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The legal justification for poll observers is transparency in the voter check-in process. The best protection against a corrupt poll worker saying, "Hi Joe. This time through you can be Mary Gibbs" and handing the fifth ballot to a co-conspirator is the observer (and the fellow poll workers, who are from different parties).
But the real reason poll observers show up is to keep track of which voters on their hot prospect list have already voted. That knowledge lets them not waste time calling those who have already voted, and concentrate on those who have not.
To do this effectively the poll watchers must be within hearing range of the voter at checkin in a fairly noisy room. That means sitting right behind the poll worker.
There isn't much room back there. You might fit two separate observers behind one poll worker - that's about the limit. But if every major campaign staffed up on observers, you would have volunteers from Clinton, Edwards, Obama, Huckabee, McCain, and Romney trying to squeeze in.
Partly because of this, I assume, state law says that only "official" observers, certified by the Secretary of State or the major parties, are allowed behind the poll workers. Citizen observers can watch, but from farther away. If there is more than one check-in line, probably too far away to hear names as people check in.
There may be an issue in how Obama workers were blocked from access. This diary doesn't address that. I'm instead talking about how the system is currently incapable of supporting every campaign, if they all want effective observers.
I've heard rumors of precincts where the moderator allows campaign workers to simply come in at (say) 2PM and check the checklist, crossing names off their list of targets. It's a "win-win": the campaign gets the information it wants and the polling place is less noisy and crowded. ("Noisy" because the poll workers are supposed to repeat each voter's name loudly enough for the observer to hear.) That is not currently an officially recognized practice.
There's an old line about political campaigns: "Half of what we do is a complete waste of time. But we don't know which half." I nominate the observer function as a poor use of campaign workers. What does it accomplish? It avoids calling supporters who have already voted and possibly annoying them. But really, the cranky ones screen your calls anyway (Elwood admits guiltily). And it's easy to choose words that are fairly pleasant: "I'm calling to see if you have had a chance to vote today, and offer you a ride if you need one. You have? Great! Thanks, and have a great day."
Someone suggested that the whole process would work better if the check-in tables had computer terminals and the "who voted" list was updated electronically. I've thought about that, too. But there is too much mistrust of electronics in voting - often misplaced, I believe - to move in that direction. And the poll workers - many of whom are even older than me! - may not be early adopters of new technology.