Bloomberg News

Obama Money Edge Competes With Republican Cash ‘Tsunami’

May 21, 2012

A supporter of President Barack Obama at a campaign event at Virginia Commonwealth University in Richmond on May 5, 2012. Photographer: Wang Yiou/XINHUA/Landov

A supporter of President Barack Obama at a campaign event at Virginia Commonwealth University in Richmond on May 5, 2012. Photographer: Wang Yiou/XINHUA/Landov

Four years ago, Barack Obama became the first Democratic presidential nominee in at least two decades to outspend the Republican challenger. The incumbent president shouldn’t expect the same advantage this time.

Super-political action committees backing the presumptive Republican nominee Mitt Romney are raising money at a faster clip than Democrats, threatening to erase an Obama financial advantage that allowed him to expand the battleground map in 2008 to include such states as Indiana and North Carolina.

The incumbent’s 12-to-1 financial advantage at the end of April over Romney, a former Massachusetts governor, shrunk to less than 2-to-1 when the bank accounts of the national party committees and friendly super-PACs were added.

“Those people who can and are willing to write seven- and eight-figure checks are few and far between on the Democratic side and far too numerous on the Republican side,” said Democratic consultant Peter Fenn, who participates in weekly phone calls with Obama campaign operatives. “There was some thought that Obama was going to outspend whoever was nominated. That’s long gone.”

Republicans are determined to keep pace this year. Obama and the Democratic Party had about $1 billion to spend in 2008; Republican nominee John McCain, a U.S. senator from Arizona, and the Republicans had more than $200 million less. This time, both campaigns and their allies are expected to reach $1 billion.

No Money Advantage

“My guess is we will have true parity this time,” said Alex Vogel, a Republican consultant. “Whoever wins or loses is not going to win or lose because they were dramatically outspent.”

Some Democrats express concern that Obama will be trailing in cash when the pro-Romney super-PACs, which can take in unlimited donations from corporations and individuals, are combined with pro-Republican nonprofits that keep their donors secret such as Crossroads GPS, which is spending $25 million on anti-Obama ads.

“Everyone is aware of the dangers that super-PACs represent,” said Democratic National Committeeman Robert Zimmerman, an Obama fundraiser. “It comes up in discussions among donors and the Democratic political leadership.”

Ever since the Federal Election Commission began tracking unlimited contributions to the political parties -- known as “soft money” in 1991-92 -- every Republican presidential nominee has had more money to spend than the Democrat.

Obama’s 2008 Edge

Obama changed that in 2008. As the first major-party nominee to shun taxpayer funding since the system was enacted in time for the 1976 elections, Obama raised $745 million, more than twice as much as McCain’s $350 million, which included $84 million in public money. That was more than enough to offset the Republican National Committee’s fundraising edge, $428 million to $260 million, over its Democratic counterpart.

Through April 30 of this year, Obama raised $222 million to $100 million for Romney, and the Democratic National Committee brought in $169 million to $135 million for the Republicans. Obama had 12 times more money in the bank than Romney, $115.2 million compared with $9.2 million.

Even while being outraised, the Republican National Committee had more money in the bank entering May, $34.8 million, compared with $24.3 million for the Democrats.

Both national party committees have transferred money to state parties in advance of the election, and the Democrats have also spent almost $500,000 in coordinated expenses with the Obama campaign.

Super-PAC House Victories

What has Republicans cheering and Democrats worrying is the new role of super-PACs in a presidential election. Those groups helped Republicans win a U.S. House majority and increase its Senate minority in 2010.

“I don’t think anybody has duly grasped the impact that Citizens United can have on a national race,” said Democratic consultant Glenn Totten, in a reference to the 2010 U.S. Supreme Court decision removing restrictions on corporate and union political spending. “We haven’t seen it before and nobody knows how it’s going to turn out. This could be a tsunami of cash.”

Restore Our Future, formed by former Romney aides, raised $56.5 million through April 30. The group raised $4.6 million last month, including $1 million from John Kleinheinz, president of Fort Worth, Texas-based Kleinheinz Capital Partners Inc., and $985,000 from Harold Hamm, chief executive officer of Continental Resources Inc. based in Oklahoma City. It had $8.2 million in the bank entering May.

Simmons Donation

American Crossroads, founded with help from Karl Rove, a former political adviser to President George W. Bush and Ed Gillespie, a senior adviser to Romney’s presidential campaign, brought in $1.8 million last month and has now raised $30 million. The super-PAC had $25.5 million in the bank. Harold Simmons, chairman of Dallas-based Contran Corp., gave $1 million. He is a donor to both Restore Our Future and American Crossroads.

Obama supporters have their own super-PAC, Priorities USA Action, which has trailed the Republicans in fundraising despite requests from the president’s campaign team for donations. The PAC, which raised $10.6 million through April 30 and had $4.7 million cash on hand, and hired Mary Beth Cahill, who helped run 2004 Democratic presidential nominee John Kerry’s campaign.

Priorities USA Action raised $1.6 million last month, with $1 million coming from the air traffic controllers union and another $250,000 from the plumbers and pipefitters union.

Another pro-Democratic PAC, American Bridge 21st Century, raised $5.7 million and had $1.3 million in the bank through March 31. The research group, which focuses on Romney and other Republican candidates, learned earlier this month that it would receive $1 million from investor George Soros, founder of Soros Fund Management LLC.

Republican Confidence

The success of the pro-Romney PACs has Republicans confident that they will be able to match Obama’s fundraising.

“The most important thing is not to be disproportionately outspent,” said former Republican Representative Bill Paxon of New York, who is raising money for American Crossroads and Crossroads GPS. “It is clear the Republican campaign is going to have enough resources to be competitive.”

The proliferation of super-PACs carry a disadvantage because Romney won’t have the same control over their messages as he does with his campaign committee.

A case in point: Ending Spending Action Fund, whose patron, TD Ameritrade (AMTD:US) founder Joe Ricketts, considered spending $10 million on ads attacking Obama’s connections with his former pastor who’d delivered racially-charged sermons. Romney repudiated the proposal and Ricketts rejected it.

“The difference is Obama controls his message,” said Republican fundraiser Al Hoffman Jr., a real estate developer based in North Palm Beach, Florida, and a former Republican National Committee finance chairman. “You don’t want the super- PACs throwing stuff out there that’s not central to the core issues, the deficit and the economy.”

To contact the reporters on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net; Greg Giroux in Washington at ggiroux@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.


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