Hillary's campaign is desperate, money troubles are real and they're going for the fake out

ProSense

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Thu Feb-07-08 06:12 PM
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Hillary's campaign is desperate, money troubles are real and they're going for the fake out

Does the Clinton campaign really have money problems?

Yes -- in all probability. But, that doesn't mean that the events of the past 24 hours haven't been orchestrated in some respect. Let me explain how I see this.

Here's what we know about the financial situation of the Clinton campaign. We know that, as of the 1st of the year, the Clinton campaign had $18.6 million cash on hand for the primary election cycle, according to the New York Times. We know that they raised $13.5 million in January. So, that's a total of $18.6 million + $13.5 million, or $32.1 million, that they had available to spend by January 31, not counting Hillary's own $5 million contribution.

Could their campaign possibly have spent $32.1 million in the month of January? It's entirely possible and in fact somewhat probable that they spent something approaching this figure.

The Clinton campaign spent an average of $6.7 million per month in 2007. This is what I'll call their "Baseline Burn Rate" and includes -- well, the basics, and includes rudimentary travel and staffing expenses. Basically, that's what it takes to keep the campaign's core operations running. But it doesn't include things like advertising, of which there was relatively little until 2008 rolled around.

Ben Smith reports that the Clinton campaign spent $12 million on television advertising alone through February 3. Add that to the $6.7 million baseline rate, and you're already approaching a $20 million spend for the month. And, there are many other sorts of expenses that tend to accelerate as the primary season heats up. You're paying more staff. You have more offices open. You're running ads not just on television -- but also on radio and through the mail, internet, and other media. You're traveling more, and taking longer flights. So, the Clinton campaign could very easily be spending $30 million a month -- general election campaigns spend this much and a little more once the action really heats up.

Let's take a look at a few specifics. The numbers that follow are obviously just a supposition -- but one that should give you some reasonable example of the importance of fundraising power in a drawn-out primary cycle. We'll also look at the finances of the Obama campaign, which started out with somewhat less in the bank ($13.5 million as of January 1) and is probably spending at a somewhat faster rate -- but is also receiving donations at a considerably faster rate.

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So I'd conclude that the Clinton campaign's financial difficulties are probably real. It's not so much that they didn't anticipate having to compete after February 5th -- but that they didn't anticipate having to compete after February 5th against an opponent who was raising money much faster than they were. There are probably some diminishing returns in your return on investment as you spend more and more money -- so this is not entirely a zero-sum game -- but when you consider the prospect of trying to build an Iowa-type operation in three states as large as Ohio, Texas and Pennsylvania, you can imagine running through money pretty quickly.

In fact, there were already plenty of signs that the Clinton campaign was falling behind in the financial race, even before yesterday's disclosure. The production budget on their ads has been lacking. The Clinton campaign trailed 21-0 in field offices in the post-February 5 states by my last count. Hillary had begun to fly on her press plane (something she should probably have been doing all along; there are better ways to spend money than to charter two separate planes everywhere you travel, not to mention the reduced carbon footprint).

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