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Money Talks

John McCain's floundering presidential campaign

The release of the second-quarter fundraising totals spells trouble for two presidential candidates: Democrat John Edwards and Republican John McCain. Edwards has always been a long-shot for the nomination, but McCain was once the Republican frontrunner and expected (by me, among others) to have an easy path to the nomination. His candidacy is in now a shambles--and for more reasons than money.

When former Senator Phil Gramm was running for the Republican presidential nomination in 1996, he used to cite "Huckaby's Law," named after political consultant and fundraising expert Stan Huckaby. Huckaby's Law said that the presidential candidate who raised the most money by January 1 of election year would inevitably win the nomination. John Connally had defied the law in 1980, but that was before public financing kicked in.

Gramm ended up confirming Huckaby's Law. Bob Dole beat him by $4 million and then won the nomination. In 2004, however, Senator John Kerry overturned Huckaby's Law by losing the fundraising primary to Howard Dean (Dean raised $47 million to $32 million for Kerry by January 31, 2004) but still won the nomination.

What about 2008? There is no reason to accept Huckaby's Law as an immutable law of physics. If two candidates can raise roughly the same amounts--let's say $110 million to $100 million--then, all other things being equal, they should be able to compete equally for the nomination. But if the margin is any larger--if it is comparable to Dean's five-to-three edge over Kerry in 2004--then the candidate raising less money will be at a significant disadvantage--more so than in any previous election. That's because of the changes in the primary schedule.

In the past, the early phase of the presidential race--lasting into March--was concentrated in several relatively low-cost caucuses and primaries in Iowa, New Hampshire, and South Carolina. If a candidate did well in two of these, as Kerry did in 2004, he could make up an edge in fundraising before the big primary week of Super Tuesday a month later, when the number of primaries and the size of the collective electorate put a premium on paid advertising. But this year, Iowa and New Hampshire will be followed on January 19 by Nevada, then on January 29 by Florida, which will occur the same Tuesday as South Carolina, which will be followed the next week by some 23 primaries and caucuses, including California, New York, Texas, New Jersey, Georgia, and Michigan. Candidates who trail significantly in the money race on January 1 will not have time to raise enough money to compete in Florida on January 29 and in 23 states on February 5.

Among the Democrats this year, Barack Obama and Hillary Clinton are both going to have enough money to compete. But John Edwards, who raised only $9 million in the last quarter, compared to $32.5 million for Obama and $27 million for Clinton, looks like he is going to fall by the wayside. The problem is a practical one. Edwards is hoping that a victory in the Iowa Caucuses on January 14 will boost his chances, but, given the condensed primary schedule, a victory probably won't help him enough if he doesn't already have the money to pay for advertising in the big states. Of course, Edwards could follow Steve Forbes's precedent and make a huge loan to his campaign.

Among the Republicans, John McCain also faces money problems. In the second quarter, he raised $11 million compared to $17 million for Rudy Giuliani and $14 million for Mitt Romney. By itself, Giuliani and Romney's edge over McCain isn't decisive, but what is significant is that Giuliani's totals increased $2 million from the last quarter while McCain's declined by $2 million. McCain also has much less money in the bank than his rivals, and he has had to lay off staff. His difficulties in fundraising, combined with his slide in opinion polls (which makes it still more difficult to raise money) suggests that his campaign is in serious trouble.

If Edwards's lackluster fund-raising is simply the result of being overshadowed by his Democratic rivals, McCain's decline reflects a flawed campaign strategy. He set out to become the "Republican establishment" candidate. In doing so, he was relying on a law of his own--the Republican propensity to nominate former runner-ups for president: George H.W. Bush in 1988, Bob Dole in 1996. Once a fierce foe of George W. Bush, McCain tied his candidacy to the president this time around. He eagerly defended Bush's prosecution of the Iraq war --"We elected him, we need him, he needs to do well and the country needs him," McCain declared in March 2006--and he hired the president's former operatives, including Terry Nelson, Bush's former political director, who became McCain's campaign manager.

His strategy relied on rerunning the 2000 campaign, but with one important difference: McCain would play himself and Bush. McCain hoped to retain the loyalty of the self-described independents and moderates who helped him win states like New Hampshire and Michigan in 2000, while winning over enough conservatives to defeat a challenger from the right like former Senators George Allen or Rick Santorum. He focused his efforts heavily on South Carolina, where Bush had upended him in 2000. McCain won endorsements from many of the same South Carolinians who had backed Bush's vicious attacks against him. He hoped to wrap up the nomination early by winning New Hampshire and South Carolina.

McCain also tried to alter his political image sufficiently to attract diehard conservative Republicans as well as moderates and independents. To appease the religious right, he now claimed to favor the reversal of Roe v. Wade. To appease anti-taxers annoyed by his opposition to the Bush tax cuts, he now backed a continuation of those cuts. And he trumpeted his ability to win the war on terrorism and the war in Iraq.

As his poll and fund-raising numbers illustrate, this strategy appears to have failed. McCain has not been able to alter his image sufficiently to attract conservative donors or voters. Unlike, say, Mitt Romney, McCain has not been able to perform an ideological makeover. His apostasy in 2000 and during Bush's first term is too well known to conservatives. Indeed, his standing among Republican conservatives has declined still further in the last two months because of his support for allowing 12 million illegal immigrants to remain in the United States. For Republican conservatives, opposition to illegal immigration has replaced opposition to abortion as the dividing line between who they will and won't support. And McCain falls on the wrong side of the line.

McCain hoped his stand in favor of the war in Iraq, and most recently of the administration's "surge" strategy, would help him among Republican conservatives. But perhaps because of his stand against the administration's treatment of enemy combatants, Republicans have failed to acknowledge his support for the war. In a Pew poll last month, Republican voters who rate Iraq as a "very important" issue favor Giuliani, former Senator Fred Thompson, and Romney over McCain. Only 20 percent favor McCain in comparison to 39 percent for Giuliani even though the former New York mayor has no foreign policy experience and has displayed a tenuous grasp of Iraq's political and ethnic divisions.

The absence of conservative support has left McCain as the candidate of independents and moderates, as he was in 2000. But McCain has had to divide this vote with Giuliani and, in the Northeast, with Romney. Most revealing is a Survey USA poll last month of California Republicans, where McCain trailed Giuliani by 32 to 19 percent, Thompson also at 19 percent. McCain bested his 19 percent share among voters who identified themselves as moderate or liberal, were pro-choice, were convinced that the threat of global warming was real, supported same-sex marriage, favored stem-cell research, and didn't own a gun. Oh yes, he was also favored by 24 percent of Republicans who had voted for Kerry in 2004. Unfortunately, Giuliani did somewhat better among these voters, while he and Thompson did much better than McCain among the more conservative voters.

McCain's geographical strategy has also hit the skids. Romney has steadily climbed ahead of McCain in New Hampshire polls, and McCain is now running behind Giuliani in South Carolina, where Republican voters are so up in arms over "amnesty for illegal aliens" that Senator Lindsay Graham, McCain's main backer in the state, may be in political trouble. But in any case, the South Carolina primary has been completely overshadowed by Florida, where McCain is running far behind Giuliani and Thompson.

McCain could bounce back. He is being hurt partly because his heretical past is so well known to Republican voters, and his prospects could improve if more people learn, for instance, that Giuliani is pro-choice and in favor of gun control. But McCain's lag in fundraising hurts his prospects for recovery. And it should continue. Without a conservative grassroots following in the Republican Party, McCain has been more dependent on large donors than his rival candidates. And large contributors want to back a winner.

Now the McCain campaign is talking about taking public financing. But public money won't get him through January. In 2004, the limit on a candidate's spending in the primaries was $40.89 million. It'll be higher this year, but not high enough to compete with McCain's privately financed rivals, who should each raise twice that much before the year is out. Whether one heeds Huckaby's Law or looks at opinion polls in states like Florida and California, McCain's prospects are looking grim.

Correction: This article orginally stated that John Connally ran for president in 1976. He ran in 1980. We regret the error.