Short on Money, McCain Campaign Dismisses Dozens

Marc Santora and David D. Kirkpatrick contributed reporting.
July 3, 2007.

The presidential campaign of Senator John McCain, the Arizona Republican who once seemed poised to be his party’s nominee in 2008, acknowledged yesterday that it was in a political and financial crisis as a drop in fund-raising forced it to dismiss dozens of workers and aides and retool its strategy on where to compete.

The campaign said the decline in contributions had left it with $2 million. It said it had raised just $11.2 million over the last three months, despite Mr. McCain’s promise to do better than his anemic $13 million showing in the first three months of the year.

Mr. McCain’s advisers blamed his close association with the recently defeated immigration bill, which was strongly opposed by conservatives already skeptical of his ideological credentials. But he has also had to contend with a host of other issues, including his support of the Iraq war, opposition from evangelical voters, the prospect of former Senator Fred D. Thompson’s entry into the race, and the sense that his continuing struggles to raise money were consuming the campaign and making fund-raising even more difficult.
Mr. McCain was visiting Iraq as his aides moved to reshuffle his campaign organization a second time. They said they would focus his efforts now on three states with early contests: Iowa, New Hampshire and South Carolina.

The problems fueled speculation that Mr. McCain would pull out of the race, a notion that his aides were quick to reject.

They also sent a jolt of uncertainty through Republican circles when many in the party are uneasy with their current candidates and are worried about their prospects against a far more determined Democratic field.

The party has failed to coalesce around a favored candidate, with conservatives skeptical of Rudolph W. Giuliani’s support of abortion rights and Mitt Romney facing scrutiny for shifting his positions on key social issues.

Mr. McCain’s campaign was in flux particularly in Iowa, where half of his 16-member staff was let go yesterday, campaign officials said. His state director left, and Jon Seaton, his national field director, headed to Iowa to take over.

Department heads spent yesterday calling in lower-level staff members to inform them of their dismissals. Mr. McCain’s advisers said they were cutting back on consultants, with those in the fund-raising area losing their guaranteed monthly retainers. The moves amounted to a sharp scaling back of what had once been a gold-plated campaign.

Top advisers to Mr. McCain, a Vietnam veteran known for his maverick streak, said the problems might force him to accept federal matching money, which could pump $6 million into his primary campaign but force him to abide by strict spending limits.

Mr. McCain’s aides expressed hope that with the immigration battle over, the campaign could recover its momentum as the focus shifted to other issues, like federal spending. And the history of American primary campaigns is replete with examples of troubled candidates rising from major setbacks.

“The decisions we made today were not easy,” said Terry Nelson, the McCain campaign manager, who said he would no longer accept a salary.

While refusing to go into detail about the depth of the cuts or say exactly how many staff members had been fired, Mr. Nelson said “every department” had been affected. Republicans close to the campaign said that at least 50 and as many as 80 people were being let go, out of a staff of around 150 people.

Campaign strategists said Mr. McCain’s ability to raise money was severely limited in recent weeks by the reaction to his support of the immigration legislation, which collapsed last Thursday in the Senate. They said Mr. McCain was now looking to raise $50 million this year — half of what he once expected — and was retooling the campaign to save as much money as possible for television advertising and travel.

“Clearly, we didn’t meet our goals for the second quarter in fund-raising, which I largely attribute to the immigration legislation that has dominated the news for the past two months, and his position is not too popular with our small donors,” said Charlie Black, a senior Washington political strategist who is a volunteer adviser to Mr. McCain. “We have got to restructure the budget and the organization.”

Mr. Black and others dismissed any suggestion that the moves were a precursor to Mr. McCain’s dropping out, particularly with the race still in its early stages and with no other candidate breaking away. John Weaver, another senior adviser to Mr. McCain, said the senator would now focus almost exclusively on the three early primary and caucus states.

After the defeat of the immigration bill, Mr. McCain told reporters he had no intention of leaving the race despite the setback on what has become a driving issue for him.

“Why would I contemplate such a thing?” he said. “I don’t know why I would even remotely consider such a thing in the month of June and July. It’s always been hard for me to raise money. None of the special interests are contributing because they don’t want me to be president.”

Mr. McCain’s allies in the Senate had hoped that approval of the immigration legislation would help him politically by showing that there was consensus on his position, tightening the borders while offering the prospect of legal residency to some illegal immigrants. But the widespread Republican abandonment of the bill only further undercut him and caused him particular trouble in Iowa, where aides said polls had found that his support had plummeted to single-digit numbers.

The scene yesterday at McCain headquarters in suburban Virginia was described as somber. People were called in and told they were being dismissed, effective immediately. They were given two weeks’ severance pay. A dozen senior campaign aides either agreed to work without salary or for less pay.

Senior McCain advisers say they realized over the past few months that they had to change the mindset that they were running what one called a “Bush-Cheney campaign,” with the plush offices, army of consultants and extended staff befitting a front-runner. Mr. McCain himself had raised questions about the size of the operation and also bristled at making fund-raising calls.

Rival campaigns said they still considered Mr. McCain a threat, but added that the decision to reduce his staff in the primary states of Iowa, New Hampshire and South Carolina could be disastrous because a strong organization was crucial.

Mr. Black, the McCain adviser, was adamant that the senator was competitive in those states and said the end of the immigration fight could ultimately help Mr. McCain by shifting attention from the issue.

“This will fade over time,” he said. “He has got as good a chance as anyone else.”

The immigration battle resonated particularly in South Carolina, where the state’s two Republican senators split on the measure. Senator Lindsey Graham, a top McCain ally, supported the bill, and Senator Jim DeMint was a leading opponent.

Katon Dawson, the chairman of the South Carolina Republican Party, said that Mr. McCain had been hurt but that the race there would be decided on more than one issue.

“I do think it has wounded him, but I don’t think it has taken him out of the game,” Mr. Dawson said. “There is time to recover from this.”