DNC is Broke: Good News or Bad?

News is in the eyes of the beholder. Here's the news: the DNC is Nearly Broke.

Is that good news or bad news?

Republicans will view the report as good news, democrats as bad news. I am actually an independent, but one who supports Rand Paul for president.

I certainly do not want to see either Biden or Hillary be the next president. Yet, the next election is so far off, and the current focus is on Obamacare and the budget (and on those issues I side with the Republicans).

Of course, one needs to consider fundraising for the mid-term elections.

All things considered (for me), the report is a small bit of good news. Here are a few details.

There's another budget crisis in Washington, and it's unfolding inside the Democratic party. The Democratic National Committee remains so deeply in the hole from spending in the last election that it is struggling to pay its own vendors.

It is a highly unusual state of affairs for a national party -- especially one that can deploy the President as its fundraiser-in-chief -- and it speaks to the quiet but serious organizational problems the party has yet to address since the last election, obscured in part by the much messier spectacle of GOP infighting.

The Democrats' numbers speak for themselves: Through August, 10 months after helping President Obama secure a second term, the DNC owed its various creditors a total of $18.1 million, compared to the $12.5 million cash cushion the Republican National Committee is holding.

Several executives at firms that contract to provide services to the party -- speaking anonymously to avoid antagonizing what remains an important if troubled client -- describe an organization playing for time as they raise alarms about past-due bills falling further behind. And senior strategists close to the DNC say they worry the organization appears to have no road map back to solvency. "They really thought they could get this money raised by the summer," one said, "but the fact is, from talking to people over there, they have no real plan for how to solve this."

DNC national press secretary Michael Czin says the committee is working with vendors on a case-by-case basis to pay down their tabs. And filings show the organization over the last five months has made $4.5 million in payments to the Amalgamated Bank and appears to be hewing to a $1 million-per-month installment schedule now. "While we work to retire our debt, we're not taking our foot off the pedal and are making the investments that will help ensure that Democrats are successful in 2014, 2016, and beyond," Czin said. He pointed to ongoing work by the DNC's National Finance Committee, which met over the weekend in Colorado to discuss fundraising strategy.

That the DNC has been allowed to drift so much is in part a function of the calendar. But with the 2014 midterms coming into view, expect the party's Congressional leadership to start applying more pressure on the White House to get involved. Without sustained help from the President, the committee will not be in a position to provide material support in that campaign. Mustering that presidential muscle will only get tougher as Obama's second term wears on, once his attention turns to legacy projects like fundraising for his library, and big donors puzzle over whether the committee becomes a stalking-horse for a presidential bid by Hillary Clinton -- or somebody else.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com