By Jon Greenberg on Tuesday, June 10th, 2014 at 6:18 p.m.
Hillary Clinton is walking the line between being remarkably successful and yet still in touch with the lives of ordinary people. The former secretary of state and potential 2016 presidential candidate has found herself trying to limit blowback to her claim that she and husband Bill were “dead broke” when they left the White House.
She made the comment during an interview with ABC’s Diane Sawyer. Sawyer pressed Clinton on a reported haul of $5 million in speaking fees.
“You have no reason to remember, but we came out of the White House not only dead broke, but in debt,” Clinton said. “We had no money when we got there, and we struggled to piece together the resources for mortgages for houses, for Chelsea’s education. It was not easy. Bill has worked really hard. And it’s been amazing to me. He’s worked very hard.”
Republicans called the claim laughable and the next day Clinton clarified, again on ABC, that she and Bill had done very well over the past 14 years.
“We have a life experience that is clearly different in very dramatic ways from many Americans,” Clinton said. “But we also have gone through some of the same challenges many people have.”
We wanted to take a closer look at Clinton’s claim of being “dead broke” when their time in the White House ended after December 2000.
The Clintons’ balance sheet
Clinton’s 2000 Senate financial disclosure form, via the Open Secrets website, provides a rough view of the balance between the couple’s assets and liabilities. These forms only show amounts in broad ranges — from $15,001 to $50,000, from $50,001 to $100,000 and so forth — but under any set of assumptions, the Clintons were in the red, a problem driven by Bill Clinton’s enormous legal bills.
Their highest possible assets totaled about $1.8 million, while their lowest possible debts were nearly $2.3 million. The most optimistic scenario left them in a hole of about $500,000.
But the federal disclosure form does not include homes used for personal use and the Clintons owned two. In 1999, they bought a five-bedroom home in Chappaqua, N.Y., for $1.7 million. In December 2000, just as they were leaving the White House, they bought a seven-bedroom house near Embassy Row in Washington, D.C. The price was $2.85 million.
While those homes had mortgages, which would increase the amount of the Clintons’ debt, the family also had equity in them. The New York Times reported that the Clintons put $855,000 down on the Washington house, for instance. That equity would have covered the low-end debt estimate of about $500,000.
Point being: Clinton’s 2000 disclosure doesn’t prove the Clintons’ liabilities exceeded their assets when they left the White House.
We reached out to Hillary Clinton’s office for more details and did not hear back.
Were they dead broke?
All this begs the question of whether someone who can afford to buy a $2.85 million house is “dead broke.” We reached two accounting professors at Ohio State University’s Fisher College of Business, one of the top-ranked schools in the country. Assistant Professor Jeffrey Hoopes said to call the Clintons dead broke would be a stretch for how the term is commonly understood.
“Almost any president leaving office can expect tens if not hundreds of millions of dollars of future earnings as a result of their having been president,” Hoopes said. “Speaking, consulting, board positions, and so on, are all very lucrative.”
Professor Brian Mittendorf said a balance sheet of assets and liabilities simply doesn’t paint a complete picture. Mittendorf compared the Clintons to a medical school graduate saddled with huge debts but with the prospect of a very hefty income down the line.
“While one can claim to be technically broke, creditors wouldn’t take it as such as long as future income streams could cover the liabilities,” Mittendorf said.
In December 2000, at least one large bank saw the Clintons through that lens. Whatever their balance sheet might have been, Citibank lent them $1.995 million to buy that house in Washington, D.C. This was a safe loan. By Feb. 5, 2001, Bill Clinton was commanding regular speaking fees of $125,000 or more.
Hillary Clinton herself did quite well in 2001. The book publisher Simon and Schuster paid her $2.84 million in royalties.
By 2004, the Clintons had erased their debts and Hillary Clinton was ranked the 10th-wealthiest member of the Senate, with a net worth between $10 million and $50 million.
Hillary Clinton said she and Bill were in debt and dead broke when they left the White House. The public record shows that they possibly had more liabilities than assets, but it doesn’t show that conclusively. More important, a balance sheet does not tell the full story and the experts we reached said the Clintons’ earning potential had a real economic value that the financial sector traditionally acknowledges and is willing to bank on.
A few weeks before they left the White House, the Clintons were able to muster a cash down payment of $855,000 and secure a $1.995 million mortgage. This hardly fits the common meaning of “dead broke.”
We rate the claim Mostly False.