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Democratic Party In Financial Straits

Campaign debt, legal bills and day-to-day costs mounting

By Brooks Jackson/CNN

WASHINGTON (March 27) -- In the 1996 campaign, the Democratic National Committee (DNC) raised $210 million, more than double its previous record from four years earlier. It was more money than the party had ever seen. Now it's gone and donations are drying up, leaving the DNC in financial crisis.


"There's no way to sugarcoat the fact that this is probably the worst financial crisis of a major political party in modern times," said former DNC Finance Director Donald Sweitzer.

At the end of last year, the DNC owed nearly $6.9 million to banks and vendors. Now officials say the party's debt has more than doubled, to a staggering $14.4 million.

As for cash in the bank, the DNC had nearly $2.4 million then, but now it's down to only $1.7 million. The reason there is so little money now is that there was so much of it before -- too much from illegal or dubious sources.


DNC General Chairman Roy Romer announced at the end of February that the DNC would return the questionable money. "The DNC will return contributions from 77 donors totalling $1.5 million," he vowed at the time.

Those contributions have yet to be paid back. Meanwhile the DNC is spending time and money responding to investigations by the Senate, the House and a federal grand jury.

Big donors are holding back.


"A lot of people are saying, 'I don't want to give my money right now to a party where I see them paying a lot of legal bills for the sins of the past,' and so for now, I think a lot of them are sitting on their hands," Sweitzer said.

President Bill Clinton says the DNC has its work cut out. "We're just going to have to work double hard now to pay the money back," he said. "We'll do that, we'll pay our debts, [and] we'll make our budget this year."

Meanwhile the party's new leaders, who inherited the mess, are keeping up a brave front.


DNC National Chairman Steve Grossman said, "Look, it's a tumultuous, challenging time for the party. That simply means that the leadership of the party has to be up to that challenge."

And what a challenge it is. That $14.4 million debt does not include the $1.5 million still to be returned, and an estimated $4 million in legal fees resulting from the investigations.

For the DNC, it's deja vu. In 1968, the party went deeply into debt trying to elect Hubert Humphrey as president over Richard Nixon. The last of that debt was not paid off until 17 years later.

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