McCain cuts staff
amid slump in fund-raising

Republican John McCain struggled to keep his deeply troubled campaign afloat Monday, laying off dozens of staffers after lackluster fund-raising and excessive spending left him with just $2 million for his second presidential bid.

Considered the GOP front-runner just six months ago, the Arizona senator trails his top rivals in money and polls. McCain's fortunes soured this year as he embraced President Bush's troop increase for the Iraq war and a bipartisan immigration bill that has divided the GOP. He also has fought to win over skeptical conservatives who make up the core of the party.

Officials with knowledge of the reorganization said more than 50 staffers--and perhaps as many as 80 to 100--in every department of the campaign were being let go, and senior aides will be subject to pay cuts. These officials spoke on condition of anonymity because the campaign would not publicly discuss specifics.

The campaign's fundamental leadership will not change. Terry Nelson, a veteran of President Bush's winning 2004 campaign, will remain campaign manager but said he would volunteer his time instead of drawing a salary for the next few months. A few senior aides were doing the same.

''We confronted reality, and we dealt with it in the best way that we could so that we could move forward with this campaign focused on winning our primaries in the early states,'' Nelson said.

McCain raised just $11.2 million in the second quarter of the year, which ended Saturday. That was less than the $13.6 million he brought in during the year's first three months, when he came in third behind Mitt Romney and Rudy Giuliani.

In what would be a major strategic shift, the campaign said it was seriously considering taking public matching funds of about $6 million. But doing so could tie the campaign's hands by limiting the amount of money it can spend in individual states, particularly if his rivals forgo taxpayer money as expected.

Nelson acknowledged that the campaign has faced a series of challenges over the past six months and said officials had made ''incorrect assumptions'' about its fund-raising ability.

''At one point, we believed that we would raise over $100 million during this calendar year, and we constructed a campaign that was based on that assumption,'' Nelson said. That, he said, proved to be wrong.

Thus, aides said, McCain needed to cut staff positions to ensure that he had enough money to compete and run television ads in early-voting states. They made clear that the campaign now would focus primarily on the first states to hold votes--Iowa, New Hampshire, and South Carolina.

As 2006 ended, McCain had built an expansive national campaign organization that melded top operatives from Bush's political and fund-raising team with his own base of longtime loyalists from his failed 2000 presidential run.

But the money hasn't come in as expected, and the initial spending soared.

At its peak, McCain's payroll consisted of 150 staffers, according to Federal Election Commission records. From January through March, McCain spent nearly $1.6 million on salaries, the highest among Republican candidates. Romney was second at $1.1 million, and Giuliani spent nearly $900,000.

As the second financial quarter began in April, the campaign cut some consultant contracts and low- to mid-level jobs, and revamped its finance operation. However, McCain's fund-raising continued to lag.

The financial difficulties have fueled speculation that McCain would drop out of the race, but he has dismissed that notion, and his aides insisted Monday that he was in no way abandoning or suspending his campaign. They argued that McCain's character, experience, and leadership would carry him to the nomination when voters tune into the race.

As his aides notified staffers, McCain embarked on his sixth trip to Iraq, where he will spend the July 4 holiday with U.S. troops. He last visited Iraq in April, when he was widely criticized for saying he was cautiously optimistic about the effort's success even as he toured Baghdad under heavy military guard. He is to address the public about the war upon his return.

Six months before primary voting begins, McCain is struggling for some semblance of momentum.

His popularity among Republicans has dropped since the start of the year, in part because of his support for measures in Congress that don't sit well with the GOP's base, like the immigration bill. He declined to participate in an early test of organizational strength in the leadoff voting state of Iowa this summer, and the 70-year-old is fighting the perception that he is yesterday's candidate.

McCain's support in national polls has slipped. He is in single digits in some surveys in Iowa and South Carolina, trailing Giuliani, the former New York mayor; Romney, the ex-governor of Massachusetts; and Fred Thompson, the actor and former Tennessee senator who hasn't officially entered the race.

Among other Republicans, officials with underdog Sam Brownback's campaign said he raised about $1.5 million in the second quarter; he raised $1.3 million in the first. (Liz Sidoti, AP)