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. (By Alan Diaz -- Associated Press)

Black called this spring the "worst two months" in McCain's career but said polls showing that he is competitive in New Hampshire, Iowa and South Carolina suggest he can still win the nomination. "Whatever damage has been done hasn't been fatal," he said. "As long as we can afford gas for the bus, then McCain can campaign effectively. He doesn't need a lot of staff out there."

McCain's troubles go beyond immigration. His attempts to build his credibility with conservatives and his staunch support for the war in Iraq have threatened his popularity among moderate Republicans and independents. Meanwhile, many conservatives remain wary, noting McCain's role in passing campaign finance reform and his initial opposition to Bush's tax cuts.

Worsening the financial picture, the campaign acknowledged yesterday, was its assumption that it would bring in far more money -- at least $100 million this year -- and could therefore afford a bigger staff than its rivals. At its peak, the campaign employed about 150 people. In the first quarter, it spent $1.6 million on payroll, more than Romney and Giuliani.

After the sluggish first quarter, campaign leaders hoped to reach $20 million in the second. A new official, former Texas congressman Tom Loeffler, was put in charge of the finance operation, top fundraisers were given clear goals, and a system of accountability was installed to make sure the campaign stayed on pace.

But two factors prevented that. The immigration debate flared up, and the finance team went through another restructuring partway through the second quarter. "We realized a few weeks into the quarter that we needed to make a change," said a senior campaign official. "While necessary, the changes did slow the fundraising down for a period of a few weeks."

Nelson said the campaign qualifies for $6 million in public funds, which match up to $250 of each donor's contribution. Matching funds are not given out until January, but a campaign can borrow against its payout before that. The downside is that a candidate must agree to spend no more than $55 million before the party conventions in summer 2008.

By accepting public money, McCain would also face strict limits on how much he could spend in early primary states such as Iowa and New Hampshire -- further complicating a strategy that is focused on winning those states, where the other major candidates are expected to spend as much as $15 million each.

Staff writers Dana Milbank and Michael D. Shear contributed to this report.