Through complex arguments, Obama and McCain duel on campaign finance

In a preview of what right now appears as the most probable general election match-up, Barack Obama and John McCain have been going back and forth in the past few days about campaign finance.

The GOP is criticizing Obama for fudging a pledge he supposedly made earlier this year to enter the public financing system if the Republican candidate does as well. Now that McCain is looking very interested to do just that but Obama has not yet reiterated that he then would for sure, Obama is being portrayed as a waverer. After all, many Democrats are logically reluctant to enter in public financing in the general election considering that they have a very rare advantage in campaign contribution. Used to being heavily outspent, it is Democrats have been crushing their Republican opponents in fundraising, and that disparity is especially striking in the case of McCain and Obama.

Obama's semi-pledged that is now being quoted is as follows: "If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election." No candidate uses this kind of careful construction if he is trying to take a pledge, and Obama can therefore hardly be accused of having broken one.

However, the question remains of how the Illinois Senator will be able to not reach such an agreement without looking bad, especially if McCain agrees to his conditions. (It is worth noting that this question presupposes that the Obama campaign is searching for a way out of this dilemma, when there is no indication that they are leaning for or against public financing). He could outline a set of conditions that would not be acceptable to McCain's camp, or he could simply say -- the earlier the better -- that he will not abide by public financing. He would get bad press for a few days, but this is not the kind of issue that has ever had any kind of resonance among voters. And Obama could offer some compelling reasons for having changed his mind, for example that the sudden surge of campaign contributions and of the number of small donors made him realize that it would not be fair to deprive these supporters of a chance to mobilize themselves.

It is also worth pointing out that it will ultimately not make a dramatic difference in the Democrats' money advantage, because the general election financing only kicks in after the party conventions so at the end of August for Dems and in early September for the GOP. Until then, Barack Obama will be able to use his large campaign coffers and probably enjoy a healthy financial advantage on the Arizona Senator.

The issue for Democrats here is McCain's image as a government reformer. Obama does not want to be stuck in a narrative in which the Arizona Senator is looking to run a clean process whereas Obama -- who typically emphasizes the need for a new politics -- is shying away from that. The GOP believes that it can use this topic as a first hit against Obama's image and install this issue in the campaign's narrative.

But McCain will have difficultly doing so now, because his own recent dealings with campaign finance are being more closely studied -- and are being shown to be very inconsistent. The Wall Street Journal fired one of the shots hitting McCain hard for crossing the ethical line when taking out his campaign loan in the fall.

But the main question mark around McCain is whether he committed himself to the public financing system for the primary (until September). Being forced to stay within limits until September would surely put the McCain campaign at a huge disadvantage. McCain applied and qualified for public financing a few months back but never used the funds, finally returning his certification on February 6th.

Now, a Washington Post article published yesterday casts doubt on whether McCain is allowed to do that! The WaPo writes that "McCain may have inadvertently committed himself to entering the public financing system for the remainder of the primary season by holding out the prospect of taking public matching funds in exchange for the $1 million loan in December."

In his summary of this complex matter, the American Prospect's Mark Schmitt writes:

It seems to be the consensus of experts that a candidate can drop out of the system, even after being certified to receive funds, as long as he or she hasn't used the certification as collateral for a loan. And McCain specifically excluded the prospect of public funds from the section on collateral for a loan he took out in November... But on Saturday, the Washington Post reported that there was a second loan for $1 million on December 17 that pledged "incoming contributions" as collateral but did not exclude public money.

The McCain campaign disputes that characterization, arguing that he only committed to use those funds as collateral if his campaign faltered and that he is thus in no way committed to public financing. The Washington Post article's is a must-read to understand what is going on here, and the question ultimately seems to be whether the McCain campaign used the FEC certification as a collateral or not.

At the end of the day, the FEC is unlikely to step in unless there is a very clear violation of rules, and there appears to be enough of a gray area here that McCain is unlikely to be forced into public financing for the primaries. But this new storyline cannot help the campaign's efforts to portray Obama as a waverer.