As obtained by Hotline:

To: National Finance Director Spencer Zwick, National Finance Co-Chairs and the National Finance Committee
From: Benjamin L. Ginsberg, Romney for President National Counsel
Katie Biber Chen, Romney for President General Counsel
Date: March 30, 2007
Subject: A Guide to First Quarter FEC Reports

With Saturday’s close of the first quarter FEC reporting period, Romney for President and the other campaigns will be releasing the totals of the amounts they’ve raised. There are sure to be a lot of articles appearing, and it’s important to know whether reporters are measuring apples to apples. Here’s a guide of what to look for.

First, Governor Romney’s totals will be indicative of our extraordinary success in building an organization and stirring excitement among grassroots activists. The number will be quite a tribute to Governor Romney and all of you since the other leading candidates enjoy universal name identification, existing networks of contributors and clear advantages in the national polls.

Second, be aware that some campaigns’ totals will include monies raised for the general election. This money will artificially inflate totals, but it is meaningless in gauging current strength since not one penny of a campaign’s general election funds can be used in the primary. Reports that don’t separate primary and general election contributions will be misleading. As you know, Romney for President has raised only primary funds, but the McCain, Giuliani, Clinton and Obama campaigns have raised both. (While there may be some advantages in raising both kinds of money now, know there are also disadvantages – for example, 100 percent of general election monies raised must be returned if the candidate is not the nominee. This means that all the costs of general election fundraising, including fundraisers’ commissions and event costs must be paid for with primary funds.)

Third, reporters should be telling readers if candidates are planning on taking federal matching funds for the primary. Governor Romney has decided against using the primary matching funds, as have the McCain, Giuliani, Clinton, Obama and Edwards campaigns. Candidates who take matching funds will receive up to a $20 million check from the U.S. Treasury next January – but in return will be limited to spending about $40 - $50 million through the Conventions in late August. By contrast, President Bush and Senator Kerry each raised and spent more than $250 million through their parties’ conventions in 2004. Thus, it’s difficult to see how any GOP candidate taking the primary matching funds can remain competitive against the Democratic candidate from the time the nominee is decided through late August. (Those who remember Bob Dole’s 1996 campaign struggling against the Clinton machine have a taste for what this is like.) In other words, look for the GOP field to start to split between a top tier that can be competitive against the Democratic nominee and a second tier that will be tethered to the federal match and its spending limit.

In summary, we hope this Memorandum gives you a better understanding of what you’re reading in the news reporting this weekend and early next week about the first quarter FEC reports.