The Obamas constantly mention the "tiny" three bedroom condo they lived in for so long (although Obama periodically downgrades it to a one bedroom), and that they purchased it for just $277,500. They have not yet mentioned what the Chicago Tribune recently reported, that they purchased that 1993 condo with a down payment of $110,000, or nearly half the purchase price.
This tidbit puts the Obamas comments about "their student loans being higher than their mortgage" in a whole new light. A hundred thousand down payment does wonders for a mortgage's interest burden.
It also raises the question: where did they get the money for that down payment? While the timing is fuzzy, Obama did publish a book in 1995, two years after purchasing the condo, so the obvious assumption is that the couple used his book advance to make the condo purchase.
Unfortunately for the Obamas, scrutinizing the book advances he received for his first book raises more questions.
The NY Times reports that Obama's first agent (the one he dumped when he became a big name) forgave him for missing his first deadline at Poseidon Press (then a small imprint of Simon Schuster) and wrangled him a second contract with a $40,000 advance. Obama then had free writing space, according to the Times article, and also a small fellowship--but even with all this, he went off to Bali for a while to complete the book.
Given that he wasn't working at the time, Obama presumably used the $40,000 to cover the couple's living expenses--indeed, many reviews of his second book mention this "modest advance".
But the Times article glosses quickly over an aspect of the story that Peter Osnos, who was then publisher of Times Books at Random House, filled in two years ago, before anyone was paying attention.
A book proposal by Obama about his life was submitted to publishers and a deal was reached with Poseidon, a small imprint of Simon & Schuster, for what is known in the industry as “six figures” (about $125,000, I am told). Several years passed and Obama was too busy finishing law school and embarking on his career to get the book done. Simon & Schuster canceled the contract, which probably meant that Obama had to pay back at least some of what he had received of the advance.
So the "modest advance" was preceded by an extremely generous advance, but Obama didn't honor that first contract. While presumably (says Osnos) Obama had to return at least some of the advance, the Times leaves the first advance completely unmentioned. Thus, Obama took a six-figure advance, around $125,000, while still in law school, and didn't deliver a book. What did he do with the money? When did he return it, and how much?
Is it possible that Obama used the first advance to fund his condo? If not, where did he get the money for the down payment?
Senator Obama should disclose how much of the first advance he paid back, and when. Given his questionable ties to shady financial deals, he should reveal the source of the $110,000 that the Obamas used for the down payment on their first condominium.
Moreover, the Obamas should stop pretending that they struggled to pay down their school debt and lived a life of near penury out of noble motives or, worse, the horrible conditions that were thrust on Americans in the 1990s. The Obamas made substantial six figure incomes throughout the late 90s. They had enough money to put down six figures on a three-bedroom condo, at a time when neither of them was apparently working. As other stories reveal, the Obamas chose to take on $20,000 in debt in a disastrous run for Congress and fund his campaign from his credit cards (which is why he was so broke at the 2000 Democratic Convention).
The Obamas didn't deduct their student loan interest in the years 2000-2003, because their joint income exceeded the income limits. This fact alone calls their claim of being "regular people" into question. Moreover, the lack of an interest deduction leaves the Obamas with no evidence supporting their constant campaign claim, and they have thus far refused to provide any additional support. The Obamas should produce their student loan debt records so that the public can see what they paid and when.
School loans didn't cause the "loan debt" people to come calling. Their own choices did. These choices reveal further details about the Obamas' ambition and financial priorities. They do not reveal "regular people" and the normal financial choices that working professionals, much less working class, often make.
Finally, the media has faithfully reported as fact all of the Obama claims about their financial condition. It's time that more outlets follow the Chicago Tribune and begin asking them hard questions about the money they lived on during the 90s, and whether or not their touching campaign anecdotes are reality-based.
May 28, 08 10:29 AM