Could the Obama/Clinton Race End In A Whimper?

Posted by Ashish on 04.05.2008

Could money woes force Clinton out?

With all the talk we've heard for the past few months about convention floor showdowns, backroom deals, superdelegates tearing the party apart, etc. comes word from Newsweek that Hillary Clinton may have only raised $7 million in primary funds in March. How can that be when she claimed to have raised $20 million? Simple. Her rich donors are maxed out for the primary (people can only donate up to $2300 for the primary) and she got them to donate towards her general election campaign so she could inflate the total sum and hope people didn't notice that most of the money can only be used in a general election, a place she is unlikely to even get to.

She did the exact same thing in February to try and stop talk of her being finished. Remember how she shouted from the rooftops that she raised $34.5 million and how it was a record month for her? Turns out only $11.7 million of that could be used in the primary, according to Newsweek. The rest will only become available to her if she gets to the general election. But she needs the money now. The reason nobody noticed this is that candidates aren't required to disclose how much they raise in primary funds and how much in general election funds until 20 days after the month ends. So when she did report the full picture, that only a third of her February total could be used in her battle with Obama, the media didn't take notice. I won't even get into the fact that Clinton closed February with $8.7 million in debt. For comparison, Obama raised $55.5 million in February, $54 million of that can be used in the primary. How can he do this? Because he has over a million small donors (and growing daily) and basically none of them are even close to being maxed out, which means he can keep going back to them for more money.

The Newsweek story also exposes that Clinton, despite plugging her website everywhere and trying to get small donations recently in the same way Obama has been doing, has been unsuccessful and is relying on her usual assortment of wealthy donors who can't give her more primary money but gave her enough money for the general election to delay talk of her campaign running out of money for a few extra days. It doesn't make a difference to these wealthy Clinton donors because she will eventually have to give them all that money back if she doesn't get to the general election. Why does this matter? Fundraising is CRUCIAL in the general election and it's another reason why you'll see superdelegates continue to side with Obama. The old ways of raising money, relying on the extremely wealthy and putting together high-dollar dinners with the rich and famous, is a thing of the past now.

If Clinton only raised $7 million in primary funds in March, a month where she won the Texas and Ohio primaries and Barack Obama got saddled with the negative Rev. Wright story, it may indicate that this race won't end in fireworks and excitement, it'll end in a whimper as Clinton runs out of money.

The $7 million figure could be true because right now, Clinton is letting Obama outspend her 5-to-1 in Pennsylvania even as polls show her lead collapsing in the state. If she had $20 million to spend, she would put it all in PA, as it is a do or die state for her. Instead, what we're likely seeing is her put in everything she has, but that everything is far less than what she wants people to think she has. This is how campaigns usually end. The frontrunner begins to rack up huge financial advantages after cementing himself as the likely winner and it gets to a point where money results in too many advantages for said frontrunner for the other candidate to ever stop the bleeding. And eventually their campaign dies. If this money advantage persists, it'll catch up with Clinton sooner rather than later, if not in PA, then in North Carolina and Indiana on May 6th. A loss in any of those three states will sink her.

If the Newsweek story is true, her only remaining option would be to donate massive amounts of her personal fortune to go on competing in a race that she is almost sure to lose. Her tax returns were released yesterday and showed that her and Bill have amassed over a $100 million since 2000, mostly from books they have written and Bill's speaking gigs. They will need at least another $30-$40 million over the next three months to even think about continuing in a legitimate fight against Obama, because in those same three months, he will likely raise near or over $100 million and already has a huge financial advantage going in. Clinton cannot be outspent 3-to-1 and 4-to-1 in every remaining state and think she stands a chance. She knows that.

Her bluff, reporting her March fundraising total to include general election funds which she will likely never be able to use (and will have to return), is something she had to do because had she come out and reported, say, a $10 million month, it would have completely demoralized her supporters in PA, NC, and IN, and would have accelerated the media's talk of her being finished (even more so than what the media is already talking about, which is that she has almost no chance to win). And I think she realizes that that demoralization has already started. Looking at her huge drop in PA polls, there seems to be a mix of Obama's advantage in ads and some of Clinton's softer supporters starting to lose faith and tell pollsters they just don't plan to vote, not because they don't support Clinton, but because it may no longer be worth the trouble to go vote for her. Again, this is how campaigns usually end.