Barack Obama's decision to forego public financing was met with widespread criticism. Putting aside the issue of whether Obama has broken his promise, I would like to comment upon the decision.

I agree with analysts that refusing public financing will give Obama a financial advantage in the fall. However, most observers failed to point out the potentially negative consequences for Obama had he accepted public financing. Specifically, his candidacy would have been heavily dependent upon the Democratic National Committee, which in this cycle could generate unacceptable risk.

To appreciate this, we first have to understand a few points about the national party committees that are often overlooked.

Frequently, political commentators note the party committees' fundraising hauls as an aggregate sum. They compare RNC + NRCC + NRSC total receipts to DNC + DCCC + DSCC receipts. There is value to this. After all, this can give us a sense of how "the parties" as a whole are stacking up.

However, taken too far, this can be an inefficient way to look at the parties. Each committee has a unique strategic goal, and it does not necessarily coordinate its actions with the others in an overall party push. Thus, adding the total receipts from a party's national committee to its congressional committee receipts obscures the amount of money the party has for the very different tasks of electing a president and electing congressional majorities.

Right now, if you add Republican fundraising across the RNC, NRCC, and NRSC - and compare this sum to the fundraising across the three Democratic committees, you would discover a rough tie. However, this tie masks significant disparities. Namely, the Democrats are vastly outperforming the Republicans on the congressional level, and the Republicans are vastly outperforming the Democrats on the national committee level.

This is important because the national committees and the presidential candidate committees work closely during the general election. To appreciate this, consider the following chart, which delineates the amount of money raised by the RNC and the DNC in the last eight cycles.

Note that both committees tend to raise a lot more in presidential elections. The exception is the 1994 midterm when the RNC raised a little bit more than it did in 1992. All in all, in the average midterm, the committees raise about two-thirds of what they raised in the previous presidential cycle.

The national committees thus play an important role in the push for the presidency. They are one of three major planks in presidential campaign finance: (a) public financing; (b) privately raised funds nominally spent on the primary election; (c) party funds that primarily come from the national committee.

I want to focus principally on (c). However, because this is not a topic often discussed, it is important to clarify some confusion about (b).

There are actually two public financing regimes for presidential candidates - one for the general election, one for the primary elections. For the general election this year, candidates can receive $84 million to spend between their convention and Election Day. Obama is the first candidate ever to reject this offer. Candidates can also choose to accept public financing for the primaries as well. Specifically, they can get "matching funds" from the federal government depending upon whether they satisfy certain criteria. The problem is that the matching funds carry with them a pretty restrictive spending cap. In 2004, candidates who accepted matching funds could spend no more than $45 million prior to their convention. That's not very much in this day and age, which is why nominees in recent years have skipped out on primary matching funds.

Because recent nominees have been rejecting matching funds for the primaries, they can raise and spend as much as they please until they formally accept the nomination at their conventions. From a legal standpoint, all money spent prior to the convention is classified as primary spending, even if both nominees have been selected and are spending all their money attacking each other. Assuming a candidate accepts public financing for the general election, they must put aside their privately raised funds at the time they formally accept their nomination. From then on, they rely upon the dollars allocated to them by the public financing system.

Thus, we can appreciate the importance of the party committees. They are a way for the presidential candidates to spend well in excess of $84 million during the fall campaign. The national party committees effectively serve as legal money laundering outfits that have several advantages. First, they are not bound by fundraising or spending limits even if their nominees accept public funds. Second, they can spend about $19 million in so-called "coordinated expenditures" with their presidential candidate - thus paving the way for a deeply integrated campaign operation. Third, they can receive much more from individual donors than presidential candidates can - $28,500 per donor per year. Fourth, they can spend unlimited amounts of money on "independent expenditures," or expenditures spent to advance a candidate's election but done without coordinating their activities with the candidate. Fifth, they can transfer unlimited sums to state party organizations, thereby facilitating get out the vote operations in the crucial swing states.

All in all, a presidential candidate who accepts public financing is one who expects to work very closely with his national party committee.

This might be one reason that Barack Obama chose to refuse public financing. The DNC has not done a great job of raising and distributing funds under the chairmanship of Howard Dean.

Return again to the above chart, and note the value in the bottom-right cell, the amount the Democratic National Committee raised in the 2006 cycle. I mentioned earlier that in midterm cycles, the national committees raise about two-thirds of what they spent in prior presidential cycles. In 2006, the DNC raised about one-third of what it did in 2004.

This was probably an issue that the Obama campaign considered when mulling whether to skip public financing. Accepting public financing would necessitate a greater reliance upon the Democratic National Committee, and this is something his campaign might not have felt comfortable about.

Think of it this way. As I indicated, there are three major sources of presidential money. These are: (a) public financing if you accept it; (b) private funds raised during the primary campaign; (c) party money.

Suppose that the Obama campaign accepted public financing for the general election. What would happen then?

That would nominally equalize (a). Both he and McCain would receive about $84 million to spend between their convention and the day of the election. However, this would actually give McCain an advantage because his convention comes a week later. Thus, McCain would have to spread his $84 million over nine weeks. Obama would have to spread his over ten weeks. This would be like giving McCain an extra $8.4 million or a whole week of complete campaign dominance.

Obama would be able to run up a large advantage in (b) between now and the time of his convention. Unfortunately for Obama, he could not spend any of this money after that date. John Kerry faced this difficulty in 2004, and decided to give tens of millions of extra dollars to the national and state party committees. This money then fell into (c), and thus under party control. Obama would have to do the same with any privately raised money that he did not spend before becoming the official nominee.

Category (c) would be the big question mark for Obama. Just like the major party nominees before him, if Obama were to accept public financing, he would be heavily dependent upon the capacities of his national committee. The DNC would receive most of his excess primary dollars. It would also be responsible for raising massive amounts of cash on its own. My guess is that the Obama campaign was none too thrilled at this prospect, and that it harbors doubts about the DNC's ability to raise or spend money.

As for the raising of funds - not only did the DNC fail to meet expectations in 2006, it is lagging far behind this cycle, too. To date, the DNC has raised only about half of what the RNC has pulled in. This is about where the two parties stood back in 2004 - and the DNC was only able to match the RNC by the end of the year because of the $41 million the Kerry campaign pumped into its coffers. What is more, the DNC has an even bigger problem with cash on hand. As of June 1, 2008 - it had just under $4 million in the bank. At the same point in the 2004 cycle, it had $49.8 million in available funds. All in all, the DNC is in weaker financial shape now than it was at this point in 2004, when it was still weaker than the RNC.

If Obama had accepted public funds, could he have shored up the DNC's fundraising coffers? Possibly. Again, he could have done something like what Kerry did: raise more than he could conceivably spend by his convention and give the excess to the DNC. Like Kerry, he could also hold fundraising events on behalf of the DNC, and offer lots of institutional support to build a fundraising network. However, that would not necessarily mean that the DNC would have enough cash to do what a national committee needs to do in a presidential election campaign. One of the big differences between 2004 and 2008 is that Terry McAuliffe's DNC was a strong fundraiser in its own right. Howard Dean's DNC has not proven itself nearly as capable. While Obama could give the DNC a huge amount of cash, and support it in its fundraising activities, he would still have to trust that it could actually raise dollars on its own. Given the relatively puny $130 million the DNC raised in 2006 - could he really do this?

What about the distribution of funds? Even if Obama could bring the DNC's fundraising up to snuff, there are reasons to doubt the capacity of the DNC to spend the dollars. Recall the nasty fight between Dean and DCCC chair (and Obama's fellow Chicagoan) Rahm Emmanuel over spending during the 2006 midterms. And of course, there is the poor cash management the committee has exhibited to date in this cycle. If Obama gave the DNC $40 million, for instance, could he be sure that the DNC would spend it as the Obama campaign would want it to be spent? Ultimately, that money would go to Howard Dean. It would be under his control, not Obama's. Is that something the Obama campaign would really want?

I can envision two scenarios should Obama have accepted public financing for the general election. First, he raises less money than he otherwise would, but the DNC holds its own and the Democrats have more than enough to spend. Second, he raises less money than he otherwise would, leans on the DNC, which in turns falls right over, and he is left with little more than $84 million to fight off the McCain/RNC onslaught in the fall.

My guess is the Obama campaign envisioned the same possibilities - and this was a factor in its decision to opt out of public financing. Howard Dean and the DNC cannot necessarily be trusted to handle the heavy load that national committees typically carry in presidential election campaigns.