Think of it as Hillary Clinton's own personal credit crisis: With her Presidential prospects fading fast, her once powerful fundraising machine has stalled out. That's left the senator from New York racking up debt almost as fast as rival Barack Obama is piling on the superdelegates, even as questions have grown about how she'll be able to pay it all back.
On the eve of the West Virginia primary, campaign officials conceded that she's already some $20 million in the red. And just as her strong showing in that state has done little to alter the delegate math that favors Obama, the math Clinton faces on the money side will likely get worse the longer she stays in the race. "By continuing to incur costs even as her funding falls off, she's probably digging herself a bigger hole," says Jan Witold Baran, a specialist in campaign finance law with the law firm of Wiley Rein.
Whatever the final tally, Clinton's debt already far exceeds the level typically seen at the end of a campaign. With the exception of multimillionaires such as Mitt Romney and Steve Forbes, who always intended to finance their own quixotic runs at the White House out of their own pockets, most candidates are forced to wind up their campaigns when they fall a few million into the red. By tapping into her own fortune—the Clintons have earned $109 million since Bill left office, and Hillary has lent her campaign $11.4 million in recent months—she has been able to hang on far longer. The rest of the debt is owed to a huge array of consultants and vendors—everything from the $4.8 million she owed pollster Mark Penn's firm at the end of March to a few hundred dollars for equipment rental in various cities.
All of which raises a big question: If Clinton ultimately is defeated by Obama, where will the money come from to pay off those debts?
Uncertain Debt Manuever
She can't just walk away from the obligations, other than the money she lent herself. Even if the many political consultants and operatives who depend on campaigns were willing to cut her a deal, knowing there will be more work to come in a future election, that would be considered an illegal campaign donation. And while she can certainly continue to hold fundraisers for months and even years to come, as many indebted candidates do after losing a race, Clinton will have to find a slew of new donors who haven't already given her the maximum $2,300 that an individual can give a candidate in the primary.
That will be difficult, but not impossible: Presidential candidate or not, Clinton will remain a very powerful figure in Washington who may one day run for President again. "It's hard to imagine donors will be skinflints towards a sitting senator with political legs," says Sheila Krumholz, the executive director of the Center for Responsive Politics. "People don't want to burn bridges."
Still, that approach is likely to bring in only so much; all told, Clinton would need nearly 9,000 new donors at $2,300 a pop to wipe the slate clean. And it would do little to resolve her most urgent problem: If she wants her campaign to pay her back the $11 million she has lent it, the campaign has to come up with the money to reimburse her by the time the Democratic convention is held in late August. Thanks to a change in campaign finance laws, candidates can only fully reimburse themselves for any personal money they've lent their campaigns until the end of a race; after that, they are limited to reimbursements of $250,000. In Clinton's case, the reimbursement clock would stop when Obama officially receives the party's nomination.
Some campaign finance specialists believe Clinton may have one legal manuever open to her to get around tough funding restrictions. As of Mar. 31, her campaign had $23 million in hand to spend on the general election, much of it from donors who've given the $2,300 maximum for the primaries as well as another $2,300 for the fall general election campaign.
Kenneth Gross, a former associate general counsel for the Federal Election Commission now with Skadden, Arps, argues that Clinton may be able to transfer those general election contributions to her Senate reelection campaign, as long as the donors agree to the swap. Then, Gross says, her Senate campaign could take over the primary debt as well, and use those funds to pay down the debt.
The Hush-Hush Solution
But the law is ambiguous, and other experts are far less certain. Since much of that funding comes from donors who've already hit the legal limit for primary donations, such a move may not pass muster. "It's an uncharted sitution; they can ask the FEC, but it's unclear they would succeed," says Michael Toner, a former FEC chairman now with Bryan Cave. Paul Ryan, an attorney with the the watchdog group Campaign Legal Center, is even more adamant: "Transfering the money wouldn't help," he says. "They could only use those funds to pay the primary debt if it comes from people who haven't already maxed out their primary contributions."
The confusion is all the more reason why most political analysts say the most likely solution is the one neither campaign will openly talk about yet: Once Clinton leaves the race, Obama would agree to help raise the money she needs. Such bury-the-hatchet help from the victor has been a common practice in many past campaigns—and it would go a long way toward easing the tensions between the two camps and assuring that Clinton, and her supporters, back him fully.
"It's easy to be a gracious winner," says Charlie Cook, the publisher of the nonpartisan Cook Political Report. "Plus, he'll need her a lot more than she needs him."
So look for Obama to hold a few big fundraisers with Clinton, or appeal to his own maxed-out primary donors to cut a $2,300 check for Clinton as well. It's just one more strange turn in a political season that's already had more than its share of surprises.