Obama Says Public Financing System Is 'Creaky' And Needs Reform

Associated Press Writer

INDIANAPOLIS (AP) - The nation's system of public financing presidential elections is "creaky" and needs to be updated, Sen. Barack Obama said Friday, offering another possible argument for bypassing the three-decades-old system that has helped pay campaigns for the White House.

Obama, who has raised a whopping $234 million from about 1.3 million donors, said the limited amounts of money available from the federal treasury for presidential campaigns pose difficult choices for candidates raising large sums.

"I think that it is creaky," he said of the program financed by $3 dollar checkoffs in tax returns. "The amount of money raised through the public financing system may be substantially lower than the amount of money that can be raised over the Internet, which presents candidates then with some pretty tough decisions in terms of how they want to move forward if they want to compete in as many states as possible."

This year, the presidential nominees would be entitled to $84 million in public funds in the general election.

Speaking to donors at a fundraiser this week in Washington, Obama likened his fundraising to a "parallel public financing system," a remark that set off speculation that if he is the Democratic nominee he would be the first presidential candidate to forego federal funds in three decades.

But Obama on Friday said he had not made a decision about his general election money plans and said that if he secures the nomination he would meet with John McCain, the likely Republican nominee, to discuss ways to reduce the influence of outside groups in the election.

McCain is taking steps to accept the public funds, returning money he has raised so far that was designated for the general election.

Obama noted that participation in the $3 checkoff had declined, reducing the amount of money in the fund. Obama himself, however, did not check off the $3 designation in his 2005 and 2006 tax returns.

Obama, who had checked off the box in previous returns, said it was an oversight

"It may be a situation where my accountant didn't do it," he said.

In talking to reporters, Obama also weighed in on the controversy surrounding Clinton's former chief strategist, Mark Penn, whom she demoted because of his private work for the Colombian government on behalf of the free trade Agreement, a pact that Clinton opposes. Colombia was a client of Penn's large public relations firm, Burson-Marsteller.

"It was surprising to me that a high-ranking, if not the highest-ranking member of Senator Clinton's team would be engaged in business activities and lobbying that was directly contrary to a position that Senator Clinton had taken," Obama said.

"I know that if staff of mine were putting me in that kind of position, I would get rid of them," he said.

While Obama has relied on an unusually large number of small donors who have given less than $200, he also has relied on well-connected fundraisers with corporate interests.

On Friday he said his financial operation is separate from his policy positions.

"We have a national finance committee, they are very active but they don't interact with me," he said. "They are not as a general rule part of my day-to-day policy or advisory committee. Although there are some people who have raised money for me who are also prominent business leaders, so if we were putting forward an economic plan and there was some expertise there we would tap into it."

Obama also demanded that company shareholders have a say in how much executives get paid as he pushes his populist message.

Obama said he wants Congress to pass legislation he has sponsored that would require corporations to have a nonbinding vote by shareholders on executive compensation packages. The bill is in the Senate banking committee, chaired by Sen. Chris Dodd, D-Conn., an Obama backer and former presidential candidate.

Obama said he expected Dodd to first have to deal with housing legislation before taking up corporate pay.

Under Obama's legislation, shareholders could not veto a compensation package offered to an executive and would not place limits on pay. Rather, they would have a means to publicly express their position.

A similar bill passed the House last year.

USA Today reported this week that the top 50 chief executives in the United States made about $15.7 million last year, even though some of the companies were not performing well.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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