White House Cash Likely to Diminish

by Stuart Rothenberg August 16, 2007 · 12:05 AM EDT

While many Americans are wrapping up their summer vacations and getting their kids ready for the upcoming school year, the 2008 presidential candidates already are thinking about third-quarter fundraising figures.

The uncertainty surrounding the date of the Iowa caucuses increases the importance of those numbers, which constitute one of the few tangible measures of candidate support before actual voters have their say.

In the 2004 cycle, candidates released their fourth-quarter fundraising numbers in late December 2003 in an effort to show momentum heading into the Jan. 19 caucuses. But if Iowa holds its caucuses before Christmas this year, fourth-quarter fundraising numbers won’t be available, enhancing the importance of the third quarter.

The early intensity of the presidential race is unprecedented, and the fundraising success to date of Sens. Hillary Rodham Clinton (D-N.Y.) and Barack Obama (D-Ill.) is matched only by George W. Bush’s money juggernaut of 2000 and 2004.

Now, the candidates are faced with rising expectations set by their own early fundraising prowess. Historically, over the past two presidential cycles, the third quarter of the off year has been a difficult one to raise money, with candidate fundraising dropping off in July through September. This cycle’s candidates will try to leverage the Internet and other techniques to overcome the slump.

“A lot of low-hanging fruit has been taken off the branches,” GOP fundraising consultant Steve Gordon said.

Veteran Democratic strategist Don Foley puts it a bit differently.

“It’s a mature field,” he said. “They’ve gone to their friends and tapped the obligatory money, so now the hard part begins.”

There are two key recent exceptions to the third-quarter slumping trend.

In 1999, Sen. John McCain (R-Ariz.) was the only major candidate to increase his fundraising in the third quarter. He raised $3.1 million after bringing in only $2.5 million from April to June.

Former Vermont Governor Howard Dean (D) raised a hefty $14.8 million in the third quarter of 2003, a then-fundraising record for a Democratic presidential candidate in a quarter. It was another piece of evidence that his campaign had amazing momentum, after he raised $2.6 million in the first quarter and $7.6 million in the second. In fact, Dean raised more money in the third quarter than his four main Democratic opponents combined.

At the time, both McCain and Dean were running as “outsiders” and their insurgent campaigns placed a high priority on fundraising on the Internet. Now, no single candidate of either party has the online market cornered and this cycle’s crop of candidates will prove whether the message matters more than the fundraising vehicle in overcoming the third-quarter slump.

Of course, neither McCain nor Dean won his party’s nomination, proving that fundraising is still a flawed indicator of electoral success in presidential contests.

Dean’s chief Democratic competitors, then-Rep. Richard Gephardt (Mo.), Sen. Joe Lieberman (Conn.), then-Sen. John Edwards (N.C.) and the eventual nominee, Sen. John Kerry (Mass.), all saw their third-quarter fundraising slip from their take in the previous three months. And Bush’s fundraising in 1999 fell in the third quarter only because he brought in an amazing $28.3 million in the second quarter.

If history is a guide, most of the candidates will see their fundraising numbers decline, and Edwards is no exception. In 2003, the former North Carolina Senator’s fundraising steadily declined from $7.4 million raised in the first quarter to $4.5 million in the second and $2.6 million in the third.

This year, Edwards raised $14 million in the first quarter and $9 million in the second. Based on his 2003 trend, he should come in close to $5 million raised through the end of September. Decreasing resources makes Edwards’ Iowa showing that much more important if he is going to compete in the next round of states.

A slower third quarter is not necessarily a fatal blow for a candidate. Kerry’s fundraising dropped by a third between the second and third quarters in 2003, and he went on to win the nomination.

Other candidates don’t see a significant drop-off in their fundraising but also don’t get the big boost like Dean. In 2003, Gephardt’s fundraising was very steady — he raised $3.6 million in the first quarter, $3.9 million in the second and $3.8 million in the third — yet he couldn’t gain momentum.

This year’s equivalent could be Sen. Chris Dodd (D-Conn.), who raised $4 million in the first quarter and $3.3 million in the second, or Sen. Joseph Biden (D-Del.), who raised $2.1 million in the first quarter and $2.4 million in the second. Their numbers have been steady, while their campaigns haven’t caught fire.

The third quarter is a particularly hard time for second-tier candidates to raise campaign cash, Foley said, noting that extensive polling shows potential donors which candidates have the best chance of winning.

Sometimes there is no distinction between the frontrunners in third-quarter finance reports. In 1999, former Sen. Bill Bradley (D-N.J.) and then-Vice President Al Gore (D) raised just about the same amount of money. There could be a similar result this year with Clinton and Obama.

It remains to be seen whether Obama’s message of hope and change will be matched by a third-quarter fundraising bump. Or will Clinton or someone such as New Mexico Gov. Bill Richardson (D) use the period to gain momentum?

All in all, the amount of money raised thus far in the race is staggering. Clinton and Obama raised more money in the first quarter of this year than Dean raised in the first nine months of 2003, and he was considered to be bringing in money by the truckloads.

And way back in 1991, Bill Clinton raised a little more than $200,000 through September, and he would go on to become president.

Almost halfway through the third quarter, the campaigns are giving no clues on the current state of their fundraising. But in the constant news cycle void of actual voting results, this fall’s fundraising reports will be scrutinized even further.