Cash-strapped Clinton Fails To Pay Bills

Hillary Rodham Clinton’s cash-strapped presidential campaign has been putting off paying hundreds of bills for months — freeing up cash for critical media buys but also earning the campaign a reputation as something of a deadbeat in some small-business circles.

A pair of Ohio companies owed more than $25,000 by Clinton for staging events for her campaign are warning others in the tight-knit event production community — and anyone else who will listen — to get their cash upfront when doing business with her. Her campaign, say representatives of the two companies, has stopped returning phone calls and e-mails seeking payment of outstanding invoices. One even got no response from a certified letter.

Their cautionary tales, combined with published reports about similar difficulties faced by a New Hampshire landlord, an Iowa office cleaner and a New York caterer, highlight a less-obvious impact of Clinton’s inability to keep up with the staggering fundraising pace set by her opponent for the Democratic presidential nomination, Illinois Sen. Barack Obama.

Clinton's campaign did not respond to recent, specific questions about its transactions with vendors. But Clinton spokesman Jay Carson pointed on Saturday to an earlier statement the campaign issued to Politico, asserting: "The campaign pays its bills regularly and in the normal course of business, and pays all of its bills."

Just like with other businesses, it’s common for campaigns to carry unpaid bills from month to month, but in Clinton’s case, it also could serve a strategic purpose.

The New York senator’s presidential campaign ended February with $33 million in the bank, according to a report filed last week with the Federal Election Commission, but only $11 million of that can be spent on her battle with Obama.

The rest can be spent only in the general election, if she makes it that far, and must be returned if she doesn’t. If she had paid off the $8.7 million in unpaid bills she reported as debt and had not loaned her campaign $5 million, she would have been nearly $3 million in the red at the end of February.

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By contrast, if you subtract Obama’s $625,000 in debts and his general-election-only money from his total cash on hand at the end of last month, he’d still be left with $31 million.

The presidential campaign of presumptive Republican nominee Arizona Sen. John McCain reported $4.3 million in debt at the end of February, but only $1.3 million of that was in the form of unpaid bills to a dozen vendors. The rest was a bank loan, which the campaign says it paid off last week.

It’s not just the size of Clinton’s debts that’s noteworthy. It’s also that her unpaid bills extend beyond the realm of high-priced consultants who typically let bills slide as part of the cost of doing business with powerful clientele whose success is linked to their own.

Some of Clinton’s biggest debts are to pollster and chief strategist Mark Penn, who’s owed $2.5 million; direct mail company MSHC Partners, which is owed $807,000; phone-banking firm Spoken Hub, which is waiting for $771,000; and ad maker Mandy Grunwald, who’s owed $467,000.

Clinton also reported debts more than one month old to a slew of apolitical businesses and organizations, large and small, in the states through which this historically expensive Democratic primary campaign has raged.

She owed Iowa’s Sioux City Art Center Board of Trustees $3,500 for catering and venue costs, New Hampshire’s Winnacunnet Cooperative School District $4,400 in event costs, Qwest $24,000 for phone service, various branches of the Iowa-based supermarket chain Hy-Vee $15,000 for food, beverages and catering, and $7,700 to Ohio and Massachusettsbranches of the theatrical stage employees’ union, for equipment costs.

In fact, about a third of the nearly 700 individual debts Clinton reported at the end of February were for various types of “event expenses,” including $319,000 for catering and venue costs, $420,000 for equipment, $11,000 for photography and $9,000 for security.

Event production is important to big-time presidential campaigns. It shapes how candidates look and sound, not just to the thousands of people who turn out to campaign speeches and rallies but also to the millions who catch snippets of them on television.

And word is getting around that Clinton’s campaign does not promptly pay those who labor to make her events look good, said an employee of the event production company Forty Two of Youngstown, Ohio.

“I feel insulted by the way that the campaign treated this company and treated us personally,” said the employee, who did not want to be named talking about a client.

The Clinton campaign paid the company $16,500 to set up a stage, press riser, sound system and backdrops at a Youngstown high school last month for a raucous union rally, where an aggressive Clinton stump speech drew thunderous applause. But the Clinton campaign has yet to pay Forty Two for two other February events, and the employee said the campaign has stopped returning phone calls, e-mails and didn’t respond to a certified letter.

“We worked very hard to put together these events on a moment’s notice and do absolutely everything to a ‘t’ to make it look perfect on television for her and for her campaign,” said the employee. “Sen. Clinton talks about helping working families, people in unions and small businesses. But when it comes down to actually doing something that shows that she can back up her words with action, she fails.”

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Forty Two also has done events for Obama’s campaign, which has paid its bills promptly, according to the employee. FEC records show Obama’s campaign paid the company $18,500.

Show Tyme Exhibits, another Youngstown event production company, has produced political events for years and had never had problems getting paid before Clinton, according to owner Jim Phillips.

He said he’s still waiting for a payment for setting up the sound system and stage for Clinton’s February tour of a General Motors plant in Lordstown, Ohio.

“It was only $607, but I’m a small guy; I could use that,” said Phillips, adding, “Everyone I can tell, I do tell about it. You tell somebody something bad about somebody, they tell 10 other people.”

Both Phillips and the Forty Two employee said they voted for Clinton in Ohio’s March 4 primary, which she won handily, but regret their votes and are reluctant to work for her campaign again.

Their sentiments aren’t universal in the event production world, though.

At the end of January, Clinton owed $38,000 to ACS Sound and Lighting of Columbia, S.C. But the company was paid in full last month and is planning to do events for Clinton in other states, according to manager Troy Gwin.

“We don’t have any problem with them,” he said. “I’d continue to do business after the primaries if she is the nominee. I would love to.”

And Tony Galarza, director of the Missoula, Mont., branch of a national event production company, remained committed to staging an April 6 Clinton fundraising brunch at a local hotel even after a colleague in his company e-mailed a list of Clinton’s campaign debts.

Galarza said he’s confident Clinton will pay his company but admitted he was surprised to see so many event production companies among the campaign’s creditors.

“Once I looked at those numbes, I realized how important to our economy nationally these elections are,” he said. “Just the sheer numbers listed there were immense.”

Editor's note: An earlier version of this story included an incorrect figure for the Clinton campaign's cash on hand at the end of February.