Saturday, 19 Sep 2020

How Trump's billion-dollar campaign lost its cash advantage

NEW YORK (NYTIMES) – Money was supposed to have been one of the great advantages of incumbency for President Donald Trump, much as it was for President Barack Obama in 2012 and George W. Bush in 2004.

After getting outspent in 2016, Trump filed for re-election on the day of his inauguration – earlier than any other modern president – betting that the head start would deliver him a decisive financial advantage this year.

It seemed to have worked. His rival, Joe Biden, was relatively broke when he emerged as the presumptive Democratic nominee this spring, and Trump and the Republican National Committee had a nearly US$200 million (S$273 million) cash advantage.

Five months later, Trump’s financial supremacy has evaporated. Of the US$1.1 billion his campaign and the party raised from the beginning of 2019 through July, more than US$800 million has been spent. Now some people inside the campaign are forecasting what was once unthinkable: a cash crunch with less than 60 days until the election, according to Republican officials briefed on the matter.

Brad Parscale, the former campaign manager, liked to call Trump’s re-election war machine an “unstoppable juggernaut”. But interviews with more than a dozen current and former campaign aides and Trump allies, and a review of thousands of items in federal campaign filings, show that the president’s campaign and the RNC developed some profligate habits as they burned through hundreds of millions of dollars.

Since Bill Stepien replaced Parscale in July, the campaign has imposed a series of belt-tightening measures that have reshaped initiatives, including hiring practices, travel and the advertising budget.

Under Parscale, more than US$350 million – almost half of the US$800 million spent – went to fundraising operations, as no expense was spared in finding new donors online. The campaign assembled a big and well-paid staff and housed the team at a cavernous, well-appointed office in the Virginia suburbs; outsize legal bills were treated as campaign costs; and more than US$100 million was spent on a television advertising blitz before the party convention, the point when most of the electorate historically begins to pay close attention to the race.

Among the splashiest and perhaps most questionable purchases was a pair of Super Bowl ads the campaign reserved for US$11 million, according to Advertising Analytics – more than it has spent on TV in some top battleground states – a vanity splurge that allowed Trump to match billionaire Michael Bloomberg’s buy for the big game.

There was also a cascade of smaller choices that added up: The campaign hired a coterie of highly paid consultants (Trump’s former bodyguard and White House aide has been paid more than US$500,000 by the RNC since late 2017); spent US$156,000 for planes to pull aerial banners in recent months; and paid nearly US$110,000 to Yondr, a company that makes magnetic pouches used to store cellphones during fundraisers so that donors could not secretly record Trump and leak his remarks.

Some people familiar with the expenses noted that Parscale had a car and driver, an unusual expense for a campaign manager. Trump has told people gleefully that Stepien took a pay cut when the president gave him the job.

Critics of the campaign’s management say the lavish spending was ineffective: Trump enters Autumn trailing in most national and battleground state polls, and Biden has surpassed him as a fundraising powerhouse, after posting a record-setting haul of nearly US$365 million in August. The Trump campaign has not revealed its August fundraising figure.

“If you spend $800 million and you’re 10 points behind, I think you’ve got to answer the question ‘What was the game plan?'” said Ed Rollins, a veteran Republican strategist who runs a small pro-Trump super PAC, and who accused Parscale of spending “like a drunken sailor”. “I think a lot of money was spent when voters weren’t paying attention,” he added.

Parscale, who is still a senior adviser on the campaign, said in an interview that the Trump operation invested heavily in attracting donors to erase the large advantage that Democrats had built digitally after the Obama years. “We closed that gap,” he said, crediting early spending as “the only reason Republicans are even close” in terms of online fundraising.

“I ran the campaign the same way I did in 2016, which also included all of the marketing, strategy and expenses under the very close eye of the family,” said Parscale, who was the digital director, not the campaign manager, in 2016. “No decision was made without their approval.”

Trump’s son-in-law, Jared Kushner, who has overseen the campaign from his position as a senior White House aide, had posed for a Forbes magazine cover as the person who ran the 2016 campaign soon after the election.

“Any spending arrangements with the RNC since 2016 were in partnership with Ronna McDaniel,” Parscale said, referring to the party chairwoman, “who I consider a strategic partner and friend.”

Parscale said on Twitter that the campaign spent less than US$11 million on the Super Bowl ads, after moving one of them to the postgame portion of the telecast.

Nicholas Everhart, a Republican strategist who owns a firm specialising in placing political ads, said the US$800 million spent so far shows the “peril of starting a re-election campaign just weeks after winning.”

“A presidential campaign costs a lot of money to run,” Everhart said. “In essence, the campaign has been spending nonstop for almost four years straight.”

REINING IN THE BUDGET

At the top of the whiteboard in Stepien’s office are the latest numbers on the campaign budget, and Stepien has instituted a number of changes since he was promoted from deputy campaign manager. A proposal to spend US$50 million in costs related to coalitions groups was cast aside. An idea to spend US$3 million for a NASCAR car bearing Trump’s name was discarded.

The number of staff members allowed to travel to events has been pared back to avoid what one senior campaign official described as “sponsoring vacations”.

Trips aboard Air Force One, popular because they enable aides to get face time with the president – but which have to be compensated by the campaign – have been slashed.

“The most important thing I do every day is pay attention to the budget,” Stepien said in a brief interview. He declined to discuss budget specifics but said the campaign had enough funds to win.

Most visibly, the Trump campaign slashed its August television spending, mostly abandoning the airwaves during the party conventions. In the last two weeks of the month, Biden’s campaign spent US$35.9 million on television, compared with US$4.8 million for Trump, according to Advertising Analytics.

“We held on to cash to make sure that we’ll have the firepower that we need” for Autumn, said Jason Miller, a senior Trump strategist, who contended that airing ads during the conventions would prove a waste for Biden. “We want to make sure that we’re saving it for when it really matters, when it’s going to move the needle.”

Miller defended spending money on television ads earlier this spring and summer, calling it a “tough” decision necessary to keep Trump competitive as the nation suffered through a pandemic and its economic fallout. “We had to claw our way back,” he said.

One of the reasons Biden was able to wipe away Trump’s early cash edge was that he sharply contained costs with a minimalistic campaign during the pandemic’s worst months. Trump officials derisively dismissed it as his “basement” strategy, but from that basement Biden fully embraced Zoom fundraisers, with top donors asked to give as much as US$720,000.

These virtual events typically took less than 90 minutes of the candidate’s time, could raise millions of dollars and cost almost nothing. Trump has almost entirely refused to hold such fundraisers. Aides say he does not like them.

There is some disagreement in the extended Trump operation about the depth of any potential cash-on-hand shortage. Some officials believe that plenty more money will come in during the last two months from online donors and that cutting back on TV advertising in August was shortsighted. The campaign announced a combined US$76 million haul with the party during the four days of its convention.

Others said the campaign had expected the low-dollar fundraising to continue at the same pace, and were also counting on a significant number of US$5,600 cheques, the limit for direct campaign giving, that did not materialise; that was in part because they rely on in-person events, which was more difficult with the virus.

Some spending choices appear devised, at least in part, to satisfy Trump, including the Super Bowl ads, which were purchased as part of an advertising arms race with Bloomberg. The two ads on game day cost more than the Trump campaign spent on local television through the end of July in four battleground states: Wisconsin (US$3.9 million), Michigan (US$3.6 million), Iowa (US$2 million) and Minnesota (US$1.3 million).

Another Trump-pleasing expense: more than US$1 million in ads aired in the Washington, DC, media market, a region that is not likely to be competitive in the fall but where the president, a famously voracious television consumer, resides.

Trump, who once joked he could be the first candidate to make money running for president, has steered, along with the Republican Party, about US$4 million into the Trump family businesses since 2019: hundreds of thousands of dollars to Trump’s club at Mar-a-Lago in Florida, lavish donor retreats at Trump hotels, office space in Trump Tower, and thousands of dollars at the steakhouse in Trump’s Washington, DC, hotel.

Many of the specifics of Trump’s spending are opaque; since 2017, the campaign and the RNC have routed US$227 million through a single limited liability company linked to Trump campaign officials. That firm, American Made Media Consultants, has been used to place television and digital ads and was the subject of a recent Federal Election Commission complaint arguing it was used to disguise the final destination of spending, which has included paycheques to Lara Trump and Kimberly Guilfoyle, the partners of Trump’s two adult sons.

Millions more followed to firms tied to RNC and Trump-linked officials, including more than US$39 million to two firms, Parscale Strategy LLC and Giles-Parscale, controlled by Parscale since the beginning of 2017.

Parscale said that he had “no ownership or financial interest in A.M.M.C.” and that he had “negotiated a contract with the family for 1 per cent of digital ad spend and after becoming campaign manager took no percentage.”

‘SPEND MONEY TO MAKE MONEY’

There is little question that Parscale helped the Trump campaign construct an unparalleled Republican operation to lure small donors online. He directed a nine-figure investment in digital ads and list-building that appears to have largely paid for itself. Some of the president’s advisers believe it will continue to pay great dividends in the final weeks, pointing to the US$165 million raised by the president and his party in July – more than any month in 2016.

“You have to spend money to make money,” explained Walters, the RNC chief of staff. “We have had a big increase in revenue because of early investments we made in online fundraising and direct mail.” Still, the costs of the GOP money operation have been enormous.

Since 2019, Trump, the RNC and their shared committees have spent US$145 million on costs related to direct mail, almost US$42 million on digital list acquisition and rentals (to expand their list of email addresses) and tens of millions more in online advertising for new donors.

Trump has also accumulated many costs that are unusual for a presidential reelection.

Republicans, for instance, have been saddled with extra legal costs, more than US$21 million since 2019, resulting from investigations into Trump and, eventually, his impeachment trial. The RNC also paid a large legal bill of US$666,666.67 to Reuters News & Media at the end of June. Both Reuters and the RNC declined to discuss the payment. It was labelled “legal proceedings – IP resolution,” suggesting it was related to a potential litigation over intellectual property.

There have been other squandered costs driven by Trump’s sometimes mercurial desires. He switched his convention plans twice, incurring many expenses along the way. In July, for instance, the RNC made a US$325,000 payment to the Ritz-Carlton Amelia Island near Jacksonville for the convention that never happened there. The party is not expected to get that money back.

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