Video: Clinton falls further into debt

updated 5/13/2008 8:53:46 AM ET 2008-05-13T12:53:46

Should she lose or abandon her quest for the Democratic presidential nomination, Hillary Rodham Clinton will have to deal with her campaign's more than $20 million debt — a step that could test her relationship with Barack Obama and raise new issues in campaign finance law.

Clinton owed $10 million at the end of March, has made loans to her campaign totaling of $11.4 million thus far and will more than likely end the primary season significantly in the red.

Among her options is transferring that debt to her Senate campaign committee and paying it off with contributions to her 2012 re-election effort.

But, for the short term, many Democrats believe the answer lies with Obama and his vast network of contributors.

"That is a normal thing when a candidate finishes a race and loses, the winning candidate would try to help if there's some debt that's been incurred," said Tad Devine, a Democratic consultant who has worked in several presidential campaigns but is unaligned this year.

Video: Clinton adviser: She must continue By law, Obama cannot write a massive check from his flush campaign account to hers. But Obama donors, large and small, might be willing to donate to Clinton in the name of party unity.

Clinton campaign officials say they have not contemplated what she will do with the debt. Asked whether she would welcome financial help from Obama, her spokesman, Howard Wolfson, told "Fox News Sunday" that "any talk of that is premature."

Obama's chief strategist, David Axelrod, offered a similar response.

"She hasn't asked, and we haven't offered. And I think that discussion is way premature," he said on the same program.

Personal loan problems
If Clinton wants to pay herself back for the millions she has poured into her historic campaign, donors willing to help her would have to act quickly.

Video: Candidates focus on W.Va. primary Under a 2002 campaign finance law that Republican presidential candidate John McCain helped write, Clinton would have only until the Democratic convention in late August to raise money to cover her loan. After the convention, she could only raise up to $250,000 toward paying it off.

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"The biggest time crunch for her are the personal loans, that she has to move on between now and the Democratic convention if she wants to be paid," said Michael Toner, a former chairman of the Federal Election Commission.

But if Obama were to ask his donors to help Clinton, it would be at the same time that he likely will be asking those donors to contribute to the Democratic National Committee so the party will have money to help him in the general election campaign.

"We're behind in fundraising for the general election at the DNC," said Steve Murphy, a Democratic consultant who helped run New Mexico Gov. Bill Richardson's presidential campaign. "You want to run a lot of money through the Democratic National Committee."

Available options
Clinton might have another avenue at her disposal. The law permits her to transfer the presidential campaign debt to her Senate re-election committee, which would allow her to use contributions to the Senate account to pay off presidential campaign vendors. Clinton is up for re-election in 2012.

Campaign finance lawyers say she also is entitled to transfer money she raised for the presidential general election to her Senate account, provided those donors agree to reassign the money. Clinton has raised more than $22 million for the general election. If donors approve transferring any of that money to the Senate committee, some lawyers said it appeared she could use it to pay off the debt.

Others raised doubts, saying such use of money from general election contributors to retire primary debt would amount to double giving by those donors.

"This is pretty uncharted," observed Robert Biersack, a spokesman for the Federal Election Commission.

The question could end up before the six-member FEC, which currently has no quorum as it awaits Senate action on five nominees recommended by President Bush.

Sen. Christopher Dodd, D-Conn., who abandoned his presidential bid on Jan. 3, has asked the FEC if he can transfer his general election contributions to his Senate re-election committee. Dodd's request is complicated by the fact that he accepted public financing for the primaries; Clinton did not.

Still, the FEC's response — if and when it provides one — could help inform the question of how Clinton handles her debt.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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