Musings on Campaign Finances - To Loan, or Not to Loan?

A question that has been fermenting in the recesses of my brain for some time is the issue of whether candidates do themselves more harm than good by loaning money to their own campaign.

It's not necessarily the same issue, mind you, as contributing to your own campaign irrevocably - I'm talking strictly about making a loan with the intent that, if a campaign is successful, the candidate wins, and he/she continues to be able to raise money, he/she plans to pay himself or herself back as soon as possible after the election so the candidate himself/herself is not out of pocket.

Now, generally, so-called "self-funders" (that is, candidates who seem to be recruited primarily because they are well-off, and can contribute gobs of money to their own campaign) often don't fare well, it seems -- think Ozinga, Oberweis, etc. It generally seems OK, however, if candidates invest in their own campaign as long as the perception is not that the candidate themselves is the major funder. I think 10th District congressional candidate Dick Green, rightly or wrongly, has been given that label by many, for example. So the unwritten rule appears to be, go ahead and contribute to yourself, but don't overdo it.

Loans, I think, are a different dynamic than actual contributions.

If you really get behind the numbers, and it becomes obvious that the major funding of a campaign is loan money from the candidate, not only do you get the stigma of being the major source of support for the campaign, but people start to question your real commitment to yourself... especially if it becomes clear you aren't spending the money you loaned your own campaign.

My law school chum Pat Hughes, who is running against Congressman Mark Kirk for the GOP nomination for U.S. Senate, may be a good example. At the start of his campaign, Pat loaned himself $250,000 worth of seed money. We won't know for a few weeks yet how successful he's been at raising money since the end of the third quarter of 2009, but nothing I've heard on the street indicates he's been particularly successful at raising major money. I have word of only one major printed leaflet he's dropped in the mail, aside from the handouts he's made to pass around. And besides YouTube-type videos, the only other money I've heard that Pat has spent is a very small cable TV ad buy. Rich Miller has the exact amount, but you have to be a Capitol Fax subscriber to find out how small.

So, what does this mean? If Pat is trying to avoid dipping into his personal contributions for fear that he's going to lose, that is going to become evident soon. It's less than 30 days till the primary election, so the money you've been trying to raise up to this point, well, now it's time to spend it. As coach used to say, leave it all out on the field, boys, there's no reason to save anything for after the game.

Candidates in Pat's position also have to consider their future in politics. If the word gets out that Pat didn't spend everything he had, including his loan funds, in an attempt to win, what does that say about his confidence in his campaign? And, how will his contributors feel, that he was willing to spend their money, but not his own, even though he crowed about the big 'investment' he made in his campaign? The next time around (if there is a next time), people will definitely think twice about contributing.

Of course, that also illustrates a problem with shooting for the stars for your first political outing. If you lose the race for U.S. Senate, where do you go from there? Village trustee? (not that there's anything wrong with being a village trustee... LOL).

I knew Pat pretty well in law school, and he's smart, honest, and has strong values and beliefs. But he's not any smarter than I am, and I'm not ready to be a U.S. Senator. Neither is Pat.

Let's see if that loan money gets spent. Then we'll know something about where Pat's coming from.