Cash And Kerry: Will There Be Enough?

Some deep-pocketed new donors may give him a fighting chance against Bush's massive war chest

With his big Feb. 10 wins in Virginia and Tennessee, John F. Kerry has all but clinched the Democratic nomination for President. But the end of the ground war of primaries and caucuses, where the Massachusetts Senator has scored 12 wins in 14 contests, just means the battleground is shifting -- and neither Kerry nor his campaign donors can relax. Now comes the money war against President George W. Bush, and Comeback Kerry is going to have to battle from behind once again.

Conventional wisdom says he can't. Sure, Kerry's campaign raised $5.5 million between his breakthrough victory in Iowa on Jan. 19 and Feb. 10 -- and is flush for the first time since December, when he mortgaged his Boston home to lend his troops $6.4 million. But Bush's coffers make Kerry's cash look like chump change: Bush has $100 million left from the $132 million his campaign raised in 2003, and is likely to amass another $50 million between January and the Aug. 30 start of the GOP convention. That lets Bush fill the airwaves with ads that try to define the Democratic standard-bearer as a Northeastern liberal -- while Kerry may have to ration his funds, or borrow against the public money he'll get as of Aug. 1. "It will be very difficult to catch Bush in terms of the head start he has in his donor base," says Anthony J. Corrado Jr., a Colby College government professor who studies campaign cash.

Kerry, like Bush, has renounced public funding for the primary portion of the race. So the Democrat -- whose decision to go it alone last December was seen as a desperate bid to counter Howard Dean's Web-based money machine -- won't face limits on his pre-convention fund-raising or spending. While neither has publicly said so, Kerry and Bush are expected to accept public funds for the general election, during which they must refrain from raising or spending private money. But there Bush has a definite advantage. Because the Dems' July 26-31 convention is a full month before the GOP confab, Kerry must stretch over three months the $75 million he'll receive in public money for the race's general-election phase. Bush, meanwhile, will have an extra month in which to spend his primary cash hoard, and will need only to stretch his $75 million public kitty over two months.

SILICON VALLEY FANS. Still, the funding picture for Democrats may not be that bleak. Democratic wallets have been wide open throughout the nomination fight: The 10 candidates collectively raised $140 million during 2003, $8 million more than Bush. Democratic donors are energized by the challenge of unseating the President. So-called Kerry rainmakers -- media moguls, tech execs, and Wall Streeters who have already raised $50,000 apiece -- are angling to bring in a whole lot more. Among them: Hollywood titans Peter Chernin, president of News Corp. (NWS ), and Sherry Lansing, chairman of Paramount Pictures Corp., and Silicon Valley notables Chris Larsen, the CEO of E-Loan Inc. (EELN ), and Wade Randlett, CEO of Web consulting firm Dashboard Technology.

Corrado estimates Kerry could raise $40 million to $50 million from the Dems' existing donor base. Less than half of Kerry's givers gave the $2,000 limit, so they'll be tapped again. Dems who gave to rivals are also free under campaign-finance laws to give $2,000 to Kerry. And those who maxed out with a $2,000 Kerry donation can pony up another $2,000 to cover legal and accounting expenses.

Already, Kerry's front-runner status is helping channel donations his way. Says E-Loan CEO Larsen: "A lot of the people who had been behind other candidates are rallying around Kerry." Union funders who had backed Dean and Representative Dick Gephardt (D-Mo.) are jumping aboard. And Richard S. Ziman, CEO of Los Angeles-based Arden Realty Inc. (ARI ), says he's been "getting calls out of the blue" from people eager to donate. He was set to host a Feb. 12 fund-raiser and expected to draw 250 people paying $1,000 apiece -- even without the candidate there.

Up in Silicon Valley, "Kerry has the deepest and broadest support" of any Democrat, says Simon Rosenberg, president of the moderate New Democrat Network. Californians have kicked in slightly more money than Kerry's home-state backers. On Feb. 11, at a San Francisco fundraiser in Pacific Heights, songstress Carole King was to serenade some 125 Kerry supporters, each of whom had bunded $10,000 in donations in 10 days.

WEB HITS. Kerry's even doing better than expected with Web donations. Prior to his Iowa win, his best Internet haul in one day was about $50,000, says campaign spokesman Michael Meehan. The day after Iowa, the Net delivered $365,000 to his campaign. Another $500,000 came in between Feb. 5 and Feb. 10. Altogether, Net donations have exceeded $4 million.

Democrats are feeling optimistic about party funding, too, despite the McCain-Feingold campaign-funding law's limits on big checks from fat cats. Under the 2002 law, individuals can give $25,000 apiece to the Democratic National Committee. The party has raised over $10 million, and is expected to start spending it on Kerry's behalf at the end of March.

Dems are also counting heavily on some new players. Free-floating independent committees -- called 527s after the section of the Internal Revenue Code that governs them -- can raise and spend unlimited funds. One of the biggest, America Coming Together, was created to turn out Democratic voters and had a yearend kitty of about $12.5 million, of which some $5 million came from financier George Soros. The Media Fund, which will unleash TV ads prior to the general election to support the Democratic nominee, is aiming to raise $95 million. The 527s' only constraint: They can't coordinate their activities with the Kerry camp, such as which message to broadcast and in which media markets.

What's opening Democratic checkbooks, from Boston to Beverly Hills, is a burning urge to beat George Bush. The Dems' donors may not be able to match the deep pockets of the GOP's business backers. But they're likely to dig deep enough to give Kerry at least a fighting chance in the money war.

By Paula Dwyer and Lorraine Woellert in Washington, with Rob Hof in San Mateo, and Christopher Palmeri in Los Angeles

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