Obama Campaign Outspending McCain

WASHINGTON (AP) -- After tightening his expenditures in June, Barack Obama spent far more freely in July, cutting into his cash reserves while mounting an advertising campaign against Republican presidential rival John McCain.

The Illinois Democrat raised more than $50 million in July, a slight dip from the previous month, according to his monthly financial report, filed around midnight Wednesday with the Federal Election Commission. He spent about $55 million, with three-fifths of that devoted to media costs.

McCain had his best fundraising month yet, collecting more than $26 million. He, too, spent heavily - a total of $32 million, of which two-thirds was on advertising.

The documents illustrate the intensity of the contest, even at the height of summer.

The two candidates spent aggressively on advertising. McCain targeted about 11 traditional battleground states and Obama ran ads in 18 states, expanding his sights to states that have voted Republican in the past. But while Obama outspent McCain, polls show the race neck-and-neck, with McCain even closing the gap nationally and in some states.

When it comes to money, though, Obama and McCain face significantly different tasks.

McCain has agreed to accept $84 million in a federal campaign grant for September and October. That means he must spend all the money in the campaign's account by the end of the Republican National Convention in early September or donate the balance to the Republican National Committee. He ended July with more than $21 million in the bank.

Obama, however, has decided to bypass the public funds in anticipation of raising far more money on his own. As a result, he must build up his cash reserves. He reported $66 million in hand at month's end.

Obama might have fared better financially, but had to curtail his July fundraising to embark on a week of travel through the Middle East and Europe.

He also has been building a formidable ground game against McCain. He has a payroll of $2.2 million a month compared with McCain's $925,000, and has opened scores of field offices, outnumbering McCain's staff presence in key battleground states.

Obama no doubt will see a dramatic surge in contributions this month, centered on the Democratic national convention next week and his acceptance speech spectacle on Thursday at Invesco Field in Denver. But he will probably also have to continue fundraising in September and into October, while McCain is free to campaign with his own federal funds.

Both candidates benefited from new fundraising partnerships with their respective national parties. Of McCain's total amount raised, $5.6 million came from contributions made to a joint victory fund set up with the RNC. Obama reported getting $12.5 million of his total from victory committees connected to the Democratic National Committee.

McCain showed a debt of $2 million; Obama had debts of nearly $1 million.

Sen. Hillary Rodham Clinton, who suspended her race for the Democratic nomination in June, reported a slight reduction in her massive campaign debt, cutting it from $25.2 million at the end of June to $23.9 million at the end of July. Clinton, who lent her campaign more than $13 million, has been struggling to raise money to pay off her vendors. She reported raising $2.5 million in July.

McCain, meanwhile, is counting on a vote Thursday from the FEC to permit his withdrawal from the public matching fund system for the presidential primaries. Candidates can receive taxpayer money in the primaries based on the number of small contributions they have raised. Accepting the money limits a campaign's spending.

McCain had qualified for such funds, but decided not to accept them because he wanted to spend above the limits. Then-FEC Chairman David Mason informed McCain that he needed a vote of the FEC before withdrawing, but at the time the commission lacked a quorum to act. It is now at full strength.

The commission's staff has recommended that it approve McCain's withdrawal from the system.

The Democratic National Committee has objected. It asked the FEC to postpone the vote until the commission investigates a complaint the Democratic Party filed in February accusing McCain of violating public finance laws in connection with the matching funds.

In the letter, DNC general counsel Joseph Sandler said the FEC cannot vote to let McCain withdraw from the primary public funds program because McCain never requested that he be allowed to pull out.

The FEC is made up of three Democrats and three Republicans. It takes four votes to approve commission business.

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