Clinton hits milestone in trying to clear campaign debt

By Robert Yoon - CNN Political Research Director - Thurs., April 16, 2009

WASHINGTON (CNN) -- Secretary of State Hillary Clinton reached an important milestone Wednesday in her quest to pay the debt from her failed 2008 presidential bid: For the first time in eight months, her campaign committee reported having more money in the bank than it owes.
Secretary of State Hillary Clinton's campaign committee reported owing $2.3 million in debt at the end of March.

Secretary of State Hillary Clinton's campaign committee reported owing $2.3 million in debt at the end of March.

On a day most Americans were preoccupied with filing their federal income taxes, Clinton's campaign committee filed finance documents with the Federal Election Commission, reporting a total of $2.3 million in debts at the end of March, compared with $2.6 million in the bank.

The nation's top diplomat has been steadily chipping away at unpaid campaign bills since suspending her White House bid in June 2008, when her debt peaked at $25.2 million. That amount covered $12 million owed to vendors, as well as the $13.2 million she loaned her campaign from personal funds.

Clinton's campaign was unable to repay that personal loan by the time the Democratic National Convention convened in Denver, Colorado, last August, the deadline mandated by the 2002 McCain-Feingold campaign finance law. The former New York senator was forced to forgive the entire loan amount.

Her campaign owed $6.4 million to 16 creditors at the end of November; $5.9 million to five creditors at the end of December; and the current $2.3 million owed to just one creditor at the end of March. That creditor is Penn, Schoen & Berland, a political consulting and polling firm that advised Clinton during her presidential bid. The firm's president, Mark Penn, was Clinton's senior campaign strategist until he stepped down last April amid revelations that he had lobbied on behalf of Colombia for a U.S.-Colombia trade deal that Clinton opposed. Penn remained involved with the campaign.

Earlier this year, Clinton and her supporters raced to pay as much of the debt as possible by the time she was confirmed and sworn in as the nation's 67th secretary of state on January 21. As of that date, Clinton became subject to a federal law known as the Hatch Act, which prohibits federal employees from personally soliciting or accepting political contributions. The Hatch Act allows others to keep raising money on Clinton's behalf, without her direct involvement.

This week, longtime Clinton ally James Carville, a CNN contributor, sent a fundraising e-mail to Democrats on behalf of Clinton's campaign, requesting contributions of as little as $5 in exchange for a chance to win one of several prizes, including spending a day with former President Bill Clinton.

"I won't spend a lot of time trying to convince you to help Hillary," Carville e-mailed. "I know what she means to you, and I'm sure you know how important it is for her to have her campaign pay off all its obligations."

It's unclear whether the campaign will use the $2.6 million in the bank to clear its $2.3 million in debts in the short term. Continued fundraising indicates that it will not. Additional operating expenses and other outlays could emerge.

Any extra money from the campaign could be donated to political causes or returned to donors.

Clinton's campaign reported raising $938,000 in contributions in the first three months of 2009.

In addition to tapping traditional fundraising, the campaign also generated money by selling or renting various campaign assets to other organizations. It received $2.6 million from Clinton's "Friends of Hillary" U.S. Senate campaign committee for the sale of unspecified assets and an additional $2.2 million from renting out its lists of campaign supporters.

Organizations that have rented Clinton's lists include the Democratic Congressional Campaign Committee, the inaugural committee of then-President-elect Barack Obama, and the William Jefferson Clinton Foundation. Those organizations each paid $274,297. Clinton's political action committee, HillPAC, rented the lists for $822,492.

Among the Democratic candidates who have rented Clinton's campaign lists are Arkansas Sen. Blanche Lincoln; Virginia gubernatorial candidate and former Clinton campaign Chairman Terry McAuliffe; New York Sen. Kirsten Gillibrand, who was appointed to fill Clinton's seat; and New York congressional candidate Scott Murphy, who hopes to succeed Gillibrand in the U.S. House.
Read more on CNNPolitics.com