The Clinton Money Machine

The disclosure this week that Hillary Clinton recently loaned her presidential campaign $5 million prompted me to give further thought to the Clintons and their current state of affairs. I am not thinking about the presidential campaign, politics or the health of their relationship. I am thinking about their money – they have lots of it!

Since leaving office in early 2001, Bill and Hillary have created an extraordinary process of personal wealth creation. Very few Americans will ever match this rate or level of wealth creation particularly if you consider the age in which they initiated it.

For perspective, the median household net worth for someone in their mid-fifties earning at least $200,000 is just over $800,000. When they left the White House in early 2001, Bill and Hillary were in their mid-fifties. At the time, they owed upwards of $12-15 million – mostly due to outstanding legal bills related to Whitewater, Paula Jones, campaign fundraising investigations and the Monica Lewinsky scandal. They also purchased a house in Chappaqua, New York and took on a mortgage of $1,360,000. Seven years later, their net worth is now approximately $25 million, a +$40 million swing. We should all be as lucky in the run up to our golden years…

The $186,600 Bill receives from his presidential pension and Hillary’s senate salary of $169,300 are probably sufficient to cover the annual Clinton household expenses – enough to cover their overhead but nowhere near enough to pay down debt. That’s where the Clinton money machine kicks in.

Since leaving office, President Clinton has earned up to $50 million from giving speeches around the world at a rate as high as $350,000 a speech. He earned a $12 million book advance for his autobiography, “My Life.” Hillary also earned $8 million from her book advance on “Living History.” In sum, the Clinton’s together probably generated at least $70 million in earnings in the last 7 years. After paying Federal and New York State taxes and other withholdings, their take home pay was probably close to $40 million or roughly $5.7 million annually.

The math is pretty straightforward. The Clintons’ left office owing close to $15 million. They earned at least $40 million since, resulting in a household net worth of $25 million. This is before Bill receives his $20 million buy-out from Ron Burkle. Hillary can easily afford to lend her campaign $5 million.

This significant wealth creation on the part of the Clintons is extraordinary given how much controversy and scandal surrounded them. President Clinton's affair with Monica Lewinsky on its own is enough to end the money-making abilities of most executives. The increased spotlight on sexual harassment in the workplace has quickly ended the careers and earnings power of many.

How did Clinton manage to avoid this dead-end trap?

Well, it helps to be a worldwide celebrity. Celebrities have an unfair advantage over ordinary citizens when overcoming scandal or crime. It also helps to be hugely talented (Roman Polansky the academy award winning director, not Polansky the fugitive). If you have ever witnessed the Clinton charisma or the power of his speech making, you can't help but agree that Mr. Clinton is talented.

If you are a celebrity and are going to commit a crime or be involved in scandal, illicit sex is probably the easiest to overcome relative to your future earning power. Here's is my celebrity rule of thumb on the topic:

1. Illicit sex is the easiest to overcome (Hugh Grant, Eddie Murphy)
2. Drugs and alcohol are usually forgiven (Eric Clapton, Kate Moss)
3. Crimes of the mouth are unfortunately tolerated (Don Imus)
4. If you are going to cheat, do it on a technicality (Martha Stewart)
5. But never cheat the public of its trust (Pete Rose, Pee Wee Herman)
6. Murder is hardest on the pocket book (OJ Simpson)
7. But hurting animals can be just as bad (Michael Vick)
8. There are limits to just how much you can get away with (Michael Jackson)
9. If all else fails, make them feel sorry for you (Britney Spears)
10. Or, thank God you come from a rich and powerful family (Ted Kennedy)