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Trump’s loyalty pledge is going to save him millions

Donald Trump, may be “really, really rich,” as he wants everybody to know—but that doesn’t mean he wants to spend all his spare cash running for president. And now it appears he won’t.

Trump recently made a “loyalty pledge” to the Republican party, saying he’ll support whoever the party’s presidential nominee is (assuming it’s not him) and won’t mount a third-party bid as an independent. There are political reasons for Trump to do this—some states, including South Carolina, require such a pledge for candidates to be included on their party’s ballot in the primaries. Trump, for his part, says sticking with the GOP is the best path to the White House.

Maybe so, but Trump’s decision will likely save him many millions of dollars if it means he has ruled out running as an independent. Trump is funding his own campaign, and has probably already spent the $1.8 million he loaned the campaign in June. That’s a pittance, of course; a well-run presidential campaign costs hundreds of millions of dollars these days, plus tons of support from outside spending groups. But the big spending occurs late in the race, and if Trump only competes in the primaries, he’ll spend just a fraction of what a full campaign would cost.

In 2012, for instance, Barack Obama’s campaign spending swelled from just $18 million in January to $176 million during the last month of the campaign. Mitt Romney's spending followed a similar pattern: He spent $19 million in January but $105 million in the campaign’s final month.

If anything, the 2016 campaign is likely to be more expensive than the 2012 race, thanks to the growing role of super PACs able to raise unlimited amounts from rich donors.

[ See why rich political donors are wasting a lot of money .]

Trump, at the moment, is coasting along on a huge wave of free publicity, as the press hounds him hoping for controversial new sound bites—which they often get. That’s probably reducing the cost of campaigning, since Trump can simply call a press conference if he has a point to make, instead of spending money for ads in key early primary states such as Iowa, New Hampshire and South Carolina.

But that’s likely to change as the campaign progresses. Voters will start paying more attention to other candidates. The field will narrow as weak candidates drop out, making Trump’s competition more difficult. Many political analysts expect Trump’s lead in the polls to drop sharply as voters get more serious about issues and less smitten by the entertainment value he offers. All of those factors will force Trump to spend more money if he wants to remain competitive.

Were Trump to actually win the GOP nomination, the party would have little choice but to rally behind him. That means big GOP donors would either have to start helping fund Trump’s campaign, or simply concede the election to his Democratic challenger. In that scenario, Trump would most likely stop funding his own campaign and start relying on help from others.

The smart money, of course, is betting that Jeb Bush or Scott Walker or Marco Rubio will win the GOP nomination, forcing Trump to decide whether to run as an independent. Were Trump to do that, the cost of his presidential quest would escalate sharply. Ross Perot’s 1992 independent bid is a benchmark. Perot spent about $64 million of his own money running in 1992, which would equate to roughly $110 million today. It would probably take a lot more now, however, given that the winning candidate is likely to benefit from more than $1 billion in total spending, including super PACs backing the candidate.

So if Trump foregoes an independent candidacy, he probably stands to save at least $100 million or so, assuming he’s sincere when he insists he’s in it to win and will do whatever it takes. That’s a lot of money, even for Trump. Though he claims to be worth more about $8.7 billion, most of his assets are tied up in illiquid real estate and licensing deals that can’t be easily converted to campaign cash. His liquid assets amount to about $302 million, but even so, that doesn’t mean Trump can just cash it in and spend it campaigning. At least not without disrupting his financial planning and possibly his business interests.

Trump might even be better off if he exits the campaign once the GOP primaries are over. The odds of an independent candidate winning the White House are virtually nil, and by the end of the primaries Trump will probably have influenced the direction of the campaign as much as he’s going to. We’d miss him, of course. Even if he’s out of the race, however, Trump would probably find a way to stay in the headlines.

Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.

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