Kerry Throws His Wallet Into the Campaign Finance Ring

Sen. John F. Kerry of Massachusetts announced Friday he would forgo public financing in his quest for the Democratic presidential nomination, freeing himself to pour large sums of money into early caucus and primary states as he seeks to kick-start his struggling campaign.

With his decision, Kerry follows a path taken by Democratic rival Howard Dean and by President Bush. The other seven Democratic candidates are continuing with plans to accept public funding.

Abandoning the public financing system means Kerry will be able to dip into his personal wealth and not have to observe state-by-state spending limits imposed on candidates who accept federal matching funds. That, in turn, would enable Kerry to go all-out to win in New Hampshire, where he trails Dean in the polls, by saturating that state with advertisements before its crucial Jan. 27 primary.

He may also invest heavily in Iowa, which holds its caucuses Jan. 19. A recent poll showed Rep. Richard A. Gephardt (D-Mo.) leading in that state, with Dean second.

However, Kerry pledged to abide by a nationwide spending limit for the primary season that applies to candidates who stay within the public finance system: $45 million.

Bush is not expected to stay within that cap, while Dean has yet to decide.

Campaigning in Ames, Iowa, Dean said, “We don’t know what we’re going to do yet. We’re a long ways from raising $45 million.... We’ll make a decision when we get to the point of worrying about having $45 million.”

Kerry declined to say how much of his money he would funnel to his campaign, calling it a “personal and private” decision. But he said it would be a “serious” investment, in the form of a loan against his assets.

“To some degree, it’s liberating” to put personal money into the race, he said. “On the other hand, I don’t think it’s the way we ought to do it in America.”

Although Kerry is married to Teresa Heinz, heiress to the Heinz food fortune, he apparently will not have free use of that money. Campaign aides say the law requires Kerry to use only assets he owns outright, or half of what he co-owns, in self-financing his campaign.

Kerry hopes his action will help right a campaign rocked in recent days by the firing of his campaign manager, the resignation of two other key aides and a subsequent furor raised by his awkward handling of the staff shake-up.

In a statement, Kerry spoke of “a difficult week” for his campaign. “But I’ve been in tougher spots than this before,” he said, “and I’ve fought back and won.” He added: “That fight begins with the decision I’m making today to give up federal matching funds in this campaign.”

Kerry said Dean forced his hand.

“I wish Howard Dean had kept his promise to stay within the campaign finance system,” Kerry said. “But he did not. He changed the rules of this race -- and anyone with a real shot at the nomination must now play by those rules.”

The former Vermont governor, who leads all Democrats this year in fund-raising with about $25 million through Sept. 30, a week ago reversed an earlier position and decided to decline public matching funds during the primary season. Dean is gambling that he can sew up the nomination early next year and then continue to raise and spend money to promote his candidacy and attack Bush.

Any Democrat who accepts public financing would probably spend nearly all of the allowed $45 million by the time the nominee is effectively chosen, probably by March. That could leave the candidate legally prohibited from either raising or spending virtually any money until the Democratic National Convention in July.

Kerry ranks second to Dean in fund-raising among Democrats this year, with about $20 million through Sept. 30.

Some of his Democratic rivals criticized Kerry’s financing decision. “Limiting the amount of money in campaigns is an important principle that I have spent years fighting for,” Sen. Joe Lieberman of Connecticut said. “It’s unfortunate that John Kerry has joined Howard Dean in abandoning that principle.”

But others blamed the president.

“We’re not going to take shots at our opponents for this,” said Matt Bennett, a spokesman for retired Army Gen. Wesley K. Clark. “We don’t blame Kerry. We don’t blame Dean. The responsibility lies at the feet of George Bush.”

In 2000, Bush became the first major-party candidate to win a presidential nomination without public funding since the system was established in 1976 after the Watergate scandal.

Kerry’s decision was not entirely unexpected. But it cemented a growing sense among campaign finance experts and political professionals that the presidential public funding system is on the ropes.

The purpose of the system is twofold: to limit overall spending and to help level the playing field for candidates who raise large amounts of money from small donors.

Under the law, candidates who raise enough money to qualify for public funding are eligible for a taxpayer-financed match of as much as $250 for each private contribution they receive, for a maximum $18.7 million. By accepting the money, candidates agree to spend no more than $45 million during the primary season, plus a few million more to account for campaign overhead.

In addition, publicly financed candidates are limited in how much they can spend in a given state in seeking their party’s nomination. The limits are determined by a population-based formula.

A spokesman for the Federal Election Commission, Ian Stirton, said the estimated base spending limit in New Hampshire would be about $730,000, about $1.3 million in Iowa, and about $15 million in California, which holds its primary March 2.

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Times staff writer Matea Gold contributed to this report.