Last Tuesday night, as the results from Kentucky and Oregon gave both the Clinton and the Obama campaign something to feel good about, another statistic blipped up on the television. In April the Obama team had raised a further $31m (£15.8m) for its campaign. The Clintons managed $20m - and the broader financial picture was even grimmer for Hillary.
Barack Obama now has close to $38m cash in hand for the remaining campaign, compared with Clinton’s $6m. And her debts amount to $10m, not counting the $11m she lent herself. His debts are only $2m.
How did this happen? The Clintons are the biggest name in the Democratic party. Their campaign chairman, Terry McAuliffe, was once chairman of the party. In December, when Clinton was the favourite, she was able to use that leverage to persuade most big donors to go with her. She had star power and a pitch designed to appeal to Hollywood (the first female president) and to New York (she was its senator).
There is only one real answer to Obama’s financial success: the internet. What Howard Dean, a previous candidate for the Democratic presidential nomination, presaged in 2004 - when he raised $27m online for his campaign - has come to fruition only four years later with a candidate who is primed to take advantage of web power and a generation that is now used to relating, thinking, talking and meeting online.
It was one of Clinton’s many huge errors that she bypassed Silicon Valley’s fundraisers in favour of more traditional areas of Democratic support. And she missed the key element of the new politics: social networking. She was still AOL; Obama was Facebook. Clinton was the PC; Obama was a Mac.
As Peter Leyden of the New Politics Institute, an influential California think tank, says: “What’s amazing is that Hillary built the best campaign that has ever been done in Democratic politics on the old model – she raised more money than anyone before her, she locked down all the party stalwarts, she assembled an all-star team of consultants and she really mastered this top-down, command-and-control type of outfit. And yet she’s getting beaten by this political start-up that is essentially a totally different model of the new politics.”
The new model really began thanks to John McCain. His 2002 campaign-finance law ended the era of a few big donors funding party politics. The maximum legal amount of any individual donation became $2,000 in 2004 and $2,300 in this election cycle. And so the key to raising money was getting people to “bundle” together as many friends and colleagues as possible to contribute the maximum of $2,300 each.
That’s how George W Bush did it – with his “pioneers” and “rangers”: friends and supporters who could corral dozens or hundreds of friends to pitch in. The usual means were living-room fundraisers and barbecues and phone trees, often involving the candidate himself or a surrogate.
But the Obama team realised that online social networking made such physical fundraisers redundant; and it also realised that a much better point of entry wasn’t $2,300 but less than one-tenth of that: $200. It transformed its website into a social networking zone, and its appeal to the young made this strategy viral.
Last month’s $31m haul – almost all of it accrued online – is all the more impressive when you discover that 94% of it came in sums of $200 or less. A million little donors became the model.
One of the men Obama hired to set up this new effort certainly knew what he was doing: Chris Hughes is a co-founder of Facebook.
When you hear Hillary Clinton call Obama an elitist, the flood of small donations is worth remembering. Obama’s campaign has in fact been the least elitist and most democratic fundraising operation in the history of American politics. He has more than 1.5m individual donors, who come with their own e-mail address books and social networks. And since most have not donated anything like the maximum amount, he doesn’t just have a list of names to thank; he has a huge list of names to ask for more. This is a money machine unlike any other.
Joshua Green, whose definitive report on Obama’s strategy appears in the latest issue of The Atlantic magazine, points out something else: “During the month of February, for example, his campaign raised a record-set-ting $55m – $45m of it over the internet – without the candidate himself hosting a single fundraiser.”
That’s another staggering benefit of this kind of open-source, web-based operation: the personal drain on a candidate is lessened. He can spend less time at rubber-chicken dinners, fewer soul-sapping hours begging for cash on the phone, less time schmoozing possibly cheesy characters (remember how much trouble Al Gore got into in 2000?) and more time honing speeches, working on policy, engaging the media.
Obama’s trademark mass rallies must also be seen in this context. They aren’t just media draws. Everyone who wanted to get into the 75,000-strong rally in Portland, Oregon, last weekend had to provide an e-mail address.
By the time they came home from the event, an e-mail was waiting for them, asking them for money or for referrals to other friends, and encouraging them to form “affinity groups” to spread the network wider and wider.
It’s a new form of politics; it is likely to last beyond the Obama campaign and to change the shape of all campaigns to come. For Obama the new method was also bang on message. His liberalism is not a top-down, managerial variety; it’s more in line with progressive traditions of self-empowerment. A social network was the perfect medium.
I have seen this for myself. This spring, many friends who had never previously been interested in politics suddenly told me about their Obama fundraisers. I was stunned by their activism. No one had asked them. They were arranging the parties or performances or gatherings through Facebook and MySpace, without any formal leadership from Obama headquarters.
Just as Obama’s most famous web videos were never commissioned by the candidate – they were created and disseminated spontaneously online – so his fundraising began to take on a life of its own. The only other candidate who managed to inspire such energy was the maverick Republican Ron Paul. His message was not unlike Obama’s: self-empowered, antiestablishment, next-generation.
There is no question in my mind that this is the future of political organisation and fundraising.
The strongest criticism of Obama is his lack of substantive achievements in public life. He is a freshman senator, and his record is indeed thin in comparison with that of McCain or Clinton. However, if his abilities in government are in any way similar to the skills he has shown in managing – and brilliantly not managing – his campaign, then this is a candidate not to be underestimated. Clinton has been sideswiped. And, privately, most Republicans I know are terrified.
Maybe Obama’s model is a little before its time. If not, the online president of social-networking democracy is imminent. And his URL is My.BarackObama.com.