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Posted Monday, October 20, 2008 2:17 PM

The Meaning of Obama's New Money Advantage

Andrew Romano

 

When Barack Obama recently announced that he'd shattered the single-month money record by raising $66 million in August, we said we were "impressed." But we also noted that to keep pace with John McCain and the Republican National Committee, "Obama and the DNC must rake in another $200 million or so before Nov. 4, which divies up as $100 million per month--or $17 million more than the $83 million they raised together in August." Our conclusion? The Illinois senator "still has a lot of work to do."

Well, the latest stats just trickled in, and it looks like Obama has done it. And then some. On Sunday morning, Obama campaign manager David Plouffe emailed supporters to announce that Democratic nominee had raised a shocking $150 million in September, more than doubling the previous monthly record and bringing his total take to about $604 million. To provide some perspective, that nearly matches the amount raised by all of 2004's major-party candidates--combined. (All told, Obama has raised an average of less than $100 from 3.1 million Americans.) Coupled with the DNC's healthy haul--$50 million total; $27.4 million in cash on hand--Obama's staggering September should propel the Democrats past McCain and the RNC for the first time, well, ever. As of Oct. 1, the Republicans had $124 million in the bank--$47 million in McCain's coffers and $77 million at the RNC. That's a lot of money. But given that Obama started September with $77 million on hand, it's safe to assume that he and the DNC finished the month (after spending was subtracted) with a war chest worth between $125 million and $175 million. [UPDATE: The final number is $160 million.] Most importantly, Obama controls between $100 million and $150 million of that pot. [UPDATE: $133 million.] McCain, meanwhile, is free to spend only a third of the Republican kitty.

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The money gap has been especially evident since the start of October. Between Sept. 30 and Oct. 6, Obama dropped about $20 million on television advertisements in 17 battleground states; the next week, he increased his outlay to $32 million. McCain, on the other hand, spent only $10 million on ads in 14 states during the second week of October, while the RNC chipped an additional $6 million. As a result, Obama is currently doubling the combined McCain-RNC TV budget--and directly outspending his rival more than three-to-one on the airwaves. (CMAG, a service that monitors political advertising, predicts Obama’s general election advertising campaign will surpass the $188 million George W. Bush spent in his 2004 campaign by early next week.) How does this affect the electorate? Take health care. Neither candidate has spent a ton of time talking about the issue. But Obama has flooded national TV markets with a series of (not always accurate) ads that characterize McCain's market-based plan as "radical" and accuse him of planning "drastic cuts to Medicare"--and McCain hasn't ponied up for a response.  Which may be why 54 percent of voters surveyed earlier this month by the New York Times and CBS News said they weren't confident McCain would "make the right decisions on health care." Only 10 percent said they were "very confident" he would.

Ultimately, the new cash disparity gives Obama a major messaging advantage. In public, the Illinois senator can appear to float above the fray. But in the privacy of America's living rooms, he can frame McCain's plans however he wants--dangerous, erratic, radical, out of touch, whatever. “What Obama is doing is being his own good cop and bad cop,” CMAG's Evan Tracey recently told The New York Times. Given the economic instability and the dismal political environment for Republicans, McCain can't afford to let his rival define him. But right now, it's looking like he can't afford not to, either.

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Member Comments

Posted By: Clatech (October 24, 2008 at 8:23 AM)

The New York Times reports some of that $150,000,000 donated to Obama in September came from fake donors. Maybe some of that Arab oil money being re-invested? At least in the past elections were bought by Americans who had an interest in their own country’s stability.


Posted By: mariat (October 23, 2008 at 8:11 PM)

I smell fraud.

Anyone who has donated under these ridiculous and obviously bogus names has something to hide.  If the Obamaman has nothing to hide, what's the big deal about disclosing????

If this were McCain, he'd be fried by the media and the Dems.  This is all one sided!!!!

As an Independent, I am voting for McCain.  Obama will absolutely not help me or this country.  His "tax breaks" will put us into a depression.  


Posted By: sweggen (October 23, 2008 at 7:50 PM)

Not that you give a rats patutey...but here's the truth:

Obama Ignores Credit Card Donation Fraud

Tuesday, October 21, 2008 10:01 PM

By: Kenneth R. Timmerman  Article Font Size  

What do Bart Simpson, Family Guy, Daffy Duck, King Kong, O.J. Simpson, and Raela Odinga have in common?

All are celebrities; and with the exception of Odinga and O.J. Simpson, they also are fictional characters. And yet, all of them gave money earlier this month to the campaign of Barack Obama, without any apparent effort by the campaign to screen them out as suspect donors.

The Obama fundraising machine may owe its sensational success in part to a relaxation of standard online merchant security practices, which has allowed illegal donations from foreign donors and from unknown individuals using anonymous “gift” cards, industry analysts and a confidential informant tell Newsmax.

An ongoing Newsmax investigation into the Obama campaign’s finance reports has exposed multiple instances of campaign finance violations and has been cited in a formal complaint to the Federal Election Commission filed by the Republican National Committee on Oct. 6.

Though many of the known violations include donations in excess of the $2,300 per election limit on individual contributions and contributions from foreign nationals, the extent of the amount of fraud is hidden because of a loophole in federal election law.

Campaigns are not required to disclose contributors who donate less than $200 — and Obama’s campaign refuses to release their names, addresses, and donation amounts. Obama has collected a staggering $603.2 million. Most of the money — $543.3 million — has come from individual contributors, half of it from “small” donors Obama won’t disclose.

The Obama campaign has turned a blind eye to the possibility of donor fraud. Reportedly, during the heated primary battle with Hillary Clinton, the Obama campaign “turned off” many of the security features on its online donor page, allowing any person with a valid credit card number to donate using any name or address.

Typically, card merchants require a cardholder’s name to match critical personal details, such as an address or, at the least, a ZIP code.

Though in recent months the Obama campaign has tightened up security and restored some of the security features used by merchants to weed out fraud, it still has left open easy ways for potential credit card fraud, including techniques similar to those employed by terrorists and drug traffickers to launder illicit funds.

For example, on Oct. 14, an individual using the name “O.J. Simpson” participated in Obama’s latest small-donor fundraising drive, making a $5 donation through the campaign’s Web site.

Giving a Los Angeles address, he listed his employer as the “State of Nevada” and his occupation as “convict.” The donor used a disposable “gift” credit card to make the donation.

The Obama campaign sent O.J. a thank-you note confirming his contribution, and gave him the name of another donor who had agreed to “match” his contribution.

Four minutes earlier, an individual using the name “Raela Odinga” also made a $5 contribution, using the same credit card.

The real Raela Odinga became prime minister of Kenya in April and has claimed to be a cousin of Obama’s through a maternal uncle.

Obama donor “Raela Odinga” listed his address as “2007 Stolen Election Passage” in “Nairobi, KY.” This credit card donation raised no alarm bells in the Obama campaign.

A few minutes earlier, “Daffy Duck” gave $5 to the Obama matching campaign, listing his address as “124 Wacky Way, Beverly Hills, Calif.”

But just as with Odinga’s address, the “Wacky Way” address failed to raise any alarm bells or security traps on the Obama Web site. Daffy Duck also used the same credit card.

Within the hour, three other new donors gave $5 to the Obama campaign. They were:

Bart Simpson, of 333 Heavens Gate, Beverly Hills, Calif.

Family Guy, of 128 KilltheJews Alley, Gaza, GA.

King Kong, of 549 Quinn Street, Capitol Heights, Md.

Newsmax learned of these contributions, which were all made on a single $25 Visa gift card (oddly, the total was $30), from a source that requested anonymity.

Calling himself “Bart Simpson,” the tipster said he had been following the Newsmax investigation of Obama’s campaign finance irregularities “with great interest,” and believed that some of the small donations were coming from gift cards — “you know, the type of disposable debit card you can pick up at Rite-Aid or just about any supermarket.”

[Editor's Note: See "Obama Campaign Runs Afoul of Finance Rules."]

“I tried it myself a few days ago,” he said. “I’m attaching for you proof of the contributions I made in the names of Daffy Duck, Bart Simpson, Raela Odinga, and Family Guy.

“What this means is that the Obama campaign does no verification of the name of the contributor. With a normal credit card, this wouldn’t wor[k], but with these disposable debit cards, no problem!

“This needs to be exposed,” he said.

The tipster attached the confirmation pages from the Obama Web site showing the names of the donors, and in some cases, the names of other Obama donors who had agreed to “match” their contributions.

None of the matching donors’ names appears in the Obama campaign’s public disclosures to the FEC.

Other donors with clearly fictitious names revealed previously by Newsmax, The Los Angeles Times, and blogger Pamela Geller (Atlas Shrugs) include “Dertey Poiiuy,” “Mong Kong,” “Fornari USA,” and “jkbkj Hbkjb.”

Five major companies process the bulk of all credit card transactions made in the United States, industry insiders tell Newsmax. The Obama campaign paid one of them, Chase Paymentech, just over $2 million to process its online transactions.

“We never discuss our relationships with any of our merchants, or customers we work with,” James Wester, a spokesman for Chase Paymentech, told Newsmax.

Newsmax asked whether Chase Paymentech had any security feature that would allow it to identify individuals making contributions using gift cards, but Wester declined to comment.

But other industry analysts, who asked not to be identified by name because of the sensitive nature of the issue, told Newsmax that processors could track gift cards and debit cards “only by the numbers on the cards.”

“There are no names associated with these cards, so as a processor, you have no way of knowing who made the transaction,” one industry analyst said.

Anyone can go into a supermarket or a Rite-Aid and buy a batch of these cards with cash, so there is no trace of the transaction, he added.

“It’s like walk-around money. They could be handing these things out as perks” to newly registered voters or others, “and there’s no way of tracing who is using them.”

Ken Boehm, a lawyer with 30 years of experience in campaign finance law, said that such contributions were clearly illegal.

“Making a contribution in the name of another person is the only part of federal election law that actually carries a criminal penalty,” he told Newsmax. Boehm is the CEO of the National Legal and Policy Center, a conservative think tank in Washington, D.C.

The Obama campaign has paid Synetech Group Inc. of Charlottesville, Va., close to $2 million to compile all of the campaign contribution data from online contributors, bundlers, telemarketers, campaign events, and direct-mail campaigns, and process it for submission to the FEC.

The sheer scope of the Obama fundraising juggernaut was “never contemplated by the FEC,” a company official told Newsmax, asking not to be quoted by name.

“It’s a lot of data. You’re talking 7 million contributions,” he said.

The campaign itself is responsible for screening out fraudulent donors, not Synetech, he said. “I’ve been doing this for 30 years, and this is as well-managed as any [campaign]. It’s just huge. When it’s this big, any little thing becomes something more than it is.”

One of the biggest problems the campaign faces is fraud, he said. “It’s a colossal problem. They’re paying the campaign with other people’s money.”

Individuals such as “Doodad Pro” and “Good Will” who made hundreds of contributions to the campaign in excess of the legal limits were not working for the campaign, but for themselves, he insisted.

“It’s all fraud. They do it for kicks. Or they’re testing the cards. The campaign doesn’t want this. Why on earth do they want to have all these messy little transactions? It’s a colossal pain.”

However, the campaign itself has solicited these “messy little transactions” in numerous e-mails to supporters.

For instance, just days before the Democratic National Convention in Denver, campaign manager David Plouffe sent an e-mail to supporters, asking them to “make a donation of $5 or more before midnight this Thursday, July 31st, and you could go backstage with Barack.”

Since them, the campaign has run several small donation drives, claiming to “match” donations of $5, $10, or $25 with an equal amount for a previous donor.

Newsmax put a series of questions to the Obama campaign more than a week ago in preparation for this article, such as whether its Internet contribution system automatically matches donors' names and addresses to their credit card numbers, as is common industry practice with online stores.

Newsmax also asked if the campaign uses a similar security screen to match a donor’s name and address to the card number when the donor uses a debit card or a gift card.

Despite multiple requests from Newsmax, the Obama campaign declined to comment for this story.

© 2008 Newsmax. All rights reserved.

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