Dean Won't Accept Public Financing

Times Staff Writer

Breaking with a nearly 30-year tradition, former Vermont Gov. Howard Dean on Saturday announced he would become the first Democratic presidential candidate to opt out of the system for publicly financing elections.

Speaking to supporters in Vermont, Dean said that only by rejecting public financing -- and the spending limits it imposes -- could he compete financially with President Bush if he wins the Democratic nomination. Bush has already rejected public financing and is aiming to raise at least $175 million by the Republican National Convention in late August.

"We have supported public financing, but the unabashed actions of this president to undercut our democratic process with floods of special interest money have forced us to abandon a broken system," Dean said.

But some of the other contenders for the Democratic nomination immediately charged that Dean's move was aimed more at burying them under a flood of his own money during the primaries.

"It's a shame that Howard Dean has broken his word and abandoned his earlier pledge never to bypass the public financing system," Craig Smith, the campaign director for Sen. Joe Lieberman of Connecticut, said in a statement.

Aides to Sen. John F. Kerry of Massachusetts have said Dean's move could lead him to opt out of the system as well.

But Kerry, whose fund-raising has slowed in recent months, would probably have great difficulty making up for the public financing he would lose if he opts out, unless he taps assets he owns jointly with his wife, Teresa Heinz Kerry, an heir to the Heinz family fortune.

The public financing system, established after the Watergate scandal in the early 1970s, offers matching funds to candidates who agree to spending limits and is paid for by a $3 checkoff on federal income tax returns.

Dean's decision came after his campaign asked supporters this week to vote online or through telephone calls on whether he should remain in the public financing system. Of 104,746 supporters who participated, Dean's campaign said 85% voted to reject the public finance system.

Critics said the result was foreordained after Dean indicated in a speech and e-mail to supporters last week that he strongly preferred to reject public financing.

The decision may have also been made inevitable by Dean's extraordinary fund-raising success. Through Sept. 30, he raised nearly $25 million, more than any of his Democratic rivals. Dean collected almost $15 million from July to September, the most money any Democratic candidate -- including President Clinton -- ever raised in a single quarter.

Dean was continuing to raise money so fast that he would probably have reached the legal ceiling under the public financing system within weeks, if not days, campaign manager Joe Trippi acknowledged.

"We are done," Trippi said in an interview just before Dean announced the decision. "If they vote to stay in, we're probably a million or 2 million [dollars] away from basically having to stop [raising money]."

Now Dean can raise unlimited sums -- though individual donors are still subject to the federal limit of $2,000 per contribution. But Dean's freedom to continue raising money comes at a hefty price: By rejecting public financing, he is renouncing $18.6 million in federal matching funds that he was on track to receive in January.

His move could have significant implications for both the primary and the general election, if he wins the nomination. In explaining the decision, Dean and his aides focused on the general election problems that a nominee who remained in the public system would face against Bush.

In return for their public matching funds, candidates who participate in the public system are required to limit their spending through the party conventions.

This year, the Federal Election Commission estimates that candidates will be allowed to spend $45 million on campaign activities, plus another $4 million on legal and accounting expenses, for $49 million in all through the party conventions next summer. At that point, the party nominees will receive a federal grant of about $75 million to finance their general election campaigns.

Camp Was Forced to Act

Dean's camp said the choice was forced on them by Bush's decision to opt out of the system. Because Bush is not accepting public financing, he can spend unlimited sums through the Republican convention.

But any Democrat who remains in the system would probably spend nearly all of the allotted $49 million by the time the nominee is effectively chosen, probably by March.

That could leave the party's nominee legally prohibited from either raising or spending virtually any money until the Democratic National Convention in July.

On Saturday, Dean said he would seek to match Bush's fund-raising by persuading 2 million supporters to contribute $100 each through the general election if he wins the nomination. Supporters pledged $5.3 million during the two days of balloting on whether to remain in the public system, the campaign said.

"This is about being toe-to-toe with the campaign that has done the most to abuse the system," Trippi said.

But Dean's Democratic rivals said the decision was also intended to give him an advantage in the fight for the nomination.

Compromise Suggested

Over the last few days, most of Dean's rivals -- along with several prominent campaign finance reformers -- urged him to voluntarily abide by spending limits for the primaries even after opting out of the public finance system.

Under such a compromise, they argued, Dean could continue raising money to compete with Bush through the spring and summer if he wins the nomination -- the principal motivation he cited for rejecting public financing.

But under that approach, Dean would not attempt to overwhelm his Democratic opponents by spending more than the candidates accepting public financing are permitted to spend in the individual states or overall.

Dean's camp said Saturday it would attempt to honor the spending limits, but pointedly refused to guarantee it. Trippi said the campaign could not rule out exceeding the limits in individual states because it may feel compelled to offset activities by Bush's campaign, even before the Democratic nomination is settled.

"We do not expect that we will have to exceed the caps during the primaries, but the only question is whether there will be a clear demarcation between the end of the primaries and the beginning of the general election," Trippi said.

But Robert Gibbs, Kerry's press spokesman, said Trippi's formulation signaled that Dean was looking for a way to ignore the spending limits.

"The only way you can abide by the spirit of the law is to pledge not to exceed $45 million in spending until a nominee is effectively chosen," Gibbs said.

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