Obama Suggests Offer Maybe Clinton Can't Refuse

May 17, 2008 | Updated May 25, 2011

On Friday, Barack Obama publicly raised the possibility of helping Hillary Clinton pay off more than $25 million in debts, including the $11.42 million she loaned her own campaign to keep it afloat in recent months.

"Historically after a campaign is done and you want to unify the party, particularly when you've had a strong opponent, you want to make sure you're putting that opponent in a strong position so that they can work to win an election in November. So, obviously, I would want to have a broad range of discussions with Senator Clinton about how I could make her feel good about
the process and have her on the team moving forward."

Talking to reporters in front of a Mexican restaurant in Woodburn, Oregon, the Illinois Senator warned that such discussions are "premature right now. She's still actively running and we've still got business to do right here in Oregon and in other states."

The Clinton campaign dismissed out-of-hand any talk of Obama helping Clinton with her debts. "We are running a competitive primary race," said spokesman Phil Singer. "We have seen the dangers of declaring 'mission accomplished' before."

Obama cannot under federal law assume direct responsibility for Clinton's debts because that would amount to an illegal contribution, far above contribution limits.

There are, however, a number of other alternatives. Obama could, for example, send out a solicitation in Clinton's behalf to his own donors and to other donor lists, asking for contributions to be directed to her campaign. He could, in addition, hold a joint fundraiser with the money
split between Clinton and Obama.

Strong opposition to helping Clinton, in the event that she withdraws from the contest, has emerged among Obama supporters who continue to voice intense anger at Clinton and her former chief strategist, Mark Penn. The opposition surfaced immediately after the Huffington Post ran stories
raising the subject.

At an Obama-run blog
for supporters, a number of contributors have argued that any effort to help Clinton pay off bills would be insupportable.

"The read-between-the-lines statement that I am hearing is that he would be expected to use his campaign clout (which as far as I am concerned, means his ethics and integrity) to attach her debt consolidation efforts to his future fundraising efforts. Which means he WOULD be taking money from lobbyists - big time!!!!" wrote "TH" of California. "So yes, while he may not be selling us out by giving away our hard earned money directly to her, Obama would be selling out by using his new political clout to help pay off her debts. Memo to OBAMA: You do not need to sell one ounce of your soul to gain this nomination. NOT THIS TIME! Remember? NOT THIS TIME!!!"

"Ken" from Wagoner, Okla., wrote: "I am also reading Sen. Obama is considering Hillary for his VICE !!! I am wondering what has happened to Sen. Obama, has he gone BONKERS? I pray he has nothing to do with the Clinton's or their financial problems !!!"

There is deep animosity towards Clinton in the Obama camp, where many believe she has raised issues of race and 'elitism' that will hurt the Illinois Senator in November.

In an interview with USA Today for example, Clinton declared: "I have a much broader base to build a winning coalition on," citing an AP article "that found how Sen. Obama's support among working, hard-working Americans, white Americans, is weakening again, and how whites in both states who had not completed college were supporting me."

In addition, Mark Penn, the former chief strategist for Clinton and head of one of the biggest PR-lobbying conglomerates in the nation's capital, is seen as the quintessential Washington insider, capitalizing on political connections to become a multi-millionaire.

The immediate problem with Penn -- whose conflicts of interest plagued the Clinton campaign and ultimately led to his being publicly, if not privately, repudiated -- is that if Obama helps Clinton pay off her debts, a big chunk of those debts - as much as $10 million by some estimates -- is owed to Penn.

Penn is the CEO of Burson-Marsteller, which has "a global network of 94 offices and 1600 employees that brings world-class public relations to companies around the world."

Burson-Marsteller is one of the 246 companies owned by WPP, a leading global advertising and marketing services group. WPP controls a powerful array of public relations, advertising and lobbying companies, including Hill and Knowlton; Dewey Square; Ogilvy and Mather; Public Strategies Inc.; AGB Nielsen Media Research; Quinn Gillespie and Associates; Timmons and

Company; Wexler and Walker Public Policy Associates; Young and Rubicam Brands.

Penn, who remains a top adviser to Clinton, was forced to step down as the face of the Clinton strategy team after disclosures that he was meeting privately with the government of Colombia to promote congressional approval of a trade agreement which Clinton - and her most loyal voters -- oppose.

Consideration by the Obama camp of providing financial help to Clinton would be part of a peace-making process in the event that she withdraws from the presidential nominating contest.

Under federal campaign finance law, the Obama campaign cannot directly pay off Clinton's debts, or the $11.43 million she has loaned the campaign, because that would violate campaign contribution limits. But if Obama is the nominee, he and his donor base could provide invaluable help to her in raising money through signed appeals, joint fundraisers and by other methods.

The Obama campaign does not want to be identified as having discussions about Clinton's finances. Obama aides used the term "chit-chat" to dismiss any such discussions.

Both Obama and Clinton have broken all Democratic fundraising records. Through the first quarter of this year, Obama raised $234.7 million, and Clinton $189.1 million. As of March 31, the date of the most recent FEC filing, Obama had $51.1 million in the bank and just $662,784 in debt, for a net cash position of $50.4 million; while Clinton had $31.7 million in the
bank, debts of $15.2 million, and had loaned the campaign $6.4 million. (The FEC lists debts and loans separately.) More recently, Clinton disclosed that she had made her campaign additional loans, bringing the total amount she has loaned to her effort to $11.4 million. At the same time, her campaign was running close to broke for much of last month. Details of fundraising and spending for the month of April do not have to be filed until May 15.

Money is a central issue in the delicate negotiations that many expect to lead to a Clinton withdrawal. A winning candidate often offers to do whatever is legal to help a loser pay down debts. In this case, there is exceptional animosity between the two camps. Furthermore, Penn's interest in any negotiations are sure to be pressed very aggressively by the Clinton campaign's new Chief Operating Officer, Howard Paster. Paster was brought in immediately upon Penn's retreat, and, as it happens, Paster is Penn's boss. Paster is the executive vice president for public relations and public affairs at Burson-Marsteller's parent company, WPP.

In his new capacity as COO of the Clinton campaign, Paster is almost certain to be central in deciding how much of any money Obama might help raise for Clinton is used to pay off the debt to Penn. This set of relationships will undoubtedly impact the enthusiasm of Obama donors for a Clinton-Obama pact.