At the end of a presidential campaign, there is celebration and there is heartbreak. There are winners and there are losers. For some, there is also a large pile of debt and unpaid creditors. Joe Biden was accurate when he once quoted a trenchant observation from his father: “Don’t tell me what you value, show me your budget and I’ll tell you what you value.” This maxim is extremely applicable to presidential campaigns.
How a campaign spends its finite and valuable money and for what it is willing to go into debt speaks volumes about the campaign’s strategy and oftentimes its weaknesses. As the former CFO of the Romney campaign, I know what it is like to successfully budget for a $1 billion operation and land the plane. I know how my company, Red Curve Solutions, handled it and how spending decisions were made. With that in mind, here are the top 10 expenses that have plunged presidential campaigns into debt. The following is not a scientific or statistical analysis, but rather observations based on my research:
1.) Telephone Calls
This makes sense and is a worthy expenditure. Getting your supporters to vote on Election Day and raising money is critical and worth whatever it takes. Ideally, with proper budgeting, you won’t go into debt in the process. Also, of historical note, it is interesting to see the shift in campaign spending from old school landlines to expensive, primitive cell phones (starting in the ’90s) to modern and relatively inexpensive mobile phones today. The range of debt in telephones that campaigns were stuck with in the last 20 years is from $37,000-$479k,000.
2.) Legal Services
Legal services are an essential investment for any campaign. Spending money for good legal counsel up front can save lots of legal headaches down the road that would be even more costly. You should not skimp on your lawyer. The debt range here is between $11,000-$1.7 million.
There are two expenditures tied for #3.
3.) Air Travel
This is one area where candidates can save money. It is very easy to rack up bills flying on a Gulfstream V. Commercial airfare is the easiest way to save money but with security concerns, flying via a charter company is safer and gives campaigns the flexibility they need in their hectic schedules. Most charter companies require payment up front. Campaigns in the last 20 years have found themselves between $150,000 and over $1 million in debt for air travel.
3.) Accounting/Compliance/Treasury
While ostensibly these costs have no bearing on a good ground game or a good media strategy, they actually do. Real time and accurate budgeting allows the campaign to deploy their valuable resources in the smartest and most effective manner. Accounting and compliance is vital for legal, record-keeping, budgeting and reporting reasons. Some campaigns minimize the importance here, but mistakes usually translate into greater costs down the road, including greater legal costs (see #2). Also of note, as the amount of data in campaigns is increased, the costs for storing and managing that electronic data will increase. Debt here is in the $210,000-#313,000 range.
5.) Direct Mail Costs
Debt range: $31,000-$2 million
6.) Digital Consulting and Online Advertising
As the world becomes more digital and as more campaigning is done on social media and other web-based platforms, it wouldn’t surprise me if this jumps several spots on the list in the next five years. This wasn’t really a factor in the ’80s and ’90s. Debt range: $37,000-$110,000.
7.) Fundraising Consulting
Debt range: $110,000-$300,000
8.) Polling and Media Consulting
Debt range: $390,000-$3 million
9.) Rent and Security
Debt range: Approximately $100,000
10.) Accrued bank interest
John Glenn had over $1 million owed in bank interest from his 1984 run. His campaign committee was open for 22 years until the FEC administratively terminated it in 2006. Compound interest is a killer — even in presidential politics.
Brad Crate is the Founder and CEO of Red Curve Solutions and was the CFO of Mitt Romney’s 2012 presidential campaign. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
