The Implication of Edwards' Financing Woes

John Edwards announced this past Friday that he will accept public financing for his presidential campaign. The former NC senator says this decision is not about money calculations, but rather about taking a "principled stand". Of course, one cannot help but wonder if he would be taking that stand were he leading the top-tier candidates in fundraising instead of trailing them.

Edwards has challenged the other candidates to join him, attempting to box-in Hillary Clinton with the statement, "Sen. Clinton said she is for public financing so she can step forward and show she actually means it". While Edwards is trying to claim a mantle of leadership, Obama was actually the first to throw down the challenge gauntlet on public financing.

Way back in February, Obama was the first candidate ever to ask the Federal Elections Commission whether he could accept money from private donors for the general election before the primary, but give it back, should he win the nomination, and accept public financing. Of course, the FEC was completely flummoxed, as no candidate had ever approached them with the novel idea of actually returning donated money.

The FEC answered affirmatively with the caveat that, among other restrictions, the general election monies had to be kept in a separate account. Obama's innovative approach allows options, such as proposing to an eventual Republican nominee that both parties only use matching Federal funds in the general election. Senator John McCain and Obama have, in fact, already entered such a pact.

Fast-forwarding to the present, we find Obama now taking the lead in Iowa (among caucus goers), a product of almost daily appearances in the state and 33 strategically placed field offices. To her credit, Clinton's campaign has steadied since the replacement of their Iowa Field Director Angelique Pirozzi, but it is Edwards for whom Iowa is make-or-break. His entire campaign strategy has been rooted from jumpstreet in Iowa, knowing Clinton would be a 2008 candidate and he wouldn't likely be able to out-fundraise her. Obama has cast a monkey-wrench into even that plan, however, by competing for the "anybody-but-Hillary" vote and drawing more than his fair share of fundraising oxygen -- largely at the expense of the Edwards campaign along with those of the second and third-tier candidates.

Should Edwards lose Iowa, his one-state campaign is effectively over. By petitioning for matching federal funds, he accepts with it the severe handicap on how that money can be spent. The most restrictive of these regulations regards per-state spending, which for Iowa amounts to a whopping $1,486,433. While the restrictions on this money are primary related to direct-mail and television advertising within 28 days of the primary date, this puts Edwards at a serious spending disadvantage in a state that is notorious for deciding late. Expect Obama (and Clinton, perhaps to a lesser degree) to spend cash like drunken sailors, saturating airwaves and mailboxes, while ground-canvassing the entire state.

Make no mistake about it, however. An Edwards loss in Iowa is important to Obama, while Mme. Clinton is rooting for an Edwards win -- perhaps even moreso than her own. An Edwards victory in Iowa allows him to remain competitive in the "anybody-but-Hillary" sweepstakes, and his presence will likely draw considerable votes from the Obama campaign. The longer Edwards remains viable, the longer the vote-split will continue, and the more Clinton will benefit. A perfect storm for her campaign would be to finish 2nd in Iowa to Edwards, while winning New Hampshire, South Carolina, and Nevada primaries with a plurality of votes. Heading into February 5th, all the candidates know that momentum is going to be the name of the game.

For Obama, a perfect storm would be to win Iowa, New Hampshire (where independents can vote in the primary, tilting the race decidedly in Obama's favor), and South Carolina (where half of the registered Democrats are black). The second-most favorable outcome would be a Clinton victory, with Obama a close second, eliminating Edwards while still lending legitimacy to his campaign by finishing second in a state that is 94% white. Under either scenario, Nevada might be sacrificed.

Since no candidate has won the nomination without winning two of the first four primaries, history would not favor Hillary assuming an Obama victory in Iowa. And with her cloak of inevitability pierced, the table could be set for an Obama landslide, as the "anybody-but-Hillary" vote unifies under his banner.