Paltry fundraising by Obama "Super PAC" prompted new strategy

Campaign manager Jim Messina works inside President Barack Obama's new campaign headquarters in Chicago May 12, 2011, next to a photo of himself with the president.

WASHINGTON (Reuters) - In early January, President Barack Obama's campaign manager Jim Messina called David Axelrod, the president's top strategist, into his Chicago office and started writing on a white board.

On one side of the board, Messina sketched out the amounts of money he expected Republican "Super PACs" and other groups to raise and spend to try to defeat the Democratic president in the November 6 election.

Drawing a line under that cumulative number -- roughly $700 million -- Messina then highlighted the amount raised by the Republican groups' Democratic counterparts. It was a measly figure.

"We've got to talk about this. This is a problem," Messina told Axelrod, according to a campaign official.

Roughly a month later, on February 6, the Obama campaign announced it would start supporting Priorities USA Action, the struggling Super PAC formed to help Obama. The move reversed a position rooted in Obama's distaste for the Supreme Court decision that allowed such independent groups to raise and spend unlimited amounts of money to try to influence elections.

If there were any lingering questions about why Obama's campaign changed course, they were answered late on Monday.

Priorities USA raised a paltry $59,000 in January, Federal Election Commission filings showed, and that amount came almost entirely from one longtime Obama supporter, John W. Rogers, who donated $50,000.

The disappointing figures were a sharp contrast with the tens of millions of dollars raised by the political action committees, or PACs, that support Republican presidential candidates.

The results reinforced concerns among Obama's advisers that despite his campaign's fundraising strength, Republican PACs could help the opposition outspend the president's re-election efforts this year.

A campaign spokesman declined to comment about the Priorities USA figures, but one Democratic official familiar with Super PACs said January was a rough month to fundraise because Democrats did not have a nominating battle.

"You have to look at it in context," the official said. "If you don't have a primary, if you don't have a caucus, if there isn't an urgency there ... people don't really start getting engaged again until the middle of January."

ENTHUSIASM RISING?

On February 6, Messina announced that Obama campaign and White House officials would start appearing at Priorities USA events, though they would not directly solicit contributions.

However, Obama, First Lady Michelle Obama, Vice President Joe Biden and his wife, Jill, would not participate in the Super PAC events.

Greater involvement by the campaign and the White House has made a difference in donor enthusiasm, said Bill Burton, a former White House official who helped found Priorities USA and is a senior strategist for the group.

"Interest and enthusiasm has increased significantly since the announcement," he said in an email.

Despite the PAC's financial weakness, the Obama campaign itself is still a fundraising juggernaut, raising $29.1 million in January along with the Democratic National Committee and other allies. It is expected to raise at least as much for the president's re-election as the $750 million it collected in the 2008 presidential race.

But there are limits to how much the campaign can take in from big donors.

Individual donations to campaigns are limited to $2,500 during the primary season and another $2,500 for the fall general campaign. Because of the 2010 Supreme Court ruling that banned limits on fundraising and spending by independent political groups, Super PACs have no such limit on donations.

Obama opposed that ruling, which erased longstanding limits on corporate and union money in federal elections.

Obama "believes that this is an unhealthy development in our political process, but it is a reality of the rules as they stand," Axelrod said in an interview.

"This was not a quick decision, but he also feels a responsibility to win this election," Axelrod added. "There's a lot hanging on this beyond him."

Priorities USA had raised just $4.2 million by the end of January, only a fraction of that raised by Restore Our Future, the group supporting Republican frontrunner Mitt Romney, which had raised $36.8 million by the end of last month.

The figures showed Priorities USA had $1.3 million in cash on hand at the end of January and no debt.

The PAC's incoming contributions in January averaged less than $2,000 a day. Without Rogers' $50,000 donation on January 17, the group would have pulled in less than $10,000 last month.

(Additional reporting by Alexander Cohen; Editing by Jackie Frank)