The Obama campaign has launched an all-out effort to help Hillary Clinton retire her debt. Obama’s national finance team members (bundlers) are being asked to go back to the well and get their donor friends to kick in up to $2300 (maximum allowed by law) to Hillary Clinton’s primary campaign. Donations will be designated for Hillary Clinton’s “2008 Primary Election Debt Retirement”. Donors are being assured that the money will not be used to pay back Hillary and Bill Clinton’s personal loan to her campaign, which they reportedly are recognizing as a loss. The campaign’s message is that this financial help is critical to ensure party unity and secure the support of Clinton’s backers – both donors and voters – for Obama in the general election.I’m not convinced.
Update: Obama campaign now denying report. A spokesman called the number "way off the mark" but didn't offer the correct total. Back to waiting...
The Wall Street Journal reports this morning that Obama's fundraising total for June will come in around $30 million, following burnout and exhaustion after a lengthy primary, and leftover bitterness among Clinton supporters still unwilling to donate:
June fund-raising for Sen. Obama appears to be falling below the expectations of some supporters. The campaign hasn't released its June numbers, but people close to the fund-raising operation say the total will likely be just over $30 million. While this isn't a poor showing, it is an underwhelming haul for a campaign that has ballooned in recent months, has promised a true, 50-state electioneering effort and has told its biggest fund-raisers that it wants to collect $300 million in general-election cash by mid-October.
This comes as McCain and the RNC report a planned $400 million budget for the fall campaign and already have over $90 million on hand. It's going to be a tough slog ahead for the campaign.
It's worth remembering though that the Obama campaign has also begun to fundraise for the DNC in earnest, so the combined fundraising should be good.
Second, remember that small donor fundraising can be fickle. Summer-time fundraising from small donors is difficult because it's harder to gain momentum; the candidates are in the news less; people are less plugged in; many are on vacation; there isn't the press of the primary schedule.
But here's the main thing: Supporters don't necessarily feel the urgency to donate to a candidate if they don't know they're in trouble. The Obama campaign needs to be up front with small donors, if the campaign wants them to chip in an extra $25 or $50 dollars.
Clinton found out that loaning herself $5 million at the end of January was the best fundraising move she ever made, since her supporters finally found out she was in trouble.
And that was the genius of Ron Paul, who offered total transparency in terms of fundraising totals, and whose internet fundraising boomed as a result.
Matt Yglesias makes an important point about the nature of Obama's small donor fundraising:
What if the small donors who powered Obama's rise look at a guy who's ahead in the polls and who everyone is predicting will shatter financial records and think to themselves, "why bother."
Small dollar fundraising requires you to overcome collective action problems and too much success may make that difficult. The psychology of donation seems to me to require both "buy-in" on the part of the donor and also a sense of being embattled.
This is the right kind of question to be asking, though it's not just a question of too much success. Obviously Obama's strongest, record-breaking months were after his victory in Iowa, when he started to look more and more like the nominee --- though both Obama and Clinton saw strong one-day totals right after a decisive loss.
But Yglesias is point at the dynamism of Obama's fundraising model. We saw this relative to Hillary Clinton in the primaries. While Obama's online fundraising was capable of sudden and staggering leaps and bounds, Clinton's traditional, large-donor fundraising was much more reliable, even stunningly consistent, particularly over the slow summer months, in turning in the same amount month after month.
In other words, Obama's online fundraising follows the same general rules of YouTube traffic or Facebook friend requests --- it follows spurts, is much more subject to group psychology, and is more difficult to corral into steady, consistent progress.
It looks like the Obama campaign only narrowly beat McCain for fundraising in the month of May. The Chicago Sun-Times' Lynn Sweet has the details of altogether healthy campaign finances, but disappointing nonetheless:
Cash on hand $43,147,333
Primary cash on hand $33,263,856
The month of May:
Total raised $21,901,101
Total primary raised $21,211,417
General election raised $689,683
General elec. raised to date $9,883,476
Debt: $304,162
While Obama's fundraising has almost certainly surged since the end of May, now that the primary is over and Democrats will be able to combine their fundraising efforts, this should bring home the magnitude of the challenge facing Obama, especially now that he has left the public financing system.
On a side note, it's worth noting that on top of his healthy stash of 34 million in primary dollars, he also has already raised $10 million towards the general election.
All the same, a classic bad news dump for a late Friday night?
UPDATE: The New York Times notes that the campaign spent $26.1 million in May.
The public financing system involves an offer of public funds in exchange for obeying a private funding spending limit:
Under the federal presidential financing system, a candidate this year would be given $84.1 million from the Treasury to finance a general election campaign. In exchange, the candidate is barred from accepting private donations, or from spending more than the $84.1 million.
This morning, as expected, Obama left the public financing system, forgoing those $84.1 million in public funds --- knowing that he can raise significantly more in online donations.
Obama is now "the first candidate of a major party to decline public financing — and the spending limits that go with it — since the system was created in 1976, after the Watergate scandals." It is a historic move, although it should be said that it had long since become commonplace for nearly all candidates of both parties to decline public funds (and spending limits) during the primaries.
If McCain follows suit, then the 2008 general election will be the first in over twenty years not to be bound by spending limits --- and each candidate will be able to raise and spend unlimited private funds.
The problem is that these "spending limits" were never absolute. The RNC and DNC have long conducted their own fundraising and spending, bound by a different and much higher personal contribution limit. And 527's have now made it commonplace for outside groups to spend massive amounts in the final weeks of the campaign.
In other words, Obama would have been at a significant disadvantage in the general election, the historic disadvantage of Democrats nationally for years in fundraising --- since he would have been unable to maximize his new model of online fundraising, while his opponents would have been free to raise and spend without being bound by contribution limits.
And in a real sense, Obama's is the more public financing model, based on the active choice and mobilization of millions of Americans giving small sums, instead of the passive allocation of tax funds by a bureaucracy or the barely restrained spending of an oligarchy.
Still, public financing advocates are almost sure to be upset --- and rightfully so --- at what could be the final collapse of a system, but it's not Barack Obama they should be upset with. Public financing regulations haven't kept pace by raising spending limits or further restricting 527's, and until they do, they only leave Democrats at an extreme disadvantage.
Let's remember what public financing was for: To ensure that the voices of the public are heard over the unrestrained spending of the special interests. An unreformed public financing system no longer meets this challenge and indeed perversely maintains the inequity. Instead, the internet holds the future of an engaged public, rising up as they have, on their own, to fund the campaigns and make irrelevant the special interests.
The first article in this series described how some of the most astute political observers were “blindsided by Hope” and Barack Obama’s historic victory, convinced America would continue to be ruled by Freak Show politics.Eleven organizational principles guided Obama’s campaign for the nomination, which relied heavily on grass roots and community organizing tactics.The successful “early states” strategy provided enough momentum to carry Obama over the finish line, a race he won by the only measure that counted: delegates.
This article offers a candid assessment of the campaign’s challenges as Obama goes from being a candidate to the nominee.Obama will adapt his management approach to the general election campaign, internalizing electoral strategy as an important part of the corporate culture.The internal challenge is melding a grass roots movement with the Democratic Party establishment and limiting expenditures on paid political ads and services.The external challenge is to avoid inevitable distractions and stay on message. Obama can reassure voters it is "safe" to vote for him by convincing them he can best promote their enlightened self-interest and through his selection of a running mate and naming a shadow cabinet. The result could be an historic and major pendulum swing in American politics.
Part II continues below the fold.
No sign of Obama hinted some sensed in 2004 that Obama would make history. But few expected it would be so soon.
Washington newspaper The Hill reports conversations with Democratic fundraisers, quoted by name, predicting massive totals this summer:
Specifically, they say Obama could raise $100 million in June and could attract 2.5 million to 3 million new donors to his campaign.
These fundraisers say Obama could increase his fundraising dramatically because of three factors: a boost of enthusiasm among Obama donors following his clinching of the nomination; the migration of Sen. Hillary Rodham Clinton’s (D-N.Y.) donors to his camp; and the mobilization of big Democratic donors who have given little so far this year.
In the past, the Obama campaign has been tight-lipped about fundraising results, and we now have a broader range of "Democratic fundraisers" offering predictions to the press.
Second, I hope this influx of major Democratic donors (including those have until now remained on the sidelines) doesn't change the broad-based, small-donor model of Obama's fundraising this year.
Third, Obama's spectacular achievement has been a far more successful fundraising model that requires a minimum of candidate time:
During the month of February, for example, his campaign raised a record-setting $55 million—$45 million of it over the Internet—without the candidate himself hosting a single fund-raiser. The money just came rolling in.
That model should be maintained as much as possible, and that means continuing to make significant investments in online campaigning. Techpresident contributor Patrick Ruffini predicted:
The Obama Internet team hit the ground running with ten staffers in February 2007, including Facebook co-founder Chris Hughes. Don't be surprised to see them recruit more tech and data geeks for the general, including former Clintonistas and from Silicon Valley.
Time Magazine is starting to report the first rumors, from anonymous campaign staffers, of how much the candidates raised in the month of March. An official for the Obama campaign has apparently said that the figure is over $30 million, while the Clinton campaign hints their total will be closer to $20 million.
Even though these numbers haven't been confirmed, it's likely that the fundraising for both campaigns will be down from last month. Clinton's total campaign debt, meanwhile, has remained close to $9 million, not including Clinton's personal loan of $5 million. This raises two questions:
How does the Clinton campaign pay off this debt once the campaign is over, activists have moved on, and fundraising becomes more difficult?
Does the debt put Clinton at a disadvantage for an expensive 2012 Senate re-election race?
One Clinton adviser wondered whether that what he called the "massive debt" was beginning to hang over not simply the campaign but Clinton's political future. How, this adviser asked, can the campaign climb out of "the debt hole if we don't win this whole thing?"
Facing a Senate re-election campaign in 2012, he noted, Clinton's choice is daunting: "If you have a $10 million debt when this thing is over, she has to pay it off, and then, four years later, raise $30 to $40 million" to wage a re-election campaign.
The Clintons have been working their fundraising network to the brink, with an expensive 2006 Senate campaign, followed immediately with a 2008 presidential campaign.
Now, I'll assume they'll be perfectly capable of paying off a $10 million debt, and the Clintons' personal fortune is such that they can write off the $5 million loan as a loss, but these financial worries could grow louder over time.
UPDATE (jlarson) :
From the campaign--
The campaign announced today that more than 442,000 contributors across the country together contributed more than $40 million in March. Of those contributors, over 218,000 were donating to the campaign for the first time.
In a press release, campaign manager David Plouffe said:
Senator Obama has always said that this campaign would rise or fall on the willingness of the American people to become partners in an effort to change our politics and start a new chapter in our history. Today we're seeing the American people's extraordinary desire to change Washington, as tens of thousands of new contributors joined the more than a million Americans who have already taken ownership of this campaign for change. Many of our contributors are volunteering for the campaign, making our campaign the largest grassroots army in recent political history.
Once again, you've defied the expectations and the odds. You've shown that the strength, dedication and commitment of this movement has not slowed or wavered one bit. In unprecedented numbers, ordinary people are volunteering and donating to this campaign, taking true ownership in a way that has never happened before. Together, you have shown that ordinary people can do extraordinary things. Yes we can.
The Clinton campaign is expected to announce that the campaign has so far raised $35 million in the month of February, just shy of Obama's January total of $36 million.
Clinton's February haul was far less internet-driven than Obama's January total, as the Clintons have raced around the country holding major donor fundraisers in recent weeks. About two-thirds, $24 million of Clinton's $35 million, came from the internet.
The Obama campaign has yet to release its fundraising total for February, but spokesman Bill Burton told the Politico's Ben Smith that it was "considerably more."
There's considerable speculation that Obama might just have raised more than $50 million, which I would find shocking. Marc Ambinder of The Atlantic seems to be stating with some certainty from his sources that this is the case.
UPDATE:More details on the Clinton haul --- more internet donations than earlier reports led us to believe and most of the donations were indeed for the primary campaign:
The Clinton campaign offered some details about its February resurgence: $30 million came in over the Internet or in other small donations; 200,000 of the 300,000 people who contributed were new donors; the average contribution for the month was just over $100.
Perhaps most important, $34 million can be used for the primaries, with the rest set aside for the general election.
How about a little props to this website? Not only is it a great place to come and get good information about the campaign, but now that we truly are One Million Strong it's proven to be downright prophetic or perhaps inspirational. Time to change the title to Two Million Strong.
Despite raising a solid $11.65 million in January, McCain remained broke at the end of the month:
According to filings with the Federal Election Commission late Tuesday, McCain had $5.2 million cash on hand at the start of February and $5.5 million in debts, including a loan of nearly $4 million. [...]
The campaign's net worth was negative at the end of January. Even worse, the McCain campaign showed a pattern of borrowing before important primaries to try to keep up:
But his report also showed that he entered the month with trepidation, borrowing $950,000 in the first week of January in addition to the $2.9 million he had borrowed in December. The loan improved McCain's cash on hand, allowing him to buy ad time in New Hampshire to fend off an aggressive run by Romney, the former governor of Massachusetts.
McCain had also decided to participate in public financing, before abruptly deciding to pull out after his fundraising improved. He was in the position of actually being forced by his bank to pledge to participate in the public financing system if his campaign floundered:
McCain had applied for public financing for the primary but backed out this month. Though he did not secure his loan with the public money, loan records show that the bank, Fidelity Trust & Bank, had insisted that if McCain lost early primaries he would have been required to participate in the federally financed system.
Some principled defender of public financing... It's worth pointing out that McCain's January total, although a personal record, was less than a third of the $36 million Obama raised in the same month, most of it on the internet.
Since primaries and caucuses were being held in such rapid succession, fundraising during the last month almost exclusively online, as the candidates raced from state to state. During this time, Obama had a distinct advantage. Now that there's a little more time to breathe, they're plunging back into holding traditional fundraising events.
Bill and Hillary Clinton plan to hold nearly daily fundraisers between now and the end of February, according to a New York Times report out today. Next week Bill Clinton has planned "five events in California on Monday and Tuesday, followed by four fund-raisers in Florida and one in New York." Hillary Clinton has a similarly packed schedule.
The goal? Mindboggling:
Clinton advisers say they hope to raise about $30 million online this month and another several million dollars in total at these in-person events.
For over a year now, Obama has been going up against the strongest fundraising machine in the history of Democratic party politics, and it's small donors that have made it happen for him again and again.
Just as further news arrives of Clinton's deepening financial trouble --- she recently loaned $5 million of her personal fortune to her campaign (funds that have probably already been spent on advertising in the February 5th states) and word is out now that at least some of her senior staff are going without pay --- just as all this troubling news for the Clinton campaign is emerged, it comes out that Obama has raised $2.2 million in the last 24 hours.
Not only is $2.2 million [*see Update*] a faster pace than Clinton plans to raise in the fundraising drive announced today by email for $3 million in three days, but, according to Obama campaign aides, it puts the campaign on track to raise $30 million again this quarter.
And now conventional liberal fundraising powerhouses like MoveOn.org are starting to weigh in, sending out an email to their 3 million members encouraging them to donate.
No candidate in American history has ever raised $32 million in a month. And Obama is planning to come close to repeating it again in February. Stunning.
Because of the internet, a African-American recent state senator from the south side of Chicago will be wildly outraising the Clinton establishment --- and by a lot. Absolutely stunning.
Now, I should say that the official campaign spokesman was somewhat worried by the talk of a repeat month, playing down expectations of reaching $30 million:
Bill Burton, an Obama spokesman, cautioned that the fundraising pace may slip and downplayed talk of another $30 million month.
“We’re obviously pleased with the amount of grass-roots support that we have, but it’s way too early to be making predictions like that,” he said.
Regardless, it shows how much stronger a fundraising model Obama has built than Clinton. Traditionally, campaigns have relied on direct mail (which involves expensive mail buys and generally doesn't provide high returns) and traditional in-person fundraisers (which are expensive to host and require the candidate to take time off from the campaign trail).
Moreover, the Obama model is far more sustainable.
[A]ccording to the Obama campaign, only 3 percent of his donors have given the maximum $2,300 donation for the primary.
That means he can go back to the vast majority of his supporters, over and over again, and ask them to send another check.
Indeed, the strength of the Obama fundraising machine from the outset was based on its unusual recruitment and reliance on small donors.
At the very least, Clinton will almost certainly need to take time off from the campaign trail to host major-donor fundraisers. That will be the first cost of lagging financially.
UPDATE: The Obama campaign now reports that it has raised $3 million since the polls closed yesterday. And there are still hours left before a full day has passed. They've sent out an email asking for supporters to match the $5 million Clinton loaned to her own campaign from her personal fortune.
UPDATE II: They're closing in on $4 million. One has to wonder if the Obama campaign is close to someday being able to match the single-day fundraising totals of the Ron Paul campaign. (They already have far surpassed the Paul campaign in internet fundraising over the course of a month.)
Al Giordano has had great coverage of the Democratic primary over at The Field. In a comment on DailyKos yesterday, he laid out the math of why the Clinton campaign is probably running out of money.
Clinton's December "burn rate" (the amount spent - largely on staff and consultants) was $25 million.
If she had $13 million going in to January, and raised another $10 million, that means that unless she put millions of her own money in (and that is limited to, according to financial filings, around $10 million), she has spent her last dime on Tsunami Tuesday ads in just 12 states.
So Clinton does not "still have a huge warchest." She has nothing left in the account, or will by Wednesday.
Clinton's burnrate in January must have been at least as high as it was in December. She was spending in Iowa, New Hampshire, Nevada, and South Carolina, and has been trying to keep up by advertising in twelve February 5th states.
And she reported $13 million cash on hand at the end of the fourth quarter on December 31st, augmenting that with $10 million that she raised in January. That wouldn't be enough money to maintain her December level of spending.
It's possible that the Clinton campaign is actually already in debt.
UPDATE: It's worth pointing out that "merely" raising $10 million in a month is not a bad fundraising result. Indeed, it's one of her strongest months. Here are month by month totals courtesy of Opensecrets.org (the Center for Responsive Politics):
The Clinton campaign usually raises the majority of its funds in the last month, indeed in the last week, before a fundraising deadline. So they actually raised $11 million in the final week of March at the close of the first fundraising quarter, for example, giving them a total for the month of $16 million.
What this chart also shows is just how phenomenal Obama's results from January really are. It's double what he's ever raised in the span of a month. Despite a strong performance from Clinton, there was just no possible way to keep up.
This week brought the stunning news that Obama had outraised Clinton in the month of January $32 million to $10 million. He not only tripled her fundraising total, he did so by raising $28 million of it online --- in other words, his fundraising machine is essentially churning away on autopilot.
His biggest day in fundraising was the day after he lost the New Hampshire primary, when he raised $2 million in 24 hours --- shattering the conventional wisdom that donors back away when you don't meet expectations.
And Obama did it by gaining an additional 170,000 new donors, further bolstering his small donor network --- a network to which he can return again and again for funds --- in contrast to the donors who have already maxed out $2,300.
The Clinton campaign has to be running low on funds. They're only running ads in 12 states right now, compared to Obama's 24. Everything is riding on Clinton doing sufficiently well on Tuesday that big donors starting supporting their campaign again. Clinton has far more to lose from a tie than Obama does.
The Obama campaign is so well-funded at this point, that it already has ads on the air in most of the remaining primary states in February, as well as staff on the ground.
Yes, the Obama campaign needs it to be close this Tuesday. But far more is riding on the results for the Clinton campaign.
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