January Fundraising

by hilzoy

Earlier tonight, I went to the FEC's website to check out the January fundraising reports for Clinton, Obama, and McCain. Matt Stoller wonders whether the McCain campaign is broke, based on the fact that its liabilities exceed its assets. They do, but on the other hand, most of those liabilities are McCain's bank loan, whose due date seems to be in May, so he has time to drum up the money. (On the other hand, I had no idea it was possible to run up $720,164.57 on one's AmEx card. Not something I want to try at home.)

I was somewhat puzzled by Clinton's statement, though. On the one hand, her campaign clearly took in considerably less than it paid out. About nine million dollars less. And that can hardly be good news. Moreover, she has a mass of debt: $7,576,700.48 worth, to be precise (not including the loan she made to herself.) Moreover, while some of it is large sums (over $2million owed to Mark Penn, for instance), there are a lot of pretty small unpaid bills to places throughout Iowa and New Hampshire. (Honestly, why not pay the $500.12 they owe to Premier Pizza in Algonquin, Iowa? Or the $615.25 they owe Depot Deli of Shenandoah, Iowa? Your average pizzeria or deli is not made of money, after all.)

The puzzling part, though, was that despite all this debt, the Clinton campaign has tons of cash on hand. Nearly $38 million at the beginning of January; a little over $29 million at the end of the month. That seemed odd, especially in light of those news stories about their being broke after Iowa. As I was scratching my head about this, I came across a story in Politico that explained everything:

"According to the reports, Clinton raised about $20 million in January, including her loan. She spent nearly $29 million during the month.

She reported a cash balance of $29 million. But more than $20 million of that is money dedicated to the general election. Her personal loan accounts for more than half of the remaining approximately $9 million, leaving just about $4 million in cash raised from donors. (...)

Clinton’s strapped financial situation in late January meant she couldn’t invest in all of the Super Tuesday states, particularly the expensive ground operations required in caucus states.

Obama won every one of those caucus contests on Feb. 5, opening up a critical lead among pledged delegates."

That's the fact I didn't know: that these forms include money restricted to the general election. Which changes everything.

If Clinton's receipts and spending for February match her receipts and spending for January, she will have blown through all the cash she has available for the primaries by the end of the month. Question: does anyone think that she will take in as much in February as she did in January? I don't. For one thing, January included both the period after she lost in Iowa and the period after she won New Hampshire, either of which might have prompted people to send money. But by February, losses were no longer a shock, and for most of the month, there weren't any victories. People want to back someone they think has a decent shot at winning, and after Maine, at least, Clinton's donors have to have been wondering whether she can pull it out. Besides that, February has also been a month full of stories about the Clinton campaign's ineptitude. If I were a donor, I'd think twice about giving to a campaign that had burned through so much money with so little to show for it, or that had declared Texas a must-win state without bothering to figure out its delegate selection rules.

I assume that the Clinton campaign has cut back its expenses. But there are limits to how far you can cut back expenses without seriously affecting your chances of winning, and if donations drop considerably, the Clinton campaign will reach those limits. Clinton can always make another loan to her campaign, but I imagine there are limits to the Clintons' willingness to finance the campaign themselves. Which means that at some point, they are going to have to make some tough decisions. In their shoes, if I didn't dramatically turn things around in Texas and Ohio, I would think long and hard before continuing to Pennsylvania.

Obama doesn't have to make those choices: he has plenty of cash on hand, and took in over $6 million more than he paid out last month. And Greg Sargent reports that he's on track to raise more money this month than he did last month. But Clinton will, I think, and soon.

Comments

[ty]

Sen. Clinton's campaign has made some positive noise about its February fundraising, at least in the days after the Super Duper.

[Gary Farber]

"On the other hand, I had no idea it was possible to run up $720,164.57 on one's AmEx card. Not something I want to try at home."

I'm guessing it was a corporate account, not a personal account.

[bwaage]

I'm kinda amazed that little pizza places and delis in Iowa will take IOUs from a campaign and wait months for them to be paid back.

Why does that never work when I try it?!

[Gary Farber]

"I'm kinda amazed that little pizza places and delis in Iowa will take IOUs from a campaign and wait months for them to be paid back."

This has happened with every presidential election cycle in recent memory, if not longer. I have to say that if I owned a pizza place, or similar outfit, and a political campaign placed an order with me, and didn't want to pay cash, or a credit charge that immediately was authorized, I'd either need to regard it as a political contribution to a candidate I supported, or I wouldn't take the order.

[joejoejoe]

It would be great guerrilla theatre to pay off Sen. Clinton's pizzeria bills. Loaning your campaign $5 million of your own money and then no paying for ten large pies with pepperoni from last December doesn't look good.

[Brett Bellmore]

People in businesses which largely supply goods and services to campaigns, or so I was given to understand when I worked on one years ago, operate strictly on a cash and carry basis, except in instances where they regard the service as a campaign donation. This because campaigns are notorious for their habit of stiffing any creditor they can, in their relentless drive to spend as much as they feel they need to, regardless of whether or not they have it to spend.

[Tony Adams]

The fact that Senator Clinton has all that money for the general election a sign that a lot of her donors are big money donors. Since the primary and general elections are considered different, these big money people gave the maximum for each. Senator Clinton got the early, big money while Senator Obama is getting a the later "small" money - just an awful lot of it.

You also need to consider what happens to Senator Clinton's $20 million for the general election if she doesn't get the nomination. I believe she gets to keep this money for a future run - either for the Senate or president.

[freelunch]

Sen. Clinton doesn't need to keep the money. IIRC she can give it to the congressional campaign committees or the DNC. I'm sure Howard Dean can make excellent use of it.

[Tony Adams]

So Sen. Clinton can either keep the money for her future campaigns or give it to the DNC. Which do you think is more likely?

;-)

[femdem]

I know I was reading a story a few weeks ago about all the Republicans retiring and Dean having to pick and choose which seats he went after because he didn't have enough money to fully fund a fight for all of them. Maybe this will change soon.

[KCinDC]

Tony, clearly she'll have to keep the money for herself so she can't be accused of "bribing superdelegates".

[OCSteve]

he didn't have enough money to fully fund a fight for all of them

He didn’t have enough to fight for any of them. The DNC started the year with less than $750,000 cash on hand. Maybe things picked up in February…

[Dan Miller]

Re: Brett's comment, when I attended campaign management training a few years ago, one of our guest lectures was about day to day management of campaign materials--office equipment, stuff for volunteers, etc. The preferred order was "beg, borrow, steal, buy, in that order." I've never been sure if she was joking...

[Goodman Holiday]

>In their shoes, if I didn't dramatically turn things around in Texas and Ohio, I would think long and hard before continuing to Pennsylvania.

Yesterday Bill Clinton said "If she wins in Texas and Ohio I think she will be the nominee. If you don't deliver for her then I don't think she can. It's all on you."
- http://www.cnn.com/2008/POLITICS/02/20/clinton.strategy/?iref=hpmostpop

[fester]

Hilzoy --- The Clinton campaign is claiming a million dollars a day pace since Super Tuesday (so a bit more than $15 million so far in February)(via USA Today)
Working with your assumption that her spending patterns in February match her patterns in January (roughly $1 million/day), she is still breaking roughly even on the intake-outflow on a day to day basis, so she should have a little bit of extra cash available for a splurge in Ohio/Texas and if she wins both, she can expect to see her finances improve. If she loses one/both, then I agree with you, her donors will shut her down.

[Davebo]

I've got a corporate platinum Amex and I assure you they won't let me run up 700,000 in charges!

But man, think about all those points!

[farmgirl]

maybe theirs is *titanium.*

[Chuchundra]

The American Express Plutonium Card!

[Incertus (Brian)]

So Sen. Clinton can either keep the money for her future campaigns or give it to the DNC. Which do you think is more likely?

I'd like to think we can shame her into coughing at least some of it up the way we got Kerry to cough up some of his leftovers back in 2004.

As far as the DNC funding races thing is concerned, lots of people make a big deal of the cash on hand, but I believe the DNC is burning more money than it has in the past because it's spending it on rebuilding the party in red states, and is leaving a good bit of money there that would have been vacuumed up in the past by McAuliffe and the like. I'll take the party building. We may not win in Mississippi soon, but we'll never win if we don't build.

[Nell]

OCSteve: He didn't have the money to fight any of them...

Congressional campaigns are primarily the job of the Democratic Congressional Campaign Committee (and the candidates themselves, who must fundraise to make themselves viable recipients of DCCC $). The D triple C is rolling in it, compared with the DNC itself.

If Sen. Clinton does not make a very significant contribution to the DNC in the aftermath of Obama being nominated at the convention, then I'm not sure why should expect support from the national committee in any future run.

[KCinDC]

I don't understand how people can make contributions to a general election campaign that never exists, in order to get around contribution limits. It seems like a loophole in the campaign finance laws.

[trilobite]

What I don't understand is why campaign finance laws never have teeth in them. Well, alright, I understand it, I just don't like it.

The penalty for accepting too many funds or using soft money for hard money purposes or whatever is a fine. After the fact. I don't think this discourages the conduct much. The meaningful penalty would be to surrender votes. Failing that, someone should go to jail. Candidates never seem too concerned about having to pay a fine after they win the election.

[Gary Farber]

"What I don't understand is why campaign finance laws never have teeth in them."

Some have suggested that the fact that the people affected are the people who write the law, but I'm sure that has nothing to do with it.

[jwo]

I came here looking for something on the new '527' set up to suppport Clinton in her TX and OH battles. I wonder if this could backfire? It clearly is the POM guys stepping in to help "their candidate" to win over the "candidate of the people." Would love to hear thoughts on this from both posters and commentors. The article in today's Washington Post makes it sound as though they are skirting the edge of the campaign finance laws....I don't know about the rest of you, but having lost so badly in the last two elections, I find myself waiting for the other shoe to drop in this one. It is going to be a long road to November!

[KCinDC]

OT: I know it's not news that John Derbyshire is crazy, but John Derbyshire is crazy (and Ezra doesn't even mention all the craziness in Derbyshire's post).

[Morat20]

OCSteve: You're making the mistake of assuming the DNC has the same sort of mandate and job description as the RNC.

They don't. Historically, the DNC only really existed in Presidential election years and ran the primary, ran get-out-the-vote and national ads, and then went into dormancy for 4 years. As such, they've never raised all that much money -- in fact, when the Clintons won in 1992 they made a big deal out of how their DNC chair actually started raising enough money to really do a few things more than that.

Dean took over and started investing heavily in infrastructure (something that had been HUGELY neglected -- it's impossible to overstate how craptacular the Democratic machine was). He also, last I checked, was still handily raising more money each quarter than his predecessor (by apples-to-apples comparisons -- comparing 2006 with 2002, etc).

The DNC has been focused on building party apparatus that can be tapped by candidates -- they've actually staffed all 50 states year round, they've invested in modern tools for voter contact, and have started actual party building in states that have been neglected for decades.

The DSCC tends to raise money for candidates, although the DNC undoubtly helps put them in contact with donors and certainly provides trained and experienced hands once they're past the primaries. I do know the DNC does a good bit of party recruiting as well -- but fundraising for candidates really isn't their thing, and never has been.

A great deal of 2006's success can be attributed to the fact that Dean's 50-state strategy was in place -- he had candidates in FAR more races than was usual, had party assets in all states, and while he didn't create the wave -- he made sure we had candidates to ride it. That wasn't the case in 2002 and 2004, where WAY too many Republicans ran unchallenged.

If you look at the way things are organized and how everything works, there's one unavoidable truth: The GOP is screwed, money wise. On every front. The DNC/RNC area is the only place they have an edge (Everywhere else is total blowouts), and that's a meaningless comparison. Factoring in what the DNC has actually started doing with itself, and even that's not a positive for the GOP.

Lack of money is NOT a problem on the Democratic side. Anywhere.

[Beth]

So what this also means is that most of her donations are coming from people who are tapped out for the primaries? Interestingly enough, the blog over at the Clinton website is lately full of "impassioned" testimonials about how the poster gave up his/her food money or has been eating ramen in order to donate to the campaign. I think I smell planted posts.

[KCinDC]

Beth, I hope those are fake testimonials. Remember that Clinton has given her campaign a $5 million loan, so any donations that are going to repay that loan are effectively going right into the pocket of a very rich woman (granted, unlike the Bushes, the Clintons have not always been rich, but they're very rich now). People had better not be giving up food for that.

[Nell]

@OCSteve:

Further on my comments and those of Morat20, here are the most recent money figures for the party committees, via a Daily Kos post.

Jan 08 cash on hand debt
DCCC 3.7 35.4 1.7
NRCC 3.8 6.4 2.3

DSCC 3.9 30.5 0
NRSC 3.5 13.2 0

DNC 5.8 3.0 0
RNC 11.9 21.8 0

[amounts are in millions of $]

January is the first month in a while that the NRCC has raised more than its Dem counterpart. Among the possible explanations: relief at the final cutting-loose of the embezzler who was the NRCC treasurer for the last ten years. Those guys aren't real high on oversight in any setting, apparently.

[Nell]

Before anyone pounces, I'll freely concede that my characterization of the former treasurer of the Republican Congressional campaign committee is not yet supported by evidence or charges, much less a conviction.

The circumspect version: there are significant apparent financial anomalies. Today's Post has an overview of the story so far.

There are more details in dispatches early this month by the Politico and Real Clear Politics, which were the first to report on the unfolding, um, irregularities. For instance:

Rep. Mike Conaway (R-Texas), a certified public accountant, had pushed for months for an internal audit of the National Republican Congressional Committee, according to GOP members, but the committee’s treasurer at the time was reluctant.

Finally, at a recent meeting, the now former NRCC treasurer, Christopher J. Ward, relented, giving Conaway what was supposed to be an official internal audit from 2006. That document was a fake, the GOP members said. Even the letterhead on which it was sent was a forgery.