Sen. Kennedy's beleaguered presidential campaign has again run short of money and is eroding from within. Several staff members are resigning because they are not being fully paid, and the campaign is using art works as collateral for loans to buy television advertising.
The resignations and the fund shortage mean renewed problems for Kennedy as he seeks to resusciate his campaign in the primaries of Illinois next Tuesday and New York and Connecticut the following week. In all three states, campaign media are costly.
Kennedy's finance chairman, Martin Katz, has resigned due to personal financial reasons, according to informed sources within the campaign. Half of the advance and scheduling staff -- at least 15 persons -- have been taken off the payroll. And similar cuts are being made elsewhere on the campaign staff.
Others, including Kennedy's special assistant and longtime associate, James Flug, are scaling back their involvement in the campaign to just part-time consultation, also because of the reduced salaries being paid by the Kennedy headquarters, according to a Kennedy spokesman.
"The choice comes down to meeting a payroll in full or trying to finance a media campaign for illinois and New York," said a high campaign official. "The campaign has opted for the latter."
But even that alone will not make the media ends meet, according to campaign officials. And so, the campaign has begun obtaining loans to finance purchases of television time, using works by famous artists as collateral.
The campaign obtained a $100,000 loan from the Chemical Bank in New York by putting up as collateral a work of Kennedy done by Andy Warhol, according to one campaign official. They are also negotiating with other banks for loans that will use as collateral works that artists Jamie Wyeth and Robert Rauschenberg have done for the campaign.
Part of the financial problem delaying completion of these loans is that not all of the works are completed. The artists are faced with the unesthetic realities of having to finish their works in time to beat the primary date deadlines.
As for now, the Kennedy campaign has purchased about $150,000 to $200,000 worth of media ads in Illinois, but has so far purchased no media time in New York, according to a high official. Campaign spokesman Patrick Lucey said that campaign manager Stephen Smith was in New York yesterday trying to complete arrangements for the first of the media buys in that state, which is probably Kennedy's last hope of keeping his campaign alive.
For days, there was debate within the highest ranks of the campaign as to whether the payrolls of March 15 and March 31 could be met in full according to a high-level source. Campaign manager Smith was at first unable to give some top officials assurances that the payrolls would be met, the source said.
But, according to deputy campaign manager Philip Bakes the campaign has decided to meet its March 15 payroll, on the modified basis upon which it has met its payrolls for the last several weeks. After three payless weeks earlier this year, the campaign began paying salaries last month with no one being paid at a rate greater than $30,000 a year. That ceiling will continue through this week.
"We are living from Tuesday to Tuesday," said Kennedy spokesman Thomas Southwick.
Southwick confirmed that Katz was leaving the campaign staff for financial reasons. He reportedly will be returning to the staff of Sen. Daniel Patrick Mynihan (D-N.Y.), where he has been a legislative assistant.
Southwick also said that Flug will be scaling back his duties to "part-time" basis, also for financial reasons. Flug would not discuss the matter, except to say that he will be coordinating Kennedy's campaign in Maryland, where the primary is May 13.
Kennedy's director of scheduling, Stpehen Robbins, said he has not resigned but is assessing the situation. "I'ill make my decision shortly," he said.
Other campaign officials will be "dispersed" from headquarters to various states as part of the continuing effort to hold down payroll costs, Southwick said.
Kennedy officials stressed that the departures are due solely to the financial squeeze that living at a reduced salarly has placed on families. "Quite frankly," said Southwick, "I'm surprised there has not been more of this."