Politico

What happens when presidential campaigns fail to pay debts

Michele Bachmann used a fleet of golf carts to transport supporters around the grounds of Iowa State University en route to winning the Ames straw poll last August, in what proved to be the high point of her campaign for the GOP presidential nomination.

The guy who owns those golf carts is still waiting for his check.

He's not alone; Bachmann's camp owes $935,000 to vendors across the country.

Other Republican contenders such as Newt Gingrich and Rick Santorum owe even more; their campaigns are $4.85 million and $1.69 million in the hole, respectively, according to their most recent federal campaign reports.

Unpaid Jon Huntsman vendors lawyered up earlier this year, and the former Utah governor responded by personally loaning money his campaign $1.54 million since March to clear most, but not all debts.

While it's common for presidential campaigns to take their time closing up shop, the small businesses left holding the bag are asking: Whatever happened to fiscal responsibility?

Like many candidates with leftover costs from the campaign trail, Bachmann has derided the accumulation of national debt.

"Sadly, we haven't reformed the bankrupt tax-and-spend policies that we decried (through) Ronald Reagan some decades ago," Bachmann said at a National Press Club speech in July 2011. "We have merely replaced them with a new and insidious scheme called borrow-and-spend."

Turf Cars owner Cal Campbell says the Bachmann campaign left the golf carts on campus with the keys inside. "When we went to pick them up, they were destroyed," he said. "One of the things you don't do when running for president is going around hanging small businesses."

In Sioux City, Iowa, Tom Kingsbury isn't expecting to see a dime of the nearly $2,000 the Gingrich campaign owes his company, Kingsbury Electronic Systems, for staging a campaign event.

"I know it's never going to come," said Kingsbury, who said he's outfitted presidential events with staging, sound and lighting equipment for decades.

Kingsbury — who calls himself a "moderate Republican" and supported Herman Cain in the primary — said he got annoyed when he would hear Gingrich talking about his plans to stay in the race through the convention. "You're riding on my $2,000," he said. He compared it to hearing a friend who owes you money say they were going to take some other friends out to dinner. "Why don't you take me out to dinner?" he said.

It's an issue that small business owners take personally, Kingsbury added. "They should be more respectful of small business people, because that money to me means something to my employees. It means a Christmas bonus or something."

Getting paid back by defunct campaigns can take a while.

Bill Clinton, Hillary Clinton, Dennis Kucinich, Pat Buchanan and Al Sharpton are among the presidential candidates that have yet to fully clear their books. The 2008 campaign of former New York City Mayor Rudy Giuliani is still on the hook for $1.5 million, not including another $1 million owed to Giuliani himself.

The defunct 2004 presidential campaign of former Sen. John Edwards, D-N.C., this month reported owing $2,000 to H. Charles Kaffie of Corpus Christi, Texas. It's been so long that Kaffie can't recall Edwards even owing him money, or why. "But I'd sure love to have it back," he said. "Everyone wants a check for $2,000 coming their way."

The Edwards committee also owes about $65,000 to the Chicago firm of Obama campaign senior adviser David Axelrod for consulting and media fees. AKPD Message and Media Senior Partner John Kupper says of the debt that, "there are no negotiations underway now, we don't expect there will ever be and we've pretty much written off the debt that's owed to us."

The total debts of Edwards' failed 2004 campaign add up to more than $330,000.

When it comes to recouping cash, lawsuits can work — to a point. In April, an Iowa district court ordered the Bachmann campaign to pay the golf cart company $3,100 in damages, but Campbell said he isn't expecting the campaign to pay up. "They won't even talk to us," he said. "They won't do anything. They just hung us with it."

Maryland-based author James Bovard sued 2008 Libertarian Party presidential candidate Bob Barr for $47,000 he's owed after ghostwriting a book for the former congressman. Barr, who once called for "a surge in federal fiscal responsibility," this month reported still owing a dozen different vendors an aggregate $157,450.

"I suppose when you deal with politicians, you shouldn't have high expectations," Bovard said. "He thinks he can walk away from paying his debt, but he is mistaken."

Some campaigns are thinking creatively when it comes to paying off their debt.

Hillary Clinton, who has been systematically paying off millions of dollars in debt for three-plus years and still owed $100,000 to consulting firm Penn, Schoen & Berland as of June 30, has pawned off campaign trinkets in the past.

Cain's campaign recently sold an unspecified vehicle to Carmax on June 12, earning him $30,000 to help pay down debt of $450,000 — all money owed to Cain personally. The campaign last month even sold a "campaign television" and "campaign generator/ladder" to a Georgia man for a combined $750.

Cain could score a lot more if Gingrich, who earlier this year called for a "path to balanced budgets and paying down our national debt," makes good on a $16,525 liability from earlier this year to political group Herman Cain Solutions for "strategic consulting/travel" services.

Another popular cash flow technique among presidential also-rans, particularly Gingrich, is selling or renting supporter lists to other campaigns, earning tens of thousands of dollars and counting.

But that's hardly the only money-making technique employed by Gingrich, whose campaign blames the red ink on the millions of dollars it spent on television advertisements. The campaign also owes more than $1 million to charter plane company Moby Dick Airways and $456,370 to Virginia-based Patriot Group for "security services."

His campaign, for example, has formed the Solutions Start in the House joint fundraising committee with the National Republican Congressional Committee through which proceeds will be evenly split. Gingrich himself is conducting debt retirement fundraisers.

"You have folks who are very understanding and we have folks expressing frustration," Gingrich spokesman R.C. Hammond said. "Our preference is obviously not to have gone into debt. If we could eliminate the debt overnight, we would. But realistically, this will take years."

Illinois-based photographer Matthew Georgopulos is a happy Gingrich vendor: After sending the campaign an invoice, it last month cut him a $300 check for services rendered.

"They didn't seek me out to cover it, but they were very responsive when they got the bill and they've treated me very well," Georgopulos said.

But other presidential vendors haven't been quite as pleased with their interactions.

Prior to the golf cart incident, Campbell of Turf Cars was a fan of Bachmann, he said.

"I really kind of liked Michele Bachmann; I thought she was okay," he added. "I've got a different opinion now."

POLITICO and the Tampa Bay Times have partnered for the 2012 presidential election.

What happens when presidential campaigns fail to pay debts 07/30/12 [Last modified: Monday, July 30, 2012 10:31am]

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