While Americans are focused on a government shutdown precipitated in large part by America's debt crisis, the fundraising arm of the party that advocates spending trillions of dollars in borrowed money has a debt crisis of its own. As a result of spending during the 2012 election campaign, the Democratic National Committee (DNC) is nearly broke, even as it struggles to pay its own vendors.
The numbers paint a bleak picture. At the end of May, the DNC had $6 million in cash and $19.8 million in debt, and was paying off its bills at a rate of less than $1 million per month. Through August, the DNC owed $18.1 million to its various creditors. Several of those creditors, speaking anonymously to avoid any blowback from the DNC, described the organization as one falling further and further behind in its ability to pay past due bills. Moreover, senior strategists with close ties to the money-raising arm of the Democrat party have expressed concerns that the DNC has no apparent strategy for returning to solvency. "They really thought they could get this money raised by the summer," said one of those strategists. "But the fact is, from talking to people over there, they have no real plan for how to solve this."
DNC officials note that their problems are exacerbated in part by the White House, as well as DNC head Debbie Wasserman Schultz, who reportedly has no strong relationships with anyone in the administration. Tellingly, Wasserman Schultz has personal debt issues that mirror the organization she represents. She is currently over a million dollars in debt, with two mortgages worth at least $750,000 in total, and another $350,000 in home equity and personal loans. In 2012, Wasserman Schultz also carried more than $50,000 in credit card debt. By contrast, she has $100,000 worth of spouse-held stock in the community bank where her husband is employed, and other smaller accounts that include college savings plan for her children.
Yet while Wasserman Schultz is incompetent, the DNC's woes are not completely her fault. Organizing for Action (OFA), Barack Obama’s former campaign apparatus reincarnated as a nonprofit advocacy group, has emerged as a fierce competitor for donor dollars. Last March, Fred Wertheimer, head of Democracy 21, a campaign finance reform group, aptly described what OFA is all about. "It is operating as an arm of the presidency and it's funded by private money including large contributions and bundlers raising large amounts," he explained.
OFA also has a technological infrastructure with access to Obama’s 2 million volunteers, 17 million email subscribers, 37.2 million Twitter followers, and virtually every registered voter in the country. All of it is used to drive the president's message--and raise money.
It is that money raising ability that has hurt the DNC. According to the Center for Responsive Politics, all of the top-tier OFA donors have also raised substantial sums of money for the DNC in the past. And while 13 of those donors contributed six-figure sums to the OFA over the first half of 2013, only three of them gave money to the DNC over the same time period.
DNC national press secretary Michael Czin acknowledges the OFA's fund raising prowess, but doesn't consider it a problem. "Of course there's competition," he explains. "But the Democratic family is a big one, and at the end of the day we are all on the same team, our work compliments each other's, and there are enough resources for all of us."
A top Democratic operative paints a completely different picture. "Donors are being pulled in two directions, and there's absolutely no doubt it's impacted the DNC's fundraising," the operative said. "I'm hearing it from donors regularly that they're being told to help one and not the other."
The DNC is also beset by leadership problems. Patrick Gaspard who was executive director of the committee since 2011, was chosen in March to become America's ambassador to South Africa. The effort to replace him has been described as chaotic. "It's a surprise to most people that there isn't an executive director at this point," noted a source close to the DNC. "There have been a number of candidates who pulled their names out after having been floated, but it should have been done by now."
Ostensibly, President Obama is aware of the problem. According to the DNC, he has headlined 15 of their fundraisers in 2013, including two last week in New York and Washington, D.C. Yet it remains a reality that Czin is dealing with DNC vendors on a case-by-case basis, and that their aforementioned payment schedule of just under one million dollars a month is being maintained. Nonetheless, Czin expresses optimism. "While we work to retire our debt, we're not taking our foot off the pedal and are making the investments that will help ensure that Democrats are successful in 2014, 2016, and beyond," he contended.
Keeping the pedal to the metal is contingent on the continuing involvement of the president who may not be as inclined to help his party as he is to help himself. It is quite possible, given the Obama’s narcissistic tendencies, that he may be far more interested in burnishing his historical legacy than raising funds for his fellow Democrats. OFA is in a far better position to support that effort than the DNC.
This reality may explain the August appointment of longtime Clinton advisor Harold Ickes to the DNC's rules and bylaws panel. According to Ickes, the panel’s “goal is to design rules to nominate the strongest candidate for the general election.” Toward that end he is engaged in eliciting contributions from wealthy donors and "assisting" the Ready for Hillary Super PAC that aims to get Hillary Clinton elected president in 2016. Earlier in August, the DNC also hired Mo Elleithee, Clinton's traveling campaign press secretary in 2008, as its new communications director. Thus, the DNC's transition with respect to the party's standard-bearer appears to be moving past the current president towards their most obvious candidate for 2016.
It remains to be seen if Clinton is willing to return the favor. Barack Obama has established the template of organizing a SuperPac that allows him to raise large sums of money independent of the DNC's efforts. If Clinton takes the same approach, big donors may gravitate towards her, leaving the DNC to fend largely for itself in the 2014 mid-term election and beyond.
Either way, the DNC's current condition epitomizes a party that continues to insist America does not having a spending problem. Nearly $17 trillion in national debt, and more than $86 trillion in unfunded liabilities, say otherwise. It remains to be seen when denial gives way to reality for the DNC--and America itself.
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