Patterico's Pontifications

9/5/2008

McCain Now Possesses A Significant Campaign Finance Advantage

Filed under: General — WLS @ 4:24 pm



Posted by WLS:

In three posts here, here, and here, I raised questions about the fundraising totals reported by the Obama campaign for June and July, pointing out that IMO, while the numbers were impressive, they were not enough to fund the vast campaign apparatus they were creating. I argued that McCain acceptance of public financing, which would be available to him the first day of the general election campaign – today – combined with the fundraising advantage the RNC had over the DNC, would put McCain in a seriously advantageous position at the start of the campaign.

This Bloomberg article today says the McCain campaign, with its $84 million in public financing, along with the RNC and its $120 million in cash, start the general election cycle with $200 million, and hopes to raise another $100 million before election day – hopes that were buoyed by the enthusiastic embrace of Palin as the VP pick. That gives the GOP side $300 million to spend over the next 60 days, only $100 million of which it needs to raise during that time. That is a spending clip of $150 million a month.

Obama, on the other hand, reported having $68 million in cash at the beginning of August, having raised $52 million in contributions in July. But he spent $57 million in July so he actually had less money in August than he had in June. It’s certain he enjoyed a bump in his fundraising in August connected to the Convention, but he would have had increased expenses as well – and his campaign has been burning through large amounts of cash on a large organization for months. So let’s give him a generous $75 million in donations in August and $65 million in expenditures. That would leave him with about $80 million in cash to start the general election campaign.

Though the DNC did better in its fundraising in July than it had all year, it still lagged far behind the GOP in money-on-hand, reporting only about $28.5 million in cash-on-hand to start August. Assuming it also raised big money at the Democratic convention – yet with big expenses to go along with staging it – let’s say the DNC has twice as much cash at the end of August as it had at the beginning – $60 million.

Combining Obama’s $80 million with the DNC’s $60 million, they would be $60 million behind the McCain/RNC total of $200 million – a 30% funding disadvantage.

If Obama hope to merely match the McCain/RNC spending over the next 60 days, he needs to raise $160 million in that time frame – $80 million a month.

But even if he matched the GOP, a much larger share of his expenses merely goes toward feeding the campaign monster they have created and not for things like GOTV and paid advertising.

McCain and the GOP will have much more flexibility because less of their money will be tied up in hard costs of running a campaign – office space, staff salaries, equipment leases, automobiles, etc. Unless a candidate shuts down those kinds of campaign operations, the money budgeted for those expenses can’t be quickly shifted to other priorities.

And I wonder just how effective Obama will be able to raise money in the context of a Fall campaign, where a candidate on a campaign plane might make 6-8 campaign stops in any given day, mostly at smaller events in towns dotted across the maps of Virginia, Penn, Ohio, Michigan, Wisc, Minn, Iowa, Missouri, Colorado, New Mexico and Nevada. It’s not like the Spring primary where only 2-3 states needed to be tended to at a time with elections spread out over several weeks, leaving lots of time to attend fundraisers at night and on the weekends.

In one of Obama’s first decisions as the presumptive nominee of the Democratic party, he drank his own Kool-Aide and decided that his fundraising well was bottomless.

That may be the decision that, in the end, gets him beat.

37 Responses to “McCain Now Possesses A Significant Campaign Finance Advantage”

  1. That shows judgment.

    MartyH (52fae7)

  2. Judgment to lead: for Obama, that means doing what didn’t work in the past this time as well.

    Spending more than you make is a time honored liberal tradition, exlemplified by the democrats.

    Bono held a $30K (actually $30K!) a plate dinner for Obama. How in the hell can that not be elitest?

    Jack (d9cbc5)

  3. And amazingly, running this campaign is the biggest experience he offers up for why he is qualified to be president! He has 5 times the resources of any prior campaign with poor results!

    He is being horribly wasteful with the money of the people who love him, imagine how wasteful he will be with everyone else’s money?!?!?!

    Ray (8cfb7a)

  4. He did, after all, lose about $150mm in Chicago – where did all that money go while he was in charge as a “community organizer”?

    steve miller (3c2c90)

  5. I was intensely worried that the advantages BHO enjoyed prior to the end of teh conventions would be to much for JCM to overcome. You outlined several of these.

    Today? I say it will be an absolute upset if BHO wins.

    Awesome post, per usual, WLS.

    Ed (f35a20)

  6. Just another indication that the MSM is playing catch-up on the serious issues of this election season.
    Well Done, Sir!

    Another Drew (faec8a)

  7. Who is stupid enough to give Obama money now?

    “Give me more money because I broke my promise to accept public financing”

    “Also, your money only counts as half as much as that given by McCain’s donors, because I broke my promise to accept public financing.”

    This shows Obama’s poor judgment and management skills. An Obama administration will look the same way: Obama will constantly have his hands out asking for money. The Onion wasn’t far off with their article “Black Man Asks Crowd for Change.” We’re going to have a panhandler-in-chief if he’s elected.

    Daryl Herbert (4ecd4c)

  8. I agree with a lot of this, but question this part:

    “But even if he matched the GOP, a much larger share of his expenses merely goes toward feeding the campaign monster they have created and not for things like GOTV and paid advertising.”

    You have a point about advertising, but I’m not so sure about GOTV. A large part of where all the money is going is to organize networks of volunteers to make sure the GOTV is handled where it will count most primarily, and pretty much everywhere else secondarily. (It’s community organizing!) I think the structure in place, except the very top, will shift almost wholly to GOTV in the weeks before the election.

    McCain will probably have more money, but he’ll have to spend a lot of it trying to create the structure Obama in large part already has in place.

    Aplomb (b6fba6)

  9. Aplomb — the GOP maintains the GOTV infrastructure that Rove created and used so effectively in 2004. The McCain campaign didn’t have to build one from scratch like the Obama campaign has.

    What the Obama campaign has built is very impressive, but its very expensive to operate. I question whether, with a burn rate of $60+ million a month BEFORE you start paying for GOTV efforts, how much money will be left over for GOTV in the last 10 days, and how much nimble the Obama campaign will be if it needs to move it around.

    WLS (26b1e5)

  10. WLS, you have a mistake in your previous post about Michigan. It’s not true that the Democrats have controlled all branches of government since ’02. The state senate is currently under Republican control.

    Foo Bar (03f778)

  11. #8
    Good point, Aplomb.
    And WLS, why don’t you wait and see if what you hope will happen actually happens. Lest you are proven wrong again. (On this matter, that is.)

    love2008 (0c8c2c)

  12. Foo Bar,

    Please re-read the post. I added the Michigan Senate status.

    DRJ (7568a2)

  13. WLS, mark down that you have to get love2008’s permission to post.

    SPQR (26be8b)

  14. How many times has Love2008 been proven wrong now? I’ve lost count.

    Evil Pundit (843b74)

  15. love2008 — I’m simply trying to read the tea leaves based on what’s happened the last couple months. I’ve got a pretty good track record on this subject — the NYT article from last week quoted unnamed Obama campaign officials as say they weren’t raising as much money as they had budgeted for, and the reason was that so little had been raised from Hillary donors after she dropped out.

    I’ve said repeatedly that McCain getting his money in a lump sum while Obama had to continue working to raise money was going to be a big deal. Well, that day is upon us. McCain has $200 million today.

    Obama knows how much he has — they’ve reported their previous month’s total as earlier as the 3rd of the next month when they had good news to report.

    It would have be a great way to step on McCain’s speech by releasing some boffo fundraising totals for August. Here it is Friday the 5th, and we’ve heard nothing.

    So, I don’t expect the numbers for Obama or the DNC to be outrageous. They’ll be good, but good isn’t enough after the disappointments of June and July.

    WLS (26b1e5)

  16. #14
    Why do you call yourself “Evil”?

    love2008 (0c8c2c)

  17. The thing is, Obama doesn’t need to spend anything on GOTV anymore: the Democrats already have a substantial lead in new voter registration — Alaska being the only state in which the Republicans are even close — and, much as people like to disparage “community organizing,” it’s fairly obvious (to Hillary, at least) that underestimating the Obama campaign’s ground-game isn’t a winning strategy. (Also, I haven’t seen anything around here about the $10M Obama raised after Palin’s speech. She may’ve mobilized the conservative base, but it looks like she mobilized the liberal as well.)

    SEK (072055)

  18. WLS, I think that you don’t give enough emphasis to the other advantage that this gives McCain – he and Palin can spend less time fundraising and more time campaigning.

    SPQR (26be8b)

  19. #15
    Obama knows how much he has
    Right you are there. Now lets wait until he tells us. Whats the rush? :)

    love2008 (0c8c2c)

  20. There is additional support for WLS’s theory. Although buried at the end of the report, this AP article specifically noted Obama and the DNC have to raise a minimum of $100 million in September and October to keep up with McCain/RNC.

    DRJ (7568a2)

  21. SPQR — that’s the norm in the fall. That’s why candidates have always taken the federal money since it was made available. They headline a few fundraisers in NY or LA just to raise money for the Party, or they shake hands at a local fundraiser being held for a local candidate — but the Pres. candidate doesn’t usually have his hand out for himself in the fall like Obama will. Its going to be a problem.

    For the GOP, McCain has always been a poor fundraiser. But Palin is going to raise buckets of money for the RNC and local candidates. I’d set her up with nothing but friendly crowds and local fundraising events.

    When the press complains I’d simply point out that they didn’t have any loud gripes about Obama never talking to them during the primaries. Remember the incident not long at the Rev. WRight thing broke? Obama cut off press questions at one stop by saying “Gosh, I think I’ve answered five questions already. What more do you guys want?”

    Screw the press and what they think their entitled to.

    WLS (26b1e5)

  22. #17
    Hey SEK, you don’t want to ruin their party, do you?
    You “Party-Spoiler”, you.. :)

    love2008 (1b037c)

  23. SEK…
    You can register all the voters you want, but you still have to get them to the polls (GetOutTheVote, Heh?)
    Getting people to, and from, the polling places, or making all of those home visits with absentee ballots, takes m-o-n-e-y!
    You have to have properly licensed drivers, you have to rent vans, you have to buy insurance, gas, coffee, do-nuts, etc.
    And, the people directing all of this are on salary through the election – that’s all part of BHO’s $2M/day nut.

    Another Drew (faec8a)

  24. Democrats have lost national elections before where they had a nominal registration advantage.

    SPQR (26be8b)

  25. WLS.
    That may be the decision that, in the end, gets him beat.
    You wish.

    love2008 (1b037c)

  26. No, you wish . . . and hope . . . and dream . . . everything short of actually working to make it happen.

    Icy Truth (6e6d48)

  27. Another Drew #23: A point I was trying and failing to make earlier is the Obama plan in part is based on having a large staff currently organizing and coordinating an even larger staff of volunteers to handle GOTV on election day. You don’t need to pay for vans, gas and coffee if you have a paid “neighborhood whip” identifying reliable volunteers to do that for free and matching up those volunteers with identified likely Democratic voters who need help, encouragement and timely registration to get to the polls. If it worked perfectly, you wouldn’t need to rent a single van or pay for a single gallon of gas, all the money dumped into a local campaign staff person over the previous months would ensure that say 20 cars driven by volunteers and filled with people who need rides would go out for free.

    There’s a danger that this investment doesn’t pan out and Obama will find himself short of the more traditional GOTV cash at the crucial moment, but it’s not an unreasonable strategy and might be the future model if it works. Say what you will about Obama, but so far his organization hasn’t let him down yet.

    Aplomb (b6fba6)

  28. …all the money dumped into a local campaign staff person over the previous months would ensure…

    Now these local campaign staff types…would that include the same sticky fingered sorts that seem to inhabit some of our finer urban areas under the guise of community organizers and their organizees?

    There’s a danger that this investment doesn’t pan out

    I’ll go with that thought.

    allan (abcd5d)

  29. Allan 28: it’s possible some scumbags will siphon funds from the campaign, but it’s also possible some scumbags will siphon funds from McCain’s campaign. And I don’t know why you use the word “urban,” a campaign miscreant could also be in the farmlands, woodlands, or small towns. Why would you think an urban local campaign staffer would likely be more corrupt?

    We have yet to see how it works out, but I would suspect the Obama model would tend to deter embezzlement. As it is based on identifying volunteers and voters early on through paid staffers, I’m sure there are procedures in place where higher ups make sure such volunteers and voters exist ahead of time through verification of the efforts of the local staff, so slackers and scammers can be weeded out over time before the crucial day. If someone is found to be ineffective or corrupt before the election, you put someone else in charge of the volunteers on voting day. I’d be more worried about a strategy that dumps a bunch of money in the laps of people who haven’t been involved with the campaign for long with instructions to GOTV, where the plan, infrastructure, and network hadn’t been worked out well in advance.

    Aplomb (b6fba6)

  30. You forgot one very important detail: Union funded 527s and PACs. Make no mistake: McCain/Palin and the RNC will be outspent. I would also give Obama/Biden, and ACORN/DNC/AFL-CIO/NEA/AFFSME (should we just call it the socialist-community organizer complex?) the voter-fraud ground-game advantage. Normally, I’d add in the 15 point media bias advantage as well, but given the way they’ve covered themselves in glory ejaculate and then feces during the last two weeks, that advantage is probably considerably less now. There’s now doubt that the Palin pick has closed the enthusiasm gap, but that doesn’t mean it won’t reopen again. In sum, cash on hand and burn rates are indicitive, but not determinitive.

    Schreiber (ac5df5)

  31. Well, my html sucks. What can I say? I’m the product of public schools? Strike-out “ground-game” and “glory” and it should make sense.

    Schreiber (ac5df5)

  32. “…You don’t need to pay for vans, gas and coffee if you have a paid “neighborhood whip” identifying reliable volunteers to do that for free and matching up those volunteers with identified likely Democratic voters who need help, encouragement and timely registration to get to the polls…”

    So, all these people are going to do this for free?
    BHO isn’t even going to buy them a do-nut? They aren’t going to be paying rent for the store-front they operate out of? The phone co is going to donate the phone service? The desks and chairs and coffee makers are free?

    And, what happens when one of those donated vans, with a volunteer driver without a commercial endorsement on his/her license, gets into an accident, and a voter is injured? Who picks up the tab for that?
    They’ve got a $2M/day nut (overhead). Just where in hell do you think that money is going?
    Maybe it’s all going into the pockets of the campaign specialists, on top of the kick-backs (commissions) they get for ad placement? Then, the fundraisers don’t work for free either. Most major-league fund-raisers work on a commission basis – 15% min! Now, that’s not on every dollar, but it does take a bite out of some of the big donations.

    Another Drew (faec8a)

  33. AD 32, I wonder if you are trying to miss the point.

    The plan of having an organized staff directing a large number of volunteers (go to dictionary.com if you need a definition of volunteer) assumes a huge number of people will do it for free. It’s not onerous for the volunteer, you just agree to contact a number of potential Obama voters supplied by the paid campaign staff, ask them if they are registered or if they need help getting to the polls, and touch base close to election to see if they need a ride or have any questions. No donated vans, or insurance problems (as the volunteer’s own car is insured to carry passengers), no commercial license (as the driver isn’t paid). These do-nuts you seem obsessed with may or may not be supplied by the volunteer.

    The current daily nut is being paid to set all this up — pay people to identify reliable volunteers willing to keep in touch with potential voters, give those volunteers information to sway swing voters on their lists and fun things like bumper stickers and yard signs to pass out, and get people who need encouragement or transporation to the polls on the right day. The volunteers in this equation, if the campaign finds the right ones, are more than willing enough to buy their own pastries and pay for their own gas to deliver voters to the polls.

    Will it work? Who knows, maybe the paid staff sucks at identifying reliable volunteers actually willing to go out of their way to deliver additional votes for free or even some minimal personal expense and/or sucks at identifying potential Obama voters to match them up with.

    And of course there is going to be a lot of places where the campaign itself can’t find the mix of willing volunteers and potential voters where this plan doesn’t work and thus has to spend on traditional GOTV.

    But if it works well, the entire paid local campaign staff could disappear a week before the election for lack of funding, but the volunteers will have their lists in place and bring the right people to the right precincts on time.

    Aplomb (b6fba6)

  34. Aplomb, have you actually run a “volunteer” organization? They take money too in reality.

    SPQR (26be8b)

  35. Aplomb, I’ve been a volunteer in a major state-wide election effort at the state HQ. What you are outlining may work for a councilmanic election, perhaps even for a Congressman in a compact, urban district. It doesn’t work in a large, nation-wide campaign in 435 Congressional Districts (avg pop 700K+/-). Also, you have to take into account different insurance requirements in the “58” states.
    I can tell you that if you don’t have coffee, do-nuts, PIZZA: You don’t have volunteers.
    When you’re running a phone-bank with a couple dozen callers, you go through a lot of pizza as people cycle through the facility. Some people can come in for a 6-hr shift, others are there for 30-minutes. You take what you can get.
    Just think what it takes to set up a volunteer orginization in a state such as Montana (1 cong dist), with people spread from here to Hell’n gone.

    Another Drew (faec8a)

  36. SPQR 34:

    Volunteer organizations do take money. Where do you think all that daily money is going for the Obama campaign? They are spending big bucks now to set it up. They are blowing through millions every day to set up a volunteer organization they hope pays off on election day. That’s my point.

    Look this isn’t a left-right, smart-stupid, or really even and old-new issue. It’s just one strategy versus another.

    Obama is spending lots of daily money to set up a plan that will require a lot of volunteers to come through on election day. It’s a strategy based on how well you identify reliable volunteers who will follow through and give them the tools they need to do what they are willing to do for free on election day and the weeks before.

    McCain is not spending nearly as much daily money to set up such a network, saving up his money relying more on spending a bunch of money in the last days to have the campaign pay for GOTV, which has the virtue of making sure it actually happens, or at least happens in large part more predictably.

    Which strategy is better? We won’t know until November. Maybe Obama will wish he had kept a lot more money at the end because the volunteers didn’t show up in enough numbers or the potential voters weren’t connected with the volunteers efficiently. Or maybe McCain will wish he’d understood how paying one guy for months to make sure a bunch of other people GOTV for free on election day is more efficient than spending all the money late in the game and expecting the complex network of information and logistics to form in short order.

    Aplomb (b6fba6)

  37. Aplomb – Do republicans pay off lower level inner city politicians like the democrats to GOTV or is that just a democrat thing with their control of major cities?

    daleyrocks (d9ec17)


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