FACED with deep political divisions, unusually high stakes and candidates running neck and neck, Americans are on the way to holding the first billion-dollar presidential ballot.

President Bush and John Kerry are raising money from record-breaking numbers of donors and spending it in previously unheard amounts. Mr Kerry’s campaign this week announced the largest single advertising “buy” for either party, writing a $25 million (£14 million) cheque to run two 60-second autobiographical commercials in nineteen states for three weeks.

Come polling day on November 2, such an amount will seem like small change, according to analysts, who say that the total spent on the election will comfortably top $1 billion.

“It’s an extraordinary increase in the amount of money going into the race,” Anthony Corrado, a campaign finance expert at Colby College in Maine, said. “What’s most extraordinary is the amount of money flowing to the candidates. Partisan divisions are very strong in the US right now, and given the expectation of a very close race, you have high levels of competition driving political fundraising in a way that we have never seen before in the US.”

To date, Mr Bush, Mr Kerry and the losing Democrat contenders have spent more than $400 million, more than double what had been raised at this point four years ago. A few months ago analysts were wondering how on earth Mr Bush was planning to spend the $170 million his campaign was aiming to raise: “Now they are asking whether he will have enough money,” Mr Corrado said.

Ironically new campaign finance laws aimed at curbing the influence of multimillion- dollar “soft-money” donations to parties are partly behind the increase. The McCain-Feingold laws, named after the senators who sponsored the 2002 legislation, doubled to $2,000 the limit on individual donations. That was to compensate for the crackdown on parties receiving money.

That money — from businesses, pressure groups and wealthy individuals — has instead found a loophole in the form of “527s”, so-called after the tax code that allows them. They are non-profit, tax-exempt groups that can raise and spend money as freely as they wish to advertise their politics or their candidate, as long as they refrain from co-ordinating with another campaign. The largest 12, funded by benefactors such as George Soros, the financier, are all sympathetic to Democrats and have gone a long way to redressing the funding balance enjoyed by Mr Bush. So far they have raised $68 million and expect to double that by November.

With Iraq, the War on Terror and America’s burgeoning deficits as the backdrop, the election is being played for higher stakes than at any time since 1968, or perhaps 1948.

That has seen small donors send in money in unprecedented numbers. Mr Kerry now has more than 400,000 donors and Mr Bush 833,000. Both national parties have received money from a million new donors each.

Mr Bush is expected to spend about $220 million and Mr Kerry $120 million before their respective conventions. Each will then receive $75 million of federal funds to spend until polling day.

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