A Guide to Cutting Through the Fundraising Talk

A week before the end of the quarter, campaigns begin furiously setting low expectations for themselves while raising the bar for others. Supposedly “internal memos” wiggle their way into reporters’ inboxes, warning against the media’s fixation on how much money has been raised and tamping down expectations. It can be difficult to decipher all the quotes swirling around from campaign aides, so we have compiled a small list. Feel free to contribute some more.

1. If an aide says the campaign “will be thrilled to raise X dollars”, they’ll handily beat the figure. Case in point: Barack Obama’s aides said “they would be thrilled to take $7 million to $12 million [in the first] quarter.” Actual amount: $25.8 million.

2. Similarly, if someone says “it will be a coup to raise Y”, count on a coup. Case in point: A Romney adviser said, “If we do $15 million [in the first quarter], it’ll be a coup.” Actual amount: $23 million.

3. Saying the numbers aren’t important signals poor results ahead.  It accomplishes its goal of lowering expectations, but there’s no chance of spinning a good number as great.  Case in point: McCain strategist John Weaver said, “I worked for a candidate who blew everyone’s socks off in 1995”, referring to Phil Gramm.  “We didn’t get to New Hampshire.”  Actual amount: $12.5 million for the first quarter, behind Romney and Giuliani.

4. The disappointing, never boding well, “We’re in this for the long haul”.  Case in point: John Weaver commented, “We’re in this for the long haul.”  After the lackluster first quarter, finance director Carla Eudy left the campaign

Insider Trading on Intrade?

Intrade.com is a prediction markets website, where traders can bet on a number of things, including who will get the Democratic and Republican nominations. However, to the best of my knowledge, a person working for a campaign can trade based on insider information. Before a fundraising report beating expectations, a campaign worker could theoretically buy contracts for their candidate and profit on the ensuing spike.

Let’s take a look at an abnormal spike occurring on Intrade right now. In the last 24 hours, Rudy Giuliani has jumped from just over 28 to 32, nearly a 15% increase. The last week has been full of bad news for Giuliani, from his South Carolina chairman being indicted on drug charges to reports that he left the Iraq Study Group because the meetings conflicted with his paid speeches. There haven’t been any earth-shattering polls with huge leads for Giuliani: in fact, polls released over the last day show him trailing in Iowa, New Hampshire, and Georgia, and leading in Florida (by 6%), Ohio (8%), and Pennsylvania (14%).

Giuliani’s campaign has also stayed fairly mum on fundraising, with the speculation that he will meet or exceed his first-quarter totals. Although this may be natural volatility in the contract, I think Giuliani’s fundraising numbers will be better than expected.

Update: Yikes, Giuliani has now gone all the way up to 35, a 25% increase for the day. There has to be something good about to happen for the campaign. The last time Giuliani went up by more than 25% in one day was more than two years ago.

Update 2: Another development is McCain plunging dramatically from 8 to 4 in the last day.

Fundraising Watch – Republicans

In the first quarter, Mitt Romney donated $2.35 million to his campaign.  This quarter, spokesman Kevin Madden said Romney contributed a similar amount.  Campaign aides say Romney won’t beat the $20.8 million raised in the first quarter, but will break George W. Bush’s record take in the first half of 2000.  Note that the comparison is flawed, because the contribution limit was $1,000 back then, compared to $2,300 now.  Bush also didn’t start heavy fundraising until March, while Romney started with the New Year.

Romney’s numbers may also flag because of his limited donor pool in the first quarter.  He had 32,074 contributions, relying on a small base of maxed-out contributors.  This quarter, he needs to show he can expand his financial support.

Rudy Giuliani’s camp hasn’t talked about much fundraising buzz, but he will likely raise significant amounts after leading in most GOP national polls.  John McCain has been trying to ratchet down expectations, and it doesn’t appear as if he will match his paltry first-quarter effort of $13 million.

Fundraising Watch – Democrats

Barack Obama’s campaign has disclosed nearly 250,000 people have donated in the first half of the year.  More than 138,000 have contributed in the second quarter, although a campaign aide says the average contribution will likely be less than the roughly $247 in the first quarter.  Estimate the average donation at $215, multiply by 138,000, and you get a hefty $29.67 million.

Hillary Clinton also looks to do well, with aides saying she’ll beat her first-quarter effort.  Bill Clinton has been active earlier than planned (scheduled to attend at least 20 fundraisers this quarter) , providing another boost to her numbers.

The Huffington Post said anonymous sources from both candidates said Obama would out-raise Clinton for the quarter, but the report was denied by an Obama spokesman.

John Edwards has a goal of $9 million for the quarter, set in an email by Joe Trippi to supporters.  The campaign has said they only need $40 million by the year’s end, a target Edwards says he will meet.

In the first quarter, each of the three candidates set fundraising expectations differently.  Obama’s campaign predicted $7 million to $12 million, paling in comparison to the actual $25.7 million.  Edwards predicted $7.4 million, the record-breaking amount he raised in the first quarter of 2003.  The actual figure?  $14 million.  Hillary Clinton was the only candidate for which the predictions came close to the real figure: $25 million to $25.8 million.

Obama on the Air

Barack Obama starts airing two ads in Iowa, one focusing on his bipartisanship while the other takes a biographical form.  Note that both ads feature footage from his 2004 Democratic National Convention Speech.

The first one featured a Republican legislator, Kirk Dillard, who praised Obama’s ability to build bipartisan coalitions.  The second one focused on his time as a community organizer and passing over Wall Street to “devote himself to the community”, in the words of Laurence Tribe.

Supreme Court on Issue Ads

In a 5-4 vote, the Supreme Court just ruled issue ads can be aired up to election day, which can presumably be attack ads in disguise.  The case involved Wisconsin Right To Life, an organization prevented from airing ads two months before the 2004 elections.  The ad called on voters to contact the state’s two senators, Russ Feingold and Herb Kohl, and tell them not to filibuster President Bush’s judicial nominees.

Who benefits from this decision? In the first quarter of the year, Democrats raised more money than Republicans by a wide margin, reflecting their enthusiasm and the Republicans’ lackluster.  The Democratic presidential candidates raised $95 million, compared to the Republicans receiving a bit less than $60 million.  Democrats also outpaced Republicans in the House and Senate congressional committees, $32.7 million to $22.8 million.  Although this money can’t be used for issue ads, it shows the monetary advantages the Democrats hold this election cycle.  They are the ones who will likely benefit from this ruling.

Good News for Giuliani

Now, both New Jersey and New York are likely to have winner-take-all primaries on the Republican side, a move tremendously helpful to Rudy Giuliani.    In the RCP average, Giuliani is up by almost 28% in New Jersey, and he has shown a commanding lead in New York polls.

One thing I don’t like about winner-take-all primaries is that it moves the primary process closer to the Electoral College.  Since the Electoral College system isn’t going to change, the primary process should be preserved with delegates awarded in proportion to candidates’ support.

It remains to be seen if the Democrats do the same thing in the two states, which would boost Hillary Clinton (up by 18% in NJ).

Analyzing Romney’s Campaign Strategy

Mitt Romney raised the most out of the Republican presidential candidates in the first quarter of the year and seems poised to do the same in the second quarter, ending on June 30. Yet Romney’s campaign strategy seems out of touch with the front-loaded primary schedule, which is suited for his financial prowess. His current campaign strategy is to focus on the early primary states and then build off of momentum, employing the same method as John Edwards. Yet with all the money he has to spend, why not broadly advertise to start defining his image in larger states before others start to do so negatively?

When Romney limits his efforts to Iowa and New Hampshire, he opens himself up to being defined by others since he has no strong national reputation. Each bit of additional information that voters learn about Romney is extremely important, because it makes up a significant percentage of their view of him. The McCain campaign has tried to attack Romney and define him as a flip-flopper, but with limited success due to their own problems. But when Fred Thompson enters the race, he looks to court the same social conservative bloc that Romney is targeting. Thompson will have the credibility to successfully attack Romney and attract some of his supporters, if he chooses to do so.

Another potential pitfall for a Romney campaign before February 5th (where delegate-rich states such as California and New York vote) is Florida on January 29th. In the RCP average, Romney trails Giuliani by 20 points and Thompson by 6. Due to the large number of moderate voters there, it is unlikely Romney will prevail over Giuliani or perhaps a rejuvenated McCain. With the current primary schedule, Florida is a week after New Hampshire, enough time for a temporary bump to erode. (see next paragraph) A loss in Florida dampens momentum Romney may receive from victories in Iowa and New Hampsire and doesn’t bode well for his prospects on 2/5.

In 2000, there was a week between Iowa’s caucus and New Hampshire’s primary. Right before the Iowa caucus, McCain was leading Bush 45% to 33% in New Hampshire. Immediately after the caucus, which Bush won, Bush was statistically tied with McCain, 37% to 36%. However, Bush’s bump evaporated, and McCain was back to a ten-point lead two days before the primary. McCain went on to win by twenty points.

And although I began analyzing Romney’s campaign strategy, it led me to a different path. In a previous post, we determined the candidates farthest away from the center are focusing on the early states (Romney & Edwards). But the swath of moderate states voting soon after, with Florida as a momentum dampener, may prevent a far left/right candidate from the nomination. Is there something larger at stake here with the new primary schedule? Front-loading the nominating process may well lead to more moderate candidates serving as the party nominees and a less divided, less polarized nation.

Bloomberg Watch

Usually, whenever New York Mayor Michael Bloomberg is asked about his presidential attentions, he swats away the question by replying, “I’m not running for president.” However, Bloomberg has now changed his wording, choosing a slightly different phrase on WABC radio. He said, “I’m not going to be president”, and then continued, “I’m not going to have the chance to be president.”

The second statement provides some interesting material, although I may be reading too much into it. It has been reported Bloomberg was talking to Ross Perot’s former advisors and setting aside money for a presidential run. Perhaps after looking closely at the election, Bloomberg didn’t think he could win because of the current crop of candidates or because of his background (Bloomberg often says, “How could a divorced, 5-foot-7 Jewish billionaire become president?).  While Democrats have always been generally satisfied with their field, Republican satisfaction has sharply increased with Fred Thompson’s entrance into the race.  So, he decided there was no opportunity or “chance” at becoming president.  I don’t think Bloomberg will run for president but is rather angling himself so he can be influential in the race and promote his ideas.

On Intrade, a prediction markets website, the traders give Bloomberg a 45.9% of entering the race as an independent. However, there hasn’t been much volume on the contract, so the number may be misleading.

What the Front-Loaded Primary Schedule Means

The upcoming 2008 primary season has seen radical changes, with many large states moving up their primaries to avoid being made irrelevant. On Tsunami Tuesday (2/5), huge states such as California and New York are holding their primaries. Over 50% of all the Democratic pledged delegates will be awarded on that day.

Let’s take a look at the Republican top tier: Romney, McCain, and Giuliani (we’ll leave Thompson out for now because he hasn’t officially entered yet, so his campaign strategy isn’t known). Romney, the most conservative of the three, is focusing his efforts on Iowa and New Hampshire, establishing strong organizations and hitting the airwaves. His impressive infrastructure in Iowa, coupled with the financial commitment necessary, led Giuliani and McCain to pull out of the Iowa Ames straw poll this summer. Giuliani, the most liberal of the three, is the one directing his efforts toward February 5th, when moderates make up a significant bloc of the primary voters. Talk even surfaced about his campaign completely skipping Iowa. McCain, in the middle on ideology, also seems to be in the middle on where to concentrate resources.

Now to the Democratic top tier: Clinton, Obama, and Edwards. Edwards, the most liberal, is banking his campaign on a victory in Iowa, devoting his time and resources there. Like Romney, Edwards is relying on momentum to propel him to victories later on. Clinton, the most centrist of the three, had a campaign memo leak in which her deputy campaign manager, Mike Henry, proposed completely skipping Iowa. Although she quickly dispelled that theory, Clinton isn’t leading in Iowa. However, she has big leads in Florida, California, and New York, and can pick up numerous delegates there. Obama, right of Edwards and left of Clinton, is spending time in Iowa and New Hampshire, but also visiting Florida, California, New York, and other large states.

How the front-loaded primary schedule plays out has tremendous implications for each party’s nominees. If Iowa and New Hampshire play a more significant role than ever, candidates farthest from the center have a better chance of being nominated (Romney & Edwards). If February 5th turns out to be a decisive declaration of the nominee, the most moderate candidates have the best chances of representing their party (Giuliani & Clinton).