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What is Public Financing?

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  • Written By: Jessica Ellis
  • Edited By: Bronwyn Harris
  • Last Modified Date: 10 September 2016
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Public financing is a system that allows political candidates access to public funds for their election campaign. The system is meant to make the majority of the candidate’s funding come from the country, rather than from special interest groups such as Political Action Committees (PACs). Public financing is either considered a full or partial financing system for political races.

In full public financing systems, candidates must raise a certain amount of money through public donations, to show that they have garnered significant voter support. In order to access public funds, they must swear off any additional private funds. If a candidate chooses to refuse public funds and instead use privately raised money, their opponent may be able to get additional public financing in an effort to make the race a fair fight in terms of finance. In full systems, the amount available is usually based on an average of campaign expenditures from the past several years.

In the United States, the presidential election utilizes a partial system for public funds. Under these terms, a candidate can raise private money and is eligible for matching public amounts. The cost to accepting public finance is that candidates agree to limit spending to strictly governed amounts. By opting out of the process, a candidate is allowed to spend whatever they can raise.

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Public financing systems are intended as a way of assisting a clean campaign. By making the majority of a candidate’s money come from government sources, public financing rules try to limit the influence of private donors on candidates. Critics of private funding raise concerns that candidates who fund campaigns with special interest group money may feel beholden to the interest group priorities after taking office. Instead of doing their sworn duty in protecting citizens, they may be pressured into protecting the companies or groups that financed their campaign.

Opting out of public financing is not always a sign of corruption or even a suggestion of PAC influence. Some candidates voluntarily refuse money from any PAC, instead raising all of their money from voter donations. This system performs the main function of public financing, ensuring a clean campaign, without accepting the available funds. Especially popular candidates may chose to forgo public resources specifically for this reason.

In the 2008 presidential election, Democratic nominee Senator Barack Obama caused a stir by changing his early position and choosing to opt out of public finance. Critics suggest that this is an opportunistic move with questionable motives. Supporters argue that Senator Obama’s campaign has been almost entirely funded by low voter donations, and he does not accept PAC money; his refusal to take public money is a reflection of his ability to raise funds through clean and responsible tactics, and will remove some of the financial burden from the public system. It is as yet unknown how this decision will influence the campaign or election.

In the United States, the funds for presidential financing come from the tax system. For each individual tax return, $3 US Dollars (USD) can be directed toward the finance fund. This does not raise the taxpayer’s owed amount, but rather directs the money they owe to a specific destination. As a means of ensuring fairness, the system works to some extent. Critics are quick to point out that the presidential rules allow considerable loopholes in the process, that skilled politicians are certainly able to exploit.

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