Treasury May Cut Campaign Aid

A move to withhold federal matching funds in early '92 could unfairly hurt Democrats

TREASURY Secretary Nicholas Brady, a Republican, will soon make a decision with a major impact on the 1992 race for the Democratic presidential nomination. The Treasury controls the $28 million in federal matching campaign funds, which can either be distributed to candidates - or withheld - in the critical primary months of 1992.

Depending on several factors, Secretary Brady's decision could:

Severely damage lesser-known Democratic candidates, whose campaigns could collapse without federal matching money.

Boost the campaign of Mr. Brady's boss, President Bush, by weakening his Democratic opposition.

Hamper efforts by any other Republican to challenge Mr. Bush in the primaries.

The Treasury has proposed a rule that would dry up federal funds to candidates during the early, critical days of 1992 just before the Iowa caucuses and the New Hampshire primary.

Campaign experts here are alarmed by the proposal.

John Warren McGarry, chairman of the Federal Election Commission, say the rule would be ``massively disruptive and a tragedy to our process.'' It could have a ``devastating impact'' in Iowa and New Hampshire, he says.

Fred Wertheimer, president of Common Cause, says the new Treasury rule would provide ``a substantial advantage for President Bush or any other incumbent president....''

IF the rule is adopted, Mr. Wertheimer says that ``you could well wind up with President Bush unopposed in the primary in 1992, and yet receiving substantial sums of money ... while candidates in the Democratic Party all would wind up potentially with shortfalls and shortchanged.''

The dilemma arises because the 18-year-old special fund that helps pay for presidential campaigns is short on cash.

Money for the fund comes from the $1 checkoff on the federal income-tax return. In 1988, the fund provided $177.8 million that defrayed much of the costs for the presidential primaries, the two major party conventions, and the fall campaigns of George Bush and Michael Dukakis.

Analysts says the very law creating the fund made the crisis inevitable. The law provides that the money going to candidates will be indexed for inflation, but the $1 checkoff is not indexed. ($1 in 1973 would equal $2.61 today.) Eventually, says Mr. McGarry, the fund would drain.

Treasury experts worry that unless outlays for next year's primaries are reduced, there may not be enough money left for the higher-priority conventions and the general election.

However, McGarry and Wertheimer argue that the Treasury is being too conservative. The Treasury will make its decision based on funds on-hand on Dec. 31, 1991, rather than also factoring in anticipated funds that will be received prior to the general-election campaign later in 1992.

McGarry says that even using conservative estimates, there will be an additional $28 million available for the fall campaigns.

Yet the Treasury must also weigh the political implications of its decision. Should money be cut off in early 1992, Democrats may cry foul, and the checkoff program that paid for the past four presidential elections could come under fire in Congress.

Under current law, the Treasury must provide about $55.6 million to each of the major party nominees for their fall campaigns. It must also deliver funds for the conventions. If adequate money were available, it would then pay half the campaign costs for each primary candidate. In 1988, that amounted to matching funds up to $11.75 million per candidate, though no candidate actually received that much.

Under the proposed rule, the total funds available for matching candidate contributions for the month of January 1992 would be only $109,066, according to the Federal Election Commission.

All sides agree on one thing: the federal campaign fund will eventually go bankrupt unless the original law is changed. The shortfall in 1992 will be small compared with 1996 when it could reach $150 million unless more people begin checking off that $1 on their returns.

Only 20 percent of Americans contribute to the fund.

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