RAY SUAREZ: Now, the impact of Barack Obama’s record-setting fundraising numbers, and to Gwen Ifill.
GWEN IFILL: Even as the U.S. economy struggles to find its way out of an historic downturn, candidates for president continue to raise campaign money hand over fist.
The latest eye-popping number: Barack Obama’s one-month haul of $150 million, nearly twice the amount of the public financing John McCain has accepted to last the entire fall campaign.
So where is all this money coming from? And how will it change the landscape for future elections?
For that, we’re joined by Jeanne Cummings. She covers politics and campaign fundraising for Politico.
And Kenneth Gross, he’s a former associate general counsel for the Federal Election Commission. He’s now an attorney in private practice in Washington, D.C.
So is this the end of the campaign-financing world as we know it, Jeanne? We heard John McCain say, “The dam is broken.”
JEANNE CUMMINGS, Politico.com: Well, I’m skeptical of that. I think that definitely in the primary phase, it’s broken.
But when it comes to the general election, I think that there’s only a few unique candidates who can actually do what Barack Obama’s doing, and I think it requires two things: something unique about your campaign and/or something that really motivates people.
And so what did we see this year? Ron Paul, very good at it. He had a very distinct message in the Republican primary. Hillary Clinton, a unique candidate, she did very well on the Internet. Barack Obama had both, lofty rhetoric, motivating rhetoric, in addition to being unique.
I think you need a combination of those things, because if you look at the other candidates — John Edwards, John McCain, all the rest of them — they took public financing.
Public financing on 'life support'
GWEN IFILL: But, Ken Gross, when you look at the -- what is going to turn out to be $100 million gap between these two candidates, you can't help but wonder if someone hasn't figured out how to game the system and someone hasn't?
KENNETH GROSS, Former Federal Election Commission Official: I think what you're not going to see is one candidate publicly financed and one privately financed, as we have here. It's just too much of a disadvantage.
John McCain, I think, has tried to make up the difference with party committee money, and that is a much higher rate that you can raise there, but the total pot is just not going to make the difference. And it looks like unilateral disarmament when you compare the numbers. It is eye-popping.
GWEN IFILL: So do you agree that this -- that the public campaign financing piece is the thing that's going to go?
KENNETH GROSS: I really think it's on life support now, and this may pull the plug on it. It's very hard to see how it's going to have any kind of vibrancy in the future, unless, perhaps, two candidates have an iron-clad agreement to do it. There was kind of an agreement to do it this time...
GWEN IFILL: Yes, I was going to say, I think John McCain would say there was an agreement this time.
KENNETH GROSS: I know.
GWEN IFILL: It didn't kind of work out that way.
OK, so we look at -- we hear the first part of this program talking about how bad the economy is. And now we see these kinds of numbers coming in.
Jeanne, where are they coming from?
JEANNE CUMMINGS: Well, they're coming from, for Barack Obama, everywhere. He has raised money from large donors. He has the traditional bundler operation, which, by the way, grew quite a bit in September, for two reasons. First of all...
GWEN IFILL: And bundlers, you mean somebody who goes out and collects a lot of money from a lot of other little people?
JEANNE CUMMINGS: Write big checks, the maximum checks, $2,300. That operation grew in September for Obama, in part because Hillary Clinton's people, post-convention, came home, and Sarah Palin motivated a lot of the big Democratic donors to get on board.
In addition, his Internet small donors continues to explode. He now has over 3 million donors. The vast majority of them are under the $200 amount that you have to record their names on the files for, so he grew in both ways.
GWEN IFILL: Well, Ken Gross, explain small-donor numbers to me, because we know there have been a lot of small donors. But are they three million separate small donors or is it someone giving $200 in June, and then another $200 in August and another $200 later on?
KENNETH GROSS: Well, he seems to be going back to the well. And it's a deep well, because there's a lot of room there for $10, $15, $20, $30. I mean, they do, at some point, aggregate over $200, and they're supposed to track that, but it certainly isn't 3 million -- you know, that many different donors.
He's going back to some of the same donors. But at the same time, he has reached out to a broader donor base than we have ever seen before. I mean, this is truly unprecedented.
GWEN IFILL: So some of these are brand-new people who maybe have never given money to a campaign before?
KENNETH GROSS: Exactly. I mean, it's one thing to get someone interested in the process to maybe read about somebody, to go to the polls and vote, but to actually pull out a credit card and put money on it, that is a huge step, and there's a lot of people who've never done it before until Barack Obama came along.
GWEN IFILL: Now, Barack Obama's been doing this since the spring. So couldn't John McCain have done the same thing?
JEANNE CUMMINGS: Well, John McCain's fundraising history is a little jagged, which is what put him at a disadvantage.
We all remember last summer, when the immigration fight was taking place in the Senate, John McCain went broke. It killed his fundraising apparatus. So he limped his way through to the start of the year and raised just enough money to stay alive.
Then he wins the nomination, and then his campaign had this big debate. Should we become a big centralized organization or, you know, five guys on a bus?
They didn't settle that until June. Well, then it was too late. You couldn't build the kind of sophisticated, modern operation that late in the game. And so they tried it and saw that what they might be able to achieve was not going to be worth the time and effort of just taking the $85 million.
Now, the one thing they may have really miscalculated on was the impact of Sarah Palin. Of course, in June, they may not have known that's who they would select.
But I think, had he stayed out and gone private, putting her on the ticket might have made him much more financially competitive...
GWEN IFILL: A lot more money.
JEANNE CUMMINGS: ... because I think she could have raised a lot of money.
GWEN IFILL: One of the things that the Obama people always argued would allow John McCain to be financially competitive in the end was the contribution from the Republican Party or other joint fundraising organizations.
Has that panned out? Is there any evidence that there's a lot of money being raised out there?
KENNETH GROSS: It looked like it was going to pan out, it was going to make the difference, because you can raise money to the RNC at the rate of $28,500 a person, which is, you know, huge chunks.
But it doesn't appear from the numbers that they're going to be able to come close to closing the gap. And, obviously, Obama's rate of fundraising, which we haven't even seen in October, is probably even greater than September, so that has not quite panned out for John McCain.
GWEN IFILL: Why not?
JEANNE CUMMINGS: The RNC had remained competitive, I think, until this month. If you look at -- even with the $150 million eye-popper, which is so amazing, when you take the RNC's cash-on-hand and John McCain's and DNC and Barack Obama, there's like a $37 million gap.
This isn't gigantic. This is -- you know, it's not exactly competitive, but they can play in this arena.
Their problem is going to be October, because he's going to raise probably at least what he did in September, if not more, and then even the RNC can't keep up.
GWEN IFILL: OK, here's the other thing that's unaccounted for so far, anyway, was this great expectation that these 527s, these outside, independent groups, would weigh in on their own on behalf of a candidate, probably more likely to be Mr. McCain, it was thought, and would also happen to even the playing field. Has that happened?
KENNETH GROSS: No, it really hasn't. I mean, both these candidates are known as reformers in the campaign finance field, and they did throw cold water on them.
Now, that doesn't mean that they're not out there, and they are. But some of them actually have run into some legal issues. They can't be as vibrant as they would have liked to have been with some of the proposals. I think they're having trouble raising money. So 527s are not filling the gap, either.
GWEN IFILL: Is that because of the economy at all?
JEANNE CUMMINGS: No, I don't think so. I think it is what Ken said about both of the candidates discouraging their involvement. And as a consequence, what we've seen is a lot more 527 activity in the congressional races.
We've seen 527s try to swoop in and help some of these House Republicans who are in terrible shape for all the same reasons. They're underfunded and they're under stress because of the unpopularity of the Bush administration, and the economy, and all the other reasons.
But they don't have the presidential mantle to save them, and so some of the 527s are coming in to try to defend some of those hard-fought seats.
GWEN IFILL: So now as we look at this -- we don't know what October, as you point out, may yield, but do we think that Barack Obama has so far managed to create a brand-new universe, a parallel system that has never existed before in campaign financing?
KENNETH GROSS: No question. This is unprecedented, in terms of breadth and depth in the numbers. And whether it can be replicated by another candidate remains to be seen.
But it's, you know, a small donor base for a large chunk of these contributions, as well as the big donors, as Jeanne was saying, so it really is a tremendous combination that he has put together here.
GWEN IFILL: This is the free speech that Republicans often talk about in campaign financing arguments?
JEANNE CUMMINGS: That's right. The little people are, you know, we don't spend enough on politics. You used to hear a lot of that from Republicans.
But what is amazing to me is it's a plan built out of real desperation. He was nobody. He was the two-year senator from Illinois against the Clintons. And so he built a machine that could, like, work around the big bundler system.
So they built this Internet machine that was creative, and innovative and interactive. And then, when he became the front-runner, all of the momentum, and volume and goodies that come to the front-runner joined that. And that, I think, is what created such an incredible weight.
GWEN IFILL: Something we actually had not seen before. Jeanne Cummings, Ken Gross, thank you both very much.
KENNETH GROSS: Thank you.