Strategy ’08

Obama vs. the other guy, 2008

Clinton Complaints re: Obama Debt Retirement Help May be Moot

Frankly, the grumbling from Clinton supporters (and the candidate herself) about Obama’s “lack” of help retirement will probably take more of a hit with the pending publishing of the Atlantic story, but per Politico, there is some behind-the-scenes maneuvering to allow her more than 20 days after the convention to pay herself back. Or, even more interesting, allow her to use 2012 senate funds to pay herself back.

Politico with the scoop:

Bill and Hillary Clinton, who once deducted $6 on their taxes for donating three pairs of his underwear, plan to take a $13-million hit to their personal bank account by forfeiting loans she made to her failed presidential campaign.

The campaign will let expire a mid-September deadline for paying them back, sources close to the campaign told Politico, at which point they will automatically be re-categorized as contributions, confirming a decision by Clinton to forego repayment that many had expected her to make.

However, Hillary Clinton could get some post-deadline wiggle room to repay herself—and possibly with less of a public backlash—if Sen. Frank Lautenberg (D-N.J.) prevails in a little-noticed challenge to a rule requiring candidates to pay back loans of more than $250,000 within 20 days of the election.

For the uninitiated, the situation is currently this: Per the McCain/Feingold bill, any self-loans over $250k that are not repaid within 20 days of the convention are reclassified as contributions. Thus, Clinton would have to forfeit more than $12 million she has currently loaned herself. Obviously knowing that she would take a HUGE PR hit for paying herself ahead of small-business vendors, Clinton has previously said she will forget about that loan, or at least put it off in favor of paying those small vendors first.

But Politico has uncovered a challenge to the 20-day rule from Sen. Frank Lautenberg (PDF), requesting that because of the court ruling overturning a provision of McCain/Feingold, (the so-called “Millionaire’s Amendment), Lautenberg, who loaned himself $1.7 million (and by extension, Senator Clinton) would be able to raise funds to repay his loan far beyond the 20-day limit.

Lautenberg’s argument is pretty clever, if a bit brazen. Essentially, he says that the 20-day limit discriminates against rich folks, since they loan themselves hugs sums of money, 20-days is simply insufficient to raise funds (from much less rich people) to refill their bank accounts. Clipping from the letter, the law as it currently stands is:

[T]he amendment treated the personal funds loaned to a campaign by a self-financing candidate differently from other debts. Specifically, it allowed a candidate committee to repay personal loans made by the candidate in excess of $250,000 only from contributions made before the election date. Id. § 441aQ). Cf. 2 U.S.C. § 433(d); 11 C.F.R. § 116.7 (governing repayment of other debts).

Lautenberg then cites how the overturning of the “millionaire’s provision” should also apply to the time limit for repayment:

In Davis, the Supreme Court considered two of the above provisions—the contribution limits and disclosure requirements for House candidates, found in sections 319(a) and (b) of BCRA. The Court unequivocally rejected both as “antithetical to the First Amendment.” 128 S.Ct. at 2764. In so holding, the Court emphasized that a candidate has a “First Amendment right to engage in the discussion of public issues and vigorously and tirelessly to advocate his own election.” Id. at 2771. (quoting Buckley v. Valeo, 424 U.S. 1, 52-53 (1976)).

The right to spend personal funds for campaign speech is fundamental, the Court wrote. Id. Thus, not only is Congress prohibited from placing a cap on personal expenditures, it also cannot impose a penalty on candidates who “robustly exercise” their First Amendment right to spend personal funds, unless doing so would serve a compelling state interest. Id.

Reducing the natural advantage that wealthy individuals possess in campaigns for federal office, the Court made clear, is not “a legitimate government objective.” Id. at 2773. The Court’s reasoning applies with equal force to the personal loan provision, 2 U.S.C. § 441a(j). That provision was part and parcel of the Millionaire’s Amendment, and an integral part of Congress’ attempt to reduce the advantage of wealthy candidates. See 147 Cong. Rec. S3233-06, S3249 (Apr. 2, 2001).

Indeed, the personal loan provision is part of the same section of BCRA as the asymmetrical contribution limit that applies to self-financing Senate candidates: section 304(a).’

Like the asymmetrical contribution limits, the personal loan provision imposes significant burdens on the basis of a candidate’s decision to spend his own money for campaign speech. Candidates who self-finance with a loan in excess of $250,000 cannot continue to raise money to pay back that loan after the election date. Candidates who do not self-finance
are subject to no such restriction in their debt repayment.
Just as different contribution limits “for candidates who are competing against each other…impermissibly burden[] [the self-financed candidate’s] right to spend his own money for campaign speech,” Davis, 128 S.Ct. at 2771, so too do more onerous restrictions for repayment of loans. Under Davis, Congress’ desire to reduce the natural advantage of wealthy candidates is simply not a legitimate state interest that can justify the burden on a
candidate’s First Amendment right to spend personal funds.

Boy, this is a pretty slick (and sleazy) argument, I have to say. Essentially, the argument is (in non-lawyer speak):

“Since trying to level the playing field by allowing non-rich candidates to raise more funds above the previously imposed donation caps is discriminating against rich folks who self-finance huge sums, imposing a the time limit under which those self-financiers must pay themselves back is also discriminatory. Why? Because non-self financiers don’t have that time limit! Because they don’t self-finance and thus have no huge self-loans!”

And additionally, they’re arguing since the so-called “millionaire’s amendment” was overruled, the repayment time limit, as a key part of that amendment, has to be struck down, even if it were constitutional by itself!

So, if Lautenburg is successful in his challenge, you can bet that Hillary and Bill will be next in line. Which is great for Obama, since it takes the pressure off of him to do anything about retiring her debt. I say, “Go Lautenburg!”


August 10, 2008 - Posted by | Uncategorized | , , , , ,


  1. Can’t a few speeches match that amount? I mean, they’re not hurting for money.

    Comment by dansac | August 11, 2008 | Reply

  2. when i take personal loans i would sometimes make some of my properties as loan collaterials:;”

    Comment by Umbilical Cord : | October 29, 2010 | Reply

  3. i might be needing personal loans next month coz i need a home renovation and some garden renovation too *`:

    Comment by Oxygen Monitor | November 17, 2010 | Reply

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