The first great skirmish of an Obama-McCain general election has broken out over a matter of such arcane policy-wonkery that until this weekend, you would find it only here at TAPPED: the precise relationship between a loan and public financing for a presidential campaign, and the agreement, if one can call it that, between McCain and Obama to participate in the public financing system for the general election.

On the first, regarding McCain's ability to drop out of the public matching funds system for the primaries, it seems to be the consensus of experts that a candidate can drop out of the system, even after being certified to receive funds, as long as he or she hasn't used the certification as collateral for a loan. And McCain specifically excluded the prospect of public funds from the section on collateral for a loan he took out in November. While I think such an in-again/out-again dodge violates the spirit of the law, which calls for a firm choice between public funds and unlimited spending, it appears McCain hewed closely to the letter of the law. But on Saturday, the Washington Post reported that there was a second loan for $1 million on December 17 that pledged "incoming contributions" as collateral but did not exclude public money.

The story quotes McCain's lawyer as saying that the bank asked, " 'You've explained how you can pay us back if things go well. What happens if things go badly?'," and that the campaign explained, that "McCain could reapply in the future for federal matching funds," but that the existing certification was not used as collateral.

"McCain's victories in the early primaries meant he never had to enter the public financing system," the Post says. But this isn't quite right. At the time of the loan, McCain was in the public financing system ( the certification remained among the campaign's assets until Feb. 6, according to the Post). The question of reapplying in the future would have been irrelevant in December.

The Post suggests that "McCain may have inadvertently committed himself to entering the public financing system for the remainder of the primary season," which was my original argument, but it's pretty clear that his attitude toward the Federal Election Commission on this question is, "Come and get me!"

One would think that between this dodge and McCain's general flip-flopping about public financing (including voting for the elimination of the entire presidential system in 1995), he would have no credibility on this issue at all. And yet, backed by several of the reform groups and their freinds at the editorial boards,  McCain seems to be getting the better of Obama, for the moment, on the issue of whether both would agree to participate in the full public financing system for the general election ($85 million, no private funds). With Obama staffers now describing this as an option for further negotiation, he is being accused of "waffling" on a pledge.

I described this a few weeks ago as a "pledge" to participate, but I should not have. Obama's precise statement was, and has always been, "If I am the Democratic nominee, I will aggressively pursue an agreement with the Republican nominee to preserve a publicly financed general election." That's an artful statement, and it's not artful in a "meaning of 'is'" sense -- it's exactly the right answer. A commitment to "preserve a publicly financed election" would have to mean much more than whether both participate in the system. It would require some significant agreement about how to handle outside money, 527s, "Swift Boat"-type attack groups, party money, etc., and  other factors that have undermined the last two publicly financed elections, from both sides.  It is hardly an evasion to describe this as an agreement to be negotiated, rather than a simple pledge.

The side story here is why many of the the "traditional" campaign finance reform advocates and the Times and Post editorial boards still seem so hynotized by McCain-as-reformer, a pose he adopted for a period that ended years ago, that they cannot call him on his evasion of public funds in the primary, and are happy to be used to echo his first partisan attack in the general election, against someone who, unlike McCain, really has been a remarkably consistent and hard-working supporter of public financing, at both the state and national level.

-- Mark Schmitt

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