Democratic hopeful John Kerry has loaned his campaign $850,000 and will mortgage his family’s Boston home to come up with more campaign cash, marking the first time a candidate has tapped his personal fortune in the 2004 presidential race.
The Massachusetts senator, once considered the front-runner in the Democratic field, has been struggling to overcome rival Howard Dean’s political and financial lead in the race — even following Dean last month in opting out of the presidential public financing system and its spending limits.
“This is a clear statement by John Kerry — he is in the race to win the nomination and defeat George Bush,” campaign manager Mary Beth Cahill said in a written statement.
Kerry began the year as one of the field’s money leaders, raising $7 million from January through March, but his fund raising has fallen off as Dean’s has soared. In the quarter that ended Sept. 30, Dean raised $15 million to $4 million for Kerry.
Can't use wife's money
Kerry must come up with any money he loans his campaign without tapping wife Teresa Heinz Kerry’s multimillion-dollar Heinz food fortune.
Campaign law allows Kerry to take out loans on the full value of property he owns, and on half the value of property he co-owns. His wife can co-sign loans if the bank requires, but cannot pay them back. She is limited to the same $2,000 limit applied to all individual campaign donors.
In a financial disclosure form filed earlier this year, Kerry reported investments valued at about $700,000 to $2.4 million, plus up to $600,000 worth with his wife.
The Kerry family home is located in Boston’s tony Beacon Hill neighborhood, the supposed birthplace of door-to-door Christmas caroling and home to some of the city’s better known residents, past and present: the Vanderbilts, “Little Women” author Louisa May Alcott, and these days, Kerry and his wife.
It features elegant brownstones that carry multimillion-dollar price tags and a gated private park in the middle for which only Louisburg Square residents get a key. As recently as 2002, the median home price for a condominium was $400,000 and $3.9 million for a single-family home.
Several million dollars available
The Kerry campaign declined to disclose the cost of the house or what other wealth Kerry has, beyond saying he has several millions he could use for the race. If any of that resulted from gifts or transfers from his wife, Kerry would have to prove it came before he started his presidential campaign more than a year ago.
A decorated Vietnam War veteran, four-term senator and Democratic stalwart, Kerry started the campaign as the presumptive leader with the right presidential initials — JFK for John Forbes Kerry.
But during the summer months, Dean catapulted to the lead, relying on the Internet to attract supporters and cash. Many Democratic strategists complained that Kerry acted as if the nomination were his entitlement while allowing Dean to surge. In November, Kerry fired his campaign manager, and his chief spokesman and deputy finance director quit.
He trails Dean badly in New Hampshire, a must-win state for the New Englanders. Dean and rival Wesley Clark are expected to outraise Kerry in the final quarter, raising $10 million or more.
According to tax returns released by his campaign Thursday, Kerry, who files separately from his wife, reported taxable income of $111,540 for 2002, primarily based on his Senate pay. He paid $29,946 in federal taxes, $7,286 in state income taxes and $1,167 in personal property taxes. He also reported giving $18,600 to charities last year.
Kerry also had $23,317 in short- and long-term losses on trusts he owns. Kerry has four trusts, including three he inherited last year from his mother, Rosemary Forbes Kerry.
Inherited from previous husband
Heinz inherited her fortune from her previous husband, Sen. John Heinz, a Pennsylvania Republican and heir to the Heinz food fortune, who was killed in a 1991 helicopter-airplane crash. She married Kerry in 1995.
Her wealth has been estimated at more than $500 million.
The campaign declined to say how Kerry would spend the initial $850,000 loan or how much of his own money he plans to spend through the primaries. As of October, the campaign had raised $20 million, with $7.8 million on hand.
A campaign official would say only that Kerry will put in at least as much as he would have gotten from the public financing program, while declining to give an estimate. The program matches the first $250 of each individual donation up to a total payout of $18.6 million.
Kerry may find himself unable to recover all the money he loans his campaign. Under the nation’s new campaign finance law, candidates are given a limited amount of time to raise campaign money to pay back personal loans.
Kerry is not the first presidential candidate to turn to personal wealth to help bankroll his campaign. Republican Steve Forbes and Reform Party candidate Ross Perot each spent millions on their candidacies.