Rove: Obama's Fundraising Lacking, with Spending Outstripping Income

Okay, I know a lot of you don’t have a lot of affection for Karl Rove, but this time he might have something of interest.

The president faces other fund-raising challenges. For one, there are only so many times any candidate can go to New York or Hollywood or San Francisco for a $1 million fund-raiser. Team Obama is running through its easy money venues quickly.

For another, many of Mr. Obama’s 2008 donors are reluctant to give again. The Obama campaign itself reported that fewer than 7% of 2008 donors renewed their support in the first quarter of his re-election campaign. That’s about one-quarter to one-third of a typical renewal rate: In the first quarter of the Bush re-election campaign, for example, about 20% of the donors renewed their support.

There are other troubling signs. Team Obama’s email appeals don’t ask for $10, $15, $25 or $50 donations as they did in 2008, but generally for $3. Nor are the appeals mostly about issues; many are lotteries. Give three bucks and your name will be put in a drawing for a private dinner with the president and first lady.

This is clever marketing, but it suggests the campaign has found that only a low price point with a big benefit can overcome donor resistance among people who contributed via mail or the Internet in 2008. It also points to higher-than-expected solicitation costs and lower-than-expected fund-raising returns.

Gee, I wonder if Obama’s embrace of the Occupy movement angered the Wall Street crowd, who were some of his biggest donors in 2008?

And, like the big spender he is, he’s also spending far faster than he’s getting donations.

The final financial challenge facing Mr. Obama’s campaign is how fast it is burning through the cash it is raising. Compare the 2012 Obama re-election campaign with the 2004 Bush re-election campaign. Mr. Obama’s campaign spent 25% of what it raised in the second quarter of 2011, while Mr. Bush’s campaign spent only 9% in the second quarter of 2003. In the third quarter it was 46% for Obama versus 26% for Bush; for the fourth quarter it was 57% versus 40%. In January 2012 the Obama campaign spent 158% of what it raised, while the Bush campaign spent 60% in January 2004.

At the end of January, Team Obama had $91.7 million in cash in its coffers and those of the DNC. At the same point in 2004, the Bush campaign and Republican National Committee had $122 million in cash combined.

And this part made me chuckle:

The Obama campaign’s high burn rate doesn’t come from large television buys, phone banks or mail programs that could be immediately stopped. It appears to result instead from huge fixed costs for a big staff and higher-than-expected fund-raising outlays. These are much tougher to unwind or delay. Left unaltered, they generally lead to even more frantic efforts to both raise money and stop other spending.

Big staff? Maybe too many cushy jobs for 2008 donors? Or maybe Obama’s just voting “present” on whether or not he really needs all those people on his campaign? And is that staff getting paid about the same as in other campaigns, or is Obama “spreading the wealth around” to his staffers?

Bottom line, Obama has angered a lot of independents who gave to him in 2008 with his policies and his rhetoric, and now they’re not willing to open their wallets to him. If the GOP can get its act together by November, we have a good chance to show Obama how hard it is to win re-election with only lukewarm support from his lefty base (even the DailyKOS affiliated PPP polling says so) and virtually no support from independents.