The Obama administration slammed the proposal Tuesday in a statement, saying the system needs fixing, not eliminating.

"The administration strongly opposes House passage of H.R. 359 because it is critical that the nation’s presidential election public financing system be fixed rather than dismantled," it said Tuesday in a statement of administration policy released by the Office of Management and Budget.

But even Democrats, who want the system reformed, readily admit it will be a relic in 2012, likely aiding GOP efforts to get it eliminated.

"I don't think we can deny at this point that given the amount of money out there, we face a world where candidates who take public financing place themselves at a competitive disadvantage," said former chairman of the Federal Election Commission and Democratic finance lawyer Robert Lenhard. 

Still, Lenhard said Democrats need to make the argument that it's not a reason to scrap it completely. 

"I think it's a very bad idea," Lenhard said of eliminating it. "Democrats and Republicans have both benefited from this and the reality is it needs to be fixed, not scrapped."

Scott pointed out that Democrats have offered no alternative and suggested the administration is in a tough spot given that the president is unlikely to utilize the system in his reelection bid. 

"The fact of the matter is that the president is probably going to raise a billion dollars and not use public financing, which raises the probability that the Republican candidate is going to do the same and not use public financing," said Scott. "So let's just give that money back to the American people."

—Erik Wasson contributed to this article.