Kerry Rejects Matching Funds

Democratic presidential hopeful John Kerry has decided to opt out of the post-Watergate public financing system and is considering taking out a personal loan to help fund his struggling White House bid.

Kerry becomes the second Democratic presidential candidate to abandon the system, but unlike rival Howard Dean, he plans to keep his spending to the $45 million limit the program imposes for the primaries. He will not follow its state-by-state limits.

"He changed the rules of this race and anybody with a real shot at the nomination is going to have to play by those rules," Kerry said during a campaign stop Friday in Iowa.

Kerry's move marks the first time in Democratic Party history that two contenders for the nomination have abandoned the system since the Watergate scandal some 30 years ago. It also is the first time the top candidates in the two major parties have decided to skip public financing.

"As you all know, this has been a difficult week in our campaign, but I've been in tougher spots than this before and I've fought back and won," said Kerry, a decorated Vietnam War veteran. "That fight begins today with a decision I'm making to give up federal matching funds in this campaign."

The Massachusetts senator fired his campaign manager on Sunday, then lost his chief spokesman and deputy finance director, who quit within days. Kerry compounded the problem on Thursday, telling The Associated Press that his campaign would be "better off" without them. He later called the three former aides to apologize for the remarks.

Kerry's decision to skip up to $18.7 million in public money comes despite a slowdown in his fund raising after a promising start, and the acknowledgment by his campaign that he cannot tap wife Teresa Heinz Kerry's multimillion-dollar Heinz food fortune for the race.

The Massachusetts senator has reported investments valued at about $700,000 to $2.4 million and up to $600,000 worth with his wife. Kerry advisers have said he has several million dollars of his own money he could tap for his race; if any resulted from gifts or asset transfers from his wife, Kerry would have to show he received it before starting his presidential campaign.

The federal program offers a taxpayer-funded match of up to $250 for each contribution, up to a total of $18.7 million, and sets an overall spending limit of $45 million, plus state-by-state caps.

A computer analysis of Kerry's contributions through Sept. 30 by the nonpartisan Center for Responsive Politics showed he was already eligible for up to $5.6 million in matching funds, the Boston Globe reported.

In a fund-raising e-mail this week, Kerry urged supporters to contribute to help cover specific expenses, ranging from $650 to help finance a New Hampshire TV ad to $10 to provide pizza to campaign volunteers.

"By donating now, your money literally powers our field operations in Iowa and New Hampshire, the key early primary states," Kerry wrote.

He previously sent out fund-raising letters, urging people to give to help him accumulate matching funds should he decide to take public financing. The campaign will let those donors know of his decision to opt out so they can get their money back.

Kerry joins Democratic rival Dean and President Bush in abandoning the public financing system in the primaries. Dean made history Saturday when he became the first Democrat ever to decide to skip the program.

President Bush opted out in the primaries in 2000 and for 2004. Fund-raisers this week pushed his primary campaign total close to the record $106 million he raised in 2000.

Democratic strategists have worried their nominee-to-be would emerge from the primaries broke if he or she accepted public financing and its spending limits as Bush, with no GOP opponent, had tens of millions left to spend next spring and summer.

Several campaign finance watchdog groups have challenged Democrats who opt out of the public financing system to limit themselves to its $45 million cap during the Democratic primaries.

Kerry has said he will. His decision still frees him from state-by-state spending limits, however, so he can spend as much as he wants in key early primary states such as New Hampshire.

Dean, raising millions of dollars over the Internet as well as through traditional means such as direct mail and fund-raisers, has declined to limit himself.

Kerry began this year one of the top fund-raisers in the Democratic race, and was the first to say he was considering skipping public financing. He raised $7 million from January through March, second only to North Carolina John Edwards' $7.4 million. Dean began the year near the bottom, raising only about $2.6 million in the first quarter.

But like many others in the nine-member Democratic field, Kerry's fund-raising totals have fallen while Dean's have soared; in the quarter ending Sept. 30, Dean raised $14.8 million, compared to $4 million for Kerry. Dean led the field with about $25 million collected to that point, and Kerry was second with about $20 million.

Kerry will need a flood of contributions or an infusion of his own money to make up for the government money he's turning away.

The race's newest candidate, retired Gen. Wesley Clark, announced Thursday he will accept the so-called matching funds. He has filed the paperwork needed to qualify for public financing, as have Dick Gephardt, Edwards and Joe Lieberman.