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McCain is slipping in money race

He cuts staff and thinks of taking federal funds after failing to equal even his disappointing first-quarter take.

July 03, 2007|Dan Morain and Michael Finnegan | Times Staff Writers

Sen. John McCain disclosed Monday that he raised $11.2 million in the second quarter of 2007 -- significantly shy of what he raised in the first 90 days of the year -- setting off a round of staff cuts and fueling perceptions of a troubled campaign.

The Arizona Republican, once thought to be the front-runner for the GOP presidential nomination, also is considering use of federal matching funds -- a step that no other top-tier candidate in either party has taken.

Although a quarterly tally of $11.2 million would have been eye-popping in past elections, it falls far short of expectations. The campaign had anticipated being able to raise $100 million this year, but through the first six months, it remains just under $25 million.

McCain reacted by cutting his staff for the second time. He ended the first half of the year with $2 million in the bank -- about enough to air television ads for maybe two weeks in the early voting states of Iowa, New Hampshire and South Carolina.

His aides did not disclose his level of debt. McCain had $1.8 million in unpaid bills earlier this year.

McCain probably has fallen even further behind other top Republicans in the money race, though former New York Mayor Rudolph W. Giuliani and former Massachusetts Gov. Mitt Romney have not yet disclosed their second-quarter totals. Former Tennessee Sen. Fred Thompson won't have to disclose what he has raised until mid-October, assuming he announces his candidacy in mid-July as expected.

Democratic contenders Sens. Barack Obama of Illinois and Hillary Rodham Clinton of New York raised $32.5 million and $27 million respectively in the second quarter.

McCain raised a disappointing $13 million in the first 90 days of the year, prompting him to shake up his fundraising operation. The latest shake-up was more dramatic as he laid off some campaign aides and cut salaries for others.

"We confronted reality and we dealt with it in the best way that we could so that we could move forward," McCain campaign manager Terry Nelson said in a conference call with reporters.

Although Nelson would not confirm the depth of the cuts, others familiar with the McCain operation said roughly 50 staffers were being let go. McCain once had 150 paid staffers.

Nelson also disclosed that McCain was contemplating taking federal matching funds to help pay for his presidential quest. No other major candidate is considering accepting matching funds. Indeed, taking the funds could be viewed as a sign of weakness.

McCain's quest "is certainly getting close to toast. It is browning on the edges," said political scientist Bruce Cain, director of the University of California Washington Center in the nation's capital.

"He has gone from being heir apparent to apparently having no air," Cain said.

Under the federal formula, McCain could collect no more than $21 million in federal funds. To receive the maximum grant, he would need to attract at least 84,000 donors of $250 or more.

Additionally, he would be required cap his overall primary spending at $50 million. Other top candidates are declining matching funds for the primary because the state-by-state and overall spending caps are viewed as too restrictive.

Any candidate seeking federal primary funds would have to wait until Jan. 2 to collect a check. However, the account, which is filled by income-tax payers' voluntary checkoffs, would not have sufficient money to cover primary costs, at least not initially, Federal Election Commission spokesman Bob Biersack said.

McCain or other candidates would have to accept a voucher against which they could obtain a bank loan, to be repaid once Uncle Sam had enough money to pay the candidates.

"The McCain effort is probably not going to go the distance. When does it expire? I don't know," said former California GOP Chairman John S. Herrington, a Giuliani backer, who was Energy secretary under President Reagan. "This is not looking good."

Herrington and others attribute McCain's money problems to his stands over the years that have inflamed Republican stalwarts. One is sponsorship of campaign finance overhaul. Another is his support for immigration legislation that stalled last month. Another is his past tangles with President Bush.

"That is not to say he isn't a great guy and a patriot. But he is a tough sell," Herrington said.

Although some experts say McCain still could recover, there is little question he has failed to become the establishment candidate. Nonetheless, he has rallied several of President Bush's big-money supporters.

Billionaires Donald Bren of the Irvine Co. and A. Jerrold Perenchio, formerly chairman of Univision, are leading national fundraisers for McCain. His national fundraising chairman is Thomas Loeffler, a Texas attorney and lobbyist who was one of Bush's largest bundlers of campaign money.

Republican discontent with Bush and the war in Iraq, which McCain has largely backed, are among the factors making fundraising difficult.

"It is challenging [for us], and it's challenging for all the Republican candidates," said Gary Hunt, one of McCain's California fundraisers.

Hunt noted that past GOP presidential candidates such as former Texas Gov. John Connally and former Texas Sen. Phil Gramm raised large sums but failed to win over voters.

"Money certainly is an indicator," Hunt said. But citing some favorable polling results, Hunt added: "I still believe John McCain has a message" that will resonate.

dan.morain@latimes.com

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