Obama urges donors to ease Clinton campaign debt

NEW YORK— Hillary Rodham Clinton is scrambling to reduce her massive campaign debt before she becomes secretary of state, when federal ethics laws — and political sensitivities — will severely hamper her ability to do so.

NEW YORK— Hillary Rodham Clinton is scrambling to reduce her massive campaign debt before she becomes secretary of state, when federal ethics laws — and political sensitivities — will severely hamper her ability to do so. The former first lady is receiving help from her husband and from President-elect Barack Obama, who defeated her in the Democratic primary and then tapped her to be the nation’s top diplomat. The Clintons are planning a New York City fundraiser this month, which will give donors a final chance to buy some face time with the future secretary of state. Aides said the New York senator will try to avoid doing anything that suggests she is leveraging her new post for fundraising advantage. But the appearance of a conflict of interest is always possible when people give campaign money to politicians. "If nothing else, there’s the embarrassment element," said Brad Smith, a former Federal Election Commission chairman. "A secretary of state trying to raise campaign money is kind of ugly." Obama’s team sent an e-mail Friday, signed by Vice President-elect Joe Biden, asking supporters to help Obama fulfill a pledge to whittle Clinton’s campaign debt. Clinton and her husband, former President Bill Clinton, will headline a major debt retirement event in New York Dec. 15 with "Ugly Betty" star America Ferrera as master of ceremonies. Tickets range from $50 to $1,000, with top donors earning a premium seat and a backstage photo with the former first lady. At the beginning of November, Clinton owed $7.5 million to vendors from her failed presidential bid, according to campaign finance records. The largest share of the debt — about $5.3 million — is owed to the polling firm of Mark Penn, the Clintons’ longtime political strategist. She owes hundreds of thousands of dollars for printing, equipment rental, phone banks and other services. Clinton has slowly been trimming the debt since suspending her campaign last June, partly with Obama’s help. But her fundraising efforts will be curtailed if she is confirmed as secretary of state and becomes covered by the Hatch Act, which regulates political involvement by federal employees. A 2001 advisory opinion by the federal Office of Special Counsel said a federal employee with a campaign debt would be prohibited from "personally soliciting, accepting or receiving political contributions." That means Clinton’s political committee could keep raising money to pay off her creditors but without her direct involvement. The lack of access to Clinton could pose a disincentive for donors, said Sheila Krumholz, director of the Center for Responsive Politics, which tracks political donations. "People write a check to get into the room with a candidate or government official. If she’s legally barred from fundraising, the No. 1 reason for giving has been removed," Krumholz said. "It’s like attending a wedding and the bride isn’t there." The advisory opinion does allow the former candidate to appear briefly at fundraising events and thank donors. But none of the Hatch Act rules apply until Clinton is confirmed, so there’s an opportunity for people eager to mingle with the incoming secretary of state. Clinton also plans to sell a children’s book, titled "Dreams Taking Flight," by author Kathleen Krull, about her pioneering candidacy. Clinton’s mother, Dorothy Rodham, planned to send an e-mail to supporters later this week asking them to buy the book to help raise funds to pay down Clinton’s debt. On Tuesday, a day after Obama announced she would serve as his top diplomat, Bill Clinton signed an e-mail to supporters asking them to send a note of congratulations to his wife and including a link for contributing to her debt retirement. Analysts said that fundraising to retire a politician’s debt — never easy — is more difficult during the recession. Also, Clinton is trying to pay off debts from the Democratic primaries, where many of her supporters already gave the maximum $2,300 per person. They cannot give again. The large share of her debt owed to pollster Penn, a controversial figure and harsh Obama critic, also complicates matters for Clinton. Many Democrats blamed him for her strategic failings. Clinton also has about $6 million in her Senate re-election account; some of that could be used under strict restrictions to help pay these debts. Under FEC rules, she would need to ask each contributor’s permission to move the donation to her debt retirement account — and none could come from people who already contributed the maximum to her presidential bid. Associated Press writer Jim Kuhnhenn in Washington contributed to this report.  AP ______ Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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