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Romney’s Money Problems

As my colleague Nicholas Confessore notes, the Republican presidential candidates are becoming increasingly dependent on money raised by “super PACs” and are raising relatively little through traditional channels.

Mitt Romney raised slightly more than his Republican rivals in January. His campaign committee, Romney for President, brought in $6.5 million in January, according to a report filed with the Federal Election Commission. By contrast, Newt Gingrich raised $5.6 million, and Rick Santorum and Ron Paul each raised $4.5 million.

But his fund-raising pace was fairly weak despite wins in New Hampshire and Florida. And Mr. Romney spent far more than his rivals in January — $18.8 million, compared with $5.9 million for his next-closest competitor, Mr. Gingrich.

More worrisome, Mr. Romney spent more than he took in; his cash flow was negative $12.2 million for the month. He exited January with just $7.7 million in cash on hand.

That sort of pace is not sustainable. Were Mr. Romney’s campaign to continue to raise and spend money at the same rate as in January, it would have only about 20 days of expenditures before money ran out.

Although the pace of the electoral calendar was relatively slow in the first part of February, Michigan and Arizona are fairly large states, as are some like Ohio and Virginia that vote on Super Tuesday. Although the calendar then returns toward mostly smaller states, Illinois — fifth in United States population and with the third-largest media market in Chicago — votes on March 20.

The busy slate in January presents plenty of opportunities for candidates to spend money, but it also gives them a chance to earn it back by soliciting contributions after they achieve success in primaries and caucuses. In recent campaigns, in fact, candidates have broken close to even in January over all.

In 2008, the eight Republican candidates combined to spend $42.0 million in January. But they brought in $43.5 million, enough to cover their expenses.

The Democrats raised more ($62.5 million) and spent more ($67.5 million) in January 2008, but still kept their books roughly in balance for the month. They ended it with a combined $65.8 million in cash on hand, although some campaigns, like Hillary Rodham Clinton’s, had begun to accumulate a significant amount of debt.

By contrast, the six major Republican campaigns that had filed with the F.E.C. as of Monday night — Michele Bachmann’s report was not yet available — raised $22.0 million but spent $37.1 million in January. And they finished the month with just $13.4 million in cash on hand.

Mr. Romney’s negative $12.2 million cash flow represented the worst January in the F.E.C.’s online records, which cover election cycles since 2000. The previous record had been held by George W. Bush, who raised $2.0 million but spent $12.8 million in January that year, for a net $10.8 million outflow. Mr. Bush’s total would have been larger than Mr. Romney’s if adjusted for inflation, however.

But Mr. Bush exited January 2008 with $20.5 million (before inflation), about three times what Mr. Romney’s campaign had at the end of last month.

One problem is that Mr. Romney has never done very well with small donors. In January, his campaign brought in just $1.2 million in unitemized contributions, a category that covers donations of $200 or less. That total was the worst of the four remaining Republican campaigns; Mr. Santorum brought in $2.6 million in unitemized contributions; Mr. Gingrich, $2.5 million; and Mr. Paul, $2.1 million.

Mr. Romney’s relative lack of support from small donors is problematic for two reasons. First, voters who contribute to a campaign are usually among its most enthusiastic supporters and can generally be counted on to turn out for it.

Second, small donors can be tapped into again and again until they reach their contribution limits (current $2,500 for the primary and another $2,500 for the general election). By contrast, donors who have already contributed their maximums can give no more, although they can contribute to “super PACs” or other Republican-affiliated groups. Thus, a candidate who fits this pattern may be at risk of seeing the pace of fund-raising slow down as the campaign drags on.

Restore Our Future, the “super PAC” supporting Mitt Romney, also spent more than it took in during January and had a cash flow of negative $7.3 million for the month. However, its balance sheet remained strong, as it exited January with $16.3 million in cash and no debt.

The “super PACs,” however, have spent almost all of their money on television advertising — much of it negative — leaving candidates without the robust organizational infrastructures that the Democrats built in 2008 or Mr. Bush did in 2000. Although Mr. Romney’s “ground game” is strong compared with that of his rivals, it is fairly weak by historical standards, with his campaign generally establishing just one field office in each major state, according to his campaign Web site.

Even if Mr. Romney’s fund-raising pace were to pick up, it might be too late to rectify the difference. Barack Obama’s campaign spent $40.9 million in fourth quarter of 2007, much of it in field offices and infrastructure. By contrast, Mr. Romney’s campaign spent $19.0 million in the fourth quarter of 2011. And whereas Mr. Obama’s fund-raising pace significantly accelerated in January 2008 — his campaign brought in $36.8 million — Mr. Romney’s has not.

The discrepancy may help explain Mr. Romney’s relatively poor performance so far in caucuses, which are usually contests of enthusiasm and organization. If Mr. Romney’s voters somewhat lack enthusiasm, a great campaign infrastructure might have been enough to make up the difference, but a middling one might not be.

Unless Mr. Romney’s fund-raising pace picks up or he wraps up the nomination fairly quickly, he might need to consider self-financing, as he did in 2008. But that decision could carry some risk. Voters may be reluctant to contribute to a campaign once it looks like the candidate is willing to foot the bill himself, and such a decision could play into unfavorable narratives about Mr. Romney and his wealth. In addition, self-financed candidates have a poor track record in federal and state elections, although it is not clear whether there is any causal relationship.

It is not uncommon for campaigns to live paycheck to paycheck, so to speak, in the early-voting states, and sometimes they can survive it. John Kerry’s campaign had $7.7 million in cash at the end of January 2004 — the same amount Mr. Romney has now — and Mr. Kerry’s campaign accumulated $7.0 million in debt, while Mr. Romney has none. The Republican nominee in 2008, John McCain, had only $5.2 million in cash after the January primaries and $5.5 million in debt.

The calendar was much more front-loaded in 2008 than it is this year, however, and Mr. Kerry never endured a major stumble after winning in Iowa and New Hampshire, so his campaign was able to turn its attention to the general election quickly. What is problematic for Mr. Romney is his high burn rate coupled with what could be a prolonged nomination process.

As is to be expected when one party has a competitive nomination and the other does not, Mr. Romney and his rivals are losing ground to the Democratic incumbent, Mr. Obama.

Describing Mr. Obama’s finances is more challenging because he solicits donations through four separate fund-raising arms. One is its campaign committee, Obama for America, which raised just $9.3 million in January (with $11.9 in total revenue after accounting for transfers from other committees and other accounting items). However, Mr. Obama may also receive some support from the Democratic National Committee, which raised $6.3 million. In addition, the Democratic National Committee and Obama for America jointly run two fund-raising bodies, the Obama Victory Fund and the Swing State Victory Fund, which together raised $13.8 million in January.

Obama for America ended January with $76.0 million in cash on hand, and the four related organizations combined had $98.7 million.

Although those are impressive-sounding figures, they are not as strong as those of Mr. Bush in 2004. After the January fund-raising period in 2004, Mr. Bush’s campaign committee had $104.4 million in cash on hand, or $122 million when combined with the Republican National Committee.

Of greater concern to Mr. Obama might be the “super PACs.” The major one supporting him, Priorities USA Action, brought in just $59,000 in January, and most of it came from a single donor. The paltry sum may have inspired Mr. Obama’s strategists to begin explicitly encouraging donations to the “super PAC” — something they had avoided before since it conflicted with the spirit of Mr. Obama’s public criticism of the Citizens United decision.

In the long run, it is not necessarily obvious that Democrats are less likely to receive “super PAC” support than Republicans; the political preferences of the very wealthy are eccentric, and tend to run toward fiscal conservativism but social liberalism. In fact, Democrats have been slightly more reliant than Republicans on contributions from the very wealthy since at least 1990, somewhat contradicting the proletarian image that the party likes to adopt. However, in the 2010 election cycle, “super PAC” contributions were larger to Republican-affiliated groups ($47.3 million) than to Democratic ones ($36.4 million), and a single contribution from a billionaire like Shelden Adelson could outweigh thousands of smaller ones.

A detailed table of January fund-raising figures for presidential campaigns since 2000 is below.

Nate Silver founded and was the editor in chief of FiveThirtyEight.