March 13, 2019
Special Guest Perspective by Dan O’Donnell
The final step in Milwaukee’s bid to secure the 2020 Democratic National Convention was also the most important: securing a roughly $20 million line of credit.
“The money essentially serves as a backstop for the bid,” The Milwaukee Journal Sentinel reported in January. “That backstop wouldn’t come into play until after the convention, and only then if the host committee falls short of fundraising and runs a deficit.”
In essence, before the Democrats would choose Milwaukee, Milwaukee had to take on the risk of the Democrats failing to pay their bills.
And it’s a very real risk.
In 2012, the Democratic National Committee ended its convention more than $8 million in debt after forcing the host city of Charlotte, North Carolina to secure it a $10 million line of credit from Duke Energy.
Months after the convention, the DNC still owed more than $2.1 million and still had not paid the city of Charlotte $28,651.65 for volunteer shuttle passes, the Charlotte Convention Center $133,214.90 for operation expenses, and the Time Warner Cable Arena $3,025 for arena modifications.
The Democrats owed money for every single aspect of their convention: nearly $1 million in construction work, $400,000 for transportation services, $62,000 for office supplies, $11,000 for furniture rental, $2,000 for shipping expenses, and $1,000 for office supplies. They even stiffed an Office Depot store in Chicago out of $531.75 and didn’t pay a Pitney Bowes location in Pittsburgh $18.20 for using a postage machine.
Following a disastrous virtue-signaling decision to ban corporate donations to the 2012 Convention, the DNC gladly accepted what amounted to a $10 million bailout from Duke Energy, which forgave its line of credit and allowed the DNC to walk away from its debts.
Instead, the company’s shareholders absorbed the outstanding $6 million and Duke Energy CEO Jim Rogers (a major Democratic donor) called it “a contribution we’re making I think for the greater good of our community.”
The massive corporate bailout came after then-Democratic National Committee Chairwoman Debbie Wasserman-Schultz pledged that the Charlotte convention would be the first “in history that does not accept any funds from lobbyists, corporations, or political action committees.”
As soon as it became clear that the DNC wasn’t raising enough money on its own to cover the cost of its convention, though, Wasserman-Schultz did a complete 180 and took millions of dollars from the likes of Wells Fargo, Bank of America, and Duke Energy plus millions more in in-kind contributions from Coca-Cola, AT&T, Costco, and Microsoft.
Even with all of this support, Democrats were still paying 2012 election debts four years later.
Donna Brazile, who took over the DNC after Wasserman-Schultz was forced out on the eve of the 2016 Convention, wrote in her 2017 tell-all book that the Party had $15 million in bank debt and more than $8 million owed to vendors after the 2012 campaign and had been paying that off very slowly.”
The morning after the 2016 Democratic National Convention in Philadelphia, Brazile explained that she spoke with the chief financial officer of Hillary Clinton’s presidential campaign.
“He told me the Democratic Party was broke and $2 million in debt. ‘What?’ I screamed. ‘I am an officer of the party and they’ve been telling us everything is fine and they were raising money with no problems.’ That wasn’t true, he said.”
“Officials from Hillary’s campaign had taken a look at the DNC’s books. [President] Obama left the party $24 million in debt.”
By early 2018, that debt was still at $6.1 million and the DNC had just $6.53 million in cash on hand, leaving it to work with just $400,000 and forcing it to borrow $2 million just to pay rent and make payroll.
While the Republican National Committee began 2018 with zero debt and $38 million in cash on hand, Democrats struggled all year to both raise money and pay off their outstanding obligations.
Individual Democratic candidates and political action committees had no problem raising money in a “blue wave” election year, but the DNC managed its lowest fundraising totals in at least a decade.
In August, the McClatchy News Service reported that:
The DNC has so far taken in $116 million before the November midterm elections — $9 million less than it had taken in at this point in 2014 and more than $30 million less than it had taken in at this point in 2010, the last two midterm cycles.
By contrast, the Republican National Committee has nearly doubled the DNC’s haul this cycle, bringing in a total of $227 million. And of the six major federal committees of both parties, the DNC has by far the most debt ($6.7 million) and the least amount in its bank account ($7.8 million).
Quoted in the story was New Glarus Brewing Company founder Deborah Carey, a major DNC donor…until last year.
“I might give to them if they get their act together,” she told McClatchy.
Will they by the time the Democratic National Convention comes to Carey’s home state next year? Or will Milwaukee be on the hook for the DNC’s years of fiscal mismanagement?
Although Milwaukee Mayor Tom Barrett swears that taxpayers won’t be on the hook if the DNC doesn’t pay its bills, the contract the city signed Monday appears to leave it holding the bag if the Democrats can’t pay it back.
As The Journal Sentinel noted:
The resolution to approve the contract spells out, for example, that federal grants are expected to pay the costs for police and other security services needed for the convention. Although not detailed in the contract, the federal government is expected to provide a $50 million stipend for security costs.
“In the event federal grants are not available, the city agreement requires the host committee to reimburse the city for such costs,” the resolution reads.
This, of course, means that the host city is required to put up funds that would theoretically be paid back.
Just seven years ago, the host committee didn’t. What then? Will WE Energies step in to save the day like Duke Energy did in Charlotte? Or will Milwaukee pay the price for its blind faith in the DNC?
If the contract really doesn’t put Milwaukee in any jeopardy of fiscal harm, then why was securing a $20 million line of credit necessary in the first place? And why was Milwaukee’s convention committee required to put $5 million up front when it signed its contract with the DNC? How is that money recouped if the Democrats’ extreme money troubles of the past few years continue?
Given this history, while Milwaukee is right to be excited at the prospect of hosting the Convention, it should also be wary of what could happen afterward.