Is Hillary having money troubles?

I found a couple of stories, over the past couple of days, that concern Senator Hillary Clinton's campaign financing. I would say that they show some very serious problems within the Clinton campaign. The first story is how Hillary loaned her campaign $5 million dollars. From the Washington Post:

Sen. Hillary Rodham Clinton (N.Y.) loaned her presidential campaign $5 million at the end of last month, a cash infusion sure to stoke speculation that her once-vaunted fundraising operation is losing steam.

During a news conference at her campaign headquarters this afternoon, Clinton said the loan was "my money," and declined to say if she would put in more money. "I loaned it because I believe very strongly in this campaign," she said.

Communications director Howard Wolfson said, "The loan illustrates Senator Clinton's commitment to this effort and to ensuring that our campaign has the resources it needs to compete and win across this nation," adding that "We have had one of our best fundraising efforts ever on the web today and our Super Tuesday victories will only help in bringing more support for her candidacy."

Wolfson offered no comment when asked whether the loan was a one-time deal or whether Clinton was leaving open the option to again dip into her -- and her husband, former President Bill Clinton's -- personal wealth.

Wolfson confirmed that "some senior staff" including campaign manager Patti Solis Doyle have "voluntarily chosen to work without pay this month" but would not offer any other names.

The revelation of the loan comes against a fundraising backdrop in which Clinton finds herself, somewhat amazingly, the underdog to Sen. Barack Obama (Ill.). Obama raised better than $32 million last month alone -- dwarfing the $13.5 million Clinton collected in the same time frame.

Both candidates raised better than $100 million in 2007, but Obama's small dollar donor base was considerably wider, allowing him to continue to raise scads of campaign cash as the race goes along.

Heading into yesterday's Super Tuesday vote -- in which 22 states offered a split decision on the Democratic race -- both the Obama and Clinton campaigns were spending freely in hopes of securing the momentum today. The candidates largely fought to a draw, which, given Obama's current financial superiority, may well wind up as a victory for him when the history gets written.

Even as the dust settled on Super Tuesday, the practical effect of Obama's seeming financial advantage were being seen. The Illinois senator is on television already in all nine states -- Louisiana, Washington, Nebraska, Maine, D.C., Virginia, Maryland, Hawaii and Wisconsin -- that vote between this Saturday and Feb. 19. As of this morning the Clinton campaign was not yet on television in any of those states, although there could be ad buys going on as we type.

How Clinton's loan fits into the overall campaign narrative is hard to say. On the one hand, voters tend to be unconcerned about where a candidate's campaign cash comes from and aren't likely to be following the story all that closely. If Clinton needed the money to ensure much needed wins in places like California, New Jersey and Arizona, then it was money well spent.

On the other hand, Clinton's loan could well be painted as a sign that the campaign is struggling to stay competitive with Obama financially with a drawn out nomination fight still to come. If that story line comes to dominate, it could upset the current 50-50 balance of the race coming out of Feb. 5.

And here is the WaPost video of Clinton admitting to the loan:



Now there are some very interesting details to talk about in this story. The first big detail is the campaign contributions collected in January, where Barack Obama raised an incredible $32 million dollars. This sum certainly dwarfs Clinton's $13.5 million collection during the same month. With Obama's huge fundraising lead, he has a greater ability to target his own political advertising into multiple delegate-rich states to attack Clinton's lead, and to increase his own exposure and message to Democratic voters. Consider this detail in the WaPost story:

Even as the dust settled on Super Tuesday, the practical effect of Obama's seeming financial advantage were being seen. The Illinois senator is on television already in all nine states -- Louisiana, Washington, Nebraska, Maine, D.C., Virginia, Maryland, Hawaii and Wisconsin -- that vote between this Saturday and Feb. 19. As of this morning the Clinton campaign was not yet on television in any of those states, although there could be ad buys going on as we type.

The Obama campaign is already targeting television advertising in nine states, while the Clinton campaign has yet to respond to these ads. This is not a position that Clinton wants to be in, having to defend states that she has a lead in, while not being able to attack Obama-leaning states. And with an $18 million difference in the fundraising between Obama and Clinton, it is no wonder that Clinton loaned her campaign $5 million in a short-term attempt to shore up her financing.

Now there is another important story to look into regarding Clinton's financing. It appears that some Clinton staffers are now working without pay. From MSNBC News:

WASHINGTON - Some of Hillary Rodham Clinton's campaign staff have voluntarily chosen to work without pay this month, NBC News confirmed Wednesday.

Super Tuesday's mixed outcome has set up at least four weeks of frenzied delegate hunting for Clinton and Barack Obama, pitting his well-financed all-terrain campaign against her big state strategy.

Clinton faced a serious cash crunch going into Tuesday's multi-state vote due to overspending in Iowa, a source within the campaign told NBC News. Staffers blamed campaign manager Patti Solis Doyle, who was among those working for free, the source said.

Take this story of campaign staffers going without pay, plus the story of Hillary Clinton loaning $5 million to her campaign, and you have got a situation where the Clinton campaign is heading into a cash crunch--just as they have won the big Super Duper Tuesday states of New York and California, and are ahead in the delegate count. Again, this is going to hurt Clinton in where she targets her limited resources into states she hopes to win. Consider this from the MSNBC News story:

Buoyed by strong fundraising and a primary calendar in February that plays to his strengths, Obama plans a campaign blitz through a series of states holding contests this weekend and will compete to win primaries in the Mid-Atlantic next week and Hawaii and Wisconsin the following week. His campaign raised $3 million Wednesday in online contributions, a source from the Obama campaign told NBC News.

Clinton, with less money to spend and less confident of her prospects in the February contests, will instead concentrate her efforts on Ohio and Texas, large states that hold primaries March 4 and where polling shows her with a significant lead. She even is looking ahead to Pennsylvania's primary April 22, believing a largely elderly population there will favor the former first lady.

The Clinton campaign is concentrating its efforts in Ohio and Texas, whereas Obama is blitzing through states. The MSNBC story also reports that the Clinton strategists have "largely written off her chances of winning the so-called Potomac primary Feb. 9, given the large black populations in Virginia, Maryland and D.C." Again, this shows the lack of resources that the Clinton campaign has in not being able to selectively attack these Potomac primary states as a means of peeling away voters from the Obama camp.

One final thought on this story. And this is really about the message to Democratic voters. Obama has been running his campaign on a message of change. And this message has really galvanized and excited the Democratic voters--far more than Clinton's message of leadership and experience. What is more, this is a message that excited, not just minorities, but also young people to the Obama campaign. And I will say that is also making young and new Democratic voters to contribute small amounts to the Obama campaign. Consider this detail from MSNBC:

An analysis by the Campaign Finance Institute, which tracks trends in political money, found that Obama raised about a third of his money in 2007 from donors who gave $200 or less. Only one-third of his money came from donors who have given the legal maximum of $2,300, compared to Clinton who raised about half of her money from "maxed out" donors and only 14 percent from donors of $200 or less.

Obama is raising money from small donors, where "about a third of his money in 2007 from donors who gave $200 or less." This is important because Obama will have a large database of these small donors to continue soliciting contributions from. Even more important, if these donors are excited about Obama, they are going to spread the word for Obama, giving Obama an even greater access to new donors. Clinton's campaign has been getting money from big campaign contributors, where about half of her money is from "maxed out" donors who have given the $2,300 to the campaign. Only 14 percent of donors have given the Clinton campaign $200 or less. The Clinton campaign has been getting their financing from the big contributors. Those contributors are maxing their contributions out--they can't give any more money to the Clinton campaign. Hillary Clinton will need to find some way of increasing the amount of contributions from her small donors, or increasing the number of small donors giving to her campaign. I don't know if she can do that in such short time, and with the small donors gravitating towards the Obama campaign.

The financing race continues on.