Friday, August 24, 2012

Letting Three Dollars Speak For You...Or Not

Since 1976, public funding has paid an important role in Presidential elections.  In 1971, both the Federal Election Campaign Act of 1971 and the Revenue Act established the Presidential Election Campaign Fund (PECF); at the time, this allowed American taxpayers to designate one whole dollar of their tax owing to finance Presidential elections.  For those of my readers that aren't American, this voluntary donation is made by checking off a box that asks if " want $3 of your federal tax to go to the Presidential Election Campaign Fund?" on individual U.S. income tax returns.  In 1994, Congress generously increased that amount to the current level of $3.  Payouts to campaigns are indexed to inflation but the taxpayer contribution levels are fixed, at least until Congress sees fit to increase them again.

Funds raised from checking off this little box are transferred from the Treasury to the Federal Election Commission which is responsible for administering the PECF.  The funds distributed are used to finance both presidential and general election campaigns and national party conventions.  Originally, the PECF was implemented to reduce a candidate's dependence on large contributions from individuals and special interest groups, something that the 2010 Citizens United Supreme Court decision pretty much took care of on its own.

In the program's infancy, a significant portion of taxpayers checked off the little box on their tax returns however, as the years have passed, the number of participants has decreased markedly as shown on this graph:

Participation is down from a peak of 28.7 percent in 1980 to a low of 6.4 percent for the last full year of 2011.  That's a drop of 77.7 percent.  In case you were wondering, so far in 2012, only 5.1 percent of American taxpayers checked off that little box, making this the sixth year in a row with record low participation.

Here is a graph showing the dwindling size of total annual contributions since 1994 when the amount designated was increased to $3:

Since 1994, annual receipts peaked at $71.317 million in 1994 and have dropped to a full year low of $39.574 million in 2011, a drop of 44.5 percent.

How has the PECF disbursed the funds that it has collected?  Here is a look at how much has been spent during each Presidential election cycle:

1976 - $69,467,521.18
1980 - $101,427,115.89
1984 - $120,149,768.18
1988 - $158,560,804.63
1992 - $153,191,152.59
1996 - $210,395,091.09
2000 - $210,015,000.45
2004 - $178,044,734.74
2008 - $106,559.804.59

Notice the jump in expenditures from the 1992 to the 1996 cycle after the donation level was raised?  See, if you give it to them, they will spend it!

You will also notice that there was a huge drop from the 2004 to the 2008 cycle.  This decline in spending was because both Barak Obama and John McCain chose not to participate in the primary matching fund program.  By not doing this, the two campaigns were not bound by the expenditure limits that would otherwise have been imposed.  John McCain did avail himself of $14.778 million back in 2000 and Joe Biden accepted $2.027 million in 2008.  

Here is a chart showing which candidates have received more than $1 million in primary matching funds since its inception:

The largest Presidential campaign recipient was Bill Clinton who received a total of $25,948,332.  Next up was George H.W. Bush who received $24,767,864 followed by Ronald Reagan who received $22,519,172, keeping in mind that $22 million back in the early 1980s was worth far more than it is today.  Other notables that have received in excess of $15 million were Bob Dole ($21.164 million), Pat Buchanan ($20.693 million), John Edwards ($19.531 million) and Al Gore ($19.309 million).

As I noted at the beginning, the PECF funds can be used to finance the Republican and Democratic Presidential nominating conventions.  How much is spent on these confetti-flinging, sign waving, light and sound shows?  In 2008, approximately $133.6 million in federal/public funds was used to support the two Presidential conventions.  This was funded through a combination of PECF grants and security expenditures which are used to cover the cost of state and local law enforcement.  Additional Secret Service and other security costs are not included in the $50 million security expenditure that goes to each of the two parties.  Keep in mind that these are not the total costs associated with the conventions; the Center for Responsive Politics estimated that 80 percent of the funds for the Democratic and Republican conventions in 2008 came from private sources.

It is interesting to see just how much American taxpayers are on the hook for the cost of federal elections, especially party nominating conventions, particularly in this time of near-record deficit spending.  It is also interesting to see how the number of taxpayers that are willing to allocate three of their tax dollars to this "worthy cause" has dwindled to a tiny fraction of what it was back in the halcyon political days of the 1970s and 1980s.  Perhaps voters are becoming just a tad jaded.  On the upside, however, as I said before, when you see that wonderful light and sound show and all of those attendees hopped up on Red Bull (among other things), please remember, "We did that!".  Well, at least part of "that".


  1. Viable Opposition?

    No opposition here!

    Actually, you have a ‘Viable’ follower.

    Great writing. And for the acquired knowledge…, a bonus. Called it my luck.

    Thanks VO.

  2. This should not be a surprise. Only half of Americans pay any income tax. For those half that pay income tax why send some of your hard earned dollars to a candidate that wants to increase your taxes?

    This provision began as a public interest motivated idea when it was enacted when more people were paying income taxes. This has become another special interest redistribution provision in the Code.