Last December, Senator John F. Kerry told an elite group of New York political fund-raisers that he would raise "at least $30 million" before the 2004 primaries, and use federal matching funds to boost his campaign kitty to "nearly $50 million."
The scene is described in "One-Car Caravan," a new book about the early stages of the 2004 Democratic presidential campaign by Walter Shapiro, a journalist who attended the Dec. 17 meeting at an equity fund manager's office on Park Avenue.
For Kerry, that was a political lifetime ago. Back then he was the putative front-runner in the field. But as he has tumbled into the pack of Democratic presidential contenders chasing Howard Dean, Kerry is on pace to fall far short of those fund-raising goals.
Now, with the nomination campaign's endgame about to begin, the former Vermont governor has backed Kerry into a corner.
After declaring last Saturday that he would be the first Democratic presidential candidate ever to decline public matching funds, freeing himself of spending limits, Dean has forced Kerry into a potentially fateful choice: join Dean outside the public financing system or stay in, take the matching funds and abide by the state spending caps.
Either choice presents risks for Kerry. Sheila Krumholz, director of research at the nonpartisan Center for Responsive Politics, said a computer analysis of his contributions through Sept. 30 showed the Massachusetts senator was eligible for up to $5.6 million in matching funds. In comparison, Dean's campaign said it would have qualified for $18.7 million in matching dollars if it stayed in the system. (The federal government matches up to the first $250 from each donor.)
It is not at all clear that by opting out, Kerry will have more money to spend, even if he dips into his personal funds or borrows against valuable assets.
By law, he cannot tap the fortune of his wife, Teresa Heinz Kerry, the ketchup heiress with assets totaling more than a half a billion dollars.
The senator's personal assets are minuscule by comparison.
In his latest financial disclosure form, Kerry listed holdings in 2002 in his own name worth $409,000 to $1.8 million, plus assets held jointly with his wife, valued between $300,000 and $600,000. Under Federal Election Commission rules, he can spend or borrow against half the value of the joint assets, which were listed as a painting worth $250,001 to $500,000 and a bank account with between $50,001 and $100,000.
Kerry has other assets he was not required to disclose. Principal among them is the palatial home he and his wife own on Beacon Hill. The Louisburg Square residence is currently valued by the city at less than $7 million, but would certainly fetch more on the open market.
In his 1996 Senate reelection fight against then-Governor William F. Weld, Kerry used the home as loan collateral as he poured $1.7 million of his own money into the campaign.
Heinz Kerry's money could possibly be used to finance "independent expenditures" on her husband's behalf. But Larry Noble, executive director of the Center for Responsive Politics, said, "I can't imagine how they could do it legally" because Heinz Kerry has been involved in her husband's campaign, as an adviser and surrogate.
"For expenditures to be independent, his wife would have to make them truly independent of [Kerry's] campaign and her husband," said Noble, a former general counsel of the Federal Election Commission.
In the fund-raising sweepstakes, Kerry, who raised $20 million through September, still ranks second to Dean, who had taken in $25.4 million, in the nine-candidate field. But the trendlines are skewing wildly against Kerry. His fund-raising has dropped steadily, after early success, while Dean's has skyrocketed. For the quarter ending Sept. 30, Dean out-raised Kerry, $14.8 million to $4 million. Moreover, Dean had more in cash on hand, $12.4 million compared with $7.9 million.
If Kerry stays in the public financing system, he risks being overwhelmed by a free-spending Dean in the New Hampshire primary, a make-or-break contest for Kerry. But by running a privately funded campaign, Kerry would be uncoupled from the spending caps, which are constraining, particularly in high-stakes, early voting states such as Iowa and New Hampshire.
"By not having to follow the spending caps by state, it would be Kerry's way of counteracting whatever [advertising] Dean puts on the air," said Dante Scala, a professor of politics at Saint Anselm College in Manchester, N.H.
Through Sept. 30, Dean actually had more room under the early state caps than Kerry, campaign reports show. Dean had spent only 18 percent of his $1.3 million cap allocation for Iowa and 17 percent of the $729,600 New Hampshire limit. Kerry, by contrast, had spent 27 percent of his Iowa cap allocation and 33 percent of his Granite State limit.
Kerry's campaign has not revealed the timetable for a decision. Matching funds would not be available until Jan. 2.