The Democratic Party finds itself in its most confident and comfortable financial position in years, though it still trails Republicans in almost every fund-raising category.

The Democrats' efforts to whittle away at the GOP's spending advantage has been aided by presidential nominee-to-be John Kerry's decision to skip public financing (search) and its spending limits, anti-Bush sentiment over the Iraq war, elimination of the party's debt, the formation of outside Democratic fund-raising groups and Howard Dean's Internet fund-raising explosion.

"Everywhere I go I'll talk to people and they really feel we have a chance," said Tony Coelho, a Democratic strategist and Al Gore's campaign chairman in 2000. "They're going to have $200 million or more. But I think as long as we're around $100 million we'll be competitive, we'll get our message out."

Democratic National Committee (search) Chairman Terry McAuliffe sees considerable progress toward that goal: The party entered April with $25 million in the bank to spend on Kerry's behalf and no debt, its best shape at this point in an election season in years.

But the Republican money advantage remains significant, no matter how it is measured.

President Bush spent about $40 million on TV and radio ads in his first month on the air, compared with only about $6 million for Kerry.

The Republican National Committee (search) had $54 million on hand Thursday and no debt. The GOP's House and Senate fund-raising committees each had roughly twice as much cash on hand as their Democratic rivals March 1, the most recent figures released.

The DNC, tackling two problems that dogged the party for years, has eliminated its debt while substantially improving its ability to attract small-dollar donations through the mail, a fund-raising method the GOP long has used more effectively.

McAuliffe is trying to limit the party's operating costs to the amount raised through direct mail, reserving the millions of dollars taken in through fund-raisers for the presidential race.

The DNC also is coordinating its fund-raising with Kerry. The party has raised at least $5 million for Kerry using its list of e-mail addresses, and Kerry is headlining DNC events in several cities where he is holding fund-raisers for his campaign.

The area of Democratic fund-raising that has most stung the Republicans has been conducted by new tax-exempt groups on the outside that have raised millions in large soft-money donations that the Democratic Party can no longer collect.

Those groups, funded by the likes of billionaire George Soros (search) and run by such Democratic heavyweights as former Clinton deputy Harold Ickes, are running ads in battleground states to help close the gap with Bush and which gave Kerry time to resupply his campaign treasury.

Republicans were worried enough this week that they filed a formal complaint with federal election regulators accusing Kerry of illegally collaborating with the outside groups and seeking an end to the spending.

Kerry, meanwhile, is setting Democratic fund-raising records of his own.

Kerry raised at least $42 million from January through March, with checks still being counted Thursday. That tops the Democratic record of $16 million raised in a quarter set by former Kerry rival Howard Dean, and rivals the all-time presidential quarterly record of $50 million set by Bush last year.

Bush has raised far more overall than Kerry — more than $175 million compared to at least $67 million for Kerry.

Kerry can break records in part because like Bush, he skipped public financing for the primaries, freeing himself from a $45 million spending cap he would have faced until his party's nominating convention in July.

In 2000, nominee-to-be Gore was already close to the spending limit in March, leaving him a long summer of relying on others like the DNC, which faced its own fund-raising challenges, to counter the ads of the well-financed Bush.

This time, Kerry can spend as much as he can raise between now and the convention. He hopes to have raised a total of roughly $105 million from January 2003 to the convention.

The Internet is playing a big role. Dean was the first Democratic presidential hopeful to raise millions of dollars online and showed Democrats how it could be done, urging donors to help meet fund-raising goals by specific dates or for specific campaign spending. Now he's helping Kerry.

Kerry raised more than $20 million online in March through two fund-raising drives that asked contributors to help him raise $10 million in each of two 10-day periods. Dean sees potential for the party on the Internet as well.

"One of the things I think people still have to come to grips with is this is a two-way organizing effort," Dean said of the Internet. "I think on the Net if you have a really good Internet setup and you blog, people get feedback right away from what they say to you. And we actually get feedback."