McCain Loses Key Aides
Amid Fund-Raising Woes

Upheaval Underscores
Early Money's Impact;
Still a Viable Contender
By JACKIE CALMES and MARY JACOBY
The Wall Street Journal
July 11, 2007; Page A3

WASHINGTON -- Sen. John McCain's once-highflying presidential campaign went into a tailspin as a group of his top advisers and closest aides resigned. The shake-up reflects his fund-raising woes in the costlier-than-ever 2008 sweepstakes and, on a deeper level, the fallout of his unpopular positions on the Iraq war and immigration.

[John McCain]

The Arizona Republican promptly named a new campaign manager and pledged to go on. Despite his travails, Mr. McCain still has some significant assets as a contender, and history suggests that it is possible for candidates to survive such low moments and prevail to become the nominee or even president.

The shake-up follows a second straight quarter of below-target fund raising and, even more infuriating to Mr. McCain, overspending that has the campaign's cash reserves at a dangerously low level. One campaign operative said the campaign may show a debt for the second quarter. After an initial overhaul last week that laid off lower-level workers at headquarters and in the states, Mr. McCain returned Friday from a sixth trip to Iraq and decided the changes hadn't gone far enough.

He proposed to elevate longtime adviser Rick Davis, who had been effectively exiled from the headquarters operation in past months amid feuds with others in the McCain circle. That spawned the resignations yesterday morning of campaign manager Terry Nelson, a 2004 Bush campaign veteran who had sought clearer authority, and longtime McCain strategist John Weaver, whose conflicts with Mr. Davis dated to the senator's 2000 presidential bid.

In turn, Mark Salter, another longtime confidant, said he is leaving the campaign, but will remain as an unpaid adviser and speechwriter. Deputy campaign manager Reed Galen and political director Rob Jesmer also resigned.

The changes mean that the man who corralled the support of much of the Republican establishment now finds himself trying to proceed without the help of some of his closest advisers and confidants, including Mr. Weaver, with whom he has had almost a father-son relationship.

The McCain saga underscores how vital money has become in the presidential race of 2008, where a large field of candidates in both parties is routinely shattering all previous fund-raising records. Mr. McCain has been losing the first primary of the campaign -- the money contest -- to rivals Mitt Romney and Rudy Giuliani.

The gravity of the campaign's financial condition was underscored just over a week ago, when top McCain fund raisers gathered with him in Sedona, Ariz. Finance chairman Tom Loeffler, a former Texas congressman-turned-lobbyist, told the group of about 30 big donors that the fund-raising pace had slowed in the year's second quarter, not gained as top campaign officials had vowed. And the campaign's spending -- its "burn rate" -- was consuming most of that.

Some of the fund raisers were angry that Messrs. Loeffler, Nelson and Weaver had kept them out of the loop, say people with knowledge of the meeting. Afterward, the group headed to Mr. McCain's nearby ranch for an afternoon of barbeque with the candidate, but their mood was somber. Campaign reports indicate Mr. McCain raised only $11.2 million in the second quarter, down from $13.1 million in the first three months of the year.

But Mr. McCain's problems go deeper than money or personnel. On what have become the two most contentious issues in the nation, he has stuck to his positions -- supporting the Iraq war and endorsing an overhaul of the nation's immigration system, even as the former has undermined his support among independent voters who once loved him, and the latter among the Republican conservatives he has courted assiduously. Ironically, on both issues he is paying an enormous price for supporting President Bush, and now is in danger of being dragged down by Mr. Bush, who ended Mr. McCain's presidential hopes in their bitter 2000 Republican primary fight.

Polls now have the Arizona senator trailing Mr. Romney in the crucial early caucus and primary states of Iowa and New Hampshire, though he clings to a lead in South Carolina, the third important early state. Mr. Romney, a former Massachusetts governor, could be a beneficiary of the McCain woes. The problems also figure to benefit former senator and actor Fred Thompson, who is recruiting former McCain staffers and seeking support among the party's conservatives and big donors that once figured to go easily to the McCain camp.

Now, Mr. McCain will try to come back by shedding what some friends and advisers came to see as a misguided attempt to become the establishment candidate and Mr. Bush's heir apparent. They say Mr. McCain has sounded wooden and overly rehearsed in debates and failed to live up to the promise of his "Straight Talk Express" that won him the independents' support in 2000.

"I think he'll get back to being himself, and say it his way again," said Orson Swindle, a former Federal Trade Commissioner who had been a prisoner of war with Mr. McCain in Vietnam and remains a close friend.

Black Cloud: John McCain's presidential bid takes a big hit as key aides and advisers leave his campaign.
Green Issues: Mr. McCain's fund raising has come up short in a primary notable for the importance of early big money, exacerbating tensions within his camp.
Silver Lining: Mr. McCain still has significant assets as a contender, and history suggests it is possible to survive such low moments and still become the nominee or even president.

In the 1996 presidential-campaign season, Republican Sen. Bob Dole famously fired some top aides and left them on a tarmac as his plane left Jacksonville, Fla., after he lost a crucial primary race. And in 2003, Sen. John Kerry mortgaged his home to keep his nearly bankrupt campaign afloat and replaced his campaign manager as well as several deputies. Messrs. Dole and Kerry recovered to win their party's nominations.

McCain supporters continue to take heart that his rivals ultimately have bigger flaws in the eyes of Republican voters, given their past records of support for liberal positions on social issues such as abortion, while Mr. McCain has been, in Mr. Weaver's words, "the consistent conservative."

McCain confidant Charlie Black, a longtime Republican strategist who was a casualty of Ronald Reagan's 1980 shake-up of his then-faltering campaign, said of Mr. McCain's plight, "He's still the best candidate, and it's a wide-open four-way race" against Messrs. Romney, Thompson and Giuliani. "My premise is that each of the other candidates has their flaws, so McCain's not at a disadvantage as long as he gets out there and campaigns like he knows how."

As word got out yesterday morning, Mr. McCain was on the Senate floor to report on his latest trip to Iraq. He plans a speech on Iraq Friday in Concord, N.H. "Make no mistake. Violence in Baghdad remains at unacceptably high levels," he said. But the U.S. and Iraq are "moving in the right direction," and "the progress our military has made should encourage us."

Earlier that morning, he had separately accepted the Nelson and Weaver resignations, and approved public statements saluting each man. Their departures -- and Mr. Davis's promotion -- settles a long-simmering conflict amid Mr. McCain's inner circle that was reflective of his management style. "He manages by having a lot of people around him who he believes are equals, and that's not a way to run a campaign. It creates discord," said one person familiar with the McCain operation.

Mr. Nelson, a friend said, was tired of the "four-headed monster" that the campaign hierarchy had become, and of the criticism from Mr. Davis and his allies. As for Mr. Weaver, a national Republican insider who isn't aligned with any campaign said, "You know it had to be bad for Weaver to go. McCain was his life."

Write to Jackie Calmes at jackie.calmes@wsj.com and Mary Jacoby at mary.jacoby@wsj.com