Hillary's Curious Campaign Loan

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Hillary's Curious Campaign Loan

By Nat Parry
February 9, 2008

Only days before the make-or-break “Super Tuesday” primaries, Hillary Clinton dipped into her personal finances to lend her campaign $5 million, a move she kept secret until the day after she had battled Barack Obama to a standstill in the coast-to-coast voting.

If she had disclosed the loan before Super Tuesday, it might not only have generated troubling questions about the financial health of her campaign; it might have focused unwanted attention on the sources of the Clintons’ money.

Unlike other well-to-do politicians, the Clintons did not inherit their wealth or amass a fortune during a prior business career. Just seven years ago, on leaving the White House, the Clintons were millions of dollars in debt due to the costs of fighting legal battles.

Since then, they amassed a personal fortune – now estimated at about $30 million – largely from book contracts and the cachet of a former U.S. President, whose status attracted lucrative business deals and speaking tours, many involving overseas interests.

The proximity between the Clintons’ new-found wealth and Hillary Clinton’s presidential run raised eyebrows over whether the $5 million loan – and any future financial help she might give her campaign – could constitute backdoor financing from benefactors beyond what they could legally donate.

On Feb. 6, Sen. Clinton told reporters that the loan was “my money,” apparently meaning that she was not relying on the funds of her husband or anyone else. A Clinton spokesman later added that the loan was from her “share of their joint resources.”

Since 2001, Sen. Clinton has reported earning $9.9 million from Simon & Shuster for her memoir, Living History, on top of her Senate salary of $169,300 a year.

Still, the bulk of the family income derives from Bill Clinton’s speeches and his participation in business ventures, which -- when combined with the multi-million-dollar fundraising for his foundation and his presidential library -- have come to be known as “Clinton Inc.”

Last month, the Wall Street Journal reported that former President Clinton stands to make $20 million as he unwinds a complicated business relationship with Yucaipa Cos., the investment firm of his longtime supporter, billionaire Ron Burkle, which has connections to the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum. (WSJ, Jan. 22, 2008)

A week ago, the New York Times described the help Clinton gave Canadian mining financier Frank Giustra in securing a lucrative uranium deal with the repressive government of Kazakhstan in 2005, shortly before Giustra made an unreported $31.3 million donation to Clinton’s foundation. (NYT, Jan. 31, 2008)

Sen. Clinton’s most recent financial disclosure form showed that the former president also earned $10.2 million for giving 57 speeches in 2006. Of those speeches, 31 were delivered outside the United States for $6.4 million.

From 2001 to 2007, Bill Clinton collected nearly $40 million in speaking fees, according to a review by the Washington Post. His paid speeches – with fees as high as $400,000 – included appearances before landlord groups, biotechnology firms, food distributors, charities and leadership organizations all over the world.

The legal significance of Hillary Clinton’s assertion that the $5 million loan came from her portion of the couple’s wealth relates to the political sensitivity – and questionable legality – of a husband or wife financing the campaign of a spouse. Federal law only allows the candidate to make unlimited contributions to his or her own campaign.

For instance, when Sen. John Kerry arranged a $6.4 million loan to keep his 2004 campaign afloat, he used his Boston townhouse as collateral, rather than count on help from his multi-millionaire wife, Theresa Heinz Kerry.

Troubled Campaign?

Since the announcement of the $5 million loan, the Clinton campaign has tried to reassure anxious supporters that the loan does not signify a lack of resources or possible trouble staying competitive with Obama.

But Joe Trippi, a former adviser to John Edwards, said the loan is a warning sign. “It means she’s at a tremendous disadvantage moving forward,” he said. “The worst thing to be is an 800-pound gorilla who’s out of money.”

There’s also the mystery of why Hillary Clinton’s campaign needed this sudden infusion of cash. While Clinton justified the loan as necessary “to be competitive” with Obama, her campaign raised more money in 2007 than any candidate of either party.

Over the year, she brought in a total of $115.7 million, far above the $75 million goal she set at the beginning of the year. In comparison, the Obama campaign raised $102.2 in 2007. In the final three months of the year, she out-raised Obama by nearly $4 million.

It does appear that Obama out-raised Clinton in January, with reported receipts of $32 million for the month, compared to Clinton’s reported $13 million. But Clinton seemed to go out of her way to downplay that shortfall before Super Tuesday.

She claimed to have had “a great month fundraising in January,” a month in which her campaign “broke all the records.”

But there is concern among Clinton’s advisers that her smaller roster of contributors means that many have reached their legal limit and thus can’t give more. By contrast, Obama has relied on more small donors who mostly have not “maxed out.”

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Now, with Hillary Clinton emulating Rove’s fundraising machine, some campaign reformers wonder if similar favors are in store for her biggest bundlers. Some point out that her level of disclosure of bundlers does not even meet the low standard set by George W. Bush in 2004.

In a letter (PDF) to Clinton, Public Citizen said her campaign “fails to disclose bundlers’ cities and states of residence, how much money they raised other than to note that they have raised at least $100,000, or who they raised their money from.”

Her disclosure “not only fails to set an exemplary standard,” it doesn’t even “live up to the standard of George Bush and Dick Cheney,” the watchdog group said.

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