Howard Dean is putting the issue of whether to opt-out of federal matching funds to his supporters for a vote. I haven't quite decided yet how I'm going to vote. The possible actions of the other candidates in the primary race may influence that decision. So I've tried to write up my analysis and then predict who's going to do what. I'm looking for some validation (or correction) to these assumptions to help inform my vote. Thanks!
Note that the FEC rules say:
1. You have to make your opt-in/opt-out decision by December 1st.
2. If you take a dime in matching funds, you're stuck with the limits.
Dean's finances are pretty straightforward: he's raised the most money, has the most money on hand, and qualifies for the most matching funds. As of the end of the 3rd quarter he raised a total of $25,387,493. Average contribution is an ultra-matchable $77. He has raised another $5 million or so in the 4th quarter (to date). He apparently qualifies for the full $18.6 million in matching funds, but his total spending until the July Democratic Convention would be limited to $44.6 million. (In other words, he has to shut down fundraising
now if he opts-in.) As of the end of the 3rd quarter he had about $12.4 million left in the bank. So from October 1, 2003, through July, 2004, he can spend no more than $31.6 million. That includes the whole primary fight.
Dean, Lieberman, Braun, and Sharpton were the only Democrats who spent less than they raised in Q3, so burn rate looks good.
Iowa spending cap is $1.3 million and New Hampshire is $729,600. Dean looks OK on "headroom" to those caps, but it depends on what his rivals do.
Kerry had almost $7.8 million on hand at the end of Q3. Fundraising to date has been $20.0 million. Over half the money raised is in contributions of $200 or more, so figure Kerry would get about $10 million in matching funds as of today. Kerry and Edwards are essentially tied for the highest number of maxed out contributors, at around 4370 each ($8.7 million). So that portion of Kerry's contributor base are done and can't give any more.
Let's assume Kerry has a fourth quarter as good as his third. That would be another $4 million, plus let's say another $2 million match. Total available to spend: $36 million. So Kerry could stay within the overall spending limit. Since Kerry had about $7.8 million cash on hand at the end of Q3, that $10 to 12 million in matching funds paid in January would be mighty nice to keep the lights on.
On the other hand, Kerry would have to stick to state limits, particularly in New Hampshire, and he'd be outgunned by George W. Bush should he win the nomination. He does have the option of dipping into the Heinz family fortune, so that $10 to $12 million might not be as valuable.
Prediction: Toss-up. This one's going to be a really tough decision for Kerry. If he does opt-out, he'll have to dip into the family fortune at some point, probably sooner rather than later, and he'll catch heat for that.
Gephardt's problem is all Iowa. Gephardt raised $13.6 million through end of Q3. $5.9 million of that comes from maxed out contributors, and he's got a lot of other high dollar contributors besides. I think he probably qualifies for $7 or $8 million in matching funds already, and if he can raise another $3 million that would add, say $1 or $2 million more. So taking all those high numbers we've got Gephardt raising $26.6 million as of this January 1st: no problem for the overall caps.
Gephardt had $5.9 million in the bank at the end of Q3, so $8 to $10 million of matching funds this January would be huge. But he'd have to live with the Iowa limit and, to a lesser extent, live being outgunned by Bush.
Prediction: 25% chance Gephardt opts-out.
Clark, I believe, has no problem. One advantage in starting late is that you have a longer way to go to hit caps. I think state caps look good, and even with a whopper quarter of fundraising (say, $10 million), he'll only reach Gephardt's 3rd quarter total (a quarter later). Figure on $7 or $8 million in matching funds, and Clark has a total of $20 to $21 million in total funding on January 1, probably with about $12 million of that still in the bank.
Prediction: 5% chance Clark opts-out.
Edwards: Edwards has got some state cap problems in Iowa and New Hampshire, but he's not likely to spend quite as much in those two states, particularly with Clark and Lieberman pulling out of Iowa. It's South Carolina or bust now, and if lack of past spending discipline is any indication the South Carolina state cap might be a problem.
Edwards had $4.8 million in the bank at the end of Q3. He's raised $14.5 million total so far, but $8.7 million of that was from maxed out contributors. That poses two problems: (1) they can't give again (to increase his total), and (2) they aren't very matchable. The rest of his fundraising is also skewed high dollar (and not as matchable). So I'm estimating Edwards could get $5 million in matching funds. Figure $2 million in 4th quarter fundraising, another $0.8 million match, and that gives a grand total of $22.3 million. He then has well over $20 million to go to overall spending limit, so that's not a problem. And a big check for $5+ million in January would far more than double his depleted bank account.
However, there's that South Carolina spending limit and the fact Edwards has a personal fortune. It's not as big as the Heinz fortune, but it is available if need be.
Prediction: 15% chance Edwards opts-out.
Mechanism for Opting OutDo any of these candidates do the same as Dean, i.e. hold a plebicite among their supporters to determine whether they should forego matching funds?
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
