Romney will eat campaign loans

By Michael Kranish, Globe Staff

WASHINGTON -- Mitt Romney, whose prospects to be John McCain’s running mate appear on the rise, is preparing to formally declare he will not seek donations to repay $45 million in personal loans he made to his failed presidential bid — the biggest ever made by a candidate in a primary campaign.

The move could clear away the last remnants of a divisive primary race, insuring that he and his financial supporters are focused on helping McCain, but it could also put him at odds with McCain’s campaign reform message.

Romney spokesman Eric Fehrnstrom said today that the former Massachusetts governor is preparing to have the loans ‘‘reclassified as contributions’’ and will write a letter to the Federal Election Commission explaining that he is ‘‘forgiving the outstanding loans.’’

Some analysts said McCain, the presumptive Republican presidential nominee, might undermine his reform message if he picks someone who bankrolled so much of his own campaign.

‘‘Democrats would use it as an issue,’’ political analyst Stuart Rothenberg said today. ‘‘They would they try to undermine his reputation as ‘Mr. Reformer.’ "

He said it might also undercut McCain’s effort to criticize Democratic rival Barack Obama for switching his position and rejecting public financing for the general election.

Still, Romney’s investment in his own campaign and the donor network he built may have helped his vice presidential stock go up. The $45 million helped win widespread name recognition for Romney, who also raised more than $65 million from donors. Since McCain clinched the nomination in March, Romney has asked his supporters to contribute to a Republican National Committee fund that will be used to help McCain’s candidacy and he has urged his campaign finance team to work for McCain.

If Romney became the vice presidential nominee, the rules appear to allow him to give or loan unlimited funds to McCain if the ticket rejects public funds, according to Michael J. Malbin, executive director of the nonpartisan Campaign Finance Institute. McCain, however, has said he will take public funds for the general election, a decision expected to translate into a major financial disadvantage for the Republican ticket.

Romney declined a request today from The Globe to talk about his campaign loans.

During the primaries, he and McCain had unkind words for each other as they skirmished over illegal immigration, the economy, and other issues. They had some of their most bitter arguments over McCain’s landmark campaign finance reform legislation. Romney said the 2002 law ‘‘hurt my party, it hurts First Amendment rights. I think it was a bad bill.’’

McCain responded that the legislation is at the core of his candidacy, and after Obama last month rejected public financing for the fall campaign, he is highlighting the measure in a just-released TV ad that touts him as a ‘‘maverick’’ who ‘‘tackled campaign reform.’’

The 2002 law that McCain cosponsored with Senator Russ Feingold, a Wisconsin Democrat, eliminated unlimited donations to political parties, tried to lessen the advantage of wealthy candidates financing their own congressional campaigns, but did not restrict how much money a presidential candidate could loan or contribute to his or her own campaign

Romney’s ability to finance so much of his primary campaign was the source of much frustration to the McCain campaign, which nearly ran out of funds last fall before the Arizona senator managed to stage his comeback following a victory in the New Hampshire primary. McCain angrily complained that Romney was spending his fortune on attack ads against him.

But since endorsing McCain, Romney has been among McCain’s most vocal supporters — and Obama’s most persistent critics. Romney has heightened his visibility in recent days on behalf of McCain’s campaign, doing television and radio interviews in which he touts McCain’s candidacy and leaves open the possibility that he would accept a vice presidential nomination.

While Romney fended off any speculation about the vice presidential sweepstakes in appearances on both CNN and MSNBC today and McCain has refused to say who is on his short list, McCain has taken notice of Romney’s salesmanship.

‘‘I’m appreciative every time I see Mitt on television on my behalf,’’ the Arizona senator told a New Mexico audience on Monday. ‘‘He does a better job for me than he did for himself as a matter of fact.’’