WEST MIAMI, Fla. — For years, Senator Marco Rubio struggled
under the weight of student debt, mortgages and an extra loan against the value
of his home totaling hundreds of thousands of dollars. But in 2012, financial
salvation seemed to have arrived: A publisher paid him $800,000 to write a book
about growing up as the son of Cuban immigrants.
In speeches, Mr. Rubio, a Florida Republican, spoke of his
prudent plan for using the cash to finally pay off his law school loans,
expressing relief that he no longer owed “a lady named Sallie Mae,” as he once
called the lender.
But at the same time, he splurged on an extravagant purchase:
$80,000 for a luxury speedboat, state records show. At the time, Mr. Rubio
confided to a friend that it was a potentially inadvisable outlay that he could
not resist. The 24-foot boat, he said, fulfilled a dream.
Senator Marco Rubio, Republican of Florida, with his wife,
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Among the serious contenders for the presidency, Mr. Rubio
stands out for his youth, for his meteoric political rise — and for the
persistent doubts about his financial management, to the point that Mitt
Romney’s presidential campaign flagged the issue when vetting Mr. Rubio as a
possible running mate in 2012, interviews show.
Supporters at a book promotion in Miami in February. Credit
Angel Valentin for The New York Times
Many of those troubles have played out in an unusually public
way, leading even some of his supporters to worry. As he rose in politics, he
sometimes intermingled personal and political money — using a state Republican
Party credit card years ago to pay for a paving project at his home and for
travel to a family reunion, and putting his relatives on campaign payrolls.
Other moves seemed simply unwise: A few weeks ago, he disclosed
that he had liquidated a $68,000 retirement account, a move that is widely
discouraged by financial experts and that probably cost him about $24,000 in
taxes and penalties.
In the past week, he sustained a new loss when he sold his
second home in Florida’s capital, Tallahassee, for $18,000 less than he and a
friend paid for it a decade ago. The house had previously faced foreclosure
after Mr. Rubio and his friend failed to make mortgage payments for five
months.
Acknowledging Missteps
These were not isolated incidents. A review of the Rubio
family’s finances — including many new documents — reveals a series of
decisions over the past 15 years that experts called imprudent: significant
debts; a penchant to spend heavily on luxury items like the boat and the lease
of a $50,000 2015 Audi Q7; a strikingly low savings rate, even when Mr. Rubio
was earning large sums; and inattentive accounting that led to years of unpaid
local government fees.
Mr. Rubio has acknowledged missteps: using personal credit cards
to pay for his campaigns (a bad idea, he said); appointing his wife, Jeanette,
as a treasurer of a political action committee (ill advised, he said); and
using the party money for the reunion trip (an accident, he said). Mr. Rubio,
in his 2012 memoir, “An American Son,” confessed a “lack of bookkeeping skills”
and an “imperfect accounting system.”
In private conversations, Mr. Rubio has told friends that he
learned how to manage money through trial and error. His poor, immigrant
parents — his father a bartender, his mother a hotel maid — had little money to
manage, he told them.
In a statement to The New York Times, Mr. Rubio said, “Like most
Americans, I know what it’s like for money to be a limited resource and to have
to manage it accordingly.”
He added: “Our primary financial motivation over the last 15
years has not been to become wealthy. It has been to provide for our children a
happy upbringing and the chance at a great future.”
Mr. Rubio’s home in West Miami. Credit Ryan Stone for The New
York Times
Mr. Rubio’s allies said his financial blunders were the scars of
a self-made man, who rose to prominence despite lacking the wealth and
connections that eased the path for so many of his rivals.
“It’s a two-edged sword,” said Dennis Baxley, a Florida House
member and fellow Republican who served in the Legislature with Mr. Rubio.
“That’s part of the excitement of Marco.”
It shows, Mr. Baxley said, that “an ordinary person without the
financial support structure can do this with a tremendous amount of drive.”
The Rubios have taken steps to stabilize their finances in
recent years, aided primarily by proceeds from his two books. Since 2012, they
have put away at least $150,000, given $60,000 to charity and refinanced the
mortgage on their primary home to lower the monthly payments. (Mr. Rubio set up
college funds for his four children at birth, an aide said.)
But as Mr. Rubio, 44, seeks to counter questions about his
stature and readiness for the presidency, his financial history creates
particular complications. It has made him unusually reliant on a campaign
donor, Norman Braman, a billionaire who subsidized Mr. Rubio’s job as a college
instructor, hired him as a lawyer and continues to employ his wife.
And it could undermine Mr. Rubio’s well-crafted political
persona: The senator has long portrayed himself as a champion of financial austerity,
railing against excessive government spending and runaway debt.
“We have a country,” he said in 2013, “that borrows too much
money.” In 2010, he diagnosed the problem this way: “If you allow politicians
to spend money, they’ll do it.”
As he campaigns for president, Mr. Rubio is embracing his rough
financial patches as he seeks to connect with an electorate saddled with debt
and stuck in low-paying jobs. After cashing out the retirement account last
year, he explained the decision in a deliberately folksy way: He needed to
replace a broken refrigerator, and was also preparing for personal expenses
related to his campaign.
“I’m not poor,” he said, “but I’m not rich, either.”
Mitt Romney and Mr. Rubio arriving in Kissimmee, Fla., on a
presidential campaign stop in October 2012. Mr. Romney's campaign flagged Mr.
Rubio's financial issues when vetting him as a possible running mate. Credit
Stephen Crowley/The New York Times
Mr. Rubio entered public life in a deep financial hole of his
own making.
Soon after he was elected to the Legislature in 2000, he
reported a net worth of zero, about $150,000 in student loan debt, and $30,000
in what he called assorted credit and retail debt.
It was the inauspicious start to a decade of big financial ups
and downs. In interviews, friends and advisers describe Mr. Rubio as a young
politician entering public life just out of law school, whose charisma and
stardom quickly outstripped his financial acumen, leaving him unprepared to
manage the expensive campaigns and lucrative career opportunities that came his
way.
By 28, he was juggling a new family, earning a modest salary in
the Florida House in addition to his law firm work and nursing a desire for
higher office that required continual travel across the state.
“A lot of it was a function of age,” said Mr. Baxley, who
mentored Mr. Rubio in the Florida House and remains close to him. “It was very
challenging for him. He was a clear example of when you enter early, you have
to do all of these things at the same time. And it’s hard to do them all at the
same time well.”
Even as his government career took off, Mr. Rubio’s financial
picture grew grimmer and the demands of the Legislature endangered his work for
the Florida law firm, where his bosses became impatient with his lack of focus.
Despite an income of $90,000 in 2001, Mr. Rubio wrote in his
memoir, monthly expenses became so strained that he and his wife sold one of
their two cars and, along with their young daughter, moved into the home of his
mother-in-law.
But the belt-tightening was short-lived. In 2003, he bought his
mother-in-law’s home in West Miami for $175,000, putting no money down.
Within a few years, Mr. Rubio had landed a job at a high-profile
Miami law firm paying him $300,000 a year. As he would later do with the
proceeds from his book, Mr. Rubio spent heavily.
Mr. Rubio has been financially reliant on Norman Braman, a billionaire
who has hired Mr. Rubio and his wife. Credit Lynne Sladky/Associated Press
First, he bought a house in Tallahassee with another state
lawmaker for $135,000, again putting no money down.
Then, by the end of 2005, the Rubios had completed the purchase
of a new home, twice the size of their previous one, for $550,000. The house,
among the more expensive in West Miami, stood out from the aging homes nearby:
It includes an in-ground pool, a handsome brick driveway, meticulously
manicured shrubs and oversize windows.
Soaring Liabilities
Within a few weeks of the home purchase, Mr. Rubio, then a
Republican leader in the House, borrowed $135,000 through a home equity line to
pay for improvements to the house, from a politically connected Miami-based
bank, U.S. Century, after the house was reappraised at $735,000.
Suddenly the owner of three homes, the Rubios saw their
liabilities soar to $1 million from $330,000 in just a year. Harold Evensky, a
longtime financial adviser who reviewed Mr. Rubio’s public financial
disclosures at the request of The Times, called the rapid accumulation of debt
“staggering.”
“This was someone that was living financially dangerously,” Mr.
Evensky said.
Little of Mr. Rubio’s income at this time went into savings. An
analysis of his financial disclosures by Jude Boudreaux, a longtime financial
planner and an adjunct professor at Loyola University New Orleans teaching
personal finance, shows that Mr. Rubio earned $2.38 million from 1998 to 2008
but ended up with an estimated net worth of $53,000 (slightly more than Mr.
Rubio disclosed himself). His savings rate during that period was about 2
percent.
“Practically nothing,” Mr. Boudreaux said.
Still, Mr. Rubio’s advisers said that the mortgages did not
create a financial strain, and that his debt-to-income ratio did not exceed the
43 percent rate that the federal government considers worrisome. (The campaign
declined to provide a specific figure.)
Who Is Running for President?
It was during this period of growing indebtedness, in the
mid-2000s, that Mr. Rubio’s personal finances converged in unusual ways with
his political activities. As he climbed the ranks of the Legislature,
determined to reach the prestigious post of House speaker, Mr. Rubio set up
political action committees to bankroll his political endeavors and obtained a
credit card from the Republican Party of Florida.
But he struggled with the new financial responsibilities. “It
was a learning curve for him to make sure everything was being paid out of the
right canister,” said Mr. Baxley, the lawmaker.
The structure of the PACs was unorthodox, by Mr. Rubio’s own
admission. One of them was run by his wife, and was used to reimburse the
couple thousands of dollars for meals, gas and long-distance calls. The other
employed three of the Rubio family’s relatives.
During his Senate campaign in 2010, his opponents pounced on the
arrangement, suggesting he had used the PACs to subsidize his family’s
lifestyle. “It wasn’t true,” Mr. Rubio later wrote, “but I had helped create
the
His use of the Republican credit card for personal expenses was
harder to explain. Records showed that he charged the party’s card for stone
pavers at his house and travel to the family reunion in Georgia.
Mr. Rubio blamed a travel agent for the reunion charge and said
he had pulled out the wrong credit card to pay for the pavers. “I wish that
none of them had ever been charged,” he wrote in his book. He eventually
covered the costs of each himself, he said.
But similar practices carried over to Mr. Rubio’s campaign for
the Senate, and to the fund-raising group that he created after his election,
Reclaim America PAC. A review of campaign finance records shows that Mr. Rubio
employed two nephews who had worked for his local PAC years earlier, as well as
close friends.
Since 2009, Mr. Rubio’s political organizations have paid at
least $90,000 to companies registered by one of the nephews, Orlando Cicilia
III, which provided consulting and video production services.
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Mr. Rubio’s supporters said his reliance on close friends and
even family was not a case of patronage so much as necessity: He was running
for the Senate against Florida’s popular governor, Charlie Crist, who commanded
the loyalty of the state’s Republican operatives and strategists.
After the race, a new problem arose. The Federal Election
Commission repeatedly cited Mr. Rubio’s campaign — and fined it more than
$9,000 — for running afoul of campaign finance rules. In one case, the
commission found $210,000 in improper donations, many of which violated
contribution limits.
The Senate has provided Mr. Rubio with a prestigious platform,
to write books, travel the world, deliver speeches and, today, mount a run for
the White House. But he has told friends that the job has imposed its own form
of financial hardship, and he expressed occasional envy of colleagues in the
private sector.
Mr. Rubio’s Senate salary of $174,000 is far less than he earned
as a lawyer and consultant, and the Rubio family expenses are significant. All
four of their children attend parochial school.
He has looked for other ways to bring in cash: Shortly before
running for the Senate, Mr. Rubio agreed to teach at Florida International
University, for $69,000 a year. (The salary was later reduced.) Those involved
in the negotiations said it was clear that Mr. Rubio’s finances were stretched.
“I think that was an issue,” said Steve Saul, who was vice
president for government relations at the university when Mr. Rubio was hired.
“He needed the money.”
The Rubios have further supplemented their income with royalties
from his two books and Mrs. Rubio’s work for Mr. Braman, Mr. Rubio’s wealthy
campaign donor.
But Mrs. Rubio’s firm, JDR Events, has had its own bookkeeping
lapses. Over the past few years, she failed to pay annual business licensing
fees to the City of West Miami, despite nine written notices and repeated phone
calls to her home, records show.
After The Times made an inquiry with the city on May 26, a check
arrived from Mrs. Rubio two days later for the $637.50 she still owed. In a
handwritten note to the city, she said she had mistakenly believed her payments
were up to date.
“My apologies,” she wrote.
.
