Early Money is Best Gauge of Candidate Viability

By Charlie Cook
© National Journal Group Inc.

March 29, 2003

This column was originally featured on National Journal on March 29, 2003.

When Republican Senate candidate Elizabeth Dole went ahead with a Houston fundraising event scheduled for September 20, 2001, just nine days after the terrorist attacks on the Pentagon and the World Trade Center, she triggered such a hullabaloo of criticism that one would have thought she had danced the hula at a funeral. Yet now, in the early days of war, with American service members getting killed, wounded, and captured, both major political parties are going full-speed ahead with big fundraising dinners. And Democratic presidential candidates are also continuing to raise money.

As noted in The New York Times on March 25, the Democratic presidential campaigns are competing to raise every possible dollar before the first quarter of the year ends on March 31. Their official fundraising totals will be announced in early April. While political aficionados continually pore over the latest poll data, the numbers that matter most at this point are the money tallies. Total spending and net cash-on-hand figures for the first and second quarters of this year will be far better tests of candidate viability than is early polling.

Meanwhile, Democratic Party committees are desperately trying to raise as much money as possible, not just for the obvious reasons that they will need the money this year and next, but also to demonstrate that they have not been mortally wounded by their party's mistaken support for the campaign finance reform law that recently went into effect. Preliminary numbers for January and February suggest that donations to the Republican Party have outpaced Democratic committees' receipts by a staggering 4-to-1 ratio. And now Republicans are trying to run up the score even more, in hopes of not just raising as much money as possible early on but also creating the perception that Democratic dreams of recapturing Congress are just a fantasy.

When the Federal Election Commission releases the Democratic presidential candidates' first-quarter financial reports, be sure to look at the big picture. Just focusing on total receipts or cash-on-hand can be misleading. Look at new receipts for the quarter, excluding money that may have been transferred from the candidate's Senate or House re-election committee. Although money is money and always a real asset, transferred funds are not a reliable indicator of a presidential candidate's future fundraising potential. Also, when looking at cash-on-hand, subtract debts owed by the campaign to calculate its true cash situation. Campaigns are notorious for delaying paying bills in order to maximize their cash-on-hand figures at the end of the reporting period. Also, compare each campaign's rate of spending to its new receipts in order to determine its "burn rate"-how fast it is burning through the money being raised. A campaign in which dollars are flowing out as fast as they are flowing in may not be long for this world. Obviously, campaigns need to spend money at this stage in order to set up their operations. But those that spend too much at the front end of an election cycle often run short in the final stretch, when it is most important to have cash to pour into television ads and telephone banks.

Another key factor is where a candidate's money is coming from. The ability to raise significant sums from one's home state is certainly a real asset, but generally only a finite amount can be raised from a given state. To raise the $45 million or so that it may take to win the Democratic nomination, a campaign needs a 50-state fundraising effort with real strength far beyond the candidate's home state.

Far more presidential candidates drop out because they run out of money than because they are losing caucuses and primaries. Many faltering candidates close up shop still believing that they could have clinched their party's nomination if they'd only had more money. Once, it could be said that the presidential candidate who raised the most money during the first half of the calendar year before the election always won the nomination. But then-Sen. Phil Gramm, R-Texas, who raised the most in early 1995, quickly dropped out of the 1996 race. It is still true, however, that money is absolutely critical and that, at this point, it is much more important than which candidates are ahead in the polls, or which campaigns have hired which consultants or landed which state or local campaign chairman in Iowa or New Hampshire or South Carolina.