CNN alleged "creative math" in Obama's fundraising before debunking the allegation

During the July 17 edition of CNN's The Situation Room, host Wolf Blitzer repeatedly teased a report on Sen. Barack Obama's (D-IL) fundraising practices by asserting that Obama is using "creative math" and suggesting he is "overselling his grassroots support" in reporting that 258,000 individuals donated to his presidential campaign in the first six months of 2007. Blitzer stated that this "new flap" is due to the fact that the campaign counted those who purchased campaign merchandise as donors. In his ensuing report, however, CNN correspondent Tom Foreman rebutted the suggestion that Obama engaged in "creative accounting," reporting that Obama is actually "obeying the law in all of this" because "[u]nlike most of his opponents, Obama sells his campaign merchandise directly, instead of outsourcing it," and the law requires that money paid for merchandise sold directly by the campaign be counted as a contribution. Foreman also refuted the claim that Obama is "overselling his grassroots support," reporting that "people who have bought campaign merchandise only count for about 1 percent of all the donors who have given Obama money."

Indeed, the Federal Elections Commission states on its website that "anything of value given to influence a Federal election is considered a contribution" and explains that "if you pay $15 for a T-shirt sold by a campaign, your contribution amounts to $15 (even though the T-shirt may have cost the committee $5)." The Obama campaign website explicitly states this -- twice -- on its "Obama Store" homepage: "All purchases made on the Obama Store are 100% contributions to the campaign and count toward your overall contribution limit." Neither Foreman nor Blitzer mentioned this fact. Foreman's report was followed immediately by a brief segment in which CNN Internet reporter Abbi Tatton visited the online "Obama Store." Tatton also failed to note that the website informs patrons that their purchases, by law, count as campaign contributions.

Similarly, on the July 18 edition of CNN's American Morning, anchor John Roberts teased a report by Foreman, asking: "Is Barack Obama's online fundraising just smoke and mirrors?" However, in his report, Foreman aired video of Obama saying: "The reason that they're listed as donors is because, if they purchase it through the campaign, and it goes into the campaign coffers, it would be a violation of campaign laws if we did not list that. So, all we're doing is abiding by the law." Foreman added: "The raw read? He's right. Other campaigns have farmed their merchandising out to vendors, so they can't count their buyers as donors."

The CNN reports followed a July 17 New York Times article reporting that "Mr. Obama's campaign has also employed novel tactics -- like counting sales of $5 speech tickets or $4.50 Obama key chains as individual contributions -- to pump up his numbers and transform grass-roots enthusiasm into more useful forms of support." The Times article made no mention of the fact that this "novel tactic" is apparently required by law. The Times also reported that "[n]o other campaign is known to have listed paraphernalia sales as donations." However, CNN's Foreman reported: "At least four other presidential candidates do the same thing, [Sen.] John McCain [R-AZ], [Rep.] Tom Tancredo [R-CO], [Rep.] Duncan Hunter [R-CA], and [Rep.] Dennis Kucinich [D-OH]."

Wall Street Journal OpinionJournal.com editor James Taranto touted the Times' story, writing in his July 17 "Best of the Web Today" column that Obama's "numbers are inflated," adding: "This doesn't seem fraudulent, but it sure is cynical."

From the July 17 edition of CNN's The Situation Room:

BLITZER: And Barack Obama's grassroots cash bonanza, his campaign apparently using some creative math to report a massive list of donors.

[...]

BLITZER: And if you bought a Barack Obama t-shirt or a button, his campaign is labeling you as a donor. Is he overselling his grassroots support?

[...]

BLITZER: Coming up, new information about Barack Obama's record-breaking donor list. Did he overstate his grassroots support, or simply use some creative accounting? Obama's t-shirts and buttons are at the center of this new flap. We're going to check out the price tags online.

[...]

BLITZER: Sen. Barack Obama's breaking records when it comes to the battle for presidential campaign cash, but some people now seem to be questioning the way he's adding up all of his numbers. Let's go to CNN's Tom Foreman, he's in New York. He's following all of these numbers. What is going on, Tom?

FOREMAN: Well, Wolf, to put it simply, what is going on is Barack Obama has surprised a lot of people with all the money he has raised. And now those buttons and bumper stickers and T-shirts are causing a bit of a stir.

OBAMA [video clip]: We've got people who have been giving $5 and $10 and $25.

FOREMAN: It was a record-breaking announcement, Barack Obama winning the money race big, both in contributions and the number of donors.

JOHN DICKERSON (Slate.com chief political correspondent) [video clip]: You get these stories of people who come to these Obama events and say, I -- I haven't much been interested in politics, but, here, I'll give you the money out of my handbag. That gives a sense of momentum. It gives a sense of movement.

FOREMAN: What's creating the fuss is the simple fact that the senator from Illinois is growing his supporter list in a nontraditional way. People who buy Obama campaign hats, buttons, and bumper stickers are all being counted as part of that record-breaking number of contributors.

At least four other presidential candidates do the same thing, [Sen.] John McCain [R-AZ], [Rep.]Tom Tancredo [R-CO], [Rep.] Duncan Hunter [R-CA], and [Rep.] Dennis Kucinich [D-OH]. Unlike most of his opponents, Obama sells his campaign merchandise directly, instead of outsourcing it. The people who have bought campaign merchandise only count for about one percent of all the donors who have given Obama money.

OBAMA [video clip]: The reason that they're listed as donors is because, if they purchase it through the campaign, and it goes into the campaign coffers, it would be a violation of campaign laws if we did not list that. So, all we're doing is abiding by the law.

UNIDENTIFIED MALE [video clip]: There's a whispering campaign that Obama is trying to inflate his donor numbers.

FOREMAN: Obama dismissed those charges.

OBAMA [video clip]: We're so far ahead of everybody else in terms of number of donations, that we don't need to be playing with the numbers.

FOREMAN: And he may be actually on to a successful fund-raising venture.

UNIDENTIFIED MALE [video clip]: The campaign spokesman tells me, though, that they've raised several hundred thousand dollars through this process. It is a pretty novel way not only to raise money, but also to grow the campaign small-donor list.

FOREMAN: And it's a novel way not to make your opponents not very happy.

You know, we mentioned this idea of a whisper campaign. What that's really all about is there are people who don't like the fact that Obama seems to have a lot of grassroots support, that he has big numbers of people. So, they are looking at any way to tell somebody who will tell somebody who will tell a reporter, hey, maybe he's not counting it right.

But the truth is, he's obeying the law in all of this. And he gets to count them right now, whether or not opponents like it -- Wolf.

BLITZER: Interesting. Thanks very much, Tom Foreman, looking at all those numbers for us. Let's go straight to our Internet reporter, Abbi Tatton, right now. Abbi, how much does a campaign T-shirt, for example, cost in the Obama store?

TATTON: Well, Wolf, this one sells for $20, and, yes, 8 cents at the Obama store, which is featured prominently at the front page of the Barack Obama Web site, and lets supporter even buy their campaign merchandise, pins, hats, all American and union-made, it says on the site, in bulk.

But some of the things go for a lot cheaper than that T-shirt, two stickers, for example, for five bucks. The keychain, which is so popular right now, it's only available on backorder on the website, selling at $4.50 -- the store one of the many ways that Obama is using the website to bring in these small dollar amounts -- Wolf.

BLITZER: Abbi, thank you for that.

From the July 18 edition of CNN's American Morning:

ROBERTS: And is Barack Obama's online fundraising just smoke and mirrors? Tom Foreman looks into claims of fuzzy math. "Raw Politics," coming up next.

[...]

FOREMAN: The Obamarama under the O-microscope. Some political insiders are suggesting he has inflated the number of his donors by counting every person who buys a hat, bumper sticker, or button. Response?

OBAMA [video clip]: The reason that they're listed as donors is because, if they purchase it through the campaign, and it goes into the campaign coffers, it would be a violation of campaign laws if we did not list that. So, all we're doing is abiding by the law.

FOREMAN: The raw read? He's right. Other campaigns have farmed their merchandising out to vendors, so they can't count their buyers as donors. They call it sour grapes, kids.

The New York Times reported on July 17:

Just moments before he arrived, Mr. Obama had said goodbye to a less exclusive crowd of 10,000 that had gathered to hear him speak across the bay in Oakland. They paid nothing to hear him, but spent $40,000 on Obama T-shirts, baseball caps, buttons and other knickknacks. And the Obama campaign registered each of the purchasers as one of the record 258,000 contributors it signed up in the first six months of the year.

Since he got into the race, Mr. Obama has hopscotched from big-ticket to big-crowd events across the country, trying to turn the early excitement about his candidacy into campaign cash and a national political organization.

Like other candidates, he has worked hard to cultivate a network of bundlers, who can solicit the checks from individual donors for the legal maximum of $2,300 that are the mainstay of any major campaign. But to capitalize on his celebrity, Mr. Obama's campaign has also employed novel tactics -- like counting sales of $5 speech tickets or $4.50 Obama key chains as individual contributions -- to pump up his numbers and transform grass-roots enthusiasm into more useful forms of support. No other campaign is known to have listed paraphernalia sales as donations.

Taranto wrote in his July 17 Wall Street Journal OpinionJournal.com "Best of the Web" column:

The first is a New York Times piece, titled "Obama's Camp Cultivates Crop in Small Donors." We've heard this before, of course -- but when you read the Times piece, however, it turns out that the numbers are inflated:

Just moments before he arrived [at a $2,300-a-plate fund-raiser in San Francisco], Mr. Obama had said goodbye to a less exclusive crowd of 10,000 that had gathered to hear him speak across the bay in Oakland. They paid nothing to hear him, but spent $40,000 on Obama T-shirts, baseball caps, buttons and other knickknacks. And the Obama campaign registered each of the purchasers as one of the record 258,000 contributors it signed up in the first six months of the year. ...

To capitalize on his celebrity, Mr. Obama's campaign has . . . employed novel tactics -- like counting sales of $5 speech tickets or $4.50 Obama key chains as individual contributions--to pump up his numbers and transform grass-roots enthusiasm into more useful forms of support. No other campaign is known to have listed paraphernalia sales as donations.

This doesn't seem fraudulent, but it sure is cynical.