Obama Supporters: Does it upset you that the Obama Campaign has agreed to help pay off Hillary's $20mil. debt?

With your Obama Campaign Contributions?

Jonathan D. Salant

Thu Jun 5, 12:01 AM ET

June 5 (Bloomberg) -- Barack Obama's campaign is open to paying off some of the more than $20 million in debt accrued by defeated rival Hillary Clinton, a top adviser said.

ADVERTISEMENT

``Certainly that is something that would be on the table,'' the adviser, former Senate Majority Leader Tom Daschle, told Bloomberg News reporters and editors yesterday. ``Obviously we want to help each other.''

Money for Clinton to retire her campaign debt -- $11.4 million of which is owed to herself -- may help smooth relations between the two camps following a 16-month primary campaign where the candidates at times exchanged personal attacks. The urgency for Clinton, 60, is she has until the Aug. 25-28 Democratic convention to pay off her $11.4 million personal loan. Otherwise, by law she can recoup no more than $250,000.

``Candidates who win primaries who reach out to the opposition have a much better chance of winning, and candidates who don't are called losers,'' said former Michigan Governor James Blanchard, who co-chaired Clinton's Michigan campaign. ``I would expect Barack Obama is in the process of reaching out.''

Daschle, an Obama campaign co-chairman, said the issue hasn't yet been discussed with Clinton's staff.

McCain's Law

The rule banning Clinton from paying herself back after the nominating convention is part of a 2002 campaign-finance law co- sponsored by Obama's Republican rival for the presidency, Senator John McCain of Arizona. The law had several provisions to make it more difficult for people to finance their own campaigns.

Clinton has until the convention ``to raise money to retire the loan or else she will have made an $11 million contribution to her campaign,'' former Federal Election Commission Chairman Michael Toner said.

Obama, 46, an Illinois senator, is barred by federal law from using his own treasury to pay off Clinton's debts. He could host a fundraiser for the New York senator or ask some of his 1.5 million donors to help her out.

It's not unusual for a winner to help a vanquished rival retire campaign debts. Clinton backers helped former Iowa Governor Tom Vilsack after he dropped out of the race last year. And McCain's supporters gave to Kansas Senator Sam Brownback, a failed Republican candidate.

In both of those cases, the debts involved were far smaller than Clinton's. Vilsack had just over $300,000 in debt at the end of March 2007. Brownback had $33,546 in debt at the end of last year.

`The Reality'

``The reality is she's going to go out there and ask people to help pay off her debt,'' said former FEC General Counsel Larry Noble. ``She is going to have to go to new donors, most likely people who supported Obama and other candidates, and get them to contribute.''

Political consultants say that the money is more likely to come from some of the 28,000 contributors who have given Obama the maximum $2,300 donation rather than his smaller donors.

Clinton's debt also included $9.5 million in unpaid bills to vendors and consultants at the end of April, according to FEC records. More than of half, $4.8 million, was owed to the firm of Mark Penn, who stepped aside as her campaign's chief strategist under criticism in April for backing a trade deal with Colombia that Clinton opposed.

Unlike the rules for her personal loan, Clinton can tap her Senate campaign account to pay off the vendor debts. While the account had $277,480 as of March 31, she could ask the donors who gave her $23 million for the general election if they would be willing to re-designate that money for her 2012 Senate re- election campaign. That would give her more than enough cash to repay everyone but herself.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net ;