WASHINGTON (AP) – John McCain and the Republican National Committee started August with a hefty $96 million, financially flush and strongly positioned to compete with prolific fundraiser Barack Obama and the Democrats.

Republicans have been trying to even out the financial playing field after trailing Democrats in overall fundraising for most of the election cycle.

McCain has been a subpar fundraiser and has lagged the much-more adept Obama in monthly campaign tallies. But the RNC, with big-draw President Bush helping, has trounced its Democratic counterpart in collections. That has helped McCain and the GOP stay competitive financially with Obama and the Democratic National Committee.

The July numbers reflect how far McCain and the Republicans have come.

McCain raised $27 million in July, his largest one-month fundraising haul since clinching the GOP presidential nomination, and had $21 million available to spend, while the RNC brought in nearly $26 million, and had $75 million on hand to compete with the Democrats.

McCain, himself, now has 600,000 donors, while the party announced it had reached 1 million.

By comparison, Obama alone recently surpassed 2 million contributors, giving him a larger pool of donors to hit up for money again. He and the DNC have not yet disclosed their monthly takes.

“Our fundraising continues to be very healthy,” Rick Davis, McCain’s campaign manager, said in a conference call with reporters, noting that July was the fifth-straight month McCain has improved his cash flow.

Despite lackluster fundraising earlier this year, the campaign’s improved money situation has allowed the GOP nominee-in-waiting to keep pace with – if not exceed – his Democratic rival in advertising, including $6 million during the ultra-expensive Olympics and three straight months of multimillions for commercials in 11 battleground states.

McCain’s overall advertising budget for August is expected to exceed $20 million, and, by the convention in early September, Davis said McCain is on track to spend some $60 million on TV expenditures.

He released a new TV ad on Friday in key states that criticizes Obama on taxes.

“Celebrity? Yes. Ready to lead? No,” the ad says, with the Democrats’ name chanted in the background and pictures of him before adoring crowds. The commercial claims that “Obama’s new taxes could break your family budget,” mean “higher prices at the pump,” and are a “recipe for economic disaster.”

Obama spokesman Hari Sevugan responded: “This ad is just more of the same old, false and discredited attacks that Senator McCain knows aren’t true.”

For the general election, McCain and Obama are operating under different financial scenarios of their own choosing.

McCain has agreed to accept $84 million in public financing for the general election and the spending restraints that come with it.

Though the party committee can raise and spend as much as it wants to help him, the taxpayer money is the only cash that McCain can spend after accepting his party’s nomination at the convention next month. He essentially needs to drain down his privately funded campaign bank account this month – and that helps explain the heavy TV spending.

Davis put the budget for September, October and the first few days of November at more than $100 million – including the taxpayer money and accounts the RNC shares with the campaign – and said: “We will start the general election fully flush.”

Obama, emboldened by record-shattering collections in the primary, decided to forgo public financing for the general election and became the first major-party presidential candidate in three decades to do so. That means he needs to rely on his significant fundraising capabilities to build up his cash reserves going into the fall, whereas McCain needs to deplete his.

McCain’s last month total exceeded his $21 million June collection, at that point his best fundraising month; Obama raised more than twice that at $52 million.

Not counting July, Obama overall has raised about $340 million to McCain’s nearly $140 million.

AP-ES-08-15-08 1621EDT