Okay, we admit it -- we think it’s deliciously delightful that so many high profile “reformers” get caught by the campaign finance traps they set for themselves. Clinton’s Campaign Cash Conundrum

Okay, we admit it -- we think it’s deliciously delightful that so many high profile “reformers” get caught by the campaign finance traps they set for themselves.

A couple of weeks ago, the McCain-Feingold maven making news was Speaker of the House Nancy Pelosi. As we explained then, it seemed the Speaker -- not to mention her legal advisors -- had forgotten that her beloved Bipartisan Campaign Finance Reform Act made it illegal for a federal candidate to lend herself to a national television campaign when the advertisements would air in the days and weeks before her own name appeared on a ballot. (Read “Trying Her Best to ‘Save the World’ … Illegally”)

This week, the ridiculous riddle of campaign finance regulations caught up to an arguably even bigger fish -- the former First Lady of the United States … who also just so happened not to become her party’s nominee for President.

You see, Hillary Clinton’s presidential campaign may be turning out the lights and closing up the shop, but that doesn’t mean all the bills are paid. And what a pile of bills there is.

According to the Clinton campaign’s filings with the Federal Election Commission, “Hillary Clinton for President” racked up a debt of nearly $20 million by the end of April for the primary election. That was more than a month before the Clinton campaign stopped competing, which occurred only after all the primaries concluded in early June. So it is certainly possible -- probably likely -- that more red ink ended up on Clinton campaign’s books by the time all was said and done earlier this month.

Now, we admit that the debt is pretty interesting in and of itself. After all, the majority of it, at least by the end of April, was owed to Clinton, herself, since she loaned her campaign $11.4 million. The rest, amounting to about $9.5 million, is mostly owed to staff and loyalists and their consulting, polling, strategy and event shops.

For instance, the Clinton campaign owes former chief strategist Mark Penn and his political polling and strategy firm more than $4.8 million, not to mention another nearly $700,000 to ad guru Mandy Grunwald and her media shop, as well as another more than $216,000 to senior advisor Minyon Moore and his political consulting business.

What’s more, those same FEC filings showed that, while the Clinton campaign had sizable outstanding loans and bills, “Hillary Clinton for President” also had millions -- indeed, tens of millions – of dollars of “cash on hand.” In other words, any average business person who was not familiar with the complexity of campaign finance would say the red ink wasn’t really troubling for a couple reasons.

First, on paper, it looked like, all told, the Clinton campaign had millions of dollars of “cash on hand” it could use to pay off much of the debt, especially since the campaign had finally ended and there would be no more spending for the future. Second, since the debt was owed to Clinton, herself, and a number of her friends, surely there would be no collections agents calling on the phone or knocking at the door any time soon.

On both counts, however, any reasonable business person would be wrong. You see, the Clinton campaign faces a debt crisis not because either the candidate or her friendly creditors believe they need to get paid now, but because the federal election laws say so.

As explained in multiple articles over the past few weeks, most of Clinton’s “cash on hand” is tied up, at least theoretically. As everyone well knows, there are federal contribution limits to political campaigns, including a limit for the primary election, and another for the general election. Unfortunately for Clinton, most of her reported “cash on hand” is not from contributions for the primary election, but instead is money raised for the general election that will never come. Indeed, this is why that cash was “on hand” -- because campaign finance laws made it illegal for Clinton to use that money on the primary election.

What’s worse is that, if a contributor already “maxed out” for the primary, then there is a reasonable argument that those contributors’ general election contributions can’t be used to pay off primary debt. Then Clinton would be “circumventing” the primary contribution limits just as if she had used the money while she was still running in the primary election. In layman’s terms, all of this simply means that those millions of dollars that were contributed to Clinton for the general election could be off limits when it comes to paying her debt – all of which resulted from the primary election.

Likewise, the Clinton campaign can’t really trade on the loyalty and friendliness of its vendors to write off the debt. Of course, businesses do just that for customers and colleagues every day. But under our campaign finance laws, such a favor could be considered an illegal campaign contribution that would only lead to election law problems not only for the Clinton campaign but the vendor, too.

And, if all this wasn’t enough, Clinton faces a tight deadline of her own if she wants to get back the $11.4 million she loaned her primary effort. That’s because under McCain-Feingold -- which she co-sponsored in the Senate -- any money loaned by a candidate to her own campaign must be paid back by the end of the election cycle, which in Clinton’s case will occur when the Democrats officially nominate Barack Obama as their presidential candidate at their August convention in Denver. Remember, the federal campaign finance laws treat the primary and general elections as separate election cycles.

Now, all is not lost in Hillaryland. Campaign finance lawyers have suggested that maybe, just maybe, Clinton could make a series of transfers so that her presidential primary election debt and most of her presidential general election contributions could end up in her Senate campaign treasury for an upcoming re-election run in 2012. Of course, such transfers would really be a fiction -- not really building a campaign war chest for a future Senate run, but instead allowing her to use general election “cash on hand” to pay off primary election debt. Nevertheless, multiple election lawyers, including former FEC officials, are suggesting that it might be permissible.

We have a different suggestion for the recently former presidential candidate, who also happens to be a less recent former best-selling author -- write another book or two.

During the campaign, when Clinton finally unveiled her post-White House tax returns, one of the biggest line items was more than $10.4 million in book income. That’s only $1 million short of the loan Clinton made to her campaign, so one book would pay Clinton back and another would pay her vendors.

In short, maybe Clinton and her advisors should spend a little less time worrying about the intricacies of campaign finance rules, and a lot more time pitching publishers on a couple of manuscripts. It would sure be an easier way to pay off that debt than laundering the old campaign cash she already has on hand.

June 12, 2008
[About CFIF]  [Freedom Line]  [Legal Issues]  [Legislative Issues]  [We The People]  [Donate]  [Home]  [Search]  [Site Map]
2000 Center For Individual Freedom, All Rights Reserved. CFIF Privacy Statement
Designed by Wordmarque Design Associates
News About The Supreme Court Conservative News Legislative News Congressional News Agricultural News Campaign Finance Reform News Judicial Confirmation News Energy News Technology News Internet Taxation News Immigration News Conservative Newsletter Legal Reform News Humorous Legal News News About Senator Kennedy News About The War In Iraq Tribute to President Ronald Wilson Reagan