Bill and Hillary Rodham Clinton, who once deducted $6 on their taxes for donating three pairs of his underwear, plan to take a $13-million hit to their personal bank account by forfeiting loans she made to her failed presidential campaign.
The campaign will allow to expire a mid-September deadline for paying them back, sources close to the campaign told Politico, at which point they will automatically be recategorized as contributions, confirming a decision by Clinton to forego repayment that many had expected her to make.
However, Clinton could get some post-deadline wiggle room to repay herself — and possibly with less of a public backlash — if Sen. Frank Lautenberg (D-N.J.) prevails in a little-noticed challenge to a rule requiring candidates to pay back loans of more than $250,000 within 20 days of the election.
For the Clinton campaign, the 20-day loan-repayment clock will start ticking when her vanquisher Barack Obama officially ends the Democratic primary by accepting the party’s presidential nomination Aug. 28 at Invesco Field in Denver.
Clinton’s campaign declined to comment for this story.
But it’s unlikely her campaign would have been able to pay herself back in full before the clock ran out, given how difficult it’s been for her to raise cash since she conceded to Obama in June. Still, her campaign has raised enough money to go toward retiring the $25 million debt it reported at the end of June — which included the personal loans plus $12 million owed to vendors — that it could have written her a check for several million dollars before the deadline.
The Clintons’ willingness to forego partial repayment before the deadline is likely a recognition of the public relations drubbing they would have endured had the campaign paid the couple back millions before repaying campaign vendors, many of them small businesses far outside the Washington Beltway.
The financial sacrifice nonetheless stands out against the Clintons’ reputation for seizing sometimes eyebrow-raising opportunities to enrich themselves and enhance their lifestyles.
The couple came under intense scrutiny during Bill Clinton’s presidency for the astonishing profits made by the then-first lady in a string of late-1970s commodities trades and the couples’ investment in an Arkansas land deal that resulted in the convictions of their business partners.
Since the couple left the White House in 2001, Bill Clinton has spent almost as much on taxpayer-funded perks as the other two living presidents combined and has lived the high life partly on the dimes (and the private jets) of his billionaire buddies, even as the couple pulled in more than $110 million through huge book deals and speaking fees.
The money loaned to the campaign may be worth less to them than the hit to their public images (and her political prospects), should they collect millions while stiffing mom-and-pop businesses.
Clinton endured just such a run of bad press in April after Politico revealed her campaign for months put off paying hundreds of small vendors’ bills to free up cash for critical media buys at a time when she was falling badly behind Obama in the cash race.
Since dropping out of the race, she’s repeatedly emphasized that the contributions she’s soliciting will be used to pay off her debts to small vendors, not her loans.
In a video message posted on her website last week, she told her supporters she was “incredibly moved” by their “continued commitment. You’ve helped me so much make progress on raising the funds to retire the campaign debt to pay the small vendors who helped us take our message across the country.”
But cash for debt retirement is among the most difficult fundraising lifts in politics, and in June, the most recent month for which campaign finance data is available, she raised only $2.7 million towards retiring her debt.
Clinton insiders have grumbled that Obama hasn’t done much towards fulfilling a promise to help her raise cash from his donors, who have chipped in an estimated $500,000 to date. Perhaps as a result, Clinton made a final $1 million loan to her campaign after she’d already dropped out of the race, partly to pay back colleges and universities from which the campaign rented facilities.
In June, the campaign also paid back $150,000 it owed CareFirst BlueCross BlueShield for employee health insurance — a debt that caused headaches for her campaign, given her ardent advocacy for universal health care — and $14,000 to food service vendors including Gueros Taco Bar in Austin, Texas.
But it didn’t pay off any of the $5.3 million it owed pollster and strategist Mark Penn (in fact, his firm billed $667,000 in June), the $921,000 it owed its direct mail firm or the $267,000 owed to the company of top spokesman Howard Wolfson.
Political firms or those run by allies are likely to be a low priority in the debt repayment. That’s because they understand lingering bills from losing campaigns are part of the business and are unlikely to sue or complain to the press, realizing they’ll get their money when their client’s political — and fundraising — prospects improve.
Former candidates used to be able to raise money well after an election to pay back their own personal loans. But in 2002, the McCain-Feingold campaign finance reform bill instituted the 20-day deadline, after which former candidates can only pay themselves back $250,000 of any loans, plus interest (Clinton had charged her campaign $37,000 in interest at the end of June).
The idea was to avoid the specter of special interest contributions going straight into newly elected or reelected office-holders’ pockets.
But Lautenberg, who loaned his Senate campaign $1.7 million, contends in a letter to the Federal Election Commission that the provision should be rendered moot by a June Supreme Court ruling overturning a McCain-Feingold provision known as the Millionaire’s Amendment. The Court found that the amendment, which allowed opponents of self-funding candidates to accept larger contributions, infringed on wealthy candidates’ free speech rights. And Lautenberg’s lawyer asserts in the letter that the $250,000 loan repayment cap “is constitutionally suspect under the Court's ruling.”
If the FEC agrees with Lautenberg, that would “absolutely” clear Clinton to repay her loans well after the convention, said Jason Torchinsky, a campaign finance lawyer for the failed presidential bid of Republican Rudy Giuliani.
Torchinsky said if Lautenberg gets the all-clear, Clinton would be able to gradually pay herself back from funds raised by her presidential committee or her 2012 Senate reelection committee.
“Whether she will do that politically is another question that she probably won't answer for awhile,” Torchinsky said.
Clinton has scheduled debt-retirement fundraisers for after the convention, but neither her campaign’s spokesman nor its general counsel responded to e-mails asking if the campaign would take advantage if Lautenberg gets his way.
