Federal cash on hand (CoH) disclosures help reveal some of the most important macro trends of a political cycle. Cash allows candidates to hire staffers and disseminate their message to voters; candidates without a significant war chest are at a notable disadvantage. Therefore, the quarterly disclosures provide vital information to individual campaigns about their opponents. But we also use CoH disclosures to evaluate the macro trends of a cycle. Last week we looked at the astronomical Presidential CoH numbers for 2020, and this week we will look at the 2020 House and Senate CoH disclosures by Party. They will show that while we only have data from one quarter, there looks to be more money in the political universe than ever, and neither party looks set to have a particularly strong advantage in CoH.
First Quarter Cash on Hand Analysis
Total 2019 Q1 CoH for House and Senate candidates is up $55M from Q1 2015 and down $6M from Q1 2017. Given the $136M already raised by Presidential hopefuls, one might assume that donors are more focused on the presidential race and less likely to give to other candidates. However, the meager $6M deficit between Q1 2019 and Q1 2017 (a year that shattered spending records) suggests otherwise. House and Senate candidates are raking in money at a level nearly consistent with 2017, and fairly unaffected by a crowded presidential primary.
The last two cycles have had several commonalities in CoH trends. Typically, CoH rises quickly in the off year and tapers during the election year, peaking in Q2 of the election year as candidates start to burn through their cash. However, the CoH growth curve has differed in the past two cycles. In 2015-2016, growth by quarter started at 18% (Q2 2015), fell to 14% (Q3 2015), fell again to 11% (Q4 2015), and hit a low point of 2% (Q1 2016). In 2017, the curve was more pronounced with a higher growth level of 21% in Q2 2017. The major difference, though, appeared in Q1 2018, when CoH increased by 13%, a full 11% more than the comparable 2015-2016 quarter. It remains to be seen whether 2019-2020 will have a growth rate as strong as 2017-2018. Although the numbers are close now, we should wait for 2019 Q2 data before we assume that 2020 will see as much House and Senate CoH as 2018 did.
CoH by party is another important metric. During the past two cycles, the party that started the cycle with the most CoH retained that edge through Election Day. As of now, the GOP has a slight edge in CoH for the 2020 cycle. However, their current $5M advantage is smaller than the starting advantage of either of the past two cycles so it is possible this could change. In 2018, the Democrats opened the cycle with a moderate advantage of $20M and rapidly expanded it over the following quarters. The small difference in initial CoH seems to match the conventional wisdom that neither party enters the cycle with a major advantage.
When we drill down further and only look at House CoH, interesting trends emerge. In 2018, the GOP started with a CoH advantage, as was expected given their hold of the House at the time. However, over the course of the cycle, the Dems were able to gain an advantage in CoH despite their large number of challengers. In 2019, the Dems have started with a large $44M advantage. Of course, they now have the advantage of a larger number of incumbents, but it will be interesting to track if GOP candidates are able to close that gap as Dems did in 2018; this might then provide an early indicator that the GOP is flush with cash and could threaten to retake the House.
The current breakout of CoH in the Senate shows a reversal of 2017-2018. In the 2018 cycle, the Dems were defending many seats and their incumbents had a sizeable head start in fundraising. This was reflected in the Q1 2017 CoH numbers. In 2019, the GOP is the party defending a large number of seats, and their incumbents have a $50M advantage in CoH. Democratic challengers for major Senate seats have been slow to emerge. Arizona is the only state so far with well-formed challenger field. When Q2 data is released, it will be worth noting if the CoH gap shrinks as the Dem challenger fields take shape in Maine, Colorado, Georgia, and Kentucky.
Initial disclosure data reveals a political universe in 2020 that is flush with cash. Record-breaking presidential fundraising does not seem to negatively impact the fundraising of House and Senate candidates, who are raising cash at a rate roughly equivalent to historic highs. The party holding the majority in both the House and Senate holds a substantial fundraising edge, and it remains to be seen whether the challenging party can close the resource gap and potentially flip the majority. We will circle back when the next quarterly reports are released to see how the landscape has changed.