It’s the fall of 2006, and the midst of a very intense General Election here in California. With a host of down-ticket races providing some modest distraction, the attention of those driving the California Republican Party Victory ’06 program are focused relentlessly on the big prize, re-electing Arnold Schwarzenegger to a full four-year term as Governor of California. At the height of the effort, a decision was made by Governor Arnold Schwarzenegger, his campaign manager Steve Schmidt, and then State-GOP Chairman Duf Sundheim that is still having reverberations today.
You see, while the Governor’s re-election campaign was going well, and his numbers were looking solid, the Victory Program was rapidly running out of money heading into the final month — a month of critical importance to be up with television advertising. Then came the big decision (the Governor always thinks BIG) — to literally "bet the bank" and have the State GOP take out a THREE MILLION DOLLAR LOAN from a friendly contributor’s company, thus providing the necessary injection of cash into the CRP coffers to run a full campaign to the end. Chairman Sundheim brought this plan to his board (the CRP Board of Directors had to approve this kind of debt), and convinced them to go along, creating what is now referred to as "Duf’s Debt."
Now this tale, up to this point, has been based upon what I have learned from talking to a lot of the participants at the time. But in February of 2007, I was elected to the CRP Board of Directors, and what had been a "story told by others" hit home really quick. At my very first Board of Directors meeting, the "new" Board was told that it had to approve the terms of Duf’s Debt (this promissory note to a major donor, complete with interest payments). Apparently an outgoing CRP Board cannot bind an incoming one. Of course, there was really no choice, since after the election, the CRP was running on fumes and Duf’s Debt was a whopping $3 million. We could approve of the loan, or go into default — no real choice there!
Fortunately we were assured by now Immediate Past Chairman Duf Sundheim (Ron Nehring was now the new Chairman) that he was in the midst of working to retire the note. It was a bit more detailed of a briefing, but some things, alas, must remain confidential. Going forward for a number of months, Duf would update us on the progress of working to bring resolution to this matter. In the meantime, of course, the CRP was definitely suffering for having Duf’s Debt hanging over us. It is hard to convince donors to give money when they think it may go to pay old bills, not go towards current and future programs.
Finally, last Fall, just before our convention, we were informed by Duf that working with the Governor’s team, arrangements had been made to fully retire the $3 million note! Of course we were all elated. While it was a bit of a downer that it would not be resolved until mid-February of this year, still, to be able to tell our membership and prospective donors that Duf’s Debt was resolved was a great relief to all — especially Chairman Ron Nehring!
Fast forward to present time. Imagine my surprise when I heard that there were now "issues" with the arrangements that had been made by the Governor and his team, and the former CRP Chairman — Duf’s Debt, in fact, might not be paid. Suddenly "conditions" were being talked about that had never been presented to the Board back in the Fall… It is worthy of noting that this issue has played out in the newspapers as there is a "leak" providing confidential documents to the media.
The timing, of course, is quite curious. After all, Senator John McCain has only recently become the presumptive nominee, and conversations are underway in earnest to bring together a coordinated Victory Program within the CRP to work towards a McCain California victory later this year. It’s almost like whomever is leaking information is trying to sabotage Senator McCain’s California General Election efforts before they even get off of the ground.
Now we have this odd situation. The "double-down" by Governor Schwarzenegger and his team, along with Chairman Sundheim with the support of the CRP Board at the time, in the form of Duf’s Debt, is unresolved. A matter that was originally going to be cleaned up shortly after the Governor’s Inauguration over a year ago, is now presenting a huge road-block to moving forward with plans for a successful 2008.
While everyone I know just calls this "Duf’s Debt" — the reality is that it is the CRP’s debt, but incurred on behalf of the re-election of Arnold Schwarzenegger. Governor Schwarzenegger publicly committed to the CRP membership in a high-profile speech at a convention that this debt would be resolved.
It would appear that the Governor is going to need to re-engage in the process, and help his Party resolve Duf’s Debt. After all, I am sure that the last thing that Arnold would intend is for the deficit from the effort to re-elect him to now negatively impact Senator McCain’s efforts to keep the Presidency in Republican hands.
The good news, as I mentioned at the top of this commentary, is that the Governor did win — and he won by a big margin. Which means he is still in a position to "terminate" Duf’s Debt in short order. I know I speak on behalf of all CRP members when I express my gratitude in advance to Governor Schwarzenegger for resolving this sticky issue.
[Note: I did have to leave out a number of details that I felt would be inappropriate to share on this website, since I am an elected officer of the California Republican Party, but you’ve got the gist.]
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