Hillary Clinton has at her disposal a handful of accounting maneuvers. HRC’s reward: Bundle of campaign cash?

Though Hillary Rodham Clinton racked up more than $30 million in debt during her Democratic primary campaign, she could emerge from her loss with a bundle of campaign cash to either play kingmaker or mount another campaign of her own.

At her disposal are a handful of accounting maneuvers — some never before tried in presidential politics — that would render her political debt practically insignificant, while at the same time freeing up $24 million in currently off-limits cash, according to interviews with her lawyer and outside campaign finance experts.


Enhancing her flexibility is that all but $1 million of her $9.5 million in unpaid bills at the end of April was owed to allies and political firms unlikely to cause her legal or political headaches by demanding prompt payment.

In fact, their assumed — but unspoken — cooperation is a key part of the New York senator’s most likely path to robust campaign finances.

That financial path would go something like this: Reclassify as a contribution most of the $11.4 million or more she loaned her campaign, which would be a personal financial hit because she wouldn’t be able to recoup much of it. Ask her donors to redirect $23.7 million they gave for her presidential general election campaign to her Senate campaign committee.

Meanwhile, try to raise some fast cash — possibly with assistance from her vanquisher, presumptive Democratic nominee Barack Obama — to pay off vendors who might sue her presidential campaign, leaving “friendly” debt to be paid down gradually as she raises money from her Senate perch.

A riskier route would be to ask her general election donors to redirect — or “redesignate,” in campaign finance parlance — their general election contributions to Obama’s presidential campaign as part of a deal under which the Illinois senator would ask his donors to give to Clinton to help her pay down her debt.

The most aggressive approach would be to redesignate the general election contributions to her Senate committee, transfer her debt to the same account, and then use the general election contributions to pay off the debt.

There’s a budding debate in the campaign finance bar about the legality of such of a maneuver. Some contend it would amount to illegally “laundering” general election contributions to pay off primary election bills. But others assert a 30-year-old Federal Election Commission decision regarding “surplus” campaign cash allows flexibility in the brave new world of privately financed presidential campaigns.

Clinton’s own campaign finance lawyer, Lyn Utrecht of Ryan, Phillips, Utrecht & MacKinnon, declined to discuss Clinton’s plans. But Utrecht’s legal analysis, set forth in e-mails to Politico this week, seems to suggest the campaign will take a cautious financial approach.

“The contributions to the presidential general election can’t be used to pay presidential primary debt, because those donors already maxed out to the presidential primary,” Utrecht wrote. She also asserted Clinton could not transfer her presidential debt to her Senate committee, an interpretation with which some election lawyers disagree.

But Utrecht said there’s nothing stopping Clinton from asking donors to redesignate their general election contributions to the Senate account.

There’s no precedent for that, however, because all previous major-party presidential nominees have participated in a public financing system that bars acceptance of general election contributions.

And there are conflicting opinions about whether Clinton can seek to redesignate general election cash to her Senate campaign.

Michael Toner, a former Federal Election Commission chairman who was the lawyer for Republican Fred Thompson’s aborted presidential campaign, and Paul Ryan, a lawyer for the Campaign Legal Center, agreed with Utrecht that Clinton can redesignate general election cash to her Senate campaign.

But others question the legality of such a maneuver. Craig Holman, a campaign finance lobbyist for Public Citizen, and Jason Torchinsky, a lawyer for the failed presidential bid of Republican Rudy Giuliani, both pointed to Connecticut Sen. Chris Dodd’s situation as potentially clearing or barring Clinton from steering general election cash to her Senate committee.

Dodd ended his own bid for the Democratic presidential nomination in January and has asked the FEC (which currently lacks the quorum needed to render official opinions) for permission to redesignate $1.7 million in general election contributions to his 2010 Senate campaign.

“If the FEC rules ‘no’ for Dodd, they would have to also invalidate it for Hillary Clinton,” said Holman, who called politicians’ ability to operate two or more campaign committees a “loophole.”

Utrecht said Dodd’s request is “irrelevant” because it pertains to his accepting public financing in the primary election, which Clinton declined.

If Utrecht is right, Clinton would have 60 days from the end of her campaign (it’s unclear if the clock started ticking when she suspended her campaign Saturday) to either return general contributions or ask donors to redesignate them to another campaign.

Redesignating cash between committees controlled by a candidate can be quick, since the money never actually has to change hands. But donors can also decline and instead request a refund. So there’s no guarantee donors would oblige if Clinton asks them to redesignate their contributions to Obama’s presidential campaign, instead of to her Senate campaign or even a potential Obama-Clinton joint campaign, unlikely though that is.

Clinton has until the end of the Democratic convention on Aug. 28 to pay back the $11.4 million or more she loaned her campaign. After that, the bulk of it would become a contribution, and repayment would be limited to $250,000 plus interest (her campaign reported owing $16,000 in interest to her at the end of April).

During the race, Clinton’s campaign indicated it would pay off vendor debts before her personal loans, but it also asserted she intended to repay her loans.

The latter transaction is looking increasingly unlikely. Still, the hit might not sting too badly, because Hillary and Bill Clinton have earned $111 million since leaving the White House.

As for the vendor debts, it’s common for big campaigns, particularly losing ones, to let unpaid bills linger, sometimes for years.

“I don’t think the debt is as big of an issue as the media seems to be making it out to be,” Torchinsky said. “Yes, it’s debt, but there are many campaigns that have carried debt for years without paying it back. Her debt has no effect on her future campaigns.”

Bill Clinton’s 1996 reelection campaign this year reported $219,000 in debts, though all of it was disputed. At the end of April, Giuliani’s presidential campaign owed $3.6 million, while Delaware Democratic Sen. Joe Biden’s owed $1.2 million.

There’s no deadline to pay back vendor debts. But campaigns have to be careful not to let debts stand for too long without paying interest or partial payments, lest they be considered illegal corporate contributions.

Firms that do a lot of work for campaigns understand that complaining to the press or suing over lingering bills are big no-nos sure to get them blacklisted, said David Louis Plevan, an official with Electrum Productions. (http://www.electrumproductions.com/)

The company staged more than 500 events for Clinton’s campaign, including her Saturday concession speech at the National Building Museum, and was owed $193,000 at the end of April.

“You try to take as many precautions to protect yourself,” Plevan said, “but you have to be flexible with it.”

Among Clinton’s top creditors are the firms of a number of her inner-circle allies.

At the end of April, pollster and strategist Mark Penn’s firm was owed $4.8 million, ad-maker Mandy Grunwald’s was short $695,000, strategist Minyon Moore’s was due $216,000, Utrecht’s was owed $85,000 and lawyer Bob Barnett’s was due $25,000.

Moore and Barnett were among three Clinton liaisons reportedly set to meet this week in Chicago with Obama campaign representatives to discuss how the former adversaries could assist one another, including what Obama might do to help Clinton retire her debt.

Contribution limits bar Obama from giving Clinton more than the $2,300 maximum donation. So his main recourse would be appealing to his supporters to contribute to Clinton, and it’s not clear how they’ll respond after the brutal primary.

Cash for debt retirement is among the toughest money to raise in politics. But Clinton’s position in the Senate and as a party leader could make things easier. She’s reportedly hauled in $1 million since the final primaries last week.

As her campaign rounded the final bend with dwindling hopes of winning, campaign chairman Terry McAuliffe characterized the mounting debts as a cost of doing business.

“I’ve been involved in a lot of debt situations with the Clintons for a long time,” he told a handful of reporters late last month. “It’s never bothered us before, and it won’t bother us in the future.”