McCain Again Falls Short of Cash Goals

Sen. John McCain had hoped to raise $20 million in the second quarter but took in just $11.2 million. Aides are considering accepting federal matching funds for the primary.
Sen. John McCain had hoped to raise $20 million in the second quarter but took in just $11.2 million. Aides are considering accepting federal matching funds for the primary. (By Alan Diaz -- Associated Press)
By Alec MacGillis and Dan Balz
Washington Post Staff Writers
Tuesday, July 3, 2007

Sen. John McCain's presidential campaign announced yesterday a wave of layoffs and a return to the kind of tactics the candidate employed in his first run for the White House, after reporting that the onetime GOP front-runner had failed to turn around his disappointing fundraising efforts.

Campaign manager Terry Nelson said in a conference call that the campaign has only $2 million in the bank after raising $11.2 million in the three-month period ending Saturday and that it will slash staffers' salaries, in addition to the layoffs. Nelson said that to help trim costs, he will no longer accept a salary for his work on the campaign. Sources inside the campaign said at least half the staff is being eliminated, on top of cuts made after the first quarter -- a level of reductions unheard of this early in a race.

McCain, of Arizona, has been battered on his support for the war in Iraq and the controversial immigration legislation that he helped author. His second-quarter fundraising trailed even the disappointing $13 million he took in over the first three months of the year, a total that led to an overhaul of his fundraising operation.

Although former Massachusetts governor Mitt Romney and former New York mayor Rudolph W. Giuliani have yet to release their fundraising totals, both are expected to far outpace McCain. Fundraisers and strategists for former senator Fred Thompson of Tennessee, who is expected to announce a bid for the GOP nomination in the coming weeks, have sought to target McCain's donor base.

Aides to McCain, who departed for a Fourth of July visit to Iraq before the figures were announced, said the campaign will adopt a sharply narrowed strategy to cope with its financial straits, betting heavily that he can weather the storm and break through in early-voting Iowa, New Hampshire or South Carolina -- the underdog approach that McCain adopted in 2000.

Campaign officials said McCain's rivals are sufficiently flawed that it is plausible for him to stage a come-from-behind win not unlike Sen. John Kerry's resurgence in the 2004 Democratic primary. All but written off well into 2003, Kerry mortgaged his Boston home to loan his campaign $6 million and charged back to capture the nomination with victories in Iowa and New Hampshire.

As part of its new tack, the McCain team is considering accepting public funds for the primary campaign, a move that Nelson said would allow it to borrow $6 million to keep going in the near term. Most of the major candidates this year have sworn off public funding for the primary because the money comes with strict spending limits.

"We confronted reality, and we dealt with it in the best way we could," Nelson said.

While the campaign had warned that it had again failed to meet its fundraising targets, the depth of its financial troubles, particularly the enormous percentage of money raised that has already been spent, surprised McCain's friends and rivals alike.

McCain's supporters placed most of the blame for his dismal fundraising on the immigration debate in Congress, which greatly complicated the candidate's efforts to raise money among rank-and-file Republicans who disapproved of his outspoken support for the bill.

Charlie Black, a veteran political consultant and lobbyist who is backing McCain, said the bill's collapse last week was a disappointment for McCain but a morale boost to his campaign staff and a reason to believe that a rebound is possible.

"If I thought immigration was going to be on the Senate floor every day and in the headlines, I'd be pretty pessimistic," he said. "The mood perked up a lot when everybody realized that immigration was going away."

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