It took 20 years for John Glenn, the former astronaut and Democratic senator, to repay the debts that he ran up in his failed bid for the presidential nomination in 1984.

Nobody is predicting that Hillary Clinton, whose campaign debts are estimated at between $20m and $30m – and rising – would take that long to meet her obligations. But the financial strain is getting more difficult with each day.

Having raised little more than $1m (€650,000, £510,000) since her defeat in North Carolina and narrow victory in Indiana last Tuesday, compared to $10m in the days following her Pennsylvania win last month, Mrs Clinton’s decision to fight on is almost certainly adding to her mountain of debts.

“I don’t recall the last time any candidate faced withdrawal from the race with debts of this magnitude,” says Michael Toner, the former head of the Federal Election Commission. “She began the race with the most formidable money machine in modern history and she looks likely to end it in record debt.”

The financial story of Mrs Clinton’s bid offers a glimpse of her campaign’s broader failures. The principal mistake was to assume that she would comfortably “outraise” her rivals. Although she has garnered what would have been a record $190m since January 2007, Barack Obama has raised almost $240m. This was in spite of Mrs Clinton beginning the race with $9m carried over from her Senate re-election campaign a few months earlier.

By drawing on perhaps the most extensive Rolodex in US politics, Mrs Clinton has been able to get thousands of people to give $2,300 – the maximum individual contribution permitted under FEC rules. But she has tapped almost everyone she knows, as well as their friends, leaving her vulnerable to a persistent debt overhang.

Mr Obama, in contrast, has relied on an internet fundraising model in which hundreds of thousands of people he has never met – and is never likely to meet – have contributed in small increments of $5 and upwards. These donors can thus legally be revisited every time the campaign needs to refuel.

“If you base your campaign on being the incumbent, then you can’t suddenly start asking the public for $25-contributions to repay your debt,” says Leo Hindery, former senior policy advisor to John Edwards, who withdrew from the race in January. “Donors sense the whiff of death around a campaign and the money just dries up.”

America’s campaign finance regulations, which were revamped in 2003 in a bill co-sponsored by John McCain, now the Republican nominee, also put tight constraints on the candidate’s ability to repay loans they have made to themselves.

Mrs Clinton has lent her campaign $11.4m of her own money since January. Under the rules she will have to write almost all of that off unless she can raise money to repay herself before the Democratic convention in late August. “It would be politically very awkward for Senator Clinton to hold fundraisers to repay herself,” says Chip Smith, who was chief financial officer to Al Gore’s 2000 presidential campaign.

Other kinds of debt, including money owed to campaign “vendors”, such as polling groups, charter plane companies or staff salaries, can be delayed indefinitely – as happened with Mr Glenn and other failed candidates. “You can put off the phone company for another month, but not that [personal] debt,” says a Democratic attorney.

According to Mrs Clinton’s most recent filings, her biggest debts are to Mark Penn, her chief pollster and former senior advisor, who is owed $4.6m; Mandy Grunwald, who makes many of her television advertisements, who is owed $528,000; The Spoken Hub, a phone bank provider that is owed $1.16m; and MSHC Partners, which does direct mailing and is owed $956,000. These amounts are likely to have grown. There are also dozens of smaller companies in states such as Pennsylvania and Indiana that organised campaign events in the lead up to polling days or provided catering to campaign staff.

“It is generally the TV production and polling research people who get paid last,” says Mr Smith. One possible solution for Mrs Clinton would be to get Mr Obama to help repay her debts in exchange for her withdrawal. Many failed candidates have struck this deal in the past – most recently Mrs Clinton helped Tom Vilsack, the former governor of Iowa, repay his debts last year in exchange for his signing on to her campaign.

Similarly, some of Mr McCain’s biggest donors helped former Republican candidate Sam Brownback pay back $40,000 in debt after Mr Brownback endorsed Mr McCain.

Howard Wolfson, Mrs Clinton’s communications director, on Friday denied rumours they had been approached by Mr Obama’s campaign with such an offer.

Even if Mrs Clinton is quietly hoping Mr Obama will help retire her debts, one Democratic campaign finance attorney said she could not count on such an offer. “There is always an effort to bring the party together …but I don’t think it is something you can take to the bank,” the attorney said. “The limit is still $2,300 – it’s a lot of people [that Obama would have to ask for donations]. It’s not like going to eight friends.”

There is always the possibility that Mrs Clinton will stay on in the fight and keep writing off her own money. Together she and Bill Clinton have $109m in personal income and, since they file joint tax returns, she is entitled to draw on her husband’s money. “If they want to throw good money after bad they can,” says Mr Hindery. “But her donor base has already hit its limit.”

Get alerts on US politics & policy when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article