Sen. Kerry Not Banking on His Wife's Fortune
Candidate to Do Own Fundraising in Effort to Win Democratic Presidential Nomination
By Thomas B. Edsall and Dan Balz
Washington Post Staff Writers
Monday, March 24, 2003; Page A05
Sen. John F. Kerry (D-Mass.) has effectively ruled out using any significant part of a family fortune estimated at $550 million in his campaign for the Democratic presidential nomination.
The senator's wife, Teresa Heinz Kerry, inherited the fortune from her first husband, Sen. H. John Heinz III (R-Pa.), after he died in a plane crash in 1991. Kerry and Heinz were married four years later, and her money has given Kerry -- at least on paper -- a potentially huge advantage in financing his campaigns.
"It would be a contradiction," Kerry said in an interview. "I said to people long ago and I held to this during my Senate campaign, I came to politics based on my own initiative and my own effort to raise money and that's the way I want to finish my life in politics. Teresa's money is Teresa's money and I've declaratively stated that."
Kerry's stand is a setback to Democratic strategists who have been privately arguing that Kerry should reject public financing of his campaign and the roughly $45 million spending limit that goes with it in order to be free to raise and spend unlimited amounts through the Democratic National Convention, assuming he is the party's nominee. These strategists argue that a candidate bound by the $45 million spending limit will be crushed by President Bush, who is expected to reject public money and raise as much as $250 million during the same period.
Once formally chosen at the July 2004 convention, the Democratic nominee is eligible for about $75 million in general election public subsidies.
A fear shared by many Democrats is that a candidate bound by the limit could well spend close to the $45 million by the end of February, when the nomination could be decided, and then face March, April, May, June and the first half of July with no cash while Bush blankets the airwaves with commercials. Three years ago, Bush was the first presidential candidate to reject public funds and win his party's nomination, raising a record $101 million.
Only candidates who agree to limit total spending are eligible for public subsidies. In primaries, the subsidy is in the form of a federal match of every contribution from an individual of $250 or less.
Kerry's comments are welcome news to his competitors for the Democratic nomination. They have been worried that Kerry would use the family fortune to strengthen his credentials as a candidate financially equipped to take on Bush's fundraising machine.
Some of Kerry's opponents have been researching his past endorsements of public financing and tough campaign finance laws in an effort to make a decision to privately finance his bid and reject public money as politically costly as possible. And strategists aligned with other campaigns have already been testing wisecracks over Teresa Heinz Kerry's money.
Earlier this year, for example, when Kerry began hiring high-profile and high-priced staff members, Steve Elmendorf, top consultant in the campaign of Rep. Richard A. Gephardt (D-Mo.), told Roll Call newspaper: "It's a sign they are going to spend the ketchup money."
Kerry's staff had seemed to keep alive the possibility that he would funnel large sums into his campaign. "Obviously, Senator Kerry is a man of some significant wealth [who] could make, if he choose, a sizable investment in his presidential campaign," Kerry spokesman Robert Gibbs said last week.
Kerry said, however, that he could "put a certain amount into it, but when you talk about self-funding, could I do an entire campaign? The answer is profoundly no." Kerry said he has "reserved the right" to use the money to respond to a personal attack, but not to run a major portion of his own bid.
"I have run as an advocate of access to public life through legitimate fundraising, which means people participating. I've never advocated -- I've always thought it's wrong to have a United States Senate that's got more than 50 percent of it who are millionaires. . . . That's why I first ran a PAC-free race. My intention is to try to hold on to that."
None of the other candidates has resources approaching the $550 million value placed by Forbes magazine on Kerry and his wife's holdings, an amount that makes Kerry the richest member of Congress. Forbes did not break down how much of the money was brought into the marriage by Kerry and how much by his wife. But an examination of Kerry's financial disclosure statement and his own comments suggests that very little of the money would be available to Kerry to put in his campaign.
The disclosure statement reflects his wife's extensive holdings in Heinz family interests, including the T.F. Heinz Bond Fund, the H.J. Heinz III Marital Trust; the Heinz Family Commingled Bond Fund; the H.J. Heinz III Revocable Trust No. 1; the H.J. Heinz II Charitable & Family Trust; and the H.J. Heinz II Family Trust.
Campaign finance regulations attempt to limit candidates to spending their own money, and not the holdings of spouses. Federal Election Commission rules provide that when specific shares of a jointly held asset -- such as a trust fund -- are spelled out in detail, the candidate's spending is limited to the candidate's share of the joint asset.
When a couple has jointly held bank accounts or other assets that do not provide for specific divisions, the FEC assumes equal shares, and the candidate can use half the money.
Although the Kerry campaign declined to provide information about the trusts, it is unlikely that Kerry is named a beneficiary in financial instruments created by the Heinz family.
Money and assets that Teresa and John Kerry hold jointly that are not governed by trusts or other legal document specifying specific shares -- typically bank accounts, art or property -- can be treated as half-owned by the candidate. Lawyers said that if Teresa Heinz Kerry removed substantial sums from trusts and put the money into a jointly held bank account, other candidates would likely challenge the maneuver as an attempt to circumvent federal regulations.
Kerry has repeatedly described the majority of the $550 million as "Teresa's money," indicating that he does not have a direct claim on it. Kerry's financial disclosure statement does not detail the level of his or his wife's interests in the trusts. In addition, Kerry's report uses the least informative mechanism for describing the most valuable holdings.
For holdings worth more than $1 million, senators can place assets in various ranges of value: between $1 million and $5 million, $5 million to $25 million, $25 million to $50 million, and "over $50 million." Kerry instead chose to list all high-dollar holdings under the catch-all category, "over $1 million."
Altogether, the report lists 101 separate holdings worth more than $1 million.
Two other Democrats known for their fundraising prowess, Gephardt and Sen. Joseph I. Lieberman (D-Conn.), have not ruled out rejecting public money if they think they can raise money to pay the heavy costs of campaigning in the rush of early primaries in January and February 2004.
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