Heading into the 2020 election cycle the Blue Party is willing to go into the red.
Student loan debt. Consumer protections from credit card companies. Clamping down on the mortgage industry. Based on many of their pet projects you might conclude that the Democratic Party is strongly averse to engaging in the perils of securing financial loans. Yet as they are gearing up for their debate schedule the Democratic National Committee is seeking out help — it has its hand out to receive millions in financial assistance.
For the second time in about two months, the DNC is securing a substantial loan in order to prepare for the election cycle and have a ground game properly established. In early April the national party secured a $5 million dollar line of credit, and already it has reported to the federal election commission that it has now doubled that amount, with a secondary loan.
And no, this is not exactly standard accounting. The DNC has been woefully behind the Republicans in fundraising this year. Through the month of April, the DNC has pulled in less than $20 million; the RNC meanwhile more than doubled that intake, with over $45 million. Things look even worse on the bottom line. The DNC is sitting on only $7.6 million in cash, and is sporting a debt total of $6.2 million. Their Republican counterparts are flush, with $34.7 million in hand and holding no debt at all.
That debt facing the DNC is not just outstanding bills. About $5 million concerns revolving credit lines, with most of it involving an outstanding loan, and over $400,000 owed to American Express.
Things are looking like they are further leveraged with upcoming election events. The city of Milwaukee was tabbed to host the 2020 Democratic National Convention, but in order for them to be considered city authorities had to first secure their own line of credit. This was not to pay for staging the event, it was more financial insurance policy.
The money essentially serves as a backstop for the bid. 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.
While considering cities for the convention the DNC was stipulating that the bids had to assure there would be a $20 million line of credit. Again, this is not standard operating procedures. According to Milwaukee Mayor Tom Barrett, this meant making some tough overtures. “I’ve made it clear for a long period of time that the city would not be the one to guarantee a line of credit,” said Barret. “Talking to mayors of other cities it is more rare than not that a city would do this.”
It may have been a cagey move on the part of Barrett to assure that the city would not be on the hook for the DNC bills. Following the 2012 convention, held in Charlotte, the DNC racked up millions in debt and it defaulted on paying back the loan that was granted by Duke Energy.
This makes the DNC a lending risk. The entity is operating in the red, and is taking out multiple loans while sitting on revolving debt. Milwaukee was wise to offset the responsibility to a third party lender.