to increase, as candidates are constantly on guard for the next election and potentially high-
spending opponents.


    
Warnings about the public financing system's demise are not unique to the 2008 election cycle.
Even at its peak, the taxpayer-participation rate has never exceeded 29%. Although fund balances
were sufficient to meet candidate needs throughout the late-1970s and 1980s, by the early 1990s
the system began to show signs of strain. Tripling the checkoff amount in 1993 provided a
significant financial boost, although checkoff designations have generally continued to decline.
Even with the larger checkoff amount, shortfalls have occurred at least briefly during the primary
matching-funds phase of the program since the 1996 election cycle. Overall, almost from the
beginning, the program has faced obstacles, even as most presidential candidates have
participated in public financing.

The 2008 campaign cycle has, however, shown evidence of unique challenges to the system.
Although several candidates chose to participate in public financing during the primaries, those
candidates who continued to actively pursue their parties' nominations into the spring and
summer of 2008 chose to opt out of primary public financing. Some candidates have, in just a few
months (or less), raised more through private contributions than the entire primary spending limit
for publicly financed candidates. In June 2008, Senator Obama, the presumptive Democratic


   
                                          ข        


nominee, announced that he would not participate in public financing during the general election.
As noted previously, media reports suggest that Senator McCain will accept public funds for the
general election.

In addition, throughout the cycle, candidates from both major parties have raised record amounts
through private fundraising. Between January 2007 and April 2008, presidential candidates
reportedly raised almost $1 billion.65 Historically, the public financing program provided access
(or at least faster access) to more money than all but wealthy, self-financed candidates could raise
privately. That proposition now appears questionable, at least for some candidates.

Some major candidates could still choose to participate in public financing, but the threat of
major candidates not participating is likely to make the current program less viable in the future,
as candidates will potentially feel increasingly compelled to forgo the system to be competitive.
The current system also does not provide additional resources to counter spending from outside
groups, such as PACs and 527 organizations. For some observers, these challenges and a possible
resurgence in small donors suggest that public financing is unnecessary and should either be
allowed to fade away or should be repealed outright. Others, however, contend that the program
has provided vital assistance to high-quality candidates who are nonetheless unable to raise large
sums of private contributions, or who choose not to do so.

The four bills introduced in the 110th Congress that would maintain the program concentrate on
increasing benefits to, and spending limits for, participating candidates. These measures are likely
to make the program more attractive to potential participants. They will certainly provide more
financial resources than are currently available to publicly financed candidates. However, in the
absence of a constitutional amendment granting Congress the power to cap campaign spending or
require participation in public financing, even the most ambitious reforms cannot guarantee that
participants will not be outspent by non-participating opponents or outside interests.

Any policy choice that maintains the public financing system with expanded benefits is likely to
be expensive. On the other hand, proponents argue that the increased cost is a worthy investment
in presidential campaigns. The Congressional Budget Office (CBO) has not issued cost estimates
for the four 110th Congress bills that would maintain the system, although Senator Feingold has
stated that "[t]he total cost of the changes to the system, based on data from the 2004 elections, is
projected to be around $365 million over the four-year election cycle."66 In the Senate bills, some
of those expenses would be covered by proposed offsets to certain federal programs. Additional
checkoff designations could also offset additional costs. Precise costs would depend on funding
sources, program elements, and candidate participation.




65
   Campaign Finance Institute, "Presidential Candidates Fundraising Activity January 1, 2007 through April 30, 2008,"
at http://www.cfinst.org/president/pdf/Pres08_M5_Table2.pdf.
66
   Senator Russell Feingold, remarks in the Senate, Congressional Record, daily edition, vol. 153 (December 5, 2007),
p. S14791.




       
                                   ข        



If Congress chooses to maintain presidential public financing, it could be useful to consider what
goals that system should pursue and how. The existing model of the checkoff designations
appears to be either poorly understood by the taxpayers, unpopular with the taxpayers, or both. If
that model is to be maintained, a commitment to educational outreach, and perhaps basic research
about public opinion of, and knowledge about, presidential public financing could be useful.
Perhaps more fundamentally, if Congress chooses to reform the program, doing so will require
consensus among lawmakers about one of the most complex and contentious areas of campaign
finance policy.




   
                                                                                                                                                                                   
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          ]5 .ceS[ 634 .S     ]5 .ceS[ 677 .R.H     gnirud tnapicitrap-non yb deviecer         fo tnuoma eht ot lauqe sdnuf lanoitidda eviecer
                   sa emas                           snoitubirtnoc no desab eb dluow       dluow )woleb ees( sdlohserht gnidneps tnapicitrap
   ;4924 .R.H ,677 .R.H sa emas ;634 .S ot               stnemyap gnihctam lanoitidda          suoirav fo %021 naht erom dneps ro esiar ohw
  ot ralimis yllaitnatsbuS ralimis yllaitnatsbuS      ;677 .R.H ot ralimis yllaitnatsbuS        stnenoppo gnitapicitrap-non gnicaf stnapicitraP                   --
                                                       seiramirp ni )"sdnuf eucser"( "hctah epacse" fo ytilibaliavA
                                                                                                                                                                   ylevitcepser ,stsoc
                                                                                                                                                    gnitnuocca/lagel dna gnisiardnuf
                                                                                                                                                     tesffo ot dettimrep era noillim
                                                                                                                                                   6$ dna noillim 8$ yletamixorppa
                                                                                                                                                 fo stnuoma lanoitidda ;noillim 24$
                                                                                                    ]4 .ceS[ stimil etats-yb-etats laeper dluoW    yletamixorppa si timil esab 8002
   ]4 .ceS[                                                                                                                                        ])c(a144 ;)1()b(a144 งง .C.S.U 2[
4924 .R.H        ]4 .ceS[                             ;)stnemtsujda noitalfni erutuf htiw( noillim 051$ ot gnidneps yramirp latot timil dluoW
    ,634 .S        634 .S                                                                                   ;)stnemtsujda noitalfni erutuf htiw( noitalfni htiw yllaunna detsujda era
 ,677 .R.H     ,677 .R.H               ]4 .ceS[                                                                                                     stimil htob ;stimil etats-yb-etats
   sa emaS       sa emaS      677 .R.H sa emaS              raey noitcele na fo 1 lirpA erofeb noillim 001$ ot gnidneps yramirp timil dluoW          sulp noillim 01$ eht ot detimiL
                                                                       stimil erutidnepxe yramirP
   )dlognieF( 2142 .S                                        )CN ,ecirP( 4924 .R.H      )dlognieF( 634 .S                           )syahS-naheeM( 677 .R.H             ouQ sutatS
                                                                                                                                                                                
   ]4 .ceS[
4924 .R.H        ]4 .ceS[
    ,634 .S        634 .S                                                                         ]4 .ceS[ gnidneps tnenoppo           noillim 1.48$ yletamixorppa si tnuoma 8002
 ,677 .R.H     ,677 .R.H                                           no gnidneped dedivorp eb dluoc noillim 001$ lanoitidda
   sa emaS       sa emaS              ]4 .ceS[ 677 .R.H sa emaS    ;noitalfni rof dexedni ,noillim 001$ eb dluow tnarg esaB                        ;eenimon s'ytrap hcae ot stnarG
                            )setadidnac ytrap-rojam( snoitcele lareneg gnirud setadidnac gnitapicitrap ot elbaliava gnidnuf fo yrammuS
                                                                  SNOISIVORP SNOITCELE LARENEG
       ]3-2
     .sceS[                                                        ]3-2 .sceS[ lareneg eht ni sdnuf cilbup eviecer ot yramirp
4924 .R.H     ]3-2 .sceS[                                                 eht ni sdnuf cilbup deviecer evah tsum setadidnaC
    ,634 .S        634 .S                                                                                                                                                   rehtien
 ,677 .R.H     ,677 .R.H                                             ;noitcele lareneg eht ni gnicnanif cilbup tpecca ot sdnuf       ro ,htob ,lareneg ,yramirp eht gnirud gnicnanif
   sa emaS       sa emaS           ]3-2 .sceS[ 677 .R.H sa emaS   gnihctam yramirp eviecer ohw setadidnac eriuqer dluoW             cilbup ni etapicitrap ot esoohc yam setadidnaC
                                    snoitcele lareneg dna yramirp eht ni gnicnanif cilbup ni noitapicitrap neewteb noitcennoC
   ]2 .ceS[
4924 .R.H        ]2 .ceS[
    ,634 .S        634 .S                                                                                                                                                 ])6(2309 ง
 ,677 .R.H     ,677 .R.H                                                             ]2 .ceS[ raey noitcele-lareneg eht gnirud etats yna ni        .C.S.U 62[ raey radnelac noitcele
   sa emaS       sa emaS                           ]2 .ceS[ 677 .R.H sa emaS     dleh si yramirp tsrif eht erofeb shtnom xis nigeb dluoW          -lareneg eht fo trats eht ta snigeB
                                                                      doirep emit dnuf-gnihctaM
   ]2 .ceS[                                                                                                                                                                ])4()b(3309
4924 .R.H        ]2 .ceS[                                                                                                                            ;)3()b(3309 งง .C.S.U 62[ setats
    ,634 .S        634 .S                                                                                                                                02 tsael ta fo stnediser morf
 ,677 .R.H     ,677 .R.H                                                         ]2 .ceS[ setats 02 tsael ta fo stnediser morf ssel ro 002$       ssel ro 052$ fo stnuoma ni 000,5$
   sa emaS       sa emaS                           ]2 .ceS[ 677 .R.H sa emaS        fo stnuoma ni 000,52$ tsael ta esiar tsum setadidnaC               tsael ta esiar tsum setadidnaC
                                              ytilibigile gnidnuf-yramirp rof dlohserht gnisiardnuf level-etats desiveR
                                                                                      ]5 .ceS[ )noillim 052$ = timil gnidneps tnapicitrap latot
                                                                                ;tnenoppo yb noillim 042$ = %021( yramirp gnirud noillim
                                                                                 002$ fo %021 sdeecxe gnidneps ro gnisiardnuf tnenoppo
   ]5 .ceS[                                                                        fi tnemllatsni hctah-epacse evoba noillim 05$ lanoitiddA
4924 .R.H        ]5 .ceS[
    ,634 .S        634 .S                                                        ;)noillim 002$ = esac rettal ni gnidneps elbissimrep latot(
 ,677 .R.H     ,677 .R.H                                                            timil yramirp latot noillim 051$ ro noillim 001$ fo timil
   sa emaS       sa emaS                           ]5 .ceS[ 677 .R.H sa emaS         1 lirpA-erp rehtie gnideecxe rof noillim 05$ lanoitiddA                      --
                                                     seiramirp ni "hctah epacse" rof stimil gnidneps desaercnI
   )dlognieF( 2142 .S                                     )CN ,ecirP( 4924 .R.H       )dlognieF( 634 .S                           )syahS-naheeM( 677 .R.H               ouQ sutatS
                                                                                                                                                                            
   ]5 .ceS[                                                                                                                                         ]6009 ;5009 งง .C.S.U 62[
4924 .R.H       ]6 .ceS[                                                                                                                                      airetirc ytilibigile
    ,634 .S       634 .S                                                                                                                         rehto steem dna noitanimon
 ,677 .R.H    ,677 .R.H                                                              ]6 .ceS[ noitanimon s'ytrap eht deviecer etadidnac               ytrap seviecer etadidnac
   sa emaS      sa emaS    ]6 .ceS[ 677 .R.H sa emaS          eht nehw fo sseldrager ,raey noitcele eht fo yaD robaL erofeb yadirF ehT          a retfa syad 01 naht erom oN
                                                             gnidnuf noitcele-lareneg rof etad esaeleR
   ]5 .ceS[
4924 .R.H       ]5 .ceS[
    ,634 .S       634 .S
 ,677 .R.H    ,677 .R.H                                                         ]5 .ceS[ etadidnac gnitapicitrap yb deviecer sdnuf cilbup
   sa emaS      sa emaS             ]5 .ceS[ 677 .R.H sa emaS        lanoitidda htiw etarusnemmoc desaercni eb dluow stimil gnidnepS                        --
                                             snoitcele lareneg ni "hctah epacse" rof stimil gnidneps desaercnI
                                                                                       ]5 .ceS[ sruoh 42 nihtiw CEF eht ot detroper eb
                                                                    ot evah dluow stnapicitrapnon yb gnidneps ro gnisiardnuf evissecxE
   ]5 .ceS[
4924 .R.H       ]5 .ceS[                                                               ;)noillim 003$ = timil etagergga noillim 052$ eht
    ,634 .S       634 .S                                           fo %021 ;ylevitcepser noillim 001$ dna noillim 051$( stimil gnidneps
 ,677 .R.H    ,677 .R.H                                                  lareneg dna yramirp denibmoc eht fo %021 ,naht erom sdneps
   sa emaS      sa emaS             ]5 .ceS[ 677 .R.H sa emaS             ro ,fo tnuoma eht ni snoitubirtnoc seviecer tnenoppo-non a fI                     --
                                         snoitcele lareneg ni stnemyap "hctah epacse" rof ytilibigile rof reggirT
   ]5 .ceS[                                                                                                           ]5 .ceS[ setadidnac
4924 .R.H       ]5 .ceS[                                                  ytrap-ronim rof deificeps si noisivorp etarapes ;)noillim 002$
    ,634 .S       634 .S                                              eb dluoc gnidneps noitcele-lareneg latot ;noillim 001$( noitatimil
 ,677 .R.H    ,677 .R.H                                             erutidnepxe noitcele-lareneg eht fo %001 ot lauqe sdnuf lanoitidda
   sa emaS      sa emaS             ]5 .ceS[ 677 .R.H sa emaS            eviecer dluow stnenoppo gnitapicitrap-non gnicaf stnapicitraP                      --
                                                       snoitcele lareneg ni "hctah epacse" fo ytilibaliavA
   ]4 .ceS[
4924 .R.H       ]4 .ceS[                                           ]4 .ceS[ )woleb ees( gnisiardnuf ro gnidneps tnenoppo              noillim 1.48$ yletamixorppa si timil 8002
    ,634 .S       634 .S                                             niatrec ot esnopser ni dettimrep eb dluow gnidneps
 ,677 .R.H    ,677 .R.H                                            rehto ;)stnemtsujda noitalfni erutuf htiw( noillim 001$                     ])c(a144 ;)1()b(a144 งง .C.S.U 2[
   sa emaS      sa emaS          ]4 .ceS[ 677 .R.H sa emaS         ot gnidneps noitcele-lareneg 'stnapicitrap timil dluoW     ;noitalfni rof detsujda sa ,noillim 02$ ot detimiL
                                                         stimil erutidnepxe noitcele-lareneg desiveR
   )dlognieF( 2142 .S                                  )CN ,ecirP( 4924 .R.H       )dlognieF( 634 .S                         )syahS-naheeM( 677 .R.H               ouQ sutatS
                                                                                                                                                                                   
,677 .R.H                                                                                                           gninimreted ni ,yraterceS       denimreted sa ,sisab lauqe ylhguor
  sa emaS                                ]8 .ceS[ 634 .S ,677 .R.H sa emaS     ]8 .ceS[ 677 .R.H sa emaS             yrusaerT timrep dluoW           a no detarorp era sdnuf elbaliavA
                                                        snoitagilbo gnicnanif cilbup revoc ot sdnuf tneiciffusnI
                                                                      SNOISIVORP SUOENALLECSIM
                                                                                                                                      ]7 .ceS[
                                                                                                                snoitangised gnicnanif-cilbup
   ]7 .ceS[                                                                                                  enilced ro tpecca yllacitamotua
4924 .R.H                                                                                                                 ton seod erawtfos
    ,634 .S                                                                                                       taht erusne ot snoitaluger
 ,677 .R.H                                                                                                          etaglumorp ot yraterceS
   sa emaS                               ]7 .ceS[ 634 .S ,677 .R.H sa emaS     ]7 .ceS[ 677 .R.H sa emaS           yrusaerT eriuqer dluoW                           --
                                                     erawtfos noitaraperp-xat ni sesnopser ffokcehc citamotuA
   ]7 .ceS[                                                                                                                    ]7 .ceS[ noitalfni       ])a(6906 ง .C.S.U 62[ noitalfni
4924 .R.H                                                                                                          rof gnixedni erutuf ;yltnioj       rof dexedni ton stnuoma ;yltnioj
    ,634 .S                                                                                                    gnilif selpuoc deirram rof 02$             gnilif selpuoc deirram rof 6$
 ,677 .R.H
   sa emaS                               ]7 .ceS[ 634 .S ,677 .R.H sa emaS     ]7 .ceS[ 677 .R.H sa emaS                   ;slaudividni rof 01$                       ;slaudividni rof 3$
                                                                    snruter xat laredef no tnuomA
                                                                   SNOISIVORP "FFOKCEHC" XAT
                                                                                                                                      ]4 .ceS[
   ]4 .ceS[                                                  )noillim 081$ = %021( timil gnidneps yramirp llarevo noillim 051$ eht fo %021
4924 .R.H       ]4 .ceS[                                            ,naht erom sdneps ro ,fo tnuoma eht ni snoitubirtnoc seviecer tnenoppo
    ,634 .S       634 .S                                                yramirp gnitapicitrapnon fi )swardhtiw tnenoppo litnu ro( noitanimon
 ,677 .R.H    ,677 .R.H                                                fo emit dna )dereggirt si hctah epacse hcihw no etad ro( raey noitcele
   sa emaS      sa emaS         ]4 .ceS[ 677 .R.H sa emaS        fo 1 lirpA neewteb yleritne timil erutidnepxe ytrap detanidrooc tfil dluoW                         --
                           )"hctah epacse"( stnenoppo gnidneps-hgih gnicaf esoht rof dettimrep gnidneps ytrap detanidrooc lanoitiddA
                                                                                                                                                                        8002 ni noillim
                                                                                                                                                    2.91$ yletamixorppa si timil 8002
   ]4 .ceS[
4924 .R.H       ]4 .ceS[                                    ]4 .ceS[ )stnemtsujda noitalfni erutuf htiw( noitanimon seviecer etadidnac retfa                      ])c(a144 ;)2()d(a144
    ,634 .S       634 .S                                         dettimrep gnidneps ytrap detanidrooc ni noillim 52$ lanoitidda ;noitanimon                   งง .C.S.U 2[ noitalfni rof
 ,677 .R.H    ,677 .R.H                                              fo tpiecer etadidnac dna raey noitcele fo 1 lirpA neewteb setadidnac fo           detsujda ;)PAV( noitalupop-ega
   sa emaS      sa emaS         ]4 .ceS[ 677 .R.H sa emaS     flaheb no noillim 52$ ot timil erutidnepxe ytrap detanidrooc esaercni dluoW             -gnitov no desab alumrof yb teS
                                                             STIMIL ERUTIDNEPXE YTRAP DETANIDROOC
   )dlognieF( 2142 .S                                       )CN ,ecirP( 4924 .R.H            )dlognieF( 634 .S                     )syahS-naheeM( 677 .R.H                ouQ sutatS
                                                                                                                                                                                      
                                                                                                                                                          ngiapmac fo noitinifed eht morf
   .S ,677 .R.H sa emaS     ]4 .ceS[ 634 .S ,677 .R.H sa emaS         677 .R.H sa emaS             laitnediserp rof noitpmexe eht laeper dluoW          stsoc gnisiardnuf niatrec stpmexE
                                                                serutidnepxe sa stsoc gnisiardnuf fo tnemtaerT
                                                                 ]01 .ceS[ dedulcxe
                   sesuops morf snoitubirtnoc ;elcyc ngiapmac raey-ruof eritne eht                                        ]01 .ceS[ sronod esoht                 ])I(434 ง .C.S.U 2 [ doirep
               rof tnuoma etagergga na dna doirep gnitroper eht rof snoitubirtnoc                              yb edam snoitubirtnoc deldnub fo               htnom-xis a gnirud )gnixedni
             deldnub yficeps ot evah dluow gnitroper ;sdoirep htnom-xis deificeps                          stnuoma etagergga dna ,snoitubirtnoc               erutuf htiw( 000,51$ tsael ta
                 gnirud )gnixedni erutuf htiw( ]seettimmoc laitnediserp dezirohtua                            deldnub ni 000,01$ tsael ta gnikam        gnitagergga snoitubirtnoc deldnub
                    rof 000,05$[ 000,51$ tsael ta gnitagergga snoitubirtnoc deldnub                            esoht fo reyolpme dna noitapucco             erom ro owt gnikam esoht fo
 ]01 .ceS[        erom ro owt gnikam esoht fo reyolpme dna noitapucco ,sserdda                             ,sserdda ,eman eht CEF eht ot troper         reyolpme dna noitapucco ,sserdda
4924 .R.H       ,eman eht CEF eht ot troper ot ,seettimmoc laitnediserp gnidulcni ]11 .ceS[ 677             ot seettimmoc ngiapmac laitnediserp              ,eman eht CEF eht ot troper
  sa emaS     ,seettimmoc lacitilop eriuqer ot aaAGOLH dna ACEF dnema dluoW .R.H sa emaS                         eriuqer ot ACEF dnema dluoW                   tsum seettimmoc ngiapmaC
                                                                                 erusolcsid gnildnuB
 ]11 .ceS[                                                                       ]9 .ceS[ gnidnuf noitnevnoc                                                 ])a(8009 ง .C.S.U 62[ gnidnuf
    634 .S                                                                                    fo noitazitiroirp                                         lareneg dna yramirp revo ytiroirp
  sa emaS                                  --                                                   laeper dluoW                     --                         seviecer gnicnanif noitnevnoC
                                                                                    ]01 .ceS[ denoitnem ton
                                                                                  secruos tnemnrevog morf         ]9 .ceS[ elbissimrep si secruos
                                                                                       gnidneps ;snoitnevnoc          tnemnrevog morf gnidneps
                                                                 ]9 .ceS[ dleh       no yenom tfos gnidneps              ;snoitnevnoc no yenom
  ]9 .ceS[   si noitnevnoc eht hcihw ni ]yrotirret ro[ etats emoh eht morf           ro gnisiar morf "stnega"      tfos gnidneps ro gnisiar morf                             secnatsmucric
    634 .S   renoissimmoC tnediseR ro ,etageleD ,srotaneS ,srebmeM rof                    rieht ro setadidnac       "stnega" rieht ro setadidnac                       niatrec ni dettimrep
  sa emaS      snoitpecxe gnisiardnuf niatrec ;634 .S ot ralimis yllaitnatsbuS        laredef tibihorp dluoW              laredef tibihorp dluoW                 gnisiardnuf "yenom tfoS"
                                                                  gnicnanif noitnevnoc ot detaler snoisivorP
                                                                                                                                ]8 .ceS[ dnuf lareneg
                                                                                                                  s'yrusaerT eht ot ,tseretni sulp
                                                                                                                    ,stnuoma detairporppa yaper
                                                                                                                     ot evah dluow dnuf gnicnanif
                                                                                                                             cilbup eht ;tceffe sekat
                                                                                                                         tca eht retfa dleh noitcele
                                                                                                                       laitnediserp tsrif eht gnirud
                                                                                                                      dnuf eht rof snoitairporppa
                                                                                                                                    ezirohtua dluoW        ])c(6009 ง .C.S.U 62[ sllaftrohs
                                                                                                                                                             revoc ot dnuf eht ot detrevid
  ]8 .ceS[                                                                                                        ;raey noitcele eht gnirud edam          eb ton yam yenom cilbup rehtO
4924 .R.H                                                                                                           eb lliw taht stisoped etamitse
   ,634 .S                                                                                                           ot ,stsixe llaftrohs a rehtehw             ;yraterceS yrusaerT eht yb
   )dlognieF( 2142 .S                                         )CN ,ecirP( 4924 .R.H              )dlognieF( 634 .S                     )syahS-naheeM( 677 .R.H                ouQ sutatS
                                                                                                                                                                                  
                                                            .537 .tatS 121 ;18-011 .L.P ;7002 fo tcA tnemnrevoG nepO dna pihsredaeL tsenoH eht ot srefer "AGOLH" .a
                                                                                      .)SIL( metsyS noitamrofnI evitalsigeL eht aiv dedivorp stxet llib fo sisylana SRC :ecruoS
                                                                              ]21 .ceS[
                                                                        stsoc gnicnanif
                                                                      ngiapmac cilbup
                                                                      lanoitidda tesffo
         ]21 .ceS[ smialc                                           ot noillim 001$ yb
      ro stimrep gnizarg                                         stcudorp larutlucirga
   ro ,sag ,gninim ,lio ot                                               fo noitomorp
detaler seitlayor ro seef                                                 rof seidisbus
 suoirav timrep dluoW                      --                    reyapxat pac dluoW                                 --                                           --
                                                                                      tesffO
                                                                                                                                     ]11 .ceS[
]31 .ceS[ 4924 .R.H ,634                                                    ]31 .ceS[
    .S ,677 .R.H sa emaS ]11 .ceS[ 634 .S ,677 .R.H sa emaS         677 .R.H sa emaS                 9002 ,1 yraunaJ retfa gnirrucco snoitcelE                   --
                                                                                 etad evitceffE
                                                                                                                                         ]7 .ceS[
                                                                                                                elcyc noitcele laitnediserp raey
                                                                                              -ruof a gnirud noitacude cilbup no dnuf gnicnanif
                                                                                          cilbup eht morf noillim 01$ ot pu dneps ot CEF eht
 ]7 .ceS[ 4924 .R.H ,634                                                     ]7 .ceS[      stimrep ;gnicnanif cilbup tuoba margorp noitacude
    .S ,677 .R.H sa emaS     ]7 .ceS[ 634 .S ,677 .R.H sa emaS      677 .R.H sa emaS                cilbup a tcudnoc ot CEF eht tcerid dluoW                     --
                                                           margorp gnicnanif-cilbup gnidrager noitacude cilbuP
                                                                                                                                                                      ])iv()B()9(134
 ]4 .ceS[ 4924 .R.H ,634                                                       ]4 .ceS[                                      ]4 .ceS[ sngiapmac         ง .C.S.U 2[ "serutidnepxe"
   )dlognieF( 2142 .S                                        )CN ,ecirP( 4924 .R.H             )dlognieF( 634 .S                    )syahS-naheeM( 677 .R.H           ouQ sutatS
                                   ข        




    
R. Sam Garrett
Analyst in American National Government
rgarrett@crs.loc.gov, 7-6443




   

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For other versions of this document, see http://wikileaks.org/wiki/CRS-RL34534