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A Deficit Of Their Very Own

By J.F.O. McAllister and Karen Tumulty

TIME magazine

(TIME, May 12) -- I wish we could have this event tonight in the Lincoln bedroom," President Clinton told 2,500 gold-plated Democrats who pledged $4 million to their party at a gala dinner last week, "but we did not have enough coffee in the White House." The crowd laughed and clapped at his defiant joke, but Clinton and Democratic heavyweights aren't exchanging many smiles these days.

The Democratic National Committee faces a financial crisis that puts it "in the worst shape it's ever been," says a major fund raiser. "I'm not sure it can recover." Fund raising is always hardest right after a national election; D.N.C. officials emphasize they have reached all their money targets so far this year and expect to raise at least $50 million in 1997. But the party is $14.4 million in debt and must repay $1.5 million more in contributions now judged improper. It is awkward to ask legitimate donors to cough up cash that will end up reimbursing illegitimate ones.

Some donors are angry about the mismanagement that led to the fund-raising scandal; others are skittish about the scrutiny any large gift will now receive. Democratic co-chairman Steven Grossman contends that contributors are responding to his pitch about investing in the party's grass roots and that the debt "is absolutely manageable," but for now the D.N.C. must resort to the tricks of the overextended. Payments to vendors are late; some donors to last week's gala were asked to send their checks overnight to help the party make its payroll.

Clinton's centrist agenda has added to the financial strain by creating at least a temporary rift between the D.N.C. and some of its most reliable friends. Conspicuously absent from the contributors to the gala was the American Federation of State, County and Municipal Employees, which spent lavishly on Clinton's re-election. Public employees know their jobs are on the line in any battle to cut spending.

An even sharper point of contention with the public employees' union has been the Administration's months-long delay in deciding whether Texas Governor George W. Bush should be allowed to turn over the management of the state's cumbersome welfare system to private firms. Several companies, including Lockheed Martin and IBM, are eager to bid on what is expected to be a $2 billion multi-year contract. The unions fear not only the loss of thousands of government jobs in Texas but also the possibility that the idea could spread to other states. The day after the union snubbed the gala last week, the Clinton Administration disappointed state officials by declaring what it called a compromise: private companies could begin computerizing the paperwork, but the larger task of determining who is eligible for various forms of assistance should be left to government workers. The Communications Workers of America, with 15,000 jobs at stake, was ecstatic; Texas officials say the issue is far from settled.

To add to its woes, the D.N.C. may soon see changes at the top. Colorado Governor Roy Romer, its other co-chairman, has declared he will decide by June whether to quit the D.N.C. to run for the Senate. He says he is excited by his party job, but colleagues report that he is frustrated at spotty cooperation from the White House. Several senior Democrats say Clinton would like Romer to quit anyway because "he apologizes too much" for the fund-raising scandals. A Senate race, however bruising, may not look like such a bad way out.

-- With reporting by Michael Duffy and Michael Weisskopf/Washington

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