The '08 Money Race

June 22, 2007 — -- As the second-quarter dash for cash enters its final week, the 2008 presidential hopefuls are asking donors big and small to open their wallets and show them the money.

The second-quarter fundraising totals, due to the Federal Election Commission by June 30, are widely regarded as a gauge of candidate electability. Political analysts say the 2008 election campaign will be the most expensive in U.S. history.

'More Money Than Ever Before'

"Candidates are raising more money than ever before," said Sheila Krumholz of the Center for Responsive Politics, which tracks candidates' fundraising money on its Web site www.opensecrets.org.

"The signals from the top-tier candidates are that they for the first time are not going to take public funding for either the primary or the general, so these factors all lead up to the fact that this will be a far more expensive election campaign than those of the past," said Krumholz.

Opting out of public funding became status quo in 2004. During that race, both President Bush and Democratic nominee Sen. John Kerry made the decision to forgo public funds made available by the FEC in order to bypass spending limits, believing they could raise more on their own.

With a wide-open field, no incumbent in the race and an historic slate of candidates, strategists argue the money race has become something of a crystal ball when it comes to who will emerge victorious in November 2008.

Romney's Fenway Park Cash Dash

The candidates are becoming increasingly creative in the ways they appeal to fundraisers for money.

Looking to continue his reign as the Republicans' fundraising king, former Massachusetts Gov. Mitt Romney has rented out Fenway Park this Sunday for a fundraising barbecue. Three hundred supporters will be given a tour of the ballpark and take part in a cookout.

"It's a unique way to get people to come and fundraise ... folks will get to visit these national landmarks while helping Mitt," said Romney spokesperson Kevin Madden.

Continuing with the sports theme, on Monday the Romney campaign set up a phone bank for supporters to Dial for Dollars at TD Banknorth Garden, the Boston sports and entertainment arena that's the home to the Boston Celtics and the Boston Bruins.

McCain Plays Catchup With GOP Rivals

Romney kicked off his '08 bid in January with a similar event at the Boston Convention and Exhibition Center where fundraisers worked the phones on a National Call Day raising $6.5 million.

The large one-day sum helped propel Romney to raise over $20 million last quarter, far more than any of his GOP rivals.

The close of the second-quarter tests whether the campaign of Republican contender Sen. John McCain can get its fundraising operation back on track after finishing third in the first three months behind former New York City Mayor Rudy Giuliani.

Clinton and Obama Battle for Cash

There is once again an intense battle brewing for first-place honors in the Democratic field between Sen. Hillary Clinton, D-N.Y., and Sen. Barack Obama, D-Ill.

While Clinton had more cash on hand during the first quarter, Obama outraised her.

As the second quarter nears to a close, Clinton's camp has been employing a frequently used campaign strategy by downplaying fundraising expectations and suggesting Obama will beat Clinton's totals.

In the final push to next week's deadline, Obama and Clinton have scheduled dueling fundraisers in Chicago Monday just a few blocks away from each other.

Downplaying Money in the Expectations Game

Reporters asked Clinton this month what it would mean for her campaign if Obama outraised her again in the second-quarter.

"It would mean nothing to my campaign. Nothing at all," Clinton replied.

Candidates and their campaign spin-doctors have been lowering expectations for how much they'll rake in, while raising expectations for their competitors' haul.

Political analysts say it's all part of the game.

"Winning the battle for campaign cash is the main goal, but winning the expectations game -- which has hit a fever pitch as the fundraising quarter comes to a close -- is a key consolation prize," said ABC News' political director David Chalian.

"If a candidate can't bring in eye-popping totals, the hope is to at least best expectations and escape scrutiny for a less than robust bank account," he said.

Edwards Pushes 'Small Change'

Meanwhile, former North Carolina Sen. John Edwards, third in the money race among Democrats, is publicly focusing on small donors in a more populist appeal for cash.

"All of us together giving small change can make big change," reads an e-mail sent to supporters Thursday by the Edwards campaign, urging people to contribute "what they can afford."

This week Edwards appeared at a $15-per-head fundraiser at a club in Washington, D.C., and explained the strategy isn't about cash, but about potential votes.

"They're important because it builds ground up support which you need in a presidential race," he told ABC News.

Investing in 2008

Clinton and Obama have also held creative, low-dollar fundraisers.

Clinton held a low-dollar $20-per ticket fundraiser this month in Washington, D.C., featuring "American Idol" runner-up Katherine McPhee, geared toward attracting women.

"That was an incredibly good model of how to expand the base of people that are invested, literally, in your campaign," said Democratic strategist Robert Weiner.

This week the Clinton campaign targeted small donors over e-mail.

"You can't win the White House with experience and wisdom alone," reads a Clinton campaign e-mail sent to supporters Thursday. "With the crucial FEC end-of-quarter deadline coming next week, joining our campaign right now with a contribution of $100, $75 or $50 will make the biggest impact on the campaign."

Obama has two low-dollar fundraising kickoff events next week in San Antonio Sunday and in Minneapolis on Friday.

Small Donations Equal Mass Appeal

Political strategists argue small dollar fundraisers have become a way to gauge a candidate's mass appeal.

"Numbers of people have become as important as size of dollar contributions," said Weiner.

This week the Obama campaign released the results of an online "dinner party" contest that asked people to make donations as small as $5 for a chance to have dinner with Obama.

"I am looking forward to sitting down with this group of four people who are representative of the millions of voices that have been drowned out by the special interests in Washington," said Obama in a press release this week.

The candidates are primarily targeting small donors through the Internet, a political strategy popularized in the 2004 race by Howard Dean.

"Before the Internet, unless you had a really good direct mail database, it didn't make sense to focus on small donor fundraising because it cost about almost as much as it brought in," said Carol Darr, director of the Institute for Politics, Democracy and the Internet.

"The Internet has changed that paradigm," she said. "It allows people to come find the candidate, rather than the candidate trying to pick the needles out of the haystack of people who would give them a small contribution."

However, Darr said those with lower incomes aren't as likely to donate online.

"Your online Internet audience is still very upper-middle class, highly educated," she said. "It's not the full spectrum of society that everybody hoped it would be with truck drivers and teachers and shopkeepers giving contributions. That still isn't the case."

Big Money Drives '08 Race

Political watchers warn not to be fooled by the public appeals for small donations. Behind the scenes, they argue, campaigns are relying on backers with deep pockets and special interest groups to fill their '08 war chests.

"Big money is absolutely driving the race at this point," said Krumholz.

Campaign finance law dictates that supporters can give a candidate a maximum of $2,300 for the primary and up to another $2,300 for the general election.

In the first quarter, the Center for Responsive Politics found that the leading '08 candidates are relying mostly on those donors giving the maximum $2,300 contribution, not the smaller contributions.

"We've tracked the sources of the funds and it's largely the same as in past cycles," Krumholtz said. "You're going to see a lot of money coming from the finance, insurance and real estate sectors."

Supporters 'Tapped Out'

Romney is attracting large sums from wealthy private equity firms because of his days running Bain Capital.

McCain is also making the rounds on Wall Street, meeting privately with financial companies.

Clinton's biggest source of cash in the first quarter was the finance sector including private equity firms and hedge funds, followed by lobbyists.

"Seventy-four percent of Clinton's donors gave $2,300 or more, maxing out for the primary," said Krumholz. "Of those people, 48 percent have maxed out for both the primary and the general. They can no longer give, she's totally tapped them out," she said.

Only 9 percent of all Clinton's donors are giving less than $200, according to an analysis by the Center for Responsive Politics.

Clinton received huge sums in the first quarter from hedge funds like Blackstone, Avenue Capital and Farallon Capitol Management.

Meanwhile, Congress is considering a new proposal for ending a tax break allowing hedge funds and private equity fund operators to sidestep billions in income taxes.

The bill has left many of the senators running for president walking a political tightrope because of the donations they receive from hedge funds.

"Sen. Clinton believes there are broad concerns surrounding private equity in relation to the rest of the market," Clinton's press secretary told ABC News this week.

Edwards has had more success with small donors than Clinton. Fourteen percent of his donors in the first quarter have given $200 or less.

"But still, nearly 50 percent of his donors are giving $2,300, maxing out for the primary," said Krumholz.

Politics, Money and Ethics

Edwards has recently come under fire for the campaign money raised by the nonprofit poverty center he started in 2005: the Center for Promise and Opportunity.

The New York Times reported Friday that the nonprofit allowed Edwards to travel to New Hampshire and other states with early nominating contests, increasing his profile and political capital prior to his declaration of intent.

Political analysts argue there are ethical issues when so many candidates are getting big money from the wealthiest members of society.

"Whether the motivation is personal or economic or ideological, donors who are maxing out, giving significant money or raising significant money, those who are bundling on behalf of the candidate, are usually looking for something," said Krumholz.

Krumholz cautions: "It may just be a seat at the table but often it's something more tangible."

ABC News' Jonathan Greenberger, Eloise Harper, Tahman Bradley, Nik Bonovich and Jordan Hultine contributed to this report.