The Beacon Hill nightmare

Posted: Feb 14, 2004 12:00 AM
The story of Senator John Kerry's mortgaged home in Beacon Hill is worth looking at. What made the papers was the suggestion that his access to it, in usufruct, was threatened by the sheer size of the loan and the attendant obligations of financing it. All of this, of course, in the context of his need for money to finance the ongoing campaign for the presidency.

There are several perspectives one needs in order to evaluate the problem of Mr. Kerry's mortgage. The first, of course, is that if you own a house valuable enough to warrant a loan of $6 million, you are living, by common standards, in an economic stratosphere, the implications of which require adjusting to normal standards of evaluation. If you hock the Hope Diamond for $10 million, attention focuses on your owing $10 million whereas, properly, it should focus on your owning the Hope Diamond.

Senator Kerry's widely publicized point is that he has had to finance his campaign by using his own resources, which are limited. But of course that is Hope Diamond talk. If a bank lends you $6 million, it knows it's going to get the money back.

How? Well, Senator Kerry is not wealthy, but he does have undisclosed assets. That is, assets undisclosed to the public, but not to the bank. All the bank needs is approximately $200,000 per year in interest payments, which is a little more than Senator Kerry's income as a senator. This point is mentioned in the news stories.

Where else would the bankers look, if they thought themselves threatened? Well, of course, to the property on which the loan was made, namely the house on Beacon Hill. There is a difficulty, which is that the house is jointly owned by Mr. Kerry and his wife. She has to be careful, even though she made out a prenuptial agreement with John. If he divorced her, one assumes, she would keep the house, to say nothing of her fortune.

Bear this poignancy in mind, that Mrs. Kerry is not permitted, under the law, to give Mr. Kerry more than $2,000 when he is running for office. Now some may classify this as an example of the problems of the idle rich. But this would be flippant. It is a big enough story of a human plight to make the press worldwide.

Now pity for Mr. Kerry is immediately evoked by the circumstances of the mortgage. It is not as if he was taking $6 million to buy himself a G-V jet. No, he was using $6 million to pay the staff of his campaign and take out ads, all of this in anticipation of the returns in Iowa and New Hampshire. It added up to this, that returns from his campaign weren't large enough to satisfy his inclination to advance the cause of the campaign by additional advertising.

Now if he had lost out in Iowa, he'd have needed to reduce spending, which would have given his most resolute backers a challenge, namely to continue to support John Kerry at least to the point of giving him back his home on Beacon Hill. But if he did well in Iowa, as indeed he did, everybody could assume that the flow of money would not only continue, but increase. The publicity attached to the mortgage can only have served the cause of alerting his donors to the need to save not only the nation, but the house.

This is because current law denies to a candidate the right to repay past loans from money that comes in after the operative political date (in this case, the national convention in late July). After that, you can use only $250,000 of campaign contributions to repay old debts, and $250,000 comes to only a little over one year's interest on the Beacon Hill loan.

So it has to be cleared up before then, Kerry supporters are being told.

Campaigning for president in l956, Governor Adlai Stevenson crossed his legs while sitting on a chair on the dais, waiting to give his speech and a photographer shot a picture of his shoe. Lo! -- there was a hole in his shoe.

That shoe with the hole became a talisman of Stevenson for President. Tiny gold and copper replicas were made to pin on to your handbag or lapel. What it said was: Vote for this man who, though so straitened as not to be able to afford to repair his shoes, walks on day after day, wearing out life's shoe leather, in the cause of America.

Get it?

John Kerry for President devoutly hopes you do.