Hey, Big Spenders

President Barack Obama fears that he will become the first incumbent to be outspent by his opponent. Nobody needs to look at his graying hair or his summertime sweat beads to know this. Just look at his campaign finance reports released Wednesday.

The president’s re-election campaign, along with the Democratic National Committee-backed Obama Victory Fund, raised about $54 million in May. And in that time, they spent $69 million, primarily for advertising, food, and travel. But officials close to the camp note that Mitt Romney and the Republican National Committee raised $77 million last month and could potentially spend a total of $1.2 billion for their half of the election.

Neither candidate is a stranger to big-budget campaigns. The Obama team and his party associates raised a record $750 million in 2008. This time around, they have nearly $147 million on hand, compared to Romney and his party’s $107 million, as of last month. But with May marking the second month this year in which the Obama campaign spent more money than it produced — January was the first — Democrats worry that their financial edge is waning.

Steven D. Levitt wrote an article in the August 1994 edition of The Journal of Political Economy,  in which he dismissed the philosophy that skilled fundraising garners more votes.

“When a candidate doubled their spending, holding everything else constant, they only got an extra one percent of the popular vote,” he wrote. “It’s the same if you cut your spending in half, you only lose one percent of the popular vote. So we’re talking about really large swings in campaign spending with almost trivial changes in the vote.”

The spending habits of this year’s Iowa caucus candidates did not correlate with vote allocation. Malapropism-prone Rick Perry spent $4.3 million on the state-wide race, but only won 10 percent of the vote. Rick Santorum spent the least on advertising than any other Iowa candidate and nearly tied Romney, who spent $1.5 million.

University of Missouri at Columbia economics professor Jeff Milyo told Freakonomics Radio earlier this year that a campaign’s money is not nearly as influential as many people think.

“How many people do you know who ever change their minds on something important like their political beliefs?” he said. “People just aren’t that malleable. And for that reason, campaign spending is far less important in determining election outcomes than many people believe.”

Like Romney, former New York City Mayor Rudy Giuliani spent a great deal of money on his unsuccessful 2008 presidential bid. He says he no longer believes that a politician should spend his or her way into office.

“I tell candidates, it’s always better to be the candidate with the most money, but you can win without it.”

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