Hsu's Your Daddy

A few weeks ago, former White House advisor Karl Rove made waves by questioning Senator Hillary Clinton’s electability. In an interview with Rush Limbaugh, Rove stated that Senator Clinton was a “fatally flawed” candidate. Rove explained that Senator Clinton’s approvals were, “in the high 40s on the negative side and just below that on the positive side” and that “there’s nobody who has ever won the presidency who started out in that kind of position.”

While Democrats muse about whether this is actually a Rovian plot to take Clinton’s electability off the table in the Democrats’ primary (what Democrat wants to parrot Rove’s words?), there is some truth to Rove’s argument. Senator Clinton’s high unfavorables are one of the reasons that she has never run particularly well in her races. In both of her Senate races she ran behind the Democrats at the top of her statewide ticket. Clinton supporters counter that she has plenty of time to turn her unfavorables around, and will be able to reintroduce herself to America during her campaign.

This may be true. After all, her husband did just that in 1992. But Clinton lacks her husband’s charm. Perhaps more importantly, she shares his tendency to attract scandal, which could make it difficult for her to turn her unfavorables around. Her 2008 campaign is proceeding apace, with a fundraising scandal already rearing its head months before the first primary.

The things we know about Norman Hsu, the Democratic fundraiser at the center of the scandal, are strange enough. We know that Mr. Hsu never made a contribution to a political campaign until three years ago, when he burst upon the fundraising scene. Today he raises millions of dollars in bundled contributions — packages of smaller individual contributions — for Democratic candidates across the country. To date he has raised close to a million dollars for Senator Clinton’s presidential campaign.

We also know that the details of many of these bundled contributions are suspicious, and have drawn a federal investigation. For example, the Paw family, which resides in a small bungalow in Daly City, California, have donated over $200,000 to Democrats since 2005. This is curious given that Mr. Paw is a mail carrier and Ms. Paw is a homemaker, and the Paw house is barely worth $200,000. It is also curious because the timing, amount, and recipients of the donations mirror those of Mr. Hsu. It is “curiouser” because the Paw home was once owned by Mr. Hsu, who used its address. We also know that a company owned by Mr. Hsu, Components Ltd., appears to have made over $100,000 in payments to nine people who made contributions to Senator Clinton. But the company itself exists only on paper, raising the question of whether it was a front for funneling money to the Democrat.

We also know that Mr. Hsu has been a fugitive from justice for the past fifteen years, arising out of his failure to appear in California state court to respond to charges of fraud arising from a Ponzi scheme allegedly run by Mr. Hsu. We know that he was recently brought before that court and posted a $2 million bond, which he promptly skipped out on. He was later located in a hospital in Grand Junction, Colorado, where he had apparently suffered an injury while heading east by train.

But the things we don’t know about Mr. Hsu are even stranger, parts of his life that are shrouded in mystery. We don’t know, for example, who was behind all of this. What prompted Mr. Hsu’s sudden interest in politics at a relatively advanced age? Did he really want to put this amount of money into Clinton’s campaign due to late-blooming political beliefs, or are there more sinister motives? There are also allegations from further in Hsu’s past, including stories of kidnappings by the Triad Society — something of a Chinese Mafia — and other unsavory business relationships that inevitably raise the question: “Who is this guy?”

What we also know is that the Clinton machine has not lost its deft ability to handle scandal. The potential damage to Senator Clinton’s campaign was obviously huge, as it immediately raised memories of Bill Clinton’s 1996 fundraising scandal. That scandal — or more accurately, series of scandals — involved fundraisers at Buddhist temples, contributions by persons connected to the Chinese government, and of course, the use of the Lincoln bedroom for campaign contributors. The Senate Government Affairs Committee found “strong circumstantial evidence” that foreign money had been used to influence the 1996 election. The scandal resulted in twenty-two guilty pleas (some by Clinton fundraisers), and over one-hundred other people fleeing the country, “pleading the Fifth,” or otherwise avoiding questioning.

To top it off, the Los Angeles Times has reported that the Clinton camp had been warned about Mr. Hsu’s donations by a California Democratic Party official, and by a California businessman. Senator Clinton’s campaign finance director for Western states reportedly dismissed these concerns, writing: “I can tell you with 100 percent certainty that Norman Hsu is NOT involved in a Ponzi scheme . . . He is COMPLETELY legit.”

Any other candidate would be a victim of the 24-hour news cycle. But Senator Clinton gradually renounced the funds in a crafty fashion. The first funds — Hsu’s direct contributions — were renounced at around 6:30 PM on August 29, shortly after the evening news had begun. Then, on September 10, Clinton announced the return of around $850,000 in bundled donations. She did this on the day of the Petraeus report, the eve of 9-11 celebrations, and again, at 6:40 in the evening, virtually ensuring that the story got minimal press coverage.

To be sure, this story shows that the scandals that dogged President Clinton through much of his term may dog Senator Clinton’s campaign for the Presidency. Other scandals involving Clinton’s bundlers wait in the wings.

But the story also shows that the Clintons’ uncanny ability to deflect scandal and master the news cycle has not dissipated in the intervening years, and that Republicans should anticipate a strong, canny opponent in the fall should she win the nomination.