Jan. 22 (Bloomberg) -- A bid for governor of California may establish former U.S. Treasury official Neel Kashkari as a credible candidate regardless of whether the Republican unseats Democrat Jerry Brown.
Kashkari, 40, who managed the $700 billion rescue of the U.S. banking system and has never waged a campaign, said yesterday he’ll seek to oust Brown, a veteran of more than four decade in politics whose approval is the highest since he returned to run the most populous U.S. state three years ago.
Kashkari’s announcement came the day before Brown delivered his annual state of the state speech, in which he vowed to place money in reserve. Not only is the incumbent credited with leading the state from a $26 billion deficit to a record surplus, but Kashkari faces an electorate in which Democrats outnumber Republicans 44 percent to 29 percent.
“Why is he running?” Sherry Bebitch Jeffe, a political scientist at the University of Southern California in Los Angeles, said of Kashkari. “Some of it may be to increase his visibility within the state Republican Party. He’ll get some name recognition out of this. He’ll be so much more appealing if known to moderates and independents.”
Kashkari joins Assemblyman Tim Donnelly, a favorite of the small-government Tea Party, in the Republican race to oust Brown, who has yet to declare his candidacy. If he does, all three would compete in an open primary June 3, where the top two vote-getters advance to the November general election, regardless of party.
Kashkari and Donnelly are new faces, said Ron Nehring, who led the California Republican Party from 2007 to 2011.
“Each candidate has unique obstacles to overcome,” Nehring said. “Neither one has run for statewide office, much less won statewide office.”
Kashkari has to show grassroots activists that he shares their values regardless of his support for abortion and gay marriage, and Donnelly has to show mainstream Republicans that he can win despite his positions on immigration and gun rights, Nehring said.
The GOP field “reflects the fact that the Republican Party in California is all but gone,” said Larry Gerston, who teaches political science at San Jose State University. “That’s not to say it won’t reappear in some form, but in 2014 it is not here.”
The last Republican to win the governor’s office was movie star Arnold Schwarzenegger, also a neophyte, who swept into Sacramento in 2003 on a wave of discontent over deficits and an electricity shortage.
Kashkari might build a base of disaffected Democrats, conservatives and young people who see the 75-year-old Brown as out of touch, Gerston said.
“You can begin to see the basis of a coalition,” he said.
Brown’s message to voters so far has been that he will restrain Democrats who want to spend the record surplus.
“Fiscal discipline is not the enemy of our democracy but its fundamental predicate,” Brown told lawmakers today in Sacramento, the capital. “We must spend with great prudence and we must establish a solid rainy-day fund, locked into the constitution.”
A Field Poll last month found that 52 percent of likely voters would back Brown in a June primary, while 9 percent would vote for Donnelly. Kashkari received support from 3 percent, with 25 percent undecided.
Kashkari spent the past year meeting with almost 700 potential donors from around the U.S. and sought advice on prisons, education and the economy from such Republican luminaries as former President George W. Bush, Texas Governor Rick Perry, Ohio Governor John Kasich, ex-Florida Governor Jeb Bush and Indiana Governor Mike Pence.
Kashkari said California’s leaders haven’t done enough to lower the state’s highest-in-the-nation poverty level, fix failing schools or help middle-class workers find jobs.
“I can’t believe our state is failing so many of our people,” Kashkari said during a speech in Sacramento yesterday. “We have to grow the economy and create jobs and give kids a good education, at the same time.”
Kashkari, who was born to Indian parents in Akron, Ohio, earned bachelor’s and master’s degrees in mechanical engineering from the University of Illinois at Urbana-Champaign, and a master’s in business administration from the Wharton School at the University of Pennsylvania.
A former Goldman Sachs Group Inc. vice president in San Francisco, Kashkari was 35 when then-Treasury Secretary Henry Paulson asked him to manage the federal government’s Troubled Asset Relief Program. Banks were on the brink of collapse after investing in risky derivatives, a disaster that could have led to a meltdown of the economy.
Kashkari, who is divorced, joined Pacific Investment Management Co. in Newport Beach, California, at the end of 2009, where he led the world’s largest bond fund’s expansion into equities. He left Pimco last year.
Kashkari, who has said he voted for President Barack Obama in 2008, favors the right of women to choose abortion and backs same-sex marriage. He is critical of Brown’s support for a $68 billion high-speed rail line and opposed Brown’s 2012 voter initiative that temporarily raised income and sales taxes.
Brown’s supporters already are using Kashkari’s job running TARP against him.
“It’s hard to imagine why someone with such a thin resume would think he’s qualified to be governor,” said Dan Newman, a Brown campaign adviser. “His one public-policy act was handing $700 billion to Wall Street banks.”
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