The Obama Money Situation

Today's New York Times features this front page story, which begins: "After months of record-breaking fund-raising, a new sense of urgency in Senator Barack Obama's fund-raising team is palpable as the full weight of the campaign's decision to bypass public financing for the general election is suddenly upon it." Also this morning, Marc Ambinder has a must-read post entitled "Quietly, Obama Campaign Calls in Cavalry," which says that "Obama's campaign will no longer object to independent efforts that hammer John McCain, just as, in their mind, the McCain campaign has not objected to those efforts targeted at Obama." (The Center for Competitive Politics applauds the free speech extravaganza.)

From the two pieces, it sounds like a bit of panic coming out of the Obama campaign, reinforced by a major tightening in the daily tracking polls (which I have advised people on both sides to stop obsessing over).

The race is indeed tightening, which explains why the Obama campaign wants a lot of money, and especially wants advertising now before the last major events of the campaign season, the debates. But from a strategic perspective, the decision of Obama to opt out makes perfect sense and does not look like a mistake even in retrospect.

If Obama opted into public financing he could raise no funds for his own campaign (besides about $20 million in GELAC funds---for legal and accounting compliance), and would receive a government grant of $84.1 million. He could help raise funds for the party (the national party can take donations of about $28,800 and the state parties can take more for federal election purposes), and the party could use that money to help him get elected under some convoluted rules that are spelled out in the Times article. This is the route that McCain has taken.

Going the private fundraising route has three risks for Obama:

1. The PR risk. McCain tried to make a lot of hay over Obama's failure to abide by a promise to aggressively pursue a public financing deal with his Republican opponent if he were the nominee. I've explained that neither side has a monopoly of virtue in this area---McCain was against taking public financing before he was for it before he changed his mind again in the primary. But more importantly, this kind of process-inside baseball argument is not likely to resonate with voters.

2. The time sucking risk. If Obama needs to go off in person and attend a lot of fundraisers, that keeps him off the campaign trail as the election closes in 8 weeks from today. First, it appears that most of the in-person fundraisers will be by surrogates. Much of the campaign's fundraising will continue to come from online donors, who now number over 2 million and who contributed an astonishing $400 million+ to the campaign during the primary season.

3. The Outspending Risk. The Times article explains that the Obama campaign may be off its target to raise $300 million for the campaign during the general election season and another $150 million for the Democratic Party. But there's no question that Obama will well outraise the $84 million that McCain will get as part of public financing for the campaign. The Democrats have known that the RNC has had an easier time raising money in those $28,800 chunks than the DNC, so the decision of McCain to opt into the pubic financing program was of little risk to him---the big money will be coming into the party. Faced with that asymmetry,the Obama campaign has taken the artificial constraint off his fundraising so that Obama and the DNC can reach some kind of parity with the McCain campaign and the RNC. In terms of outspending, Obama faced a much bigger risk remaining in the system than he faces by opting out.

The Times article may be just the thing the Obama campaign needs to get some money rolling in---a little panic is probably a good thing from their perspective.

As for the 527s, I think there may be a different explanation than one that Obama needs outside resources. Instead, he needs groups that can go more negative on Palin and McCain. Obama is trying to run as a different kind of politician, and it would interfere with his branding to go overly negative. But outside can attack in ways that Obama cannot (think of the recent union ads attacking the cost of McCain's shoes), and with the race tightening, especially in the battleground states, negative advertising probably is what the campaign wants and needs right now.

The story of money in this election is a fascinating one. I've just completed a draft article (which I hope to post later this week) on changes in the fundraising system during the primary season. I'll be writing another when the entire election is done. Suffice to say that the role of money in the presidential election is changing in some fundamental and important ways. Stay Tuned.

Comments

[INDmind]

Trying to run as a different kind of politician.....and failing miserably!

[Squirtapotamus]

No. Exceeding extraordinarily. It's to bad you can't see it.

[SeanGardner]

We're all over looking the fact that Bob Ostertag and others urged some people to "punish" Obama since he did not vote against the FISA Compromise. Remember that?

Ostertag started a thread on Barack Obama's website - a thread that ended up with over 23,000 comments. What was the result of his action: some people gave their July Obama money to Feingold, which was not cool.

Ostertag didn't have a HUGE impact on Obama's money total (because he raised $52 million that month), but just the thought of someone trying to get people to not give money to Obama because he didn't meet Ostertag's litmus test was...well, it rubbed me the wrong way, and still does.

As for Obama's money, well, did it eve occur to any of us that Obama may actually be playing with the minds of conservatives. Money is tight for everyone, but don't you believe Obama, with the greatest number of volunteers and donors in the history of presidential politics, knows how to make the money?

[mezz1962]

It so funny how Obama wanted public financing then after raking in million decided it was not for him. He was against 527's now that he is going broke he is for him. Same with Oil same with..well you get the point.

Obama once again shows he is not for change because whenever he has something not to his liking or needs something he will do a 180 and never look back.

Same old Politician I have seen for the past 50 years will say anything..Do anything...and will make a deal with the devil just to get elected

[Squirtapotamus]

Obama wanted public financing? Really? He did not. He never said this. You are making up distortions.

You're initial premise is wrong and the rest of your analysis is just a bigot's rant. Your cynicism (along with your conservative bretheren) is destroying this country.

[studmoose]

Many early Obama supporters in New Jersey are not contributing anymore money to him because of Jon Corzine!

Corzine is a man with low approval ratings matching GWB's. NJ is bonded to up to its teeth with an unbelieveable debt ratio and virtually every taxable source of revenue has been expanded. What's worse is that more and more taxes are being implemented. 2008's budget/debt increased 45% alone!

$6 billion goes MISSING from the School Construction Company - in charge of rebuilding some schools. There was NO investigation. What did the governor do? He passed a bill stating that FUTURE governors cannot float bonds without voter approval - but he still can. Weeks later, he floated another $3.9 Billion to the same school construction group that LOST $6 Billion! There is NO accountability in this state for officials!

Governor Corzine has not been running the office that much. Over the past year, he has been politicking for Hillary - saying bad things about Obama. Then, when Hillary is out of it, he switches sides.

Many radio stations say Corzine is lobbying for a Cabinet position. First with his friend Hillary and now with Obama. Corzine wants so badly to exit NJ because he is not well received, he has to now face the debts of this state which are akin to the federal problem we now face under GWB and company, and there is talk that CORZINE WILL NOT GET RE-ELECTED GOVERNOR OF NJ!

MR. OBAMA - PLEASE CHOOSE WELL AND

[blust8r]

McSame can kiss my everlovin' *ss! As long as I can hold out, I will donate to the Obama campaign. That isn't saying much, I wish I could be one of the $28,800 donators... I've always kinda liked Bab's singing... (got to see her ONCE live, tho)
Press on! Keep the "same" folks in the hole, where they belong.

[fishercat264]

I live in New Hampshire. Worked for Obama all Fall 2007 - canvas, phone calls, parades, letters to eds, house parties, etc., usual NH Primary stuff. Stood at polls all day January 8th. Was in Nashua South High School gym that night ("yes, we can"). Gave $25 every month from August '07 on. Note to campaign advisors: Haven't given a penny since FISA atrocity. As the man himself presciently observed, "For some of you, this may be a deal-breaker." It was, to the extent that he lost my money and energy, not my vote. (I would love to see the internal data the month after that, i.e., effect specifically on repeat donors.) Now he's talking about maybe keeping the Bush tax cuts alive "until the economy improves." Good luck with that.

[jungfreud]

Interesting article. The incongruity between the DNC fundraising and the RNC fundraising continues to baffle me though. Where does this money come from? The RNC was flush even as McCains funding was positively anemic, and there is no question there would have been a massive money gap if Obama's fundraising hadn't been so successful. There will never be a point that someone can seriously second guess Obama's decision to forgo public financing, and any article that insinuates that it was strikes me as both sloppy and a heavy handed attempt to stoke an issue that, as you said, isn't really resonating with voters.

[ThePeacemakers]

Obama is going to have to BUY the time on TV and Radio to tell the truth. AND NATIONALLY.

He's not going to get the same coverage that McCain and Palin get for free with their lies.

[inluvwkeitholbermann]

good point...

but in telling the truth obama and biden need to say the word, now repeat after me obama-biden team, "L-I-A-R"....i don't know why his campaign is so afraid to speak this plainly obvious truth.

[Independent-for-Obama]

No, he supported the U.S. The Republicans would have let the U.S. die rather than give any of their Corporate buddies up. The situation will only change when we elect Obama/Biden, who, because of our money, are not beholden to Corporate buddies and their lobbyists, or as it turns out Wisalla lobbyists.

How many lobbyists are on the McCain campaign team?

[hopeless277]

Ya know, I guess he should have thought twice before he supported the telecoms over the public. Or before he vowed to spend MORE of my tax dollars on megachurches. I'm not giving this moderate Republican ONE THIN DIME. I'll see McCain flush this country down the drain before I support Bush-lite.

[JinChicago]

i would argue mccain is bush lite FAR MORE

you are either a repub troll or a dummy. either one, i fell bad for you

[speeddeeps]

i reckon a tr0ll, but 0 was naive for not allowing us to donate 527