Money belt tightens on Kerry
After struggling through a period when the campaign was so cash-strapped the candidate had to loan it millions, Kerry for President was flush once it secured the nomination in March, raising and spending an average of $30 million a month.
Today, the free-flowing money gets shut off. For the first time in his campaign for the presidency, John F. Kerry faces a cap on his fund-raising. In exchange for accepting $75 million in federal money for the general election, he had to halt his private fund-raising at midnight -- barely an hour after he completed his speech formally accepting the Democratic presidential nomination and at the end of a day when his campaign collected $5.2 million in Internet donations. He also must agree to spend no more than the $75 million between today and Election Day, Nov. 2.
The effect will be felt in ways big and small, from halting his television advertising in August to reserve money to being judicious about where and when to fly his charter plane and considering bargain alternatives to the the high-end hotels his campaign has favored.
The spending is also a factor in the campaign's decision to set out on a two-week cross-country tour this morning, stepping off from Langone Park on the North End waterfront. Not only can buses, trains, and boats be a cheaper way to travel, but the caravan carrying his campaign entourage and the press that follows him are bound to attract free local media coverage as they roll through hamlets from coast to coast.
"Moving this large flotilla is expensive," Mary Beth Cahill, Kerry's campaign manager, said of campaign travel. "But this way [on the bus tour] we'll move from the national stage to the battleground states, where this election will be won."
The goal is to husband as much of the $75 million allotment as possible until Sept. 3, the day after President Bush accepts the Republican nomination and begins to draw on his own allotment of federal funds. The later Republican convention date means Bush will have to stretch his money for just eight weeks, as opposed to 13 for Kerry.
"We are going to have the same eight-week campaign they are," Cahill said. "We will be dark in August and certainly understand that's a risk, but it's the correct strategic move for us."
Chip Smith, who monitored Al Gore's 2000 presidential budget as deputy campaign manager, said the challenge for the Kerry campaign will be to return to the fiscal discipline it was forced to practice in the fall, when Kerry was faltering in the polls and donations were trailing off.
"These guys have been running a general-election campaign for the past five months, but on unlimited funds. They will now have to have financial discipline they have not had in that time," Smith said. "There's definitely some people in the campaign who remember the tough times. They will have to have strong voices to return to that discipline."
He said presidential campaigns can follow several strategies to prepare for leaner times, such as spending money during the primary on computers and other assets that will also be later, and cutting back campaign aides' salaries.
The campaign can also ask the Democratic National Committee to underwrite up to $16 million in expenses. All told, that means $91 million for the general election sprint. Kerry can also raise money for the committee, which can spend unlimited funds to support Kerry's campaign as long as it is not formally coordinating with it. Kerry can donate any money he has left over in his primary account to the committee and other state and federal party organizations. He also is expected to benefit from advertising aired by Democratic-leaning 527 groups, so named for the provision in the tax code that applies to tax-exempt political advocacy organizations.
Kerry had been planning to take federal money for the primary, as all Democratic presidential candidates have since the system was put in place in the 1970s. That would have limited him to $45 million in spending. Bush, though, passed up the federal matching funds during the 2000 race, going on to raise more than $100 million for his primary campaign.
As the president began to raise money at a torrid pace this cycle, eventually amassing more than $200 million, Democratic primary candidate Howard Dean decided to break out of the system and pass up the federal primary funds. Kerry followed suit, even though his fund-raising had been so languid at one point that he had to loan his campaign $6.4 million in December. After he locked up the nomination with a string of victories on March 2, "Super Tuesday," he became the focus of unprecedented Democratic campaign donations.
His campaign had raised more than $185 million as of June 30, leaving it with $36 million in the bank. Of the $185 million, $99 million was raised in the second quarter of this year -- a record for a presidential candidate of either party -- with $36.5 million received in June alone.
The deluge allowed Kerry to virtually match Bush in campaign spending following the primaries. He placed advertisements in states that are marginal bets for the Democrats, including Louisiana, staged elaborate campaign events, and leased not only a custom
The campaign also booked rooms at hotels such as the Four Seasons in Palm Beach and the St. Regis in Los Angeles, paying about $200 a night -- far higher than the cost of Comfort Inns and Super 8s used by candidates in the primaries.
Smith, the Gore campaign budget manager, said the Kerry campaign should ask itself a question every morning as it attempts to navigate the next five weeks.
"What do I need to spend today and this week to not lose ground by Sept. 1?" he said. "If you feel like you're losing ground, you're going to have to spend. The less they're forced to spend, the better off they'll be."
Glen Johnson can be reached at johnson@globe.com.
