How Iowa Could Decide Joe Biden’s Financial Future

DES MOINES — Joseph R. Biden Jr.’s campaign has quietly rolled back hundreds of thousands of dollars of television ad reservations in New Hampshire and South Carolina in recent weeks and redirected the funds to buy more ads in Iowa instead.

Mr. Biden’s campaign and a super PAC supporting him are on pace to churn through nearly $9 million on television ads in Iowa ahead of the caucuses on Monday, while spending virtually nothing so far in the other three states that vote in February. Mr. Biden has also planted himself in the state this week, seizing on the Senate impeachment trial and President Trump’s rally in Des Moines on Thursday night to try to convince voters that Republicans are scared to run against him.

The movement of money and energy into Iowa is a sign the Biden campaign sees an opportunity — Mr. Biden now sits in second or first place in most polls here — for a decisive showing in 2020’s opening nominating contest.

“If we can win Iowa, I think he’s going to be the nominee,” said Steve Schale, the executive director of the pro-Biden super PAC, Unite the Country. “He’s got a shot at it. Why not take a shot? Clearly the campaign’s doing that, as well.”

But Iowa also carries great risk for Mr. Biden, according to interviews with Democratic strategists, Biden fund-raisers and allies, because he is not just chasing votes and delegates in Iowa. He’s chasing cash.

A disappointing finish here, where there are four candidates bunched in the top tier in Iowa polls, could dampen his online fund-raising at a crucial juncture. Candidates need resources to build up their operations in delegate-rich Super Tuesday states like California, where campaigning and ad rates can be prohibitively expensive and early voting begins next week.

Allies say the chief danger is that a fourth-place finish — or even a third, depending on who is ahead of him and by how much — could jeopardize Mr. Biden’s financial prospects, especially in a Democratic Party with a notoriously skittish political establishment. In recent weeks, Mr. Biden has begun to consolidate the traditional donor class, but his online money operation was the weakest of the four leading candidates for much of 2019, making him particularly vulnerable to falling behind financially if he stumbles early.

Such a result could also deliver the money advantage to rivals with more reliable and passionate digital followings — none more so than Senator Bernie Sanders.

“We all know that momentum coming out of Iowa and New Hampshire, it’s not just political momentum, it’s financial momentum,” said Rufus Gifford, a former finance director for President Barack Obama’s re-election campaign who recently signed on with Mr. Biden.

For months, Mr. Biden’s campaign has sought to play down Iowa’s significance, arguing that its overwhelmingly white electorate does not reflect the full strength of his diverse political coalition. He has maintained an almost unassailable lead with black voters, in particular.

But by the time that South Carolina, Mr. Biden’s strongest early state, votes on Feb. 29, there will be only a few days before a rush of Super Tuesday contests, headlined by California and Texas, will be decided — too late for an infusion of cash to make the most impact.

And awaiting whoever emerges from the first four contests in the multibillionaire Michael R. Bloomberg, the former mayor of New York City, who has already spent or reserved an unprecedented $275 million-plus in advertising in the Super Tuesday states and beyond.

Among Mr. Biden’s supporters, “well enough” seem to be the watchwords — about both Iowa and his campaign’s overall finances. Multiple officials leaned on the same phrase.

“This is not going to be a money contest. What’s important is having the money to compete,” said Anita Dunn, a senior adviser to Mr. Biden. “And we do.”

The financial significance of Iowa should become even clearer on Friday, when all the presidential campaigns must release their full financial reports for the end of 2019. Mr. Biden’s report is expected to show him in a more precarious cash position compared with his three leading rivals, Mr. Sanders, Senator Elizabeth Warren and Pete Buttigieg, the former mayor of South Bend, Ind.

Though Mr. Biden’s fund-raising picked up in the fourth quarter, when he raised $22.7 million, he had begun October in a deep financial hole: $14.4 million behind Mr. Buttigieg in terms of cash in the bank, $16.7 million behind Ms. Warren and $24.7 million behind Mr. Sanders.

In fact, even if Mr. Biden had spent nothing in the final three months of 2019, the $9 million in cash he entered October with plus the $22.7 million he raised in those months would still be less than the $33.7 million Mr. Sanders had on hand to start October. (The Vermont senator then out-raised everyone in the contest in the fourth quarter, bringing in an additional $34.5 million.)

Three months ago, Mr. Biden dropped his longstanding opposition to having a super PAC in part to compete with his better-funded opponents. Donors to that super PAC will be disclosed for the first time on Friday.

With two major rivals from neighboring states competing in the New Hampshire primary — Mr. Sanders of Vermont and Ms. Warren of Massachusetts — the Biden campaign appears to have zeroed in on Iowa as a chance to score an early victory. The campaign has aired virtually nothing so far in any of the three other states that will vote in February — New Hampshire, Nevada and South Carolina — as of this week, according to data from Advertising Analytics.

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Be prepared for Iowa caucus night. Subscribe to “On Politics,” and we’ll send you a link to our live coverage.

Mr. Schale, the super PAC strategist, who cannot legally coordinate with the campaign, said he was following the signals of the official Biden operation in determining that “the immediate, highest and best” use of the super PAC funds was “to lean in in Iowa because that’s what the campaign was doing.”

Despite the nearly $9 million in combined spending, the Biden campaign and super PAC have still been outspent on the Iowa airwaves by Mr. Sanders, Mr. Buttigieg and the billionaire financier Tom Steyer.

In the interviews, Mr. Biden’s fund-raisers and campaign officials mostly projected confidence about the campaign’s financial condition. The exit of well-funded rivals like Senators Kamala Harris of California and Cory Booker of New Jersey, for instance, has helped the Biden campaign consolidate support among the traditional donor class.

“As time goes on, everybody is coming to the conclusion: To beat Trump, you’re going need to someone who can go across the various groups, and Biden seems to be that guy,” said Marc Lasry, a billionaire Wall Street hedge fund manager and co-owner of the Milwaukee Bucks, who had previously raised money for Ms. Harris and now supports Mr. Biden. “The nervousness that some people may have had at the beginning is gone.”

But there are signs that his online operation still lags his leading rivals. Ms. Warren’s campaign has announced a $3.5 million goal for the final five days of the month, while Mr. Biden’s campaign has told supporters it was trying to raise $1 million in the final week. At the same time, Mr. Sanders trumpeted taking in $1.3 million in under a day after news broke this week that a Democratic super PAC was attacking him.



Why the Iowa Caucuses Are So Important

Protests in the 1960s, a mimeograph machine and a long-shot candidate all contributed to Iowa’s unlikely role in the presidential election process.

This was Iowa caucus night back in the mid-1970s. And these are members of the national media covering the voting. It was so unusual to see national media in Iowa back then that people actually paid to watch them. “The Democratic Party charged $15 a head for people to watch the media watch the people.” See, in previous years, Iowa’s caucuses just hadn’t attracted national attention. “There are 3,000 frozen media members in downtown Des Moines …” Just over a decade later, Iowa is the place to be. “… It’s Iowa caucus night. Let’s party.” [shouting] The caucuses are now a key part of the presidential election cycle. “Bush, 57.” They’re the first chance to see what kind of support candidates have among voters. So how did we get here, from caucuses that only Iowans seem to care about to the national spectacle we see today? Turns out, a lot of it was accidental. For most of Iowa’s history, its caucuses were dominated by political insiders. There was little room for input from rank-and-file members. An historian writing in the 1940s put it like this: “The larger number of party voters were deprived of a voice.” But the old ways start coming to an end in 1968. The country’s in turmoil, and so is the Democratic Party, mostly over the Vietnam War and civil rights. Basically, the party establishment wants to handle things one way, and many rank-and-file members have other ideas. All this comes to a head as the Democrats hold their national convention. Protesters gather outside. So do police. Inside, the mood is also tense. All this division leads the Democratic Party to rethink the nomination rules to include the voices of all party members in the process. This is how we come to the moment when Iowa becomes key to electing a president, basically by accident. First up, how Iowa became first to hold a presidential contest. It starts with new rules to give everyday members more of a say. So by 1972, winning Iowa now involves four stages. Iowans choose their top candidates, first at the precinct level. These are the caucuses at the heart of this story. But technically, there’s further voting at the county, congressional district and state levels. The new rules make things a lot more inclusive, but this creates new delays. Committees need to be formed, and everyone needs to have up-to-date party materials. The problem is, the state party only has an old mimeograph machine to make copies of all this. It’s really slow. So because of an old machine and a bunch of new logistics, the party decides it needs at least a month between each step to do it all. The national convention is set for early July, so you’d think that the state-level convention would happen about a month before, in June. Except, the party can’t find a venue that’s available to hold everyone. That little detail helps push everything earlier in a chain reaction. See what’s going on here? The precinct caucuses now have to happen early in the year. The party chooses a date that makes Iowa’s the first presidential contest. The New Hampshire primary has been the first kickoff contest since the 1950s, but Iowa Democrats aren’t necessarily looking for national attention. They just think it’ll be fun to be first. Still, attention is what they get. The story begins with George McGovern. “People didn’t know much about the Iowa caucuses. As a matter of fact, there wasn’t a great deal of interest in them.” He’s the long-shot candidate. He’s been at the bottom of national polls. “He often walked the campaign trail alone, little known by the voters.” Most people think this guy, Edmund Muskie, is going to be the big winner in Iowa. “That challenge is great, but we can meet it.” Then comes caucus night. As the people vote, state party officials gather at their headquarters. Richard Bender is one of them. “And we had about 10 or 12 press people show up. These press people included one guy, Johnny Apple.” Johnny Apple, a 37-year-old political correspondent for The New York Times. Iowa’s Democrats aren’t ready to publicize the results right away. They hadn’t expected much demand. According to Bender, only Johnny Apple asked for them that night. “I happen to be fascinated with such things, so I made it my business, beforehand, to understand it.” Bender sets up a phone tree to gather results from across the state. He adds them up himself with a calculator. And the next day, Apple’s article helps swing the national spotlight onto the caucuses. He’s got quite the story to tell. Muskie’s won, but just barely. Not the runaway win people were expecting. And McGovern comes in a strong second. No one expected that, either. The reformed caucus rules helped a long-shot candidate rise to the top. And because this is happening so early in the election now, and because Apple’s article gives the results national coverage, something else happens. “That got picked up by some of the national news shows.” “The Democratic front-runner has been damaged in Iowa.” “And wow, all of a sudden, we were being paid attention to.” McGovern eventually wins the Democratic nomination. “I accept your nomination with a full and grateful heart.” He loses the presidential election, but some haven’t forgotten what those early caucuses did for McGovern, including Georgia’s former governor, Jimmy Carter. Three years later … “There was a major headline on the editorial page of the Atlanta Constitution that said, ‘Jimmy Carter’s running for what?’ [laughter] And the ‘What’ was about this big. [applause] I’m running for president.” … Carter heads to Iowa before any other Democratic candidate. He’s got no national profile. “He didn’t have hordes of press following him around. It was a very lonely campaign.” Washington pundits call his candidacy laughable. “I remember when we couldn’t find a microphone.” “Jimmy Who?” becomes a catchphrase. Carter’s own campaign film plays it up. “Jimmy who?” “I don’t know who he is.” But as long as Iowans come to know him and like him, Carter bets that the media will start paying attention, just like with McGovern four years earlier. Carter campaigns as locally as possible. One day, he learns that he’s been invited on a local TV show. “And I said, that is great. I can’t believe it. I said, ‘What are we going to do?’ He said, ‘Do you have any favorite recipes?’ And I said, ‘What do you mean, recipes?’ He said, ‘Well, this is a cooking show.’ Well, they put a white apron on me and a chef’s hat. That was my only access to TV when I first began to campaign in Iowa.” His opponents are in Iowa, too, but they spend far less time there. Carter wins. “Surprisingly top of the class after his win in a somewhat obscure race in Iowa against the others.” “You can’t tell until we go to the other 49 states, but it’s encouraging for us.” A year later … “I, Jimmy Carter, do solemnly swear —” … he becomes the 39th president. Now we need to head to 1980 because we haven’t talked about the Republicans yet. Here’s the state’s Republican chairman that year. He’s asked why Iowa’s caucuses have become so important. “I think because Jimmy Carter got his start in Iowa in 1976.” The Republicans in Iowa are keen to copy the Democrat’s success, and one candidate in particular gets inspired by Carter’s underdog win: George H.W. Bush. He’s running against Ronald Reagan, Bob Dole and others, and he’s near the bottom of the pack. “Your name isn’t really a household word, but Ronald Reagan can —” But Bush goes big in Iowa. He gets a surprise win. It’s a far cry from just months before. “I was an asterisk in those days. And my feelings got hurt. And now, I’m no longer an asterisk.” Bush is now the third underdog to get a boost from the caucuses. The next morning on CBS, he distills the essence of this new Iowa effect. “We will have forward, ‘Big Mo’ on our side, as they say in athletics.” “ ‘Big Mo?’ ” “Yeah. Mo — momentum.” Bush loses to Reagan, but becomes vice president. And the desire to capture the “Big Mo” from Iowa has only grown, thanks in large part to Iowa’s embrace of being first, and the media storm that descends every four years. That’s despite the fact that most candidates who win … “This is a job interview.” … don’t become president. Plus, many point out that the state’s overwhelmingly white population doesn’t reflect the country’s diversity. “I actually think that we can find places that represent that balance of urban and rural better.” But the race to get the “Big Mo” out of Iowa persists because it’s the first chance to upend expectations, and put political fates in the voters’ hands.

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Protests in the 1960s, a mimeograph machine and a long-shot candidate all contributed to Iowa’s unlikely role in the presidential election process.CreditCredit…Associated Press

Online money is particularly important now that the primary season has arrived because there are far fewer days for candidates to devote to holding fund-raisers when elections come almost weekly. There is only one week between Iowa and New Hampshire, for instance, but Mr. Buttigieg is planning to squeeze in New York fund-raisers next Wednesday evening and Thursday morning, according to invitations obtained by The New York Times. Mr. Biden has a fund-raising trip of his own to New York scheduled right after New Hampshire, including with some former top financiers for former opponents.

Some of Mr. Biden’s top aides, including his campaign manager, Greg Schultz, and the campaign chairman, Steve Ricchetti, have been imploring bundlers to gather as much money as possible, even if the former vice president himself cannot attend events, according to people familiar with the plans.

Earlier in January, Mr. Biden’s campaign gathered members of his national finance committee for a meeting in Des Moines, where Mr. Schultz and others briefed them on the state of the race.

“The overall message was we feel like we’re in a good spot but want to continue to raise more money,” said Denise Bauer, a fund-raiser and former ambassador to Belgium who has spent recent weeks campaigning for Mr. Biden in Iowa. “That’s the obvious thing.”

The Biden super PAC has actually outspent the campaign on the airwaves in Iowa — but that money buys far fewer ads than the campaign’s cash can because federal law allows political candidates to buy advertising at the lowest available rates.

The disparity is jarring, with the Biden super PAC paying four times as much for the same ads as the campaigns, blunting the advantage of having a super PAC.

Mr. Sanders, for instance, paid $375 for 30-second ads on the 6 a.m. news on KCCI in Des Moines last week; the Biden super PAC paid $1,800. To air one ad during the Grammys, Mr. Sanders paid $1,350 and the Biden super PAC paid $5,500.

“The cost difference is real,” Mr. Schale said. “At the same time, it is the most obvious gap we can help fill.”

The super PAC has been characterized by some internal tensions over its direction, according to people familiar with the matter, as it has leaned heavily on television ads. Asked about those discussions, Mr. Schale said only, “We’re an organization that has robust debates.”

John Morgan, a Florida fund-raiser who has hosted Mr. Biden at his home, acknowledged that Mr. Biden would most likely be outspent in the coming weeks, particularly by Mr. Sanders.

“Many people win the Daytona 500 on fumes and many people lose badly with a full tank of gas,’’ he said. “That’s the nature of auto racing and that’s the same nature of politics. All he needs is enough gas to win. And he has it and he will.”

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