I think we should amend the Constitution so that candidates get a fixed amount from the government for a campaign budget, and that's the only money they can use. Judicious use of said funds will help to prove the candidate has the ability to be smart with our tax money once elected. The one problem I can't resolve in my mind is how many candidates can be funded and how do we choose who we fund or who we don't. There needs to be a limit or every kook would come out of the woodwork asking for campaign funds. On the other hand, I don't want to limit funding to just the Democrats and the Republicans. One of the problems with our current system of financing is that those are the only two voices that most of us get to hear because those two parties have a tight lock on the donors. We need to make room for fresh ideas.
While I disagree with your opinion, I would suggest that Vermont has an interesting idea - at least I think it is Vermont - they have public funding for state office campaigns but the candidate seeking the office must first raise a certain number of private donations of a very low amount (basically show that they have grassroots support rather than just a couple wealthy donors) before qualifying for public funding.
I generally oppose government meddling in campaign funding b/c I take a very hard line on the 1st Amendment - it says NO Law for a reason. While the process of raising the money needed for a campaign does trouble me - esp. the implied favor trading or at the very least the natural human gratitude the candidates must feel for the major donors - I still do not trust the government will create and administer a good law - or if the legislature does manage to pull off an amazing feat of bipartisanship, I expect them to ignore the Constitution in the process - just as they did with the McCain-Feingold law in question in Citizens United.
That law actually forbade speech in a certain time frame - it wasn't just about funding that was at issue in that case, it was the fact the government actually made speech and advertising subject to punishment. Under the law as it was before Citizens United, if a publishing firm finished the final touches on a book critical of one candidate too late, i.e. inside the window of restricted speech, they could not publish that book until after the election. That was too much for Justice Kennedy to swallow.
We will always have two parties - b/c IMHO - we have an executive elected separately from the legislature - i.e. any group wishing to actually elect a President must ally with others to get to the necessary majority. This is different from the parliamentary system where the legislature elects the executive.
In the parliamentary system you have multiple parties that campaign for a share of the legislative body and then, based on their support in the population, make backroom deals on specific issues to gather enough support for a Prime Minister.
In our system, those parties have to combine before the general election (which is why we have primary elections) to form the majority. If one wishes to see more voices and get fresh ideas, then one must get active in the primary elections and not wait for the general election.
I agree that we will probably always have a two-party system. I just don't think it's written in stone that it should be THESE two parties. In the past, when one of the two parties weakened, a third party would emerge and eventually take its place. But our modern Democrats and Republicans seem to have a "bi-opoly" in place. Competition breeds adaptation and--hopefully--improvement.
I agree that it is very possible that one or both major parties will suffer an implosion like the Federalists and Whigs before them. The growth of the internet combined with the growing polarization of our electorate suggests that it will happen sooner than we might expect.
There was a very real concern among the Republican leadership that the Tea Party would form such a 3rd party and they heavily courted the movement - and it maybe that they are regretting their decision with the recent internal fights over the Speakership and other backroom maneuverings that are visible only to those of us who are deeply active in the party.
I think the Republican party is much closer to an implosion than the Democratic party. To be certain the Dems are starting to have their own problem with extremist liberals like the Republicans are having with extremist conservatives. Their problem is not as advanced as it is in the Republican party.
Traditionally political parties have been mostly regional but that started to change in the 1960's and the parties every since then have been sorting themselves along ideological grounds - i.e. no liberals welcome in the GOP and no conservatives welcome in the Dems. Moderates are fast becoming Independents / Non-affiliated voters.
I think if a particularly well funded group of individuals can appeal to these moderates they could put together a viable 3rd party. Here in my state we have a political party known as the Independent party - it is slightly left of center but it just got listed as a major party - i.e. the state will now pick up the tab for its primary elections as the state does for the Democrats and Republicans. There is talk of a fairly moderate Democratic legislator who has a lot of bipartisan appeal running for governor on their ticket - just talk now but I think that legislator could make a very credible run at governor - esp. if the Republicans select an empty suit for the next election or someone who is too far to the right for my state.