Wednesday, February 3, 2016

Caveat Emptor

Donald Trump makes a big deal of the fact that he is "self-funding" his campaign for President.

A lot of his supporters cite this so-called financial independence as a major reason they are supporting Trump. They believe that this means Trump will not be a tool of special interests if he is elected President. I hear this all the time from Trump supporters.

Meanwhile, Trump appears to think that he is not getting the credit he deserves for funding his campaign.  Witness his tweet from yesterday.

I guess when you lose, it is not worth it. It is only worth it when you win.

What are the actual facts on Trump's self-funding?

Trump has actually contributed very little to his campaign thus far. Most of the money going into the Trump campaign has been in the form of loans from Trump.

Though December 31 (the most recent reporting date) Trump had only contributed $218,567 to his campaign.

On the other hand, he had loaned the campaign $12.6 million!

He had received $6.6 million in individual contributions to his campaign.

Therefore, outside donors have actually contributed 30X more to the Trump campaign than he has has actually contributed himself. (Hat tip to @LPDonovan)

When someone makes a loan to a campaign the expectation is that the loan will someday be repaid. If not, why not just contribute the money?

How will the loans to be repaid? From political contributions to the campaign from other donors. The identical manner in which almost all politicians raise money.

Why is Trump whining that he is not getting credit for his self-funding right now and saying it is "not worth it."

That is because Trump has a clear expectation that he will have his campaign loans repaid by other donors after he wins the nomination or the Presidency. He knows it is easy to raise money when you are on top.

However, if he does not win, no one is going to be interested in contributing to retiring those loans. He will never have the loans repaid. Exactly like the lenders who loaned money to four of his companies who declared bankruptcy over the years.

It is not coincidence that Trump is whining when he is not winning.

It is not only the Trump ego that is threatened.

He is also faced with the fact that he may actually have to self-fund his campaign rather than only appearing to do so.

And there are few people on this planet that love their money more than Trump.

As I have written before, consider the fact that Mitt Romney and the Republicans spent $1.1 billion during the 2012 campaign. Romney spent $336 million in campaign funds that he raised for his campaign, the National Republican Party spent another $386 million on Romney and outside Super PACs and others chipped in another $419 million for Romney.

Is Trump really prepared to spend $1 billion of his own money to get elected?

No, he will not not.

Will he loan his campaign $1 billion?

No. In fact, I question whether he would have anywhere near that kind of liquidity in his portfolio to do so. Is he going to start selling properties to finance his campaign? I don't think so.

He also most assuredly is not going to raise $1 billion through a bunch of $200 contributions.

And if he has to go to Wall Street and other special interests to fund his campaign like everyone else, a big part of the attraction of Donald Trump washes away.

Voting for Donald Trump to be your Republican candidate for President is Risky Business.

Donald Trump is a great salesman. However, be wary about what you are buying.

This is not Costco. After you vote, there are no returns or exchanges. You own it.

Caveat Emptor.

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