Kerry's Waterloo

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The increasingly underwhelming response of donors to Sen. John Kerry's faltering campaign has forced him to dip into his trust-fund inheritance and the assets he shares with his rich wife. Following Democratic front-runner Howard Dean, Mr. Kerry on Friday became only the second post-Watergate Democrat seeking the party's presidential nomination to opt out of the taxpayer-subsidized system of presidential-campaign financing, which has been in effect since the 1976 elections. Unlike Mr. Dean, whose campaign this year has raised successively higher quarterly sums of $2.9 million, $7.6 million and $14.8 million, Mr. Kerry's quarterly receipts have been slanting downward from $10.2 million to $5.8 million to less than $4 million.

In an attempt to pour as much money as possible into the Jan. 27 New Hampshire primary, which is a make-or-break state for the Massachusetts senator, Mr. Kerry will forgo millions of dollars of taxpayer-provided matching funds. Accepting matching funds not only requires candidates to abide by a total pre-convention spending limit of $44.6 million in 2003-04; the system also sets state-by-state expenditure limits.

There are probably enough legitimate loopholes that would permit a campaign to spend twice the level of New Hampshire's ostensible $730,000 limit. However, Mr. Kerry may need to spend far more than $1.5 million in the Granite State to prevent it from becoming his Waterloo.

Most candidates who have rejected matching funds have done so either because they are personally wealthy (e.g., Steve Forbes and Ross Perot) or because they can attract cumulative individual donations far in excess of the total spending limits (e.g., George W. Bush). Mr. Kerry meets neither standard.

While he is married to the former Teresa Heinz, whose inherited share of the Heinz ketchup fortune totaled about $650 million after the death in 1991 of her husband, then-Sen. John Heinz (Pennsylvania Republican), federal law limits any individual contributions from her to $2,000. The Federal Election Commission reports that federal law further precludes Mrs. Heinz Kerry from giving her husband a campaign loan, which would be considered an unlawful contribution. Moreover, given the strict limits that McCain-Feingold places on independent expenditures, such a gambit by the Kerry clan would never pass the smell test.

Thus, insofar as his wife's assets are concerned, Mr. Kerry appears to be limited to using only 50 percent of those that are jointly owned. Beyond the $10 million home they purchased together in Boston's Beacon Hill neighborhood, Mr. Kerry's financial disclosures have listed jointly owned financial assets totaling less than $2.5 million.

The apparent inability to fully exploit his wife's wealth further explains Mr. Kerry's presumed strategy that would enable him to obliterate New Hampshire's spending cap. However, on Friday night, only hours after Mr. Kerry announced he would not be limited to the state spending caps, WMUR-TV and the University of New Hampshire released their latest poll. It showed Mr. Dean's lead over Mr. Kerry in that state was 22 points (38-16). Even as he changes his strategy, Mr. Kerry's Waterloo suddenly looks closer and closer.