Hillary Clinton’s $11 Million Question
She risks losing $11 million if she loses her party’s nomination
I like sports, especially soccer. Yes, it’s not very popular here in the US, but where I’m from (and pretty much in the rest of the world) it’s king! But I digress… I’m referring to the world of sports because often players, coaches, general managers, owners, have to make decisions that will make or break the team. Tough questions, such as “should I trade (or trade for) … [insert star player name here]” are often referred to as “the million dollar question”.
Moving away from the world of sports and into that of quiz shows, there have been plenty of instances where there have been million dollar questions in the most literal sense. Shows like “Deal or No Deal”, or “Who wants to Be a Millionaire” are the first two that come to my mind.
As a personal finance blogger, I’m always interested in those situations, if only to try and figure out what I would do. It is said that when you have a passion for something, there’s no telling where it might lead you. I have always looked at the U.S. political arena from a rather distant standpoint, preferring to see the grand scheme of things instead of focusing on the people. Yet, there has been abundant coverage of the three remaining presidential candidates’ finances. And no one’s situation holds more interest to me than that of Sen. Hillary Clinton.
Earlier this week, it was reported that she recently loaned her campaign $6.4 million of her own money, on top of a previous outlay of $5 million earlier in her presidential bid. That brings her to a total “investment” of roughly $11.4 million dollars.
As of today, with Sen Barack Obama winning support here and there, her chances of winning the nomination are remote at best. What will become of that money? Here’s a partial answer:
Thanks to a little-known provision in 2002’s McCain-Feingold campaign-finance reform bill, a campaign must repay the loan to a candidate before Election Day. In this case, that’s the nominating convention. After the election has passed, a bankrupt campaign is limited to gathering just $250,000 from contributors.
That simply means that if she stays the course and loses her bid for the Democratic nomination, she’ll stand to lose approximately $11 million! Ouch! On the other hand, she can hedge her bets by getting out of the race, which would soften the blow. Her and Sen. Barack Obama could work out a deal where she gets to keep her unspent money, and he would contribute some of the money he saves (by not having to keep campaigning against her) and she would considerably cut her losses. You can read the article here for a thorough analysis.
My question, though, is this:
Does it make sense for her financially to stay in the race?
Personally, if I had to choose between losing $11 million and losing a couple millions less, I already know that I’d broker a deal and lose less money. It’s reported that the Clintons earned $109 million since leaving the White House, but if you’re thinking that the more money you make, the more money you’re inclined to throw away, think again. Those who have amassed real wealth are precisely those who know first hand the value of money.
And quite frankly, I don’t care how rich you are, $11 million is A LOT of money.
What’s your take?
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