Romney (pg. 2)

By Marcia Vickers, Fortune senior writer

"It wasn't always clear that Mitt wanted to go into politics," says Fraser Bullock. "My view is that he was raised in a household dedicated to public service. It was in his DNA." For Romney's part, he says he felt called to serve at this "special time in the history of America [with] the challenges and opportunities." He says he's the guy for the Oval Office because of his experience "innovating and transforming" in the private sector.

Indeed, Romney was a registered Independent in the early '90s. But in 1994, now a Republican, he surprised his Bain colleagues by trying to unseat longtime Senator Ted Kennedy, a Democrat. It was a disaster. Kennedy turned Romney's stellar business record around on him, running attack ads featuring union workers who said they'd been fired after Bain took over their company. Romney claimed he had nothing to do with the layoffs, but it's undeniable that, as with many restructurings, Bain deals involved hundreds of job cuts. In any event, Kennedy trounced Romney.

"Mitt learned a hard lesson there, perhaps too hard, that his business skills can be used against him on the political front," says Eric Kriss, a Bain Capital founding partner who was secretary of administration and finance when Romney was governor. (Romney did get a laugh line out of his defeat: "I was once campaigning in a poor section in Boston when a person came up to me and said, 'What are you doing here? This is Kennedy country.' I looked around at the vacant storefronts and boarded-up windows and replied, 'Yeah, it looks like Kennedy country.'")

Romney returned to Bain yet again, but one person who worked with him says he seemed "on the lookout for the next thing that would make him a bigger star." That would be the 2002 Winter Olympics in Salt Lake City. As early as 1999, a financial crisis was looming: The Games were mired in a bribery scandal and were running a $379 million deficit. Romney was asked to step in, and he immediately slashed budgets and boosted sponsorships. And since the Games were held just months after Sept. 11, 2001, he oversaw a huge security apparatus. He now says it was one of the most difficult things he'd ever done, comparing it to "arranging 17 Super Bowls a day for 17 days." The Games ended up with a $100 million profit. President Bush publicly praised his management skills, giving him his first brush with national fame.

On a roll, Romney then won the Massachusetts governor's race as a moderate Republican - socially liberal, fiscally conservative. He took office at the beginning of 2003. His administration had three major victories: the health plan, essentially a plausible blueprint for establishing universal health care; an inventive environmental plan (which he backed away from at the last minute, afraid it would be seen as too "Al Gore lefty," as a former advisor puts it); and a balanced budget.

Romney had big plans to revamp education too, but in 2005 "he started to drift off," says the advisor. One reason: He became president of the Republican Governors' Association, another national platform, which allowed him to travel the country supporting gubernatorial candidates. In 2006, the last year of his term, the Boston Globe noted that he'd spent 212 days out of state. Romney was already on his next goal: the presidency.

Mitt-a-thon

This past January Romney raised $6.5 million in one day. He had invited 400 wealthy supporters to a "Mitt-a-Thon" at the Boston convention center and asked them to phone friends and business contacts for donations. While Supertramp's "Give a Little Bit" played, four gigantic TV screens hung from the ceiling broadcast various moments of Mitt magnificence - the Olympics, speeches, etc. There were 40 call centers, each with state-of-the-art technology. "I call it the blitzkrieg fundraiser," says Alex Vogel, a Republican lobbyist with no ties to Romney or other candidates. Vogel notes it was Romney's way of conveying, "Hey, I'm for real."

Given Romney's business acumen, it's no surprise he's assembled one of the most successful political money machines ever. "Romney is an incredibly aggressive and efficient fundraiser," says Vogel, who attributes it to his private-sector skills. In April, when he was still relatively unknown nationally, Romney made headlines when his campaign reported it had blown past the rest of the Republican field and raised $23 million in the first quarter, rivaling Hillary Clinton's $26 million and surpassing Barack Obama's $21 million.

Romney got serious about fundraising three years ago when he started the Commonwealth PAC (political action committee). It's a so-called leadership PAC - that is, the money donated is supposed to push issues; by law, it can't be used to fund the founder's political campaign. In practice, a leadership PAC "can be a bit of a personal slush fund," says Massie Ritsch, communications director for the Center for Responsive Politics in Washington, D.C. The money is often used in a candidate's "exploratory committee" phase to finance travel and staff. Last year Romney used Commonwealth PAC bucks to visit Guantánamo Bay and Iraq.

Romney aggressively took advantage of a loophole that allows donors to contribute to PAC affiliates in multiple states all at one time. He set up affiliate PACs in Iowa, South Carolina, New Hampshire, Arizona, and Michigan. (The most an individual can contribute to a federal PAC like Commonwealth is $5,000 annually; state PACs have different, typically higher limits. A dozen states, including Michigan and Iowa, have no limit at all.) That way Romney supporters were able to spread their contributions among the various state PACs. Last year, for example, Lee Munder, a Florida investment advisor, gave $5,000 to Romney's federal PAC, $5,000 to his New Hampshire affiliate, $18,250 to his Iowa affiliate, $18,250 to the one in Michigan, and $3,500 to his South Carolina fund, according to the Commonwealth PAC. (Romney may not be able to use PAC money to fund his campaign now that he's an official candidate, but he can still dole it out to state Republican candidates to build his power base.)

Romney has also raised more money than any other candidate, Republican or Democrat, over the Internet. In the first quarter ComMitt.com brought in $7.2 million, vs. $6.9 million for Obama and $4.2 million for Clinton - and Romney got more glowing headlines, this time about his red-hot "Netroots" effort. But those numbers were more tactical dexterity than common-man groundswell: The Romney campaign, it turns out, was directing big donors to its website. "It's an innovative use of the Internet," says Patrick Ruffini, an e-campaign expert who recently worked for Giuliani. "We've been focused on a new audience. But you can't neglect the importance of using technology to activate an existing base of supporters."