February 11, 2009 5:07 PM
A Perfect Storm For Fundraising
By CBSNews.com's David Miller.
In the early days of the 1996 presidential campaign, Republican Sen. Phil Gramm of Texas won attention for building a massive campaign war chest during the first quarter of 1995. How large were Gramm's cash reserves? A little over $8.4 million, putting him at the front of the pack in the race to challenge President Clinton. The man who eventually won the Republican nomination, Sen. Bob Dole of Kansas, had less than $2.5 million on hand at the end of March 1995.
Fast-forward to today, the eve of the fundraising deadline for the first quarter of 2007. Democrat Hillary Clinton raises $2.6 million in one night. Republican Mitt Romney did even better, taking in $6 million in one day.
Republican John McCain says he might not meet his fundraising goal, yet analysts still believe he'll pull in at least $20 million, which would easily eclipse the $15.6 million Gramm, who ended up dropping out before the New Hampshire primary, raised through all of 1995.
The rise in campaign fundraising numbers is shocking not only in size but also in speed — raising the bar of expectations to $30 million has been anything but gradual. At the end of the first quarter of 2003, the five Democrats then considered serious contenders for their party's nomination averaged just over $5 million in contributions. That amount was actually lower than the average posted by the top four Republicans running in the spring of '95.
So why, and how, have fundraising numbers gone up by so much and so quickly?
The answers lie in many places: the laws regulating campaign contributions, changes in how candidates are raising money and the unique political environment surrounding the next election.
• Higher Limits = Higher Totals: Until the 2004 campaign cycle, individuals could donate only $1,000 per election to a presidential candidate — once for the primaries, and once for the general election. The campaign finance overhaul law known as McCain-Feingold changed that, immediately boosting the limit to $2,000 and indexing it to inflation. The cap now stands at $2,300 per election, or a total of $4,600 per person for the entire cycle.
The new rules had just gone into effect in early 2003 and hadn't quite sunk in yet, said Evan Tracey, CEO of the Campaign Media Analysis Group. "You have a new set of books. This is the first full general election where all the strategists could focus on it for four years," he said. "By and large, the first-tier candidates have been at this a while."
• Doing the Double-Dip: The top-tier candidates have also taken the (until now) unprecedented step of raising money for both the primaries and the general election at the same time. This represents a dramatic departure from 2004, when even President Bush, with his massive fundraising network, didn't raise money for the general election in favor of accepting public financing.
Some of the candidates are doing this with caveats — Democrat Barack Obama is raising money for the general election with the option of giving it back if he, providing he wins his party's nomination, eventually decides to accept public financing. But what matters is that he and others are taking general election money now, and it will show up on their quarterly reports.
Moves like this have the effect of artificially inflating fundraising reports, says former Democratic National Committee Chairman Steve Grossman, who has donated to Clinton's campaign. He notes that while campaigns will be flush with general election funds, that money is essentially off-limits until a candidate formally accepts the nomination.
"If I'm a candidate with $25 million in the bank and $10 million of that is general election money that's escrowed but shows my prowess, I really only raised $15 million," Grossman said. "That $15 million, while an impressive number, isn't that much more impressive than the $10 million raised by Howard Dean in the 2nd quarter of 2003."
• Compressed Calendar: In previous cycles, after initial contests in Iowa, New Hampshire and, recently, South Carolina, the primary season became somewhat drawn out. "Super Tuesday" included about a dozen states and occurred in mid-March, by which time the nominee was all but decided. This meant that the early states, all of which are relatively small with no major media markets, held sway.
The 2008 calendar is substantially more compact, and seems to get shorter with each passing week. The early states — Iowa, New Hampshire, South Carolina and, for the Democrats, Nevada — will be followed almost immediately by a super-sized Super Tuesday on Feb. 5 that could include more than 20 states, including delegate-rich prizes like California, New York and Florida.
And those early states may come even earlier. In order to retain its "first in the nation" status, New Hampshire could move its primary to the first week of January to stay ahead of all competitors. There's even been talk of the nominating process starting in late 2007.
An early rush of primaries forces early fundraising, one former Bush campaign aide said. "George W. Bush didn't start raising money until early March of 1999," he said. "This time people started even before New Year's Day."
Candidates also need to be established in the Feb. 5 states if, Grossman said, they want to capitalize on early success. "The fact that you have to be competitive in Iowa, New Hampshire, South Carolina and Nevada means you've got to be on the ground in twice as many states as early on and you have to have people on the ground in the Feb. 5 states."
And while the calendar shifts may not have been a direct cause of increased fundraising, candidates aren't afraid to use it as an excuse to ask for more money. "It's gone from being a strategy plan to being a rallying cry to donors," Tracey said.
• Internet Impulse: Online fundraising became a major tool in 2004, thanks largely to its role in catapulting Howard Dean from obscure governor to Democratic front-runner. But no one has been caught by surprise this time — the Internet has been an integral part of every campaign's fundraising strategy from the start.
Part of the Internet's appeal, a former Bush campaign aide said, is that it takes relatively little persuasion for someone to make an online donation. "Let's say a candidate has a good night, gives a good speech, you can give right then," he said. "These are not the K Street guys going to events at the Washington Hilton. It's a far more inclusive politics."
Campaigns are also trying to push online fundraising — and thus their overall numbers — because while Internet donors normally give small amounts, they can be tapped again and again for money. And a large number of Internet donors can also reflect solid grassroots support.
"It's become sort of a number within the number," Tracey said. "One of the feats of strength is the ability to show how much you've raised money online."
• A Unique Environment: After two tightly contested presidential elections, a controversial war that shows no sign of ending soon, a Congress changing hands and other issues, like global warming, fanning partisan flames, polls indicate that the public is already interested in the presidential race, even at this early stage.
"I do think the ideological divide and the magnitude of the issues is driving donors from not only the ideological perspective but even the business community — the oil industry is going to recognize there's going to be a huge difference in energy policy if there's a Democrat or a Republican president," said veteran Democratic consultant Chris Lehane. "Issues we haven't faced the past 20 or 30 years are going to have a huge impact on different sectors."
This campaign also boasts more big names than usual, including Clinton, Obama, McCain and Rudy Giuliani. "It's all about these huge [dollar] figures because of the celebrity factor of Sen. Clinton and Sen. Obama and McCain and Giuliani," Lehane said. "They kind of have a pre-existing network of contributors."
In the early days of the 1996 presidential campaign, Republican Sen. Phil Gramm of Texas won attention for building a massive campaign war chest during the first quarter of 1995. How large were Gramm's cash reserves? A little over $8.4 million, putting him at the front of the pack in the race to challenge President Clinton. The man who eventually won the Republican nomination, Sen. Bob Dole of Kansas, had less than $2.5 million on hand at the end of March 1995.
Fast-forward to today, the eve of the fundraising deadline for the first quarter of 2007. Democrat Hillary Clinton raises $2.6 million in one night. Republican Mitt Romney did even better, taking in $6 million in one day.
Republican John McCain says he might not meet his fundraising goal, yet analysts still believe he'll pull in at least $20 million, which would easily eclipse the $15.6 million Gramm, who ended up dropping out before the New Hampshire primary, raised through all of 1995.
The rise in campaign fundraising numbers is shocking not only in size but also in speed — raising the bar of expectations to $30 million has been anything but gradual. At the end of the first quarter of 2003, the five Democrats then considered serious contenders for their party's nomination averaged just over $5 million in contributions. That amount was actually lower than the average posted by the top four Republicans running in the spring of '95.
So why, and how, have fundraising numbers gone up by so much and so quickly?
The answers lie in many places: the laws regulating campaign contributions, changes in how candidates are raising money and the unique political environment surrounding the next election.
• Higher Limits = Higher Totals: Until the 2004 campaign cycle, individuals could donate only $1,000 per election to a presidential candidate — once for the primaries, and once for the general election. The campaign finance overhaul law known as McCain-Feingold changed that, immediately boosting the limit to $2,000 and indexing it to inflation. The cap now stands at $2,300 per election, or a total of $4,600 per person for the entire cycle.
The new rules had just gone into effect in early 2003 and hadn't quite sunk in yet, said Evan Tracey, CEO of the Campaign Media Analysis Group. "You have a new set of books. This is the first full general election where all the strategists could focus on it for four years," he said. "By and large, the first-tier candidates have been at this a while."
• Doing the Double-Dip: The top-tier candidates have also taken the (until now) unprecedented step of raising money for both the primaries and the general election at the same time. This represents a dramatic departure from 2004, when even President Bush, with his massive fundraising network, didn't raise money for the general election in favor of accepting public financing.
Some of the candidates are doing this with caveats — Democrat Barack Obama is raising money for the general election with the option of giving it back if he, providing he wins his party's nomination, eventually decides to accept public financing. But what matters is that he and others are taking general election money now, and it will show up on their quarterly reports.
Moves like this have the effect of artificially inflating fundraising reports, says former Democratic National Committee Chairman Steve Grossman, who has donated to Clinton's campaign. He notes that while campaigns will be flush with general election funds, that money is essentially off-limits until a candidate formally accepts the nomination.
"If I'm a candidate with $25 million in the bank and $10 million of that is general election money that's escrowed but shows my prowess, I really only raised $15 million," Grossman said. "That $15 million, while an impressive number, isn't that much more impressive than the $10 million raised by Howard Dean in the 2nd quarter of 2003."
• Compressed Calendar: In previous cycles, after initial contests in Iowa, New Hampshire and, recently, South Carolina, the primary season became somewhat drawn out. "Super Tuesday" included about a dozen states and occurred in mid-March, by which time the nominee was all but decided. This meant that the early states, all of which are relatively small with no major media markets, held sway.
The 2008 calendar is substantially more compact, and seems to get shorter with each passing week. The early states — Iowa, New Hampshire, South Carolina and, for the Democrats, Nevada — will be followed almost immediately by a super-sized Super Tuesday on Feb. 5 that could include more than 20 states, including delegate-rich prizes like California, New York and Florida.
And those early states may come even earlier. In order to retain its "first in the nation" status, New Hampshire could move its primary to the first week of January to stay ahead of all competitors. There's even been talk of the nominating process starting in late 2007.
An early rush of primaries forces early fundraising, one former Bush campaign aide said. "George W. Bush didn't start raising money until early March of 1999," he said. "This time people started even before New Year's Day."
Candidates also need to be established in the Feb. 5 states if, Grossman said, they want to capitalize on early success. "The fact that you have to be competitive in Iowa, New Hampshire, South Carolina and Nevada means you've got to be on the ground in twice as many states as early on and you have to have people on the ground in the Feb. 5 states."
And while the calendar shifts may not have been a direct cause of increased fundraising, candidates aren't afraid to use it as an excuse to ask for more money. "It's gone from being a strategy plan to being a rallying cry to donors," Tracey said.
• Internet Impulse: Online fundraising became a major tool in 2004, thanks largely to its role in catapulting Howard Dean from obscure governor to Democratic front-runner. But no one has been caught by surprise this time — the Internet has been an integral part of every campaign's fundraising strategy from the start.
Part of the Internet's appeal, a former Bush campaign aide said, is that it takes relatively little persuasion for someone to make an online donation. "Let's say a candidate has a good night, gives a good speech, you can give right then," he said. "These are not the K Street guys going to events at the Washington Hilton. It's a far more inclusive politics."
Campaigns are also trying to push online fundraising — and thus their overall numbers — because while Internet donors normally give small amounts, they can be tapped again and again for money. And a large number of Internet donors can also reflect solid grassroots support.
"It's become sort of a number within the number," Tracey said. "One of the feats of strength is the ability to show how much you've raised money online."
• A Unique Environment: After two tightly contested presidential elections, a controversial war that shows no sign of ending soon, a Congress changing hands and other issues, like global warming, fanning partisan flames, polls indicate that the public is already interested in the presidential race, even at this early stage.
"I do think the ideological divide and the magnitude of the issues is driving donors from not only the ideological perspective but even the business community — the oil industry is going to recognize there's going to be a huge difference in energy policy if there's a Democrat or a Republican president," said veteran Democratic consultant Chris Lehane. "Issues we haven't faced the past 20 or 30 years are going to have a huge impact on different sectors."
This campaign also boasts more big names than usual, including Clinton, Obama, McCain and Rudy Giuliani. "It's all about these huge [dollar] figures because of the celebrity factor of Sen. Clinton and Sen. Obama and McCain and Giuliani," Lehane said. "They kind of have a pre-existing network of contributors."
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