Obama Has Financial Edge For Primary Endgame

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Obama Has Financial Edge For Primary Endgame
Illinois Senator Reports $32 Million in Cash And Minimal Debts
By MARY JACOBY, T.W. FARNAM and AMY CHOZICK
March 22, 2008; Page A4

Barack Obama had three times as much money in the bank at the end of February as Hillary Clinton, putting the Illinois senator on a stronger financial footing heading into the last round of primaries and caucuses for the Democratic presidential nomination.

Sen. Obama reported having $32 million on hand at the end of February that could be spent on the nominating contest, with minimal debt, according to his latest monthly financial report, filed with the Federal Election Commission.

New York Sen. Clinton reported having $11 million on hand at the end of February. Her debts to outside vendors were $3.7 million.

The figures are the most recent data publicly available, and the reports don't show whether the financial picture has changed in the past three weeks. The Clinton campaign seems to have improved its financial management over the last month, by improving fund-raising and, apparently, curbing some of the free-spending habits that angered backers earlier this year. Sen. Clinton's campaign was nearly broke at the end of January, forcing her to take out a $5 million personal loan and leading to replace her campaign manager.

It isn't clear, however, whether Sen. McCain can legally continue to spend money during the primary season. He is tangled in a dispute with the FEC about whether he can withdraw from an earlier pledge to follow spending limits.

Sen. Clinton's supporters say their cash gap with Sen. Obama isn't a big disadvantage for the next contest, April 22 in Pennsylvania, and the nine that follow through early June, because extensive news coverage diminishes Sen. Obama's edge in paid TV ads. "The free media coverage when you're down to two candidates in a limited number of states is intense," said Steve Elmendorf, a Democratic consultant in Washington who supports Sen. Clinton but isn't working for her campaign. "I don't think the cash-on-hand differential matters all that much."

Still, Sen. Clinton's financial position differs markedly from the image she tried to convey through 2007 as an inevitable front-runner and formidable juggernaut. These days, she casts herself as a scrappy underdog battling the well-oiled Obama money machine.

"They're going to try to outspend us three-to-one on the air," former President Bill Clinton said in a March 18 email to supporters asking for contributions of $5 or more to pay for TV advertising. "We are facing a serious financial disadvantage against the Obama campaign," Sen. Clinton said in an email appeal of her own on Friday.

The money gap stems from Sen. Obama's unprecedented fund-raising strength. His success in tapping individuals through the Internet -- he has gathered more than one million donors -- has forced Sen. Clinton to work harder at cultivating individual small donors of her own. The February reports show she succeeded, drawing 200,000 new donors and nearly doubling her take from the previous month to $34 million. But Sen. Obama boosted his total to $55 million -- a one-month fund-raising record for a presidential primary campaign. In January, Sen. Clinton raised $14 million, and Sen. Obama $36 million.

While raising less, Sen. Clinton has been spending at a faster clip: She burned through 92% of her campaign receipts in February, while Sen. Obama spent only 77 % of his contributions.

Even so, the Clinton campaign did cut back on expenses after big donors complained it was spending too much on hotels and catering. Sen. Clinton has begun holding more intimate campaign gatherings at supporters' houses and fewer lavish big events. Staff and reporters flying on her chartered campaign plane are getting cheaper boxed lunches instead of higher-end catered meals.

Staffers are staying at less-expensive hotels, too. In January, the campaign spent $38,000 at relatively plush Radisson Hotels, but only $11,000 at them in February. Spending at Holiday Inns rose to $61,000 in February from $21,000 in January.

Top staffers are also being paid less. Communications director Howard Wolfson's consulting firm was paid $267,000 in January, after picking up $421,000 in 2007. In February, Mr. Wolfson got $33,000.

Top advisor Mark Penn's firm made $3.8 million in January and $3.1 million in February. Media advisor Mandy Grunwald's firm was paid $761,000 in January and $608,000 in February.

Sen. Clinton's previous campaign manager, Patti Solis Doyle, was paid far more than her counterparts on the Obama and McCain campaigns, earning about $12,000 a month before she resigned from that position in February amid a campaign shake-up. Sen. Clinton's new campaign manager, Maggie Williams, is working without pay.

Clinton campaign payroll expenses dropped 24% from January to February, while Obama's campaign payroll remained constant. In absolute numbers, Sen. Clinton spent $2.4 million on payroll in February while Sen. Obama spent $2.6 million.

Such moves are important because "the Clinton campaign is trying to make the case to uncommitted superdelegates that she's got better prospects in the general," said Democratic strategist Jim Jordan. That case is harder to make, he said, if her campaign appears poorly managed in the primary.

Write to Amy Chozick at amy.chozick@wsj.com