Obama Won't Take Public Funds for Presidential Bid

By Kristin Jensen and Jay Newton-Small for Bloomberg.com:

Feb. 7 (Bloomberg) -- Illinois Senator Barack Obama became the latest presidential candidate to opt out of the public funding system, forgoing public money for both the primary and general elections.

Democratic frontrunner Hillary Clinton, who represents New York in the Senate, began taking donations for both elections as soon as she announced her candidacy. Former Democratic vice presidential candidate John Edwards also decided not to take public funds, USA Today reported.

An official close to Obama's campaign confirmed that the Democrat will turn down public financing, after the Washington Post reported the decision. The move allows Obama, 45, to immediately double the amount he can raise for a battle that analysts say will cost hundreds of millions of dollars.

Word on Obama's decision about financing comes days before he plans a formal announcement on his candidacy. The event is scheduled for Feb. 10 in Springfield, Illinois.

Under federal law, an individual may donate $2,300 to a candidate for the primary campaign and the same amount for the general election, as long as the candidates don't accept public funding. The second donation must be returned if the candidate doesn't win his or her party's nomination.

The 2008 campaign may hasten the end of the public financing system, set up in the wake of the Watergate scandal in an attempt to curb the influence of major contributors. While politicians previously have declined public financing for primary elections to avoid the system's spending limits, no major party candidate had yet given up the funds in the general election.

Bush, Kerry

The system doled out $75 million each to President George W. Bush and Democratic candidate John Kerry in the 2004 election. In this year's campaign, each party candidate may well end up raising and spending $500 million, according to analysts such as former Federal Election Commission Chairman Michael Toner.

"No serious candidate can be faulted for turning down public funds in this environment,'' Toner said in an interview last month.

On the Republican side, candidates are still weighing their options. Spokesmen for Arizona Senator John McCain and former Massachusetts Governor Mitt Romney said they haven't made their decisions yet regarding public funding in the general campaign. A spokeswoman for former New York Mayor Rudy Giuliani wasn't immediately available for comment.