Every political campaign loves to play the underdog. But David Plouffe, Barack Obama’s campaign manager, wasn’t kidding when he e-mailed supporters on Monday to say, “The McCain campaign is bragging that they are out-raising and out-spending us.” Team Obama still hasn’t released fund-raising totals for the month of June*, when John McCain had his best month, generating nearly $22 million. Insiders on both sides are murmuring about recent surprises, like McCain's outspending Obama in Missouri, and McCain's placing ads on cable TV’s New England Sports Network. And Democrats are starting to realize that they shouldn’t be quite as confident about money as they were just a couple of weeks ago.
Obama raised $287 million during the primary season, an incredible number by any standard; McCain raised about $120 million. But while that gap has made headlines, it’s pretty meaningless now. Obama had $33 million in cash on hand at the end of May, while the Democratic National Committee, which idled through most of the Obama–Hillary Clinton primary fight, had just $3.9 million, for a total of about $37 million. McCain, on the other hand, had $26.7 million on hand at the end of June and the Republican National Committee had $67.8 million, for a total of about $95 million. Whatever Obama collected in June, it’s clear that while he has spent the last month struggling to close the deal with Clinton donors and put out Netroots brushfires, the GOP financial machine is cranking up for McCain.
The Obama campaign believes it will raise something like half a billion dollars from nearly 2 million supporters for the general election: $300 million for Obama himself from here on out, plus $180 million through the DNC, where donors can give up to $28,500 apiece. Obama is confidently plowing $650,000 a day into television ads, nearly four times as much as McCain is spending. And he is closing off alternative sources of money: Obama has rejected public financing and has also discouraged independent groups that might not submit to his message discipline, leading “527” organizations such as the Fund for America and Progressive Media USA to disband.
But Obama will need every penny he’s wishing for to keep up with his opponent. Republicans are now busy channeling money to McCain through contributions to his campaign, to the RNC, to state GOP parties, and to the Republican Governors Association. The latter two groups are exempt from federal restrictions because they are supposed to work at the state level, creating giant loopholes that McCain is exploiting. Indeed, McCain is now hitting donors up for $70,100 a pop: $2,300 to McCain, $28,500 to the RNC, and $10,000 to each of four state parties. McCain’s campaign expects to rake in another $95 million through the Republican convention. It will then collect $84 million in public financing. And then it estimates “independent” organizations such as the RGA will spend something like $120 million on McCain’s behalf. McCain’s total general-election budget: about $400 million.
All of which tells us three things. First, Obama’s vaunted money machine will mean less than you might expect. Given his burn rate and how much McCain is raising, Obama may well end up with something like a 6-5 or 5-4 edge, not anything more decisive. Which makes Obama’s decision to run a 50-state campaign a critical gamble: He can run in Montana and Mississippi only as long as he can keep organizations and TV ads going in Michigan and Minnesota, too.
Second, campaign-finance reform is deader than dead. Maybe Obama’s huge network of small donors will emerge as a new, small-d democratic base in American politics. For the moment, however, the big-D Democratic candidate is busy attending rich folks’ fund-raisers from Atlanta to Hollywood. And McCain, reform’s chief architect, is happily blowing holes in his own law, filtering money through state-level organizations while his campaign sucks at the taxpayers’ teat.
Finally, we ain’t seen nothing yet. By this time four years ago, George W. Bush, John Kerry, and “independent” groups had already blown $176 million on general-election ads. Obama and McCain, after expending most of what they raised to get by their primary opponents, have spent just about $40 million so far campaigning against each other. They’re just getting rolling. —Peter Keating
*UPDATE: This morning, the Obama campaign announced that it raised $52 million in June, blowing away rumors of a poor month (and embarrassing the Wall Street Journal). Obama and the DNC now have a combined total of $72 million in cash on hand. That’s enough to press ahead with the campaign’s ambitious plans, such as the effort it announced yesterday to open 20 offices across the state of Virginia. However, it’s still less than the stash the Republicans have accumulated so far.