Tags: hillary | has | cash | and | debt

Hillary Clinton's Dilemma: Awash Cash and Debt

Wednesday, 04 Jun 2008 10:14 PM

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WASHINGTON -- The climactic end of the Democratic presidential race left loser Hillary Clinton in an odd position: Her campaign is both awash in cash and buried in debt.

The decisions she makes in how to handle that predicament could affect her future political prospects. Similarly, Barack Obama might seize an opportunity to make peace with his vanquished rival by helping her pay off some of her $21 million in loans.

Clinton's latest report to the Federal Election Commission showed an April 30 cash balance of nearly $29.7 million, but that was deceiving. FEC spokesman George Smaragdis said the figure included $6 million in primary-season cash and $23.7 million in donations designated for the fall general election campaign. None of the general election donations can be used to retire debts accrued during the primary season.

Clinton's biggest problem, of course, is the $21 million in IOUs, which include $11,425,000 she is known to have lent her campaign through the first week of May and possibly millions of dollars more in yet-to-be-disclosed loans during her last-ditch primary campaign efforts.

With Clinton refusing to concede defeat on Wednesday, there was little talk about financial help from Obama.

One of Obama's aides said that "no discussions like that are occurring." The Clinton campaign did not respond to requests for comment.

Olive branches seem likely, however.

Campaign experts say it's not unusual for winning candidates to assist their vanquished foes on the money front at campaign's end.

If Obama tapped Clinton to be his running mate, which many observers consider unlikely, her debt would no doubt be quickly retired.

While Obama could not directly transfer more than $2,000 to Clinton's campaign, he could either urge his donors to send her money or invite selected contributors to accept refunds so they could write new checks to the Clinton campaign.

Hillary Clinton and her husband have amassed tens of millions of dollars since he left the Oval Office in 2001, so it's unclear to what extent she will seek to recover any of her personal loans.

If she does so, time is of the essence.

Under the 2002 law overhauling campaign finance rules, she has until the Democratic convention in late August to repay herself, after which she can recover only a maximum of $250,000. The restriction was aimed at making it less likely that lobbyists or other special interests would donate money that lands directly in a candidate's pocket.

Other options include keeping her fundraising team active and collecting donations from loyal boosters over the coming months and years, or transferring the debt to her Senate campaign and paying it off gradually as she approaches the end of her second term in 2012.

In her speech Tuesday night, Clinton urged her supporters to go to her Web site where they are greeted with an appeal for contributions.

She also could eventually terminate her presidential campaign committee and negotiate financial settlements with campaign vendors - including the media-consulting firm of her former top aide, Mark Penn, which was owed $4.8 million on April 30. Such settlements are rare and require FEC approval to ensure that corporations, which are banned from making campaign donations, are not effectively doing just that.

As for Clinton's $23.7 million general election treasure chest, that money amounts to a political opportunity fund.

If Obama helps her, she could reciprocate by asking those donors to re-designate their checks to his campaign.

She also could ask the donors to authorize her to put their money into a new committee _ perhaps one that would finance a 2012 presidential run or another bid for Senate.

She can't, as was possible for political candidates through the mid-1990s, just keep the cash.

(c) 2008, McClatchy-Tribune Information Services. reprinted Via NewsCom.

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