Money and the Problem with the Clinton Apparatus

The most recent bombshell in the presidential race concerns the fiscal health of the Hillary Clinton campaign which has come under increased scrutiny as it was revealed that Clinton had loaned her campaign $5M. This is a big deal because the only candidates who loan themselves money and have staff working without pay are candidates who are having major problems raising money. And if you have problems raising money, that means you have problems generating support for your candidacy.

John Edwards, Rudy Giuliani, and Mitt Romney have all made similar moves in the past, and all three candidates have dropped out of the presidential race, with Romney being the most recent candidate to call it quits. The fact that this news comes on the heels of Barack Obama's $32 million haul in January has exposed one of the greatest weaknesses of the Clinton campaign.

Clinton started her presidential campaign with high negatives and high name recognition. This suggested that she would have the most difficulty winning over new supporters. However, she also had a fiercely loyal following and a hugely popular former president at her service. The talk about her "inevitability" last fall played right into her campaign strategy--to overwhelm the opposition and wrap up the nomination quickly so she could enter the general election without any scars or any giving her skeptics any further reasons to dislike her. Last fall in the debates, people often viewed the Democratic field as "Hillary and the Seven Dwarves." While they might not have used those exact words, the fact remained that she had no clear rival. Because Obama was being lumped with the rest of the pack, Clinton could simply stay above the fray.

But not anymore. Thoughts about a quick Clinton coronation vanished in the Iowa cornfields when Obama won the state caucuses and Clinton placed third. That turned this race on its head and threw the "inevitability" narrative out the window. And that forced Clinton out of her comfort zone of a quick blowout and into a much riskier slugfest.

The Clinton campaign is simply not designed to survive a tough, protracted campaign. It is true that she was raising a lot of money last year, but the problem is that this money often came in $2300 bundles from a small number of donors. Barack Obama, on the other hand, was raising just as much money from a much larger number of donors who were ponying up $20 or $50 at a time. So now, a greater percentage of Clinton's donors are tapped out because of campaign finance limitations. And because of her difficulty in attracting new support (and new donors) because of her high negatives, she will obviously have more trouble keeping up with Obama financially from here on out. Obama's campaign apparatus is designed to go the distance. Clinton's is not. And the fact that Obama is drawing in so many new voters only further complicates matters.

Remember, there never would have been any negative stories about Bill Clinton playing the race card or Hillary Clinton's surrogates sliming Obama had she won Iowa and put Obama away early. But those terrible news cycles have soured a lot of voters on her campaign, thus making it less likely for them to come around and donate to it in the future. And the more these kinds of stories poison the news cycle, the more tarnished the Hillary brand becomes and the worse off her campaign is.

The race for the Democratic presidential nomination likely won't be settled anytime soon. Obama failed to win the mega-states of California and New York, but at the same time, he has held his ground. His critics may wonder when he's going to deliver the knockout punch to Clinton and beat her in one of "her" states, but if Clinton's emergency $5M cash infusion means anything, she may very well end up starving herself out of the race. The challenge for Clinton now is to somehow generate support faster than she loses it to attrition.

Obama is peaking at the right time, and Clinton is helping him do so.

3 comment(s):

Mattheus Mei said...

As soon as it was learned the HRC "loaned" $5 mil to her campaign - how does one loan money to one's own campaign anyway - they sent out e-mails to their base soliciting support to match it. And today - since the polls closed Tuesday - the Obama campaign has raised $7.5 million. It really does say a lot.

Schenck said...

I'm proud to be a part of Obama's $7.5m. Made my third $25 donation yesterday (hey, I'm a student, too), and I expect to donate a small amount once a week until he wins the nomination. What a nail-biter! Gonna see Obama at UMD Monday!!

Anthony Palmer said...


I read that HRC's "loan" was more of a ploy to let her supporters know that this was a serious fight and that she stood the real risk of losing this nomination. She ended up making the money back in donations, but the point remains (as you alluded to) that Obama's fundraising apparatus is far more impressive. Looks like Obama can slowly bleed Clinton out of the race. Wow! Imagine if some of the other candidates were as well established as Clinton is! Your second-tier guys really only had one shot (Iowa) and that was it. But Clinton has been buffeted and battered for weeks.



I have yet to donate to Obama's campaign, although I'm on his campaign mailing list. Obama is more liberal than what I'd like (especially on illegal immigration), but I would happily vote for him over Clinton and McCain. I probably agree with McCain more than any other candidate, but I can't stomach his foreign policy views and his position on Iraq. Clinton would probably be the most competent president of the three candidates, but I don't want to go "back" to the 90s and have four more years of bickering. So really, Obama's views on illegal immigration are less offensive to me than McCain's views on Iraq or the retro-symbolism of Clinton.

Process of elimination.

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