Ex-MA Gov. Mitt Romney's third quarter financial audit has yet to be posted at the FEC's website, but while we wait, you can read over this internal memo written by the campaign's legal and strategy teams and distributed to campaign higher ups last week.

My quick summary: We're raising a lot; Mitt is giving a lot; We're spending a lot; We're winning where we need to be winning; Rudy's in trouble because he can't write himself a check and has to spend to keep pace.

In the memo, Romney's advisers predict that Ex-Sen. Fred Thompson and Sen. John McCain will have be forced to opt in to the federal primary financing system in order to compete with Romney. And the memo claims that Giuliani "is in danger" of confronting that choice, given the campaign's rate of spending and slowing rate of receipts. (Giuliani advisers dismiss this out of hand).

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"Investment" is used as a euphasmism for "burn rate" here -- the campaign claims that Romney's blistering 85% burn rate since the beginning of the year has paid dividends in the form of solid leads in the early polls, while Giuliani has spent furiously and managed only to maintain his lead in non-early states.

Of Romney's ability to loan himself money, the advisers offer this rationale and hint that the Romney bank account hasn't closed:

[It] continues to be of great benefit to the campaign in this most challenging of fundraising environments for Republicans. His ability to do so should not be understated when the ultimate goal is not "winning" one quarter's fundraising race, but rather beating the Democrats in November 2008. The ads he helped finance have moved Governor Romney – who began this campaign much less well-known than his primary opponents – competitive in every key early state and in an excellent position to capture the nomination.



You can read the full memo after the jump.

ROMNEY F O R PRESIDENT, I N C .
MEMORANDUM
To:
Beth Myers, National Campaign Manager
Spencer Zwick, National Finance Director
Darrell Crate, National Treasurer
National Finance Co-Chairs
National Finance Committee
From:
Benjamin L. Ginsberg, National Counsel, and Katie Biber Chen, General Counsel
Alex Castellanos, Senior Adviser
Date:
October 5, 2007
Subject:
A Guide to Third Quarter FEC Reports
As the dust settles over the Third Quarter fundraising totals, Governor Romney's chances of being the GOP nominee are excellent. We admit to being pleasantly surprised at our numbers compared to our opponents', and note that Governor Romney's totals far outpace his standing in the national polls that so obsess the media.
For the record, our campaign continues to lead in funds that can be used for the primary election. Governor Romney has raised $45 million in primary contributions, excluding his own loans. Mayor Giuliani's campaign trails by $5 million and the rest of the field is far behind and in danger of having to take taxpayer funding. This is a real credit to the excellent effort by our fundraising team. Here are some trends worth noting:
First, based on this week's announcement, Mayor Giuliani's fundraising is slipping. In fact, it has fallen considerably since the second quarter when he reported $17 million in total receipts. According to published reports yesterday, the Mayor's primary cash total for the third quarter fundraising period will only be about $500,000 more than Governor Romney's. This number indicates a notable decline in Mayor Giuliani's fundraising success, despite his extensive fundraising effort this quarter. The Mayor's campaign held well over 100 publicly reported fundraisers since the end of the second quarter, including widely-publicized events in London and Kazakhstan. The surprising total for a world-wide fundraising effort is further amplified by the Giuliani campaign's decision not to compete in the Iowa Republican Straw Poll. Giuliani's absence from Iowa freed up critical time and resources that should have given him a considerable advantage in fundraising and cash on hand. It is a clear victory for us that we are expected to report $10 million for the third quarter and yet, still handily won the Iowa Republican Straw Poll.
Second, we see very encouraging signs in the cash on hand totals. Mayor Giuliani's cash on hand continues to fall. When all the numbers are calculated, it appears that the Giuliani campaign will only have $13 million cash-on-hand.
Raised
Spent
Cash-On-Hand
Investment Rate
WMR
$62.4m
$53.4m
$9m
85.5%
RWG
$46.6m
$30.6m
$16m
65.6%
Without Giuliani's Approximately $3 Million In General Funds…
WMR
$62.4m
$53.4m
$9m
85.5%
RWG
$43.6m
$30.6m
$13m
70.1%
Taking Out Governor Romney's Ad Spending Of $10.5 Million….
WMR
$62.4m
$42.9m
$9m
68.7%
RWG
$43.6m
$30.6m
$13m
70.1%
As you can see, the Giuliani campaign is spending heavily already – and has yet to begin a paid media campaign. Furthermore, when our ad spending is taken out of the equation, the Giuliani investment rate is actually higher than ours. That is most encouraging since we've put $10.5 million on the air in the key early primary states, and the polls in those states continue to show the benefits of that strategy.
Third, numerous reports have noted that Governor Romney has loaned money to his campaign. That is true, and continues to be of great benefit to the campaign in this most challenging of fundraising environments for Republicans. His ability to do so should not be understated when the ultimate goal is not "winning" one quarter's fundraising race, but rather beating the Democrats in November 2008. The ads he helped finance have moved Governor Romney – who began this campaign much less well-known than his primary opponents – competitive in every key early state and in an excellent position to capture the nomination.
Fourth, the so-far-unreported corollary to the Governor's loans is that current cash-on-hand numbers are not a reliable indicator of the relative financial strengths of campaigns down the homestretch.
Fifth, the trend we noted after the first quarter – that the field was already splitting into two tiers – is amplified by the latest numbers, and it is encouraging for the Romney campaign. Fred Thompson raised just $9 million – significant because this is his "low hanging fruit" quarter (by contrast, Governor Romney raised $21 million in primary funds in his first quarter and Mayor Giuliani $15 million). John McCain with $6 million barely squeaked past Ron Paul. Mike Huckabee's $1 million belies the much-reported "Ames bounce."
With his first quarter total, Fred Thompson will be hard-pressed not join others in the field in taking taxpayer funding. It bears repeating that any Republican candidate who takes taxpayer funding will not be competitive against a Democratic nominee who can raise an unlimited amount between now and the Conventions. As we wrote in our First Quarter memo:
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 $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.
We hope this memo provides some perspective on the candidates' fundraising to date. Once again, you are to be congratulated for an outstanding quarter and for putting Governor Romney in such a strong position to win the Republican nomination.

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