Barack Obama's Strategic Miscalculation on Public Finance

Sean Oxendine and Soren have already covered Barack Obama's disappointing fundraising, and the rumor now is that Obama has raised $30 million.

A number like this not be a problem but for the fact that Obama opted out of the public financing system with a smug look on his face that suggested a gusher of cash in the offing. With him formally capturing the nomination in June, that doesn't seem to be happening. In fact, Obama's opting out is starting to look at best premature and at worst a complete strategic blunder.

Obama's campaign is denying the rumor, but as Sean has noted, if it were really impressive, they wouldn't be holding it back. 

A couple of thoughts:

• Remember the guy who said that Obama would raise $100 million in June with the help of HRC's finance committee and pedal-to-the-metal general election fundraising. That set the expectations bar pretty high.
• $30 million in June would be slightly south of what John Kerry did the month he captured the nomination in 2004. Even if it's in the $40-50 million range, that's only incrementally better than what Kerry did as the nominee in 2004. This does not suggest that Obama is fundamentally a different kind of general election candidate.
• After crowing for more than a year about the massive Democratic fundraising advantage, it seems that McCain+RNC will have over twice the cash-on-hand as Obama+DNC. That's extraordinary.

Whatever the final number is, I'm going to posit a theory about what's going on. And that's that Obama's camp dramatically misread the meaning of its Internet fundraising surge in the 1st quarter, a mistake that could send it limping into the fall even or slightly behind the Republicans.

It's instructive to look back at Democratic fundraising in 2004. Despite the formidable Bush-Cheney money machine, John Kerry surged (from a very low base) into $30-$45 million territory for his 5 months until the Convention. The surge was equal parts high dollar and Internet, as everyone got on board to defeat Bush. As Kerry's email director Zack Exley has described it: 

The Kerry campaign, on the other hand, had the perfect fundraising ask: "Bush is going to outspend us two-to-one unless you chip in." As Kerry began to close in on Bush's fundraising numbers, the campaign could say, "Chip in again to completely level the playing field for the first time in decades."

Indeed, the Kerry campaign almost outraised the Bush campaign, a fact as stunning then as the McCain campaign almost matching the Obama campaign would be now. Combined with the DNC, which led the RNC by a pretty penny, and the Democrats outspent the Republicans on the 2004 election.

This time, Obama will have to shoulder the burden of Democratic fundraising largely alone. That's because nobody trusts Howard Dean with money. He has consistently failed to transfer the energy from his 2004 Presidential bid into new support for the DNC, showcasing the inherent difficulties of transfering support from a candidate to an organization. With Democrats on the upswing in 2006, he was badly outraised by the RNC. With Democrats in the majority and ascendant in 2007-08, he has been badly outraised by the RNC.

The point here is that the Democrats' immediate precedent was 2004. The Obama campaign probably expected a fundraising bump commensurate with the 2004 surge, and at considerably higher levels given the high expectations for Democrats this year.

In fact, the bump actually looks to be a deflation from Obama's plenty inflated primary totals. To me this is a sign of something broader: that the intensity level of the 2008 general election will not match the 2004 election or quite possibly, even the 2008 primary.

I'm disclaimering this heavily because I worked the 2004 election for Bush, often in conjunction with the war room. So, my perspective on that election is that of thermonuclear war. But I'm not sure that even an objective observer could say that Obama vs. McCain will be anywhere near as intense as Bush vs. Kerry.

For starters, Bush vs. Kerry was consistently close and covered as such throughout. The immediate past election was 2000, which was decided by 537 votes. This closeness spawned massive grassroots energy on both sides. Bush was also a known quantity, and ousting him was a very big deal. The average voter is not as invested in Obama or McCain.

Though Obama has seen general election levels of activity for months, there's a sign of that tapering off, expressed in the netroots' comfort level with criticizing him openly and the flatlining traffic to BarackObama.com. And he has also opened up a lead outside the margin, making it less likely that his supporters will feel that everything they do matters.

Though Obama vs. Clinton -- the first black vs. the first woman, enmeshed with the quest to knock off the inevitable with a hit of Bill Clinton psychodrama mixed in -- was hugely historic, seeing record levels of fundraising and turnout on both sides, will Obama vs. McCain be similarly charged? As Doug Schoen notes in this piece I quoted him in, the campaign so far is one-dimensionally about Obama with McCain as a shadow. That won't make for as interesting a give-and-take. And to the extent Obama's supporters will feel this is a cakewalk, that will diminish their level of enthusiasm.

Obama's fundraising surge came during and around primary elections with the outcome in doubt. Once it seemed he had it wrapped up, his online fundraising fell off dramatically. As we've seen, online fundraising can be hugely tempermental and event-driven. Hillary, who would normally raise $200,000 - $400,000 per email in slow periods, would see $10 million over a couple of days after winning a key primary like Pennylavania.

Though he will undoubtedly rise in the August-November timeframe, it's unclear to me if Obama will be able to recreate that same energy from the primary if the race remains outside the margin, or it falls back into the margin but with Obama's momentum deflated.

Fundraising-wise, this could look more like a "normal" election like 2000 or 2004 rather than the transformative election the primary was and the Obama campaign was banking on. This means Obama may have to break a sweat to match McCain and the RNC's money in the fall. And his massive email list, which could be out making calls and knocking on doors, may be diverted into heavy fundraising.

That's not quite what Obama must have had in mind with this gambit.