Sunday, March 30, 2008

Politico: "Deadbeat" Clinton campaign not paying its bills

A pair of Ohio companies owed more than $25,000 by Clinton for staging events for her campaign are warning others in the tight-knit event production community — and anyone else who will listen — to get their cash upfront when doing business with her. Her campaign, say representatives of the two companies, has stopped returning phone calls and e-mails seeking payment of outstanding invoices. One even got no response from a certified letter.

Their cautionary tales, combined with published reports about similar difficulties faced by a New Hampshire landlord, an Iowa office cleaner and a New York caterer, highlight a less-obvious impact of Clinton’s inability to keep up with the staggering fundraising pace set by her opponent for the Democratic presidential nomination, Illinois Sen. Barack Obama.[1]
The narrative of the Democratic primary campaign is turning decisively against Hillary Clinton. It appears that the decisive factor will be money: the Obama campaign has it and the Clinton campaign doesn't:
The New York senator’s presidential campaign ended February with $38 million in the bank, according to a report filed last week with the Federal Election Commission, but only $16 million of that can be spent on her battle with Obama.

The rest can be spent only in the general election, if she makes it that far, and must be returned if she doesn’t. If she had paid off the $8.7 million in unpaid bills she reported as debt and had not loaned her campaign $5 million, the cash she would have had available at the end of last month to spend on television ads and other upfront expenses would have been less than $2 million.

By contrast, if you subtract Obama’s $625,000 in debts and his general-election-only money from his total cash on hand at the end of last month, he’d still be left with $31 million.[2]
The key thing to be looking for now is whether Clinton's money troubles evolve into a downward spiral. Several factors could combine to trigger the end of Clinton's campaign, despite her combative rhetoric.
  1. Media coverage has changed recently: the press is no longer pretending that Clinton has a nearly equal chance of winning the nomination through the electoral process. Most give her between a 5% and 20% chance, at best. This will discourage donors.
  2. Reports are coming out that the Clinton campaign has not been paying its vendors, especially small local businesses that can be stiff armed and held off or ignored. It is fairly customary for campaigns to be extended normal credit for services and pay the balance within 30 days. If word gets out that Clinton isn't paying up, then small business vendors will have no choice but to demand full payment up front. Losing the ability to buy products and services on short-term credit will dramatically slow down and complicate Clinton's campaign.
  3. If Clinton is asked to pay for services up front and can't, it will reinforce the image of her campaign as stalled and will discourage new donors. Small donors don't like to give to a lost cause. Larger donors might not care as much, but Clinton has already maxed out the primary money limit on many of her large donors.
  4. The final straw will come, if it comes, when Clinton can no longer pay her staffers. This will likely occur in several stages. Excess staff will be trimmed out first (most have probably already quietly left), then gradually the cuts will start reaching into critical staff. With ten contests remaining in the primary season, Clinton needs to manage her money to ensure she has media buys and a ground game in each of these contests.
On the other hand, if Clinton can weather the primary season, she can pretty much lay off most of her campaign staffers, as the focus her campaign will shift from expensive public contests to behind-the-scenes arm-twisting. To me, the shocking thing is how much money she must have wasted. While Barack Obama has had phenomenal fund raising success, Clinton has been no slouch either. Were it not for Obama's record breaking success, Clinton would have set a new record herself. Where did all that money go? Why are debts piling up at the Clinton campaign?

Read the Politico article here.

Hat Tip: DJShay at Daily Kos

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