Should Clinton's Campaign Pay Mark Penn?

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Jerry Lampen / Reuters

U.S. Secretary of State Hillary Clinton

All presidential campaigns end, one way or another, but the financial debt from them has a way of living on — especially for a candidate who loses. And while it wouldn't be seemly for a Secretary of State to be out there personally collecting checks on the rubber-chicken circuit, Hillary Clinton is lucky enough to have some big names willing to do something close to that on her behalf.

Their latest gambit to help pay off the former presidential candidate's remaining debt might be familiar to anyone who has ever had to run a raffle for a kid's preschool. The e-mails started going out last week, beseeching, "Make a $5 contribution today, and you could be on your way to one of these once in a lifetime opportunities!" Among them: a chance to spend a day with former President Bill Clinton, "followed by your own special New York City weekend." Or perhaps you would prefer lunch in Washington with consultants turned cable pundits James Carville and Paul Begala, "where you will get to tour all the amazing sights D.C. has to offer and who knows what else could happen!" And if politics isn't really your thing, well, there's always the third option: "You and a guest will watch live as the American Idol judges make their final comments and decisions on this year's most anticipated season finale!" (See pictures of Hillary Clinton on the campaign trail.)

Has it come to this? Even some of the most ardent Clinton loyalists are cringing. But as just about every loser learns, "this is the hardest money to raise in politics," says former Federal Election Commission (FEC) chairman Robert Lenhard. Clinton's operation in particular relied heavily on traditional big donors, most of whom maxed out during the campaign on the amount they were legally allowed to give. Meanwhile, amid hard economic times — and absent the political intensity of a hard-fought campaign — it is more difficult to get small donors to open their checkbooks. Still, Clinton is determined to clear her balance sheet. "She feels a real moral obligation to pay off the debt," says Begala, "to pay off every last nickel to everybody." As for his own role in her latest fundraising drive, Begala says, "I'm doing this because I just want her to have a clear conscience."

For Clinton, the challenge of raising money to pay off those last bills is made all the more difficult by the fact that the only creditor she has left is the firm of Mark Penn, the controversial political consultant who came up with her widely panned pseudo-incumbency campaign strategy. In an election year when voters were looking for freshness and change, that may have been the biggest of all the mistakes Clinton made. A quarterly filing that Clinton's campaign made late Wednesday with the FEC showed that it remains $2,307,740.82 in debt to Penn, Schoen & Berland Associates LLC for consulting, polling and mail expenses. (Read "Clinton's Mark Penn Problem.")

Not surprisingly, many Clinton allies are decidedly unsympathetic to Penn's situation. Fumes one: "He should have to eat it." But it isn't that simple. The money is owed not to Penn personally but to his company, which is a subsidiary of the worldwide public relations and advertising firm WPP Group, based in London. The bills the Clinton campaign ran up included $5 million for the polling that apparently failed to pick up on the public mood. And then there was the cost of sending out 20 million pieces of direct mail, with postage alone reaching $8 million, according to an official for the firm. Many would argue that it was money ill-spent. At a minimum, that big a bill for snail mail suggests that Clinton's campaign was relying heavily on tactics from the 20th century, while Obama was running circles around her by using the far more cost- (and politically) effective Internet.

The Clintons, however, remain firmly behind the man who served as chief strategist for both of them. "Mark did a fine job for me in 1995 and 1996, during the government shutdown and my re-election campaign. He also helped the Democrats win House seats in 1998, when we were badly outspent and pundits predicted losses of 25 to 35 seats. The last time the President's party won House seats in the sixth year of his presidency was 1822," Bill Clinton said in a statement e-mailed by a spokesperson to As for Penn's performance in the 2008 presidential campaign, the former President insisted that the consultant had been a "great help" to his wife, adding, "In 2008, his polling was accurate and advice was helpful even though the campaign didn't prevail. As President Kennedy said, victory has a thousand fathers and defeat is an orphan. I remain grateful for his hard work and loyalty."

Yet the bills remain. "They're not paying Mark Penn; they're paying the shareholders of WPP," says WPP executive vice president Howard Paster, who ran the Office of Legislative Affairs in Bill Clinton's White House. And as long as Hillary Clinton continues to show an ability to pay them off, the firm does not have the option of simply forgiving the debt, Paster insists. If it did, its lawyers say, that could be an illegal in-kind contribution under federal election law.

Clinton is in fact making significant progress in tackling her debt, which she managed to trim by nearly two-thirds during the first quarter of 2009. But that's not because of gimmicks like raffling off tickets to American Idol. Her campaign's real asset is its database of supporters. In the first quarter alone, it raised more than $2 million renting out that list. Among those who paid the most to use it: Barack Obama's Inauguration committee and the William J. Clinton Foundation, each of which spent $274,297.45.

She has also cut her debt to Penn, Schoen & Berland — which stood at close to $5.4 million at the end of last year — by more than half. At some point, though, what's left of the Clinton campaign operation may, in Paster's words, "hit a wall." At that time, the law allows her to seek the FEC's permission to renegotiate the terms of her indebtedness to the company. But that's a conversation for another day, Paster says, adding, "For now, we expect to be paid."

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