October 16, 2015
Final third quarter financials are out for the various campaigns. Between most campaigns leaking the results early and some safe inferences from those who didn’t, there weren’t any major surprises yesterday.
Hillary and Bernie are sitting on more money than their Republican competitors. No shock. It’s easier to split the pool of available donors two ways than several, and both excel at raising money under any circumstance. Having Hillary reeling in big fish while Bernie harvests vast quantities of plankton is optimal.
Bernie has more upside, Hillary a giant PAC. Neither will lack resources. Should the veep finally take the leap, we can worry about the consequences, but can’t imagine it would harm Bernie at all. Hillary’s potential problem is having too many donors capped out and giving Biden $2700 too, not having donors turn their back.
So the funding and resource allocation drama is on the GOP side. As we have learned from Rick Perry and Scott Walker, PAC money is a booster shot, a nitrous button, not something you can run a fully functional campaign on.
The entire field raised $77 million in direct campaign money, about 40% more than the Democrats. As we’ve known for a while, Ben Carson led the pack, pulling in over 25% of total GOP funding.
He’s a partial-strength Bernie Sanders, pulling in a little less and spending more to do it, so while he’s in a better position than his Republican competitors, Bernie has 2.5x cash on hand.
Following Carson’s almost $21 million haul are Jeb Bush at $13 million and Ted Cruz at $12 mil. Of the two, Cruz had the far more encouraging quarter. He has two key advantages, a slower burn rate and more diversity of contributors.
Cruz is in the favorable position of having more large contributors than the candidates relying on crowd-funding and more small contributors than the other whale catchers. He’s also spending less than anyone who is raising legit money.
Combined with PAC money only exceeded by Jeb and possibly Hillary (filings aren’t due until year end), Cruz is in great shape, definitely the best of any GOP candidate. Taking burn rate in to account, he’s better positioned than Hillary too. Only Bernie has fewer constraints.
Though the reports don’t break down contributions by date, Cruz likely has a third advantage as the slowing velocity of Bush contributions since Q2 indicates Cruz probably out-raised him over the final 45-60 days.
So Cruz has resources like Bush and Clinton, but funding momentum like Carson and Carly Fiorina.
Speaking of Carly, she raised just shy of $7 million, which puts her in a group with Marco Rubio (almost $6 mil), John Kasich (upper 4s), and Chris Christie (lower 4s). None of the other (non-Trump) candidates are raising money quickly enough to sustain a winning effort. Even this group needs to pick things up noticeably in Q4.
Fiorina might not really belong with the others. She raised almost nothing in July, did better after her undercard debate in early August and then backed up the truck in the second half of September. If she settles in at a pace somewhere in between the two debate bumps, Carly is right with Cruz and Bush.
There’s plenty of micro-donor money to go around. Over 20 million people watched each of the first two GOP debates. Let’s say 5 million of them are committed, engaged Republicans, the type who could donate a few bucks to a campaign.
At $50 a head, that’s $250 million dollars. The Carson campaign is relying on a mix of Internet and expensive direct mail. You’d have to think the ex-Silicon Valley CEO could locate a few people to throw together a tech-friendly operation (or likely already has).
Kasich and Christie are floating along, being careful with resources and mostly focusing on placing well in New Hampshire and not embarrassing themselves in Iowa. Neither are inspiring regular voters to invest. Both are hoping for serious establishment money after pulling a Granite State upset in February. Nothing to see here for now.
A quick note on The Donald, otherwise known as the smartest campaigner in human history. He’s invested $100,000 of his own money so far. Trump has received more small donations than the majority of the GOP field. Total spending for the quarter was less than Rand Paul, with the largest expense hats and t-shirts.
Maybe Mexico will build him a wall. Viva Free Media!
Where does this leave Rubio? While he has almost $11 million on hand, that will evaporate quickly if he can’t start pulling in funds. His burn rate for Q3 was about the same as Jeb’s (in the 80-85% range). Though his campaign brags about their relative frugality, there’s still a minimum ante for a top-tier candidate, especially one trying to run nationally instead of camping out in Iowa.
So far, he’s missing out on both parts of the large donor base. Cruz is pulling from the more conservative deep pockets, Jeb the more moderate/establishment types. Walker had his toes in both pools, but being recently burned, few major donors want to commit to Marco until he shows more strength.
There isn’t enough polling distance for a Cruz big fish to look at Rubio. If ideology and tone is important and you prefer Ted, seeing Rubio an average of 1 to 3 points ahead isn’t going to make a difference.
Same applies on the establishment side. Marco is ahead of Jeb, but not by that much. The trend is positive, but few want to admit they made a mistake with Bush only to potentially whiff again. Though Rubio’s caution leaves him with more money than others who haven’t raised tons, he also hasn’t yet constructed the type of large national campaign big donors are used to seeing.
He’s effectively asking large institutional investors to bet on a promising startup. However, this startup is aiming at large national market share, not a focused target market.
None of this was a problem for Rubio in 2010. His upset senate primary win over sitting governor (and Jeb successor) Charlie Crist followed a similar script. As he and his advisors planned for 2016, they figured they could expand the original recipe.
They were partially correct. Staying sober on spending allowed Team Rubio to outlast Walker, having a potentially difficult opponent go away earlier than expected. Bush is doing his best Crist 2.0 and in a recent poll, Rubio leads him 69-31 in a hypothetical head-to-head match-up.
Again, Marco is actually ahead of schedule. The problem is he’s not the Tea Party outsider favorite this time. In 2010 he was. As we all know, Rubio sounds good. Even partisan Democrats recognize this. He’s the guy they want to avoid next fall.
When running as the more conservative or more anti-establishment candidate, Rubio is unbeatable because he sounds so non-threatening. It’s a bit of the Reagan effect, but he’s quicker on his feet than the Gipper ever was, a regular baby-faced assassin.
But he broke a cardinal rule for charismatic presidency-aspiring senators. Don’t get involved with controversial issues. JFK and Barack Obama stayed out of trouble. Marco Rubio pushed for comprehensive immigration reform.
Absent this decision, there is no reason for Ted Cruz to exist. There is still a tone and tactics difference between the two, but Rubio with a spotless record would be irresistible. Instead, many wonder what else he might yield on.
If Cruz remains buried behind Trump and Carson, with Fiorina diverting some attention too, all Rubio needs to do is finish ahead of the flagging firm of Bush, Kasich & Christie to see a flood of establishment money by early March.
If outsider support remains divided, Rubio could win semi-easily once the primaries become winner-take-all.
But, if Cruz breaks through and is his primary competition, there’s a problem. A partially crowd-funded Cruz, with nary an apostasy on his record could win a majority of primary votes against a Wall Street funded, pro-amnesty Rubio.
In retrospect, the one important campaign tactic Rubio passed on was making a bigger push on building a micro-donor base. It wasn’t necessary in 2010 with official Tea Party backing. To do so in 2015 would have cost a few to several million dollars. If it hadn’t worked, Marco wouldn’t be able to say he has a few more dollars in the bank than Jeb.
If it had worked, Marco would fear no one next spring. The old saying is that politicians are forever re-running their first big victory. This is true for Rubio and true for Cruz. Marco is likely the better candidate, Ted’s modified senate campaign strategy better suited to 2016.
By Opening Day of the next baseball season we’ll know which is more important.