Sen. John Kerry gave himself quite a Christmas present last year. Mr. Kerry lent his cash-strapped presidential campaign $6.4 million two days before Christmas. Two factors made the loan possible. The first was the seemingly infinite liquidity of Teresa Heinz Kerry, the ketchup heiress he married in 1995. Mrs. Heinz Kerry reportedly forked over virtually all of the funds for the newly married couple’s mansion in Boston’s exclusive Beacon Hill neighborhood. The second factor was a little help from her friends at the Mellon financial conglomerate, who signed off on an eye-popping home appraisal. That super-sized appraisal made the loan much larger than it otherwise could have been.
With that infusion, Mr. Kerry rejected matching funds for the primaries. That decision enabled Mr. Kerry, once he had secured the nomination on March 2, to raise more than $140 million over the next four months. So far, however, the campaign has not been clear about how Mr. Kerry intends to repay the $6.4 million loan.
Less than three weeks after he accepts the Democratic presidential nomination, Mr. Kerry must decide whether that loan would be repaid by the campaign, which has been making the monthly interest payments of $16,600. The campaign clearly has the funds to retire the debt. If the campaign pays off the loan, it will have $6.4 million less to spend on advertising before Mr. Kerry accepts the nomination or to transfer to the Democratic National Committee after the convention.
Mr. Kerry clearly does not have the means to retire the debt, and his wife cannot legally repay the loan. His latest Senate financial disclosure forms report personal assets as low as $417,000. His annual Senate salary, which is less than $160,000, would not cover the $200,000 annual interest costs. Moreover, 20 days after he accepts the nomination, the so-called “millionaire’s provision” of Mr. Kerry’s beloved McCain-Feingold campaign-finance law prohibits him from raising more than $250,000 to repay the $6.4 million loan.
If elected president, Mr. Kerry’s salary would jump to $400,000. But the mortgage’s debt-service costs could rise even more sharply once the rock-bottom interest rate of his adjustable-rate mortgage (currently 3.125 percent) increases, as it surely will. If he loses the presidency and remains in the Senate, the financial vice will only tighten. On the other hand, if he uses campaign funds to repay the loan, his contributors might object; and Republicans could convincingly argue that the Kerry campaign bundled $50 contributions from the Internet or $2,000 donations from John Edwards’ trial-lawyer friends to retire the Boston Brahmin’s mortgage.
Either way, the $6.4 million loan that rescued his campaign in January likely will be causing Mr. Kerry problems in September and October and perhaps beyond.
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