Senator's Few Options Carry Big Drawbacks
By Matthew Mosk
Washington Post Staff Writer
Thursday, July 12, 2007
With just $2 million in the bank and a campaign organization in turmoil, Sen. John McCain now looks out on a vastly different landscape when it comes to financing a run for the White House.
Every option before him carries a significant downside. Accepting public financing -- an idea his campaign said yesterday that it was strongly considering after anemic second-quarter fundraising -- could put McCain at a steep disadvantage in the early-primary states.
The Republican senator from Arizona is barred from committing to the campaign a family fortune estimated to be worth as much as $53 million because the assets are held solely by his wife. She is limited to giving just $2,300 to his primary campaign, like any other donor.
Private donors, meanwhile, will have to be convinced that they are not throwing money into a failing enterprise. "It's going to be difficult," said Brian Ballard, a fundraising veteran who oversees McCain's Florida money operation. "The vultures are circling. This is going to have to be a different kind of finance effort."
The grim assessment came yesterday as the McCain campaign was still reeling from the Tuesday departures of campaign manager Terry Nelson and chief strategist John Weaver. Campaign officials confirmed that finance director Mary Kate Johnson had resigned, and sources close to the campaign said other departures are likely.
Drawing from the nation's public finance system would present McCain with "an extraordinarily steep mountain to climb," said Michael J. Malbin, executive director of the Campaign Finance Institute.
Almost all of the other major candidates in both parties are poised to abandon public financing and will thus be free to raise and spend as much as they can.
The public system, created in the aftermath of the Watergate scandals, forces candidates to submit to strict state-by-state limits on how much they can spend until the day their party's national convention selects a nominee. In exchange, they are granted matching funds from the U.S. Treasury. Given the level of spending on modern campaigns, those limits seem quaint, Malbin said.
In New Hampshire, for instance, McCain would be permitted to spend no more than $817,800 during the primaries. He spent $137,652 there in the first three months of the year, without running a single television ad.
His challenge may be greatest in Iowa, where he would be limited to spending $1.5 million. Evan Tracey, a campaign media analyst for TNS Media Intelligence, said other GOP front-runners will probably spend between $7 million and $15 million each in Iowa on television ads alone. "In that situation, you really are taking a knife to a gunfight in terms of advertising," Tracey said.
Perhaps a bigger obstacle, Malbin said, is that there is an overall national limit on primary spending that in 2004 was about $41 million, and McCain has already spent about $23 million.
"I'd like to know, how would he go between now and the nomination on a total of $18 million?" Malbin asked.
Even if McCain succeeded in overcoming a huge financial disadvantage in the primaries and won the nomination, Malbin said, he would then face months of campaigning on fumes while the Democratic nominee would face no spending restrictions. It would most likely fall on the Republican Party to assume the costs of running a separate campaign on McCain's behalf -- one that would have to be conducted without any consultation with McCain.
Jan Baran, a Republican campaign finance expert, said the practical problems of McCain would be compounded by the irony of the senator turning to the party to run what would essentially be a shadow campaign on his behalf.
"He would then have to rely on a legal fiction he spent years criticizing: having the party spend tens of millions of dollars independently of his campaign," Baran said.
Then-Rep. Richard A. Gephardt (Mo.) tried to mount his 2004 primary bid for the Democratic presidential nomination using public funds and could not keep up with Sen. John F. Kerry (Mass.) and former Vermont governor Howard Dean, said Steve Elmendorf, who ran the Gephardt campaign.
"You're at a competitive disadvantage that I think is not sustainable," Elmendorf said.
The only other clear option for McCain is to invest his own money in the campaign. Brian Jones, a McCain campaign spokesman, said that has not been discussed.
Kerry faced a similar problem when he ran short of funds late in 2003. Wife Teresa Heinz Kerry's $500 million fortune was off-limits, but he was able to take a $6.4 million mortgage on half of the value of the Beacon Hill home they owned jointly in Boston.
But even that approach could be problematic for McCain. Property records show that McCain transferred ownership of his homes in Virginia and Arizona to his wife or to trust accounts that she controls.
Campaign finance lawyers said McCain might be able to stretch a legal argument around the notion that Arizona is a state that views the holdings of married couples as community property. But that idea has never been tested in a presidential campaign.
Jones said the campaign is counting on rebuilding McCain's bank account with help from small-dollar donors. As long as that is the case, McCain's new campaign manager, Rick Davis, will have to teach his colleagues to work on a shoestring, Ballard said.
"I think he has a big enough presence that they can operate a campaign that's more lean, more frugal," Ballard said of McCain. "They're going to have to, because I don't think the money's going to be there for a while."
The approach McCain plans to take may start to emerge next week, after a long-planned weekend strategy session that now looms as a crucial chance to set the campaign's new course. The remaining campaign team will face a series of decisions, including which early states to focus on and where to look for talent to plug the holes created by this week's departures. And, of course, how to finance the campaign ahead.
Staff writer Dan Balz and researcher Madonna Lebling contributed to this report.
View all comments that have been posted about this article.