Campaign Crawlers

Gingrich and the ‘Money Power’

Will campaign debt lead Newt to make a deal with Romney?

By 4.6.12

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Palm trees swayed in a warm Florida breeze one afternoon in late January while we awaited the candidate's arrival. Four TV satellite trucks were parked outside the terminal at Page Field in Fort Myers, and I was among two-dozen or so journalists waiting in the airport parking lot where about 300 supporters of Newt Gingrich were gathered to greet the man who, just nine days earlier, had defeated Mitt Romney in the South Carolina primary.

On Monday, Jan. 30, the day before the Florida primary, the omens were clear enough that Gingrich was about to be defeated in the Sunshine State, but none of Newt's supporters that afternoon in Fort Myers seemed to suspect that the former House Speaker's campaign was on the verge of a catastrophic collapse. Nothing reported by the news media prepared them for the disasters that swiftly followed Gingrich's Florida defeat -- his Nevada meltdown and his fourth-place February finishes in Minnesota, Maine, and Michigan -- leading up to his March 6 wipeout, when Newt won only his home state of Georgia out of 10 contests on "Super Tuesday." This electoral implosion seemed to happen in slow motion, but it was astonishingly swift in comparison to the long uphill slog that had preceded it. Gingrich had announced his candidacy in May 2011 and campaigned for six months before pulling ahead of Romney in national polls in mid-November. Two months later -- after being buried in Iowa by a barrage of attack ads -- Gingrich re-emerged as the victor Jan. 21 in South Carolina. But then it all fell apart in the span of seven weeks, so that on March 13, despite an all-out effort, Newt was defeated in Mississippi and Alabama, which his campaign spokesman had previously described as "must win" states.

None of those impending humiliations seemed foreshadowed on that sunny Monday before the Florida primary, when hundreds gathered in the parking lot at Page Field to welcome Gingrich to Fort Myers. Newt was still the front-runner, the Jan. 30 Real Clear Politics average of national polls showing him with 30.3 percent to Romney's 27.8 percent. While the polls in Florida clearly indicated that Romney would win the Sunshine State, the conventional wisdom on the eve of the primary was that the fight for the GOP nomination had now come down to a two-man race between Mitt and Newt. Rick Santorum, who narrowly won the Iowa caucuses Jan. 3, had seemingly failed to capitalize on that victory, barely edging out Gingrich for fourth place in New Hampshire and then placing a distant third in South Carolina. Santorum cut short his Florida campaign for a trip home to visit his 3-year-old daughter, who had been hospitalized with pneumonia, and most of the pundits were ready to write off the former Pennsylvania senator.

As had so often been the case in the long 2012 campaign, however, the conventional wisdom was wrong. Today, when Newt's presidential hopes have evaporated and conservative leaders are reportedly seeking some way Santorum can still stop Romney from becoming the Republican nominee, it is possible to look back to that January afternoon in Florida and see how badly the pundits were mistaken.

Santorum's low-budget campaign, which had made it through 2011 with just $2.1 million in contributions, proved more resourceful than Gingrich's better-funded operation, which had collected about $12.7 million in 2011. Federal Election Commission reports showed the Gingrich campaign began January with more than $2.1 million cash on hand, compared to less than $280,000 for Santorum. When those reports became public at the end of January, many observers concluded that Newt was best positioned to go the distance against Romney's big-money organization -- a perception that the Gingrich campaign was eager to amplify. On Jan. 31, the day of the Florida primary, Newt's spokesman announced that the campaign had raised $10 million in the final three months of 2011 and another $5 million in January. This was true, and anyone could see from the FEC report released that day how much Gingrich had raised in 2011, but the official report for January wasn't due until Feb. 20. A CBS News reporter noted at the time that Gingrich's spokesman "did not, however, provide an amount for the campaign's cash-on-hand." So the question of how fast Newt's campaign was spending its money -- the "burn rate" -- in January would remain unanswered for another three weeks. No one seemed to realize at the time that Gingrich's burn rate was unsustainable, although the signs should have been obvious that Monday at the airport in Fort Myers.

Driving to Gingrich's rally that afternoon, I had listened to Rush Limbaugh's radio program and remarked on my blog that "the commercial breaks were pretty much wall-to-wall attack ads, Mitt vs. Newt and Newt vs. Mitt. It seemed as if the anti-Newt ads were the majority." In fact, Romney's campaign and its allied "super PAC" were outspending Gingrich and his super PAC more than 3-to-1on advertising in Florida. Newt's forces could ill afford the reported $2.2 million they spent on ads in the Sunshine State, and they were also spending big money for the candidate to travel across Florida for campaign events in a state where polls clearly indicated Gingrich would lose by a double-digit margin. On that Monday before the primary, Newt and his entourage were flying around Florida aboard a 16-seat Gulfstream jet for five rallies -- in Jacksonville, Pensacola, Tampa, Fort Myers and Orlando -- which drew a combined attendance estimated at less than 1,500.

The Fort Myers event may have been the best-attended stop on Gingrich's tour that day. The crowd at Page Field warmly applauded Newt and his guests, former presidential candidate Herman Cain and nationally syndicated radio talk-show host Michael Reagan, but Gingrich's speech was notable for his resentful remarks toward Romney. Newt spoke of himself as leading a "grassroots populist" effort against Mitt and the "Establishment" in a battle between his campaign's "people power" and Romney's "money power." Gingrich gave his supporters a conspiracy-theory explanation of the Romney campaign's fundraising advantage. Goldman Sachs and other Wall Street financial interests that had accepted federal bailout money were now paying for Mitt's negative campaign ads, Gingrich said. "Those ads are your money recycled to attack me," he told the Fort Myers crowd, promising that as president he would demand a "thorough audit" to find out "where the money went."

No one in the Fort Myers audience seemed worried about where Newt's money was going, which eventually proved a far more serious problem. Three weeks later, when the Gingrich campaign filed its next FEC report on Feb. 20, the campaign reported that while it had received $5.6 million in January, it had spent $ 5.9 million -- an average of $190,000 a day -- even while the campaign's debt was increasing. Although Newt's campaign had entered 2012 with $2.1 million cash on hand, it had also begun the year with $1.2 million in unpaid bills, so that the net balance was $900,000. In January, however, even while the Gingrich campaign's expenses were outstripping contributions by $320,000, Newt also added another $527,000 in new debt. Thus, while his FEC report showed Gingrich ended January with about $1.8 million cash on hand, this amount exceeded the campaign's total debt by only $62,505.

Furthermore, although there was no way to know it at the time, Newt's fundraising had already passed its peak. On Jan. 22, the day after he won the South Carolina primary, Gingrich collected more than $400,000, the peak of a nine-day period (Jan. 19-27) when the campaign's contributions averaged about $198,000 a day. But his fundraising slumped slightly after Newt fared poorly in two Florida debates (Jan. 23 in Tampa and Jan. 26 in Jacksonville), then dropped sharply after Romney defeated Gingrich by 14 points in the Florida primary.

During the first seven days of February, contributions to Gingrich's campaign averaged less than $64,000 a day and, during the next seven-day period of Feb. 8-14, dropped below $35,000 a day-- a disastrous decline for a campaign that had been spending more than it took in even during its fundraising peak. Still, during those weeks when Newt was losing caucuses in Nevada Feb. 4, Colorado and Missouri on Feb. 7, and Maine on Feb. 11, no one outside the Gingrich campaign realized how bad their financial situation had become. Newt's unsustainable "burn rate" in January drew little notice when his FEC report for the month was made public on Feb. 20. Another month went past before the publication of Gingrich's February report showed that the campaign was essentially bankrupt, owing more debt than it had cash on hand.

From late January until the Tuesday before the March 24 Louisiana primary, Newt's campaign maintained an illusion of financial viability. We are still two weeks away from the publication of the next FEC reports that will reveal how much worse the situation got before March 27, when Gingrich announced the exit of his campaign manager and a third of his staff. The spin from Newt's spokesman was that this "redesigned" campaign was still aiming to go "all the way to Tampa," but it seems highly unlikely Gingrich will make it to the August GOP convention on his own dime. Newt suffered another embarrassment yesterday when a health-care think tank he created in 2003, the Center for Health Transformation, filed for Chapter 7 bankruptcy. His campaign pointed out that Gingrich ended his role in the center when he launched his presidential bid in May, but its bankruptcy was still a public-relations debacle, prompting University of Georgia political science professor Charles Bullock to joke, "While health-care costs have bankrupted many without insurance, Gingrich may be the first to go broke studying health-care delivery."

ALL OF THIS BACKGROUND is necessary to understanding the end game for what is left of Gingrich's campaign. According to a New York Times account of a Thursday meeting between Santorum and conservative leaders, "the discussion focused on how Mr. Santorum could win the race and what role Mr. Gingrich might play." However, it was reported last week that Newt met secretly with Romney the morning of the Louisiana primary. The prospect that Gingrich could be persuaded to drop out and throw his support to Santorum -- who must win the April 24 primary in Pennsylvania to keep his campaign alive -- therefore appears remote. If Newt's campaign is now deeply in debt, it is far more likely he would endorse Romney in exchange for a promise of future financial assistance rather than to risk alienating the Republican Party leadership by backing Santorum's underdog campaign.

The clock is ticking, and we are today two weeks away from the FEC report that will disclose just how bad the Gingrich campaign's financial plight became in March. Whatever bargaining power Newt has will almost certainly expire once that April 20 report becomes public. Romney could decide he can finish off Santorum without Gingrich's help, and leave Newt to pay off his own campaign debts. We are therefore likely to learn pretty soon whether the man who called himself a "grassroots populist" in Florida is now willing to make a deal with the "Establishment" and its "money power."

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About the Author

Robert Stacy McCain is co-author (with Lynn Vincent) of Donkey Cons: Sex, Crime, and Corruption in the Democratic Party (Nelson Current). He blogs at The Other McCain.