Political campaigns - self-loans vs self-financed

Great Debates
1

An earlier thread What will people read into Hillary’s self-loan? got me thinking about financing of political campaigns.

Clinton has opted for making a personal loan to her campaign to be paid back. In that thread there is also reference to Romney footing part of the bill for his directly (no paying it back). A third option is to only spend money that others donate. There are also all kinds of ways to mix and match those. So how do I feel about these options.

Direct-finance: My gut reaction is that this is an attempt to buy an office, and would limit office holders to only the very wealthy. If I want to be a senator, I find the best spin-doctors I can find and start pouring in the money. My rational side is split between abhorring the idea of a rich elite political class, and wondering if at least this way a candidate would not be beholding to anyone for money raised.

Donation supported: On one hand, this is kind of the democratic ideal. If enough people support you, they donate money to the campaign. The cynical side sees a line of donors with a check in one hand and a piece of legislation in the other.

Self-loans: Back to the gut reaction - this just is so wrong. A candidate with a deep pocket book can temporarily fill the coffers and then repay themselves with the donations that come rolling in in response to the advertising it bought. There can still be that line of donors, waiting for a chance to be repaid in favors. Then my underdeveloped business side kicks in and says “How else would you do it? You jump start things with an infusion of money, and make sure you recoup the costs. Just like any new business.”

So what’s your take on HOW campaigns are financed? What other options am I missing (No, this isn’t a discussion of spending limits. Reality is, we in the US has a spend all you can get system.)

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contributing to your own campaign and lending to your own campaign are slightly different. Can you take a bad loan loss if your campaign cannot pay you back?

One of the things I find very attractive about Obama’s campaign is how much money he is raising from small donors.

3

There’s no perfect solution, and after all, you need money to be involved in higher-level politics anyway. The good news is that spending tons of money doesn’t guarantee a win, so it’s not quite as straightforward as “buying an office” even if it is an attempt to do so.

The obvious solution would be public financing for all campaigns, but I’m not really enthused about that idea.

Oh, and as for the Clinton thing, I’m increasingly skeptical that she actually made a loan at all.

4

That’s the way it works in Germany.

Currently, the federal treasury will pay the parties a bonus of 38 per cent on members’ contributions and donations received; additionally, they will get 70 cents every year per vote which they received in a federal, state, or European Parliament parliamentary election. There’s a cap of 133 million euros per year to be paid out as a total to all parties. And there is also the indirect effect of tax deductibility of donations to parties.

The disadvantage of such a system is that it increases public spending. That might not be a problem if you simply look at absolute numbers (133 million euros per year is not that much in a 270 billion euro budget). But one might legitimately ask the question why the taxpayer should be paying money to political parties in general, even more so to parties which he doesn’t support.

The system also has the negative effect of preferring parties which are already strong and thus makes it more difficult for weak parties to win elections.