McCain Campaign Struggling, Reduces Staff

The presidential campaign of Sen. John McCain, R-Ariz., is in trouble. Once considered a front-runner for the GOP nomination, he is now in a corner, forced to make major staff cuts and organizational restructurings just to stay in the race.

The McCain campaign announced today it raised just $11.2 million in the second quarter of this year, well below its first quarter take of $13.1 million, and well below expectations. In a conference call with reporters, campaign manager Terry Nelson said it is a "difficult fundraising environment right now."

That understates the problems for the McCain campaign. By advisers' own admissions, McCain has "taken a pounding on Iraq, and taken a pounding on immigration," both issues where he supports the president. Now the campaign is laying off staff in every department. Senior staff is taking a pay cut, and campaign manager Terry Nelson is working for free. You could hear the dejection in phone calls with staff today.

GOP pollster Kellyanne Conway said McCain has a real problem with conservatives. "His problem isn't that voters don't know him, but that they do," she said. "He has been a full-throated supporter of immigration reform," which is extremely unpopular among GOP voters.

After it came in third in GOP fundraising the first quarter, the McCain camp said it would reorganize and do better. Clearly that effort did not work out. Chief strategist John Weaver said, "We made some incorrect assumptions about how much money we would raise."

Again, an understatement. The McCain camp had counted on raising more than $100 million in 2007. Now it says it will not reach that goal. The campaign has just $2 million on hand now, facing the financial juggernauts of Republicans Mitt Romney and Rudy Giuliani. The campaign would not say how much debt it is currently carrying.

McCain has received donations from just 72,000 people; compared to more than 250,000 for new fundraising star, Sen. Barack Obama, D-Ill.

Strategist John Weaver said the campaign will now consider accepting federal matching funds in the primaries. That means the federal government will essentially match the first $250 of every donation. Right now, McCain would be entitled to about $6 million in federal funds. However, candidates that accept federal funds are restricted by national and state spending limits of just over $50 million. That total is likely to be much less than than the amount spent by other candidates.

Campaign aides say by taking the draconian measure now, it will mean that McCain still has enough time to compete. One slight change of focus will be an even greater emphasis on the early primary states of Iowa, New Hampshire and South Carolina. "The Republican nomination will be decided by what happens in the early primary states," said Weaver.

McCain himself will begin the next stage of the campaign when he returns from a trip to Iraq later this week. Campaign aides swear he is not getting out of the race. But one GOP insider said McCain has an image problem that might be tough to overcome, as "he seems frail, and old, and yesterday's news."