Whitewater Development was by no means the only high-risk, speculative investment on which the Clintons lost money. Other losers included the partnership that owns the Rose Law Firm building, Forest Drilling Partners, Midlife Investors, Kaiser Steel preferred securities and an early venture in Hong Kong and Shanghai. She lost $2,532 in one day in 1987 with financial futures contracts.
The Clintons even lost money when they rented out a house they owned briefly in the early 1980s because the rent did not cover their mortgage payments. According to Lisa Caputo, Hillary Clinton's press secretary, the couple owned three houses at different times during the first eight years of their marriage, but did not keep any of them for very long.
Because mortgage interest payments are deductible, a home is the primary investment of most middle-class Americans. Although the Clintons lived much of their married life in the Arkansas governor's mansion, it is unusual for politicians not to have a permanent residence of their own.
As Rogers sees it, the Clintons made many investment mistakes in the early years of their marriage, but none as serious as their failure to take advantage of the law allowing couples to shelter up to $4,000 of pre-tax income in an independent retirement account, or IRA.
"That really glared at me when I read their tax returns," he said. "Here are people with access to the best tax advice, and they made the worst decisions."
Their failure to invest in IRAs until 1981 is particularly puzzling. Presumably the Clintons could have used the tax shelter during 1978 and 1979, when she made big profits in commodities. It is also unclear why the Clintons failed to take a capital loss on their taxes for the sum of about $40,000 they claimed they lost by investing in Whitewater Development.
It was not until the mid-1980s that the Clintons' investment portfolio began to resemble the typical holdings of couples in their income bracket, with a combination of safer investments such as municipal bonds and more speculative ventures such as Valuepartners.
Hillary Clinton frequently denies that Whitewater Development or any of her investments created a conflict of interest for the governor, who was responsible for regulating securities dealers and all other industries doing business in Arkansas.
Nevertheless, Smith told The Times that during the 1992 presidential campaign he created "a de facto blind trust" for the future First Lady to protect her from allegations that by investing in pharmaceutical and other medical stocks, she stood to profit from her husband's pledge to reform the health care system.
"I quit sending out reports on the securities in the partnership," Smith said. "I did it to avoid any conflict of interest. I didn't want them to be on the line."
The Clintons did not put their investments into a blind trust until after they moved into the White House in January, 1993.
The Clintons' Income
Despite relatively scant resources, the Clintons embarked on a high-risk investment strategy in the late 1970s that has paid off over time.
WAGES TOTAL INCOME FEDERAL TAXES 1977 40,856 42,626 8,194 1978 51,173 85,214 22,627 1979 74,236 158,495 58,388 1980 81,388 87,556 17,380 1981 106,448 110,601 25,886 1982 90,536 95,731 21,497 1983 116,857 123,787 30,196 1984 107,989 114,585 22,280 1985 90,382 102,407 18,791 1986 124,138 147,051 30,485 1987 133,358 165,890 36,969 1988 106,870 191,947 39,734 1989 146,444 199,000 37,883 1990 159,711 268,646 50,939 1991 147,887 237,576 49,828 1992 237,699 297,177 70,228 1993 191,640 293,757 62,670
\o7 Source: Clinton family tax returns\f7