Obama and McCain fight over campaign funding

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Barack Obama on Thursday became the first American presidential candidate since Richard Nixon to rely solely on private money to sustain his White House bid when he declared that he would opt out of the Watergate-era public financing system.

By Edward Luce in Washington

Mr Obama’s decision, which he announced to supporters in a webcast, was met with strong criticism from John McCain, his Republican opponent who will rely on the $84m in public funds that are available, and also from centre-left reformers who said they felt bitterly betrayed by his move.

A broken system

The Obama campaign said the move did not compromise Mr Obama’s support for overhauling what he called a “broken system” and had been motivated by the expectation that private groups operating under tax-exempt status – so-called 527s – would launch the same kind of attacks on Mr Obama that helped sink John Kerry in 2004.

“This decision is hypocrisy at its worst and I’m bitterly angry about it,” said Craig Holman, head of campaign finance reform at Public Citizen, a consumer rights group, who had previously worked closely with Mr Obama on congressional ethics reform.

McCain attacks

“The reasons Senator Obama has given are insincere. The system of public financing for general elections, as opposed to primary elections, is not broken. It works. The only reason he has done this is because he can raise more money than McCain.”

The McCain campaign, which some project could be outspent by a ratio of two to one, said: “Barack Obama has revealed himself to be just another typical politician who will do and say whatever is most expedient for Barack Obama. The true test of a candidate for president is whether he will stand on principle and keep his word to the American people. Barack Obama has failed that test.”

Critics pointed out that Mr Obama had failed to keep a promise he made several times in recent months to negotiate a “level playing field” with his Republican opponent: “If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly-financed general election,” he said last November.

Gaming the system with 527s

The Obama campaign on Thursday hit back at Mr McCain whom they allege has been “gaming the system” by taking the legally doubtful step of accepting private loans based on the collateral of future flows of public funds and also by declaring recently that he would be unable to “referee” the actions of independent 527 groups that support his candidacy.

Obama officials say that Mr McCain’s admission on 527s gave the green light to groups that practice character assassination, such as the “Swift Boat” 527 that trashed John Kerry’s decorated Vietnam war record in 2004. “We have no doubt there will be a robust effort by 527s to paint Obama in the way his opponents would like the country to see him,” said Robert Gibbs, Mr Obama’s spokesman, on Thursday.

But the truth is

But Mr Gibbs admitted that it would have been difficult for Mr Obama to be able to afford to target traditionally Republican states, such as Virginia, Colorado and North Carolina, in the general election had he taken public financing. Mr Obama, whose widely admired internet system of fund-raising has helped him raise a record $265m so far, on Thursday said his own campaign already ran an alternative system of public financing.

“I’m asking you to try to do something that’s never been done before,” he said in the webcast. “Declare our independence from a broken system, and run the type of campaign that reflects the grassroots values that have already changed our politics and brought us this far.”

The Financial Times

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