From the Washington Post

Insolvency is likely by 2008 unless Congress adds incentives.

Within the next few weeks, two of the nine Democratic White House hopefuls
will decide whether to join President George W. Bush in rejecting public
financing of their pre-convention campaigns, using private funds to pay for
the primaries. By doing so, former Vermont Gov. Howard Dean, who has set
the Democratic pace in contributions, and Sen. John Kerry of Massachusetts,
who has family wealth available to him, can sidestep the spending limits
the other seven will have to observe.
The system of partial public financing of the presidential race is already
in shaky condition. In 1996, Steve Forbes used his private wealth to become
the first major-party contender to step outside the system. In 2000, Bush
trumped him, becoming the first privately financed candidate to win a major
party nomination. If leading Democrats now follow suit, it will signal that
the nearly 30-year-old experiment in partial public financing is on its
last legs.
A report released late last month by the private, nonprofit Campaign
Finance Institute in Washington offers strong evidence that - whatever Dean
and Kerry decide to do - time has caught up to the public-financing system.As the report says,

"Accepting spending limits has become too risky and
public funding has become less valuable. And to top it all off, the whole
public financing system faces the real threat of insolvency by 2008."
The group's bipartisan commission, made up of experienced politicians and
first-rate academics, argued that "a collapse of public funding would be a
real loss for democracy. The system has helped to support competition,
restrain costs and enhance the value of small contributions. If the system
were to be lost, the only winners would be front-running or wealthy
candidates who can manage to get their own messages across without any
help. The initial losers would be other candidates whose presence promotes
competition and civic dialogue, but the real losers would be the American
people."
Major party candidates all have accepted public financing of
their general election campaigns with the spending limits attached. But the
report makes it clear why the nominating system is in trouble. The once
relatively leisurely schedule of primaries has become a truncated,
front-loaded, virtually national contest, requiring far more money in hand
at the beginning of the year. The presence of privately financed or
self-financed candidates makes the odds against the publicly subsidized
contenders even worse.
The other part of the problem is the growing scarcity of funds for the
public subsidies. They come from voluntary checkoffs on income taxes. The
maximum for an individual has been raised once, from $1 to $3, but the
percentage of people designating any of their taxes for this purpose
continues to decline. The commission says that if candidates in both
parties accept public subsidies in 2008, the fund would likely go broke.
Its recommendations are admirably straightforward: It would double the
spending limit for the primaries to a sum equal to the roughly $75 million
allowed for the general election; allow a publicly subsidized contender to
spend as much as the most free-spending candidate who relies entirely on
private funds; and eliminate the state-by-state limits, which simply invite
cheating and fail to recognize the importance of the early contests.
To increase the incentives for small contributions, instead of a 1-to-1
match for the first $250 donation, the commission would make it a 3-to-1
match for each $100 gift. And to replenish the fund from which subsidies
are paid, it would increase the individual checkoff limit to $5. The final
point in this admirable report is a reminder that to be in place for the
2008 campaign, the changes in the law should be made in 2005.
Congress should put this on its "to-do" list.