Republican presidential candidate and former Massachusetts Gov. Mitt Romney arrives to speak at a campaign fundraising event, the first which has allowed cameras in, at The Grand America in Salt Lake City, Utah, Tuesday, Sept. 18, 2012.National Journal

After a summer in which he routinely posted larger fundraising hauls than President Obama, Mitt Romney was supposed to march into the home-stretch of the campaign accompanied by a war chest so massive it would induce insomnia at Obama headquarters in Chicago. But the GOP presidential nominee's deflating fundraising numbers this week suggest that Team Obama might get some sleep this fall after all.

Romney's campaign, in a report filed to the Federal Election Commission this week, showed $50.4 million cash on hand -- nearly $40 million less than Obama's reported $88 million. Romney's joint fundraising operation with the Republican National Committee and other party committees still has a bigger bank account overall. But that advantage "“$180 million on hand compared to President Obama's $120 million, according to The New York Times "“ is hardly as large as Republicans hoped it would be when the former governor reported hundreds of millions raised this summer.

So what happened? Campaign finance experts say Romney, and Obama for that matter, have masked their true financial figures by reporting money raised by allied groups like the RNC in addition to the principal campaign account. They have presented all of the money as being part of one big pot, but that conflation belies the fact that how a campaign raises cash determines how it can spend it.

More broadly, experts say, the confusion underscores the uncertainty of the first presidential campaign conducted in a dramatically reshaped campaign finance landscape brought forth by Citizens United and related court and FEC decisions. Rules that remained consistent for decades are now gone, and political observers and participants of all stripes are still racing to catch up.

"This is the first presidential election since 1972 in which both major party candidates are operating outside a major public financing system," said Michael Toner, a Republican and former  FEC chairman. "So it's a much more fluid situation that we're experiencing this fall."

To a large degree, Romney's fundraising was never as impressive as his bottom-line hauls suggested because much of the money was earmarked for accounts he doesn't directly control. Money raised with and for GOP committees still matters, but its value is diminished because the candidate doesn't directly control it. Money raised through joint committees, for example, is often funneled to state parties to help fund voter-contact efforts. But in that case, the cash can't be used for TV ads with the potential to shift presidential votes on a large scale.

"The candidates have presented the money to us, with the joint-fundraising, and the party and candidate money, as if they're all equivalent to each other," said Michael Malbin, executive director of the Campaign Finance Institute. "And they're really not. The three are not equally useful to candidate. They're not equally flexible."

The candidate's own campaign has maximum flexibility "“ capable of funding candidate travel, a ground game and TV ads that say exactly what the campaign wants to say, exactly when it wants to say it. So the fact that Obama's account has roughly $40 million more than Romney's, even if his allies have less on hand, is significant.

Obama has been able to raise more money through his campaign account because a greater portion of his contributions come from small donors. Major donors are important, but federal law means only $5,000 of their money can fund the official campaign account while the rest goes to party and joint-fundraising committees. In other words, $50,000 collected from many small donations is more valuable to a candidate than a $50,000 infusion from one donor.

According to numbers compiled by the Campaign Finance Institute and shared by Malbin, through Aug. 31 Obama had raised $147 million from donors whose aggregate contributions totaled less than $200 (more than the $121 million he had raised from small donors at the same time four years ago). Romney had raised $39.5 million from donors giving less than $200 by the end of last month, according to the institute (about $3 million less than McCain's total in 2008).

The larger donors also present another problem for Romney: Contributors offering $5,000 checks might have boosted his summer fundraising totals, but because they've reached their maximum contribution, he can't return to them for more money. Obama, meanwhile, can continually ask his small-donor pool for more cash.

"There's a practical problem there" for Romney, said Neil Reiff, a Democratic campaign finance lawyer. "The momentum is going to die because it's a pyramid scheme to some extent. You're claiming all this credit but you can't go back to same well."

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