Candidates Spend Millions in Race for White House
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GWEN IFILL: If money is the mother’s milk of politics, Barack Obama and Rudy Giuliani are dairy farmers. As leaders in their respective parties’ 2008 fundraising, each man has tens of millions of dollars in the bank. Hillary Clinton and Mitt Romney are not far behind.
But how is all that cash being spent? Senator Obama spent about half of the $33 million he raised last quarter, nearly $3 million of that on charter jets. Former New York Mayor Giuliani spent $11 million of the $18 million he raised, including nearly $1.5 million on political consultants.
Other candidates far outspent what they were able to bring in. Romney spent $20 million but raised just $14 million. Nearly $5 million of that went to television ads in New Hampshire and Iowa. And Arizona Senator John McCain spent all of the $10 million he raised, much of it on staff salaries.
Why so much money spent for so many so early? For that, we turn to Stephen Medvic, professor of government at Franklin and Marshall College in Lancaster, Pennsylvania; and Amy Walter, editor-in-chief of the Hotline, National Journal’s daily briefing on politics.
So, Amy, why so much, so early?
AMY WALTER, Editor-in-Chief, The Hotline: Well, I think we have an absolutely wide-open race on both sides. And as such, you’re going to get a whole bunch of people trying to raise money to give themselves that advantage early on in this campaign.
The other thing to remember, too, we’ve heard so much about the fact that this has been a pushed-up schedule, frontloading of these primaries. We have essentially a national primary by the time you get to February 5th. And what we’re seeing now is candidates spending early, not just in the traditional states like Iowa and New Hampshire, but when you look a little bit closely at the filings here, somebody like Rudy Giuliani, for example, who sees Florida as very important to him — this is a primary now at the end of January — he’s already spent about 11 percent of his total funds in that state, something that wouldn’t have happened a few years ago.
Reading into campaign spending
GWEN IFILL: So, Professor Medvic, looking at these campaign filings, is it like reading the tea leaves about what campaign strategy is?
STEPHEN MEDVIC, Franklin and Marshall University: It is to some extent. I mean, if you look, for example, at the Romney campaign, $5 million spent on advertising, that's something that is really unprecedented. At this stage in a campaign, normally the money is spent on start-up costs, organization, staffing, travel, fundraising. It costs money to raise money.
But Romney decided that he needed to get on the air and make a presence and look like a frontrunner, and so some of his spending reflects a strategy that they decided on pretty early in the campaign.
GWEN IFILL: You're right. I think that he's put his seventh ad on the air so far just today in the campaign. But how does this compare, Professor Medvic...
STEPHEN MEDVIC: It's paying off, I think, for him.
GWEN IFILL: Well, tell me why?
STEPHEN MEDVIC: Well, I think because he's now considered a frontrunner on the Republican side, when he was largely unknown at the beginning of this race. So by spending that money, by essentially acting like a frontrunner, he's now considered a frontrunner.
GWEN IFILL: Amy?
AMY WALTER: Yes, I agree with him on one point, which is it is true, when you look at the polling, especially in these early states, he is ahead. And I think it has everything to do with the fact he's invested early in those states. On the other hand, he raised less money in this quarter than he did in the first quarter, which suggests that the love money -- that's what we call it -- you know, the early money that's out there sort of just sitting there, waiting for the people, your friends and your closest...
GWEN IFILL: Love money?
AMY WALTER: Yes, OK, the people who are closest to you who will give you that money, friends, family, business associates, et cetera, but he's gone through that. And if he, indeed, is being seen in the top tier because of the fact that he's invested early, that should be coming back to him in terms of fundraising, right, if people see him as the nominally in the frontrunner position, he should be able to be raising more money. So we'll see, obviously once you get into the next quarter, whether this will translate to donors who are a little wary about donating.
GWEN IFILL: Professor Medvic, is the money being spent differently than it has been in previous campaigns? I mean, we see some money being spent on things like domain addresses for Internet fundraising and other kind of communications. Is it being spent differently?
STEPHEN MEDVIC: I don't think it is. I mean, I think largely -- except for Romney spending on television so early -- I think it's still the sorts of things you'd spend early on, as I said, for start-up costs, for organization, for putting field offices in states.
Remember, as Amy pointed out, there are more states now that the candidates are playing in, and so they need field staff, field operations, headquarters in all these states. They're traveling to more states. That's more expensive. So the burn rates are far higher than they've been in the past.
GWEN IFILL: Now, explain what you mean...
STEPHEN MEDVIC: But the things they're spending on, with the exception of -- a burn rate is the percentage of money that they're spending. And many of these campaign -- I think six candidates spent more in the second quarter than they raised. And so, with the exception of Romney, in terms of buying television time, most of what they're spending on is pretty traditional.
"Leaner and meaner campaigns"
GWEN IFILL: Well, there are some candidates who spent less than they raised or at least seem to be running leaner and meaner campaigns, like Richardson, Amy.
AMY WALTER: Yes. I mean, here's a candidate who -- he's not certainly in the same category as a Hillary Clinton or a Barack Obama, in terms of the amount of money he's been able to raise, but I think he's been able to spend it very effectively. He, too, is one of the few candidates up on TV, and we've seen some movement in the early states, especially in a place like Iowa.
Now he is trying to move his way up into the second tier here of potential Democratic candidates, but I think it gave him a little bit of a bump to be able to show some movement in polling, simply because he invested that money in something like TV, and he hasn't spent a whole lot of it on other campaign expenses.
GWEN IFILL: On the Republican side, Professor Medvic, is there anyone besides Romney who did anything unusual or insightful in the way they chose to spend their money in this quarter?
STEPHEN MEDVIC: No. Again, except for the fact that so many of them -- four of them -- have spent more than they raised. And at this stage in the campaign, that's pretty rare. They should be spending about, oh, if history is any guide, about a third of what they're raising on organization. So a lot of these candidates are spending a lot more than we've seen candidates spend in the past.
GWEN IFILL: What does that tell us, then, about someone like John McCain, who obviously is in dire straits financially right now? Was he just misspending?
STEPHEN MEDVIC: It's not necessary he was misspending. It's just that he hasn't gotten the kind of traction that he thought he might get. And so when candidates are spending to kind of keep up with the pack, if they're not really getting momentum and not raising enough money, then they're going to fall behind. They're going to go into debt, essentially.
And so Senator McCain has a big decision to make in the next few months. If he doesn't start to make some traction pretty quickly -- I mean, remember, he's not able to self-finance the way a Romney is or the way a Kerry was, to some extent, in 2004. And so, you know, if funds don't start to roll in pretty soon for him, he may be in trouble. But, again, it's a long time away until Iowa, and anything is still possible.
GWEN IFILL: Ron Paul, who's run in the past as a libertarian candidate, is now running as a Republican candidate and actually has more cash in the bank than John McCain and most of the other Republicans.
AMY WALTER: He has really caught on, on the Internet. I mean, he's really been able to -- and I think every cycle we see this one candidate who is able to touch on something, that they're not considered a top-tier candidate, but they're able to tap into this network. And I think, thanks to the Internet, it's easier to get those contributions than it ever has been before. So it does mean that he continues to be a presence, and you'll continue to see him on the campaign trail and possibly in the debates, as well.
Democrats out-raising, out-spending
GWEN IFILL: Professor Medvic, we have seen that Democrats seem to be so vastly outraising Republicans -- outspending, obviously, as well -- in this cycle, also in the congressional fundraising. What does that mean?
STEPHEN MEDVIC: I mean, I think it means that the Democratic base is a lot more fired up than the Republican base. I think, in the presidential race, I think it also indicates that Democrats are a little more excited about at least three or four of their candidates than the Republican base is excited about theirs.
And so, really, for the Republicans this may be a bad omen. I mean, if this kind of disparity lasts into the fall campaign, no matter who the nominees are, the Democrat would have an enormous advantage.
GWEN IFILL: What do you think about that, Amy?
AMY WALTER: Yes, because the suggestion is not that Republicans don't have money; it's that donors are sitting on their wallets. And so it comes down to this, which is, at what point will one of these candidates catch on for donors?
Now somebody like Fred Thompson is hoping that he's going to be that candidate, and he will show -- probably not until the next quarter, because he's not filing this quarter, but show in the next quarter -- he's hoping a very surprising sum of money to be able to tell donors, "I'm the person that you should be going with. It's pretty clear that I'm the horse that can win this thing."
GWEN IFILL: But he's not actually in the race until...
AMY WALTER: But he's not actually in the race thus far, not in the second quarter FEC reports. So the question really is this: Do Republicans still have time to make up the ground in which they're behind? Absolutely. And I think that that's what we're going to have to see as we get closer to January and February, which is, is the base now -- they've sat on their pocketbooks, they've sat on their wallets waiting for the right candidate. Do they find that person and start writing them the checks.
GWEN IFILL: Amy Walter of Hotline and Professor Stephen Medvic of Franklin and Marshall, thank you both very much.
AMY WALTER: Thanks.