Special interest money is one of the most significant challenges facing American democracy today. Money is funneled into our system by lobbyists and Political Action Committees (PACs) who finance and help to elect those candidates friendly to their agendas. In return they expect access, influence, and sometimes they expect kickbacks in the form of earmarks for pet projects. While politicians, lobbyists, and PAC members often deny that there is any quid pro quo in their relationships, it’s evident that the specter of special interest influence in and of itself has damaged the credibility of our process and we would all benefit from a system that engendered a sense of trust and credibility.

I haven't even finished reading this Ben Smith Politico article yet, but I know that its contents will be very important for the slightly less than 6 months that we have left in this campaign.

Obama: Don't fund independent groups

Now, you might be thinking:

What? A candidate so totally cannot win without a bunch of very well funded attack organizations... can they?

Well, give her credit for tenacity anyway.  Hillary Clinton doggedly continues her 08’ Trailer Park Tour in weather that can only be described as not merely stormy but actually filthy and from all appearances she’s still pretending she’s a viable candidate.   Now that’s either:
1- The worst case of cognitive dissonance seen in the wild since Baghdad Bob had his star turn, or  

2- she’s putting a happy face on a looming disaster.

A story in the Washington Post today,  suddenly makes B a lot more likely option.  It seems the Campaign for all its brave talk about fundraising is in debt-big time- to the tune of $20 million dollars:

Clinton aides..  confirm[ed} that she is $20 million in debt. "The voters are going to decide this," senior adviser Howard Wolfson said on "Fox News Sunday," acknowled[ed} the $20 million figure.

WaPo:

Clinton aides continued to insist that she will remain in the race even while confirming that she is $20 million in debt. "The voters are going to decide this," senior adviser Howard Wolfson said on "Fox News Sunday," acknowledging the $20 million figure. "There is no reason for her not to continue this process." Wolfson said he has seen "no evidence of her interest" in pursuing the second-place spot on the Democratic ticket, contrary to rumors that she is staying in the race to leverage a bid for the vice presidential nomination.

I've always thought the theories that Clinton was just hanging around to poison the Obama well to set herself up for a run against McCain in 2012 were daft.  This supports my contention; she's spending to win now, because she recognizes that she either wins now or she will never be President.  

This creates serious problems for Clinton.  At a time when her only appeal left is to superdelegates, she's just shown that she's managed to lose the pledged delegate contest AND mismanaged her campaign.  If she can't at least balance the books of her campaign while getting beaten by Obama, why would superdelegates view her as the more viable candidate for November?

Furthermore, to use gambling terminology, Clinton had doubled down...which is often a sign that the person has a gambling problem.  It usually makes it harder for the gambler to walk away, because then they're gambling to get back their losses.  For over a month Clinton's debt has been seen as a possible impediment to getting her out of the race.  There have been rumors that the exit strategy could include offers from Obama of helping her retire her debt.  As I explained Saturday:

No money donated to Obama, in the past or in the future, will end up with Hillary Clinton's campaign.

It is illegal for a campaign to accept more than $2,000 from another candidate's campaign fund for a primary.  Any discussions about Obama helping out Clinton might lead to Obama appealing to some of his donors to contribute to Clinton after she drops out to help her with her debt, but it will not involve taking money donated to him and giving it to Hillary Clinton.  

But think about it; Barack Obama has beaten Hillary Clinton in the only metric that matters—delegates—but in every other major fuzzy metric that some people clam is important: popular vote, number of states won, he generally polls better than her against McCain, and he's raised more money.  He's so much stronger than her that he can beat her, and still be in a position to help defray some of the costs of her campaign.  

And she's trying to convince the superdelegates that she's the stronger candidate?  

A month ago I raised the issue of Hillary Clinton's campaign debt as a complicating factor is ending her futile quest for the Democratic nomination.  Time had published speculation from a Clinton aide that mounting campaign debt could create problems for Clinton, because she would have to get additional donations before she could start raising for her next Senate campaign.  

The issue of Clinton's campaign debt and what Obama might be able to do about it is causing confusion.  The inherent difficulty for most people in making sense of the nuances of campaign finance issues has been exacerbated by some reportage and commentary on the matter.  For instance, a few days ago Josh Marshall ruminated on how Obama donors would feel if their contributions went from Obama's campaign fund in to Clinton's campaign fund.  

It's not a subject worth ruminating on, because it would be illegal for Obama's campaign fund to donate more than $2,000 to Clinton's campaign.  

Unfortunately Steve Benen has quoted Marshall's piece without noting that it's not legally permissible for Obama to donate money to clear Clinton's debt.  Others, including the NYT, are confusing the matter by not making it clear that Obama can not give more than $2,300 $2,000* from his campaign fund to Clinton's campaign.

Let's make this absolutely clear:

Money given to Obama's campaign, either in the past or in the future, WILL NOT end up in Clinton's campaign fund.

What Obama can do is go to his donors and ask them to contribute to Clinton's campaign.  He could have his campaign send out email appeals to small donors to help Clinton pay off her debt.  

Helping Clinton pay off her debt would not be a simple act of altruism by Obama.  It would be in Obama's self-interest to help take the debt issue off the table if it facilitated her exit from the race and helped avoid the distractions of delegate challenges and talk about "taking it to the convention."

There's still the question, however, of how much Obama could really raise for Clinton, and whether it would be enough to get her out of the race.  I'm skeptical that the offer to help erase her campaign debt would amount to much.  Her debt is over $10 million, and it's possible she's putting more money is now to keep her campaign going.  These kinds of offers are usually made when the losing candidate had taken out a bank loan for campaign debt, or had done something like put their house up for collateral in order to secure a loan.  Those are the acts of a candidate who doesn't have the means to put in her own money, or simply refuses to pay out of her own pocket.

Hillary Clinton didn't borrow money for her campaign.  She essentially wrote a check from her personal account to her campaign account.  With their new wealth since Bill Clinton left the White House, $10 million isn't really all that big a chunk of change for the Clintons.  A candidate can't carry debt from one campaign to the next, unless the debt is to themselves.  Thus, Hillary Clinton could easily write off the debt to herself.  

Since the money would not be necessary to protect Clinton's viability for future campaigns, donations to retire Clinton's debt would really be contributions directly to the personal and private wealth of Hillary and Bill Clinton.  I don't see many Obama donors taking money from their personal pocket and putting it in to Hillary Clinton's personal pocket, especially not after the campaign Clinton has run and continues to run against Obama.  

So, people worried that money you donated in the past or might donate in the future to Barack Obama might go to Hillary Clinton, relax.  Whether any of your money goes to Hillary Clinton will be your decision.  Unless you want it to, none of your money will end up in Hill and Bill's piggy bank.  

*[The personal contribution limit increased from $2,000 to $2,300 for this campaign cycle, but the contribution limit for a campaign committee to campaign committee contribution remained capped at $2,000.]

First of all, we all need to chill out.

There have been many diaries and comments today about this subject.

People have been freaking out because they think their small donations would be used to help retire her debt.

That's not going to happen, and I'll tell you why.

Let there be no more doubt that Sen. Clinton intends to fight tooth and nail for the nomination.  Sen. Clinton has poured $11.4 million of her own funds into the campaign.  According to an analysis of campaign finance law over at Slate, Clinton needs to recoup that money BEFORE the convention in August or lose it forever.

Debt retirement gets a little more complicated when candidates lend their own money to their campaign. After an election is over, any campaign contributions that go toward repaying the candidate's own loans serve, in practice, as money directly into a politician's pocket. As a result, campaign law (PDF) now limits to $250,000 the amount a campaign committee can repay the candidate after the election. In the case of the Democratic primary, the election will end when a nominee is selected in Denver. So unless Clinton is able to raise enough money to pay herself back by then, she'll have to write off millions of dollars she lent to her campaign.

Money talks in politics.  As we've seen today, this fight is going to turn nasty...

For those who are mystified as to why Clinton soldiers on in the Presidential campaign, you need look no further than

1. the $11M that she has "loaned" her campaign, and

2. her sordid history of campaign financing dealings that probably should be against the law.

I'll connect the dots, citing ancient history, below the fold.

UPDATE - with a pointer to Dick Morris's specific comments on the mechanics of one campaign relieving another of debt.

In fund raising. I recently did a comparison of Sen. Obama and Sen. Clinton’s fund raising. They have both built fund raising machines that now rely on the low dollar donors to fund their campaigns. Now I want to examine the different course taken by Sen. McCain. The state of his fund raising has been somewhat less impressive when compared to the Democratic side. His distribution of donations is similar to past campaigns and reveals little in the way of a major internet donor push. When compared to the machine of Senator Obama it does not look positive for McCain. In machine comparison, Obama is the $6bn underground particle accelerator and McCain is a button maker.

John McSame flip-flopped again this week when talking about
the economy. Oh, and he's a little unclear if you are in a recession or not.

Full Lineup and update with awesome brand new DNC "100 Years" video below....

Why? Because Mr. Straight Talk is actually Mr. Double Talk. Just watch, wait, and listen. You'll hear a policy position you agree with on every issue. Just ignore what he's saying out of the other side of his mouth. (This advice actually goes for ALL Americans, conservative OR liberal.)

Need an example? Well, how about this?

Giuliani later defended Mukasey's formulation, suggesting that the liberal media was "misreporting" how waterboarding was done. McCain then laid into the former New York mayor today, saying, "They should know what it is. It is not a complicated procedure. It is torture."

But meanwhile, McCain's evil Bush-clone twin was busy voting against the Dem's 2008 anti-torture bill.

Campaign finance has become a hot topic in this election. The ability of Sen. Obama to draw on small donors has become a big story and underlying justification for his avoiding public finance. Much has been made of the role that Pac’s and Big time donors play in the Clinton campaigns while nothing has been talked about in terms of McCain’s fund raising. The prominence of this issue demands that serious attention be paid to how much money candidates get and where it comes from. The New York Times recently delved into this topic focused on the problems surrounding the Clinton campaign’s continued fund raising efforts. What follows are my observations about the current state of the campaigns fund raising, as objective as I can make them.

This is pretty outrageous. John McCain, who has been skirting campaign finance laws at nearly every turn, gets a helping hand and a big discount for one of his fundraisers.

The DNC's been running a hard-hitting new ad against McCain.

The DNC's also suing McCain's campaign over his breaking FEC campaign finance law.

But the DNC isn't beloved of Corporate America -- not like the DCCC and DSCC.  They could use your help right now!

Maxed out on BHO and/or HRC?  Try the DNC!  http://www.democrats.org

It is an undeniable fact that a candidate needs money to run for higher office in the United States of America.

Money can be good, and money can be bad.

Mitt Romney donated donated over $42 million dollars to his own failed bid for the Presidency. Overall, I viewed his failure in the face of John McCain's meager finances as an inspiring example that money CAN'T buy you higher office.

Barack Obama, on the other hand, has raised over $235 million dollars and donated nothing from his personal finances to his campaign.

Hillary Clinton is a hybrid of these two examples.  She's raised astonishing amounts of money, donated money from her own bank accounts...and horribly mis-managed her campaign finances to the point that she is over $10 million dollars in debt.

Now...she is trying to play the role of victim to Obama's 'money'...

I'm new to campaign finance reform but am keenly interested in the impact McCain-Feingold is having during this election cycle.  

As most who have made a campaign donation know, any money that we give to either a political candidate or a PAC it is not tax deductible.  This differs from a contribution to a qualified not-for-profit.  For example, if you were to donate over $250 to The March of Dimes, and you itemized the donation, you could subtract it from your adjusted gross income.  If you give that same money to the Democratic National Committee, you aren't able to deduct the amount of your donation.

In my first diary, I want to explore the importance of money in "closing the deal". The protracted race is not evidence of Sen. Obama's inability to close the deal. Rather, the spending levels of his campaign illustrate why incumbents rarely lose, and why a challenger needs a tremendous ability to raise funds.  More after the jump.

HRC is sinking in red ink.  The recent FEC disclosures indicate that she started April with $8 mil. on hand for the primary.  The recent disclosures also indicate that she spent $22.2 million in March and is carrying over $10 million in debts to the campaign committee.  Depending on how the fundraising is going this month, she is likely drowning in debt at this point.

One would think that she would be publicizing her April fundraising numbers if they would do anything to counter the catastrophic headlines this will generate in the morning.

Update: BenjaminOmeara contributed this link, which may be the best summary to date: Americablog