Neel Kashkari Wants to Be a New Kind of Republican

TARP’s former overseer is the ideal, Karl Rove-approved, next-gen Republican to take on California Governor Jerry Brown. He may not survive the primary
Photograph by Bryan Sheffield

Neel Kashkari, 40, Republican candidate for governor of California, sits in the front passenger seat of a rented Nissan Versa, head tilted forward, eyes on his BlackBerry, squinting from the morning sun that streams through the windshield. He’s cocooned, windows rolled up, awaiting word from his press secretary, Jessica Hsiang Ng, that the students, teachers, and administrators of the Central City Value High School, a Los Angeles charter school, are ready for him. When the time comes to start campaigning, he’ll do his best to listen, empathize, and connect as a politician on the campaign trail must. Until then he’ll remain isolated, in his bubble. He’s calculated there’s very little to be gained from unscripted interaction.

At 10 a.m., Kashkari emerges, blue shirt tucked into khakis, brown shoes, his shaved, bullet-shaped head rising on a thin neck from a starched collar. He crosses the parking lot, enters the school, and then his smile appears. The corners of his mouth turn up, and he’s delighted to meet with the awaiting students and teachers. Karen, a senior, plans to attend California State University at Northridge. Brittany, a sophomore, shows him an art classroom. At every turn, he looks completely engrossed.

Kashkari is here because he says he believes charter schools are among the solutions to the state’s education problems. He has crunched the data, run the numbers, and concluded there are two issues Californians care most about: jobs and education. While Kashkari walks the halls, the president and interim chief executive officer of Value Schools (there are two, both in L.A.), Gerry Jacoby, quietly says, “All these politicians think charter schools are this magic solution. They have no idea how hard it is to actually start one up. I want to tell him.” She never gets the chance. That isn’t part of the plan. After his walkthrough, he’s gone, back into the Nissan.

Kashkari, an engineer by training, earned an MBA at the Wharton School and went on to become the Treasury Department’s assistant secretary for financial stability. He’s trying to problem-solve his way to the Republican nomination for governor of California. On a spreadsheet, he’s a formidable candidate: young, ethnic, liberal on social policies, and fiscally conservative. Yet the one thing that doesn’t chart is the ability to connect with voters. “He’s not that hyperbolic, emotional candidate. He’s kind of the opposite of that,” says Aaron McLear, chief strategist for the campaign. “But I do think that he has passion.”

Before launching his run, Kashkari says, he saw “three risks in running for governor: No. 1 was a famous fellow Republican entering the race. No. 2 would be conservatives rejecting me because I am not conservative enough. And No. 3 is a failure to connect with voters.” Now he says, “I believe I have reduced those risks.” As well, he perceived an opportunity to help redefine his party as more inclusive and less ideologically extreme. “When [Mitt] Romney lost,” Kashkari says, “the Republican Party had been cast as the party of no, the party that hates women, the party of the rich. I saw this giant need. Maybe I can show the country there is a different kind of Republican.” His goal is to make the party appeal to younger voters by focusing on fiscal issues and downplaying abortion and gay marriage, both of which the majority of Californian voters—and Kashkari—believe should remain legal.

The governor’s race, or at least the Republican side of it, is a microcosm of what the national party will probably go through in 2016 as moderate Republicans battle with Tea Partiers to nominate a presidential candidate. The Southern strategy through which the Republican Party has succeeded nationally has resulted in demographics that skew older and whiter, even in California. “Over the past 20 years,” says Mike Madrid, a Republican consultant, “certain ethnic groups, a lot of women, have abandoned the Republican Party, so that even in California you may end up with a candidate who would be conservative by Deep South standards. That sets back the party nationally.” If a moderate Republican can defy the odds and become governor or even run within 8 percentage points or so of Democratic Governor Jerry Brown, he or she will immediately become a national figure. First though, he has to win over enough of the base to finish first or second in the open primary on June 3.

High-profile national Republicans, among them Romney, Jeb Bush, and Condoleezza Rice, have endorsed Kashkari. Karl Rove said at an April dinner held by the National Federation of Independent Business that Republicans would be “stupid” not to vote for him, citing the damage one of his opponents, State Assemblyman Tim Donnelly, could do to the party’s standing among Latinos. (Donnelly, a Tea Party favorite, is best known for the Minutemen Project, a citizen patrol he co-founded to confront illegal immigrants on the U.S.-Mexico border.) On Hugh Hewitt’s radio show, Rove went further, saying a Kashkari loss would be “problematic for the GOP.” The candidate has assembled a team of veteran Republican operatives. He has spent $2 million of his own money so far; the campaign’s most recent filings show it has $1.4 million on hand. “If Kashkari beats the point spread,” says John Pitney, a former national GOP official and a professor of government at Claremont McKenna College, “he’s got a great political future.”

Kashkari is not prone to sentimentality, yet he sounds wistful about the three years he spent in Washington working closely with Secretary of the Treasury Henry Paulson. While there, he implemented various financial relief programs known by their acronyms: TSLF (Term Securities Lending Facility), PDCF (Primary Dealer Credit Facility), and, of course, TARP (Troubled Asset Relief Program). He has no doubt these staved off another Great Depression. “I realized I’m not motivated by money,” he says of that period. “We showered in the office, we were sleeping in our offices, we worked 20 hours a day, we were totally focused … The three years I spent in Washington were the most rewarding time of my life. We did really important work for the American people.”

The son of first-generation immigrants from Kashmir, the disputed territory between Pakistan and India, Kashkari grew up in Stow, Ohio, a suburb of Akron. His father was an engineer, his mother a doctor, and childhood friends recall his knack for building, designing, and tinkering. He attended the University of Illinois at Urbana-Champaign, where he also earned his master’s degree in engineering and led an 80-person team that designed a prize-winning solar car for a race across America. While in Champaign he met Minal Jayswal, his future wife. (The couple divorced amicably in 2011 and have no children.)

He went to work at TRW in Los Angeles, designing satellites for NASA. “I absolutely loved it,” he says. “And my managers were encouraging me to go get a Ph.D. But I thought, ‘If I get a Ph.D., I’ll be in R&D for the rest of my life.’ So I went to business school instead.” He interned at Goldman Sachs between his first and second years at Wharton and joined the firm as an investment banker in Silicon Valley after graduating. In 2006, while at Goldman, Kashkari applied for a White House fellowship and asked for a recommendation from then-Goldman CEO Paulson, who made a few calls looking into the worthiness of the young banker before signing off on a letter. (Kashkari didn’t get the fellowship.) When Paulson was appointed Treasury secretary a few months later, Kashkari cold-called him. Paulson’s secretary called back the next day and said Paulson would like to speak with him.
“Where is he?” Kashkari asked.
“He’s in Washington,” the secretary replied.
“Tell him I’m going to be in Washington tomorrow.” Kashkari had no plans to be in Washington.
“He doesn’t want to meet you. He just wants to talk to you.”
“But I’ll be in Washington.”
“No, you’re in California.”
“No, I’m going to be in Washington. Tell him that.”
A few minutes later, the secretary called and said Paulson would meet in person the next day. Kashkari caught the red-eye. Later, when Paulson hired him, Kashkari excitedly called his wife, who asked how much he would be making. He had no idea. (His starting salary at the Department of the Treasury was $140,000.)

The collapse of Lehman Brothers, the bailout of American International Group, the struggle to get the TARP legislation passed, and the subsequent congressional testimony would make Kashkari a national figure, a CNBC regular, and the lone bureaucrat to appear in People’s 2008 “Sexiest Men Alive” issue. In accounts of that traumatic period, such as Andrew Ross Sorkin’s Too Big to Fail and Paulson’s memoir, On the Brink, Kashkari comes across as a cool hand whom the secretary relied upon to make sure, as Kashkari puts it, “the banks weren’t jamming us with all this garbage.”

Designed to facilitate the orderly dispersal of some of that garbage, TARP was conceived by Kashkari, and he’s proud of his ownership. “I don’t just say I worked on TARP. I designed it, I negotiated it, I ran it for two presidents. I own it.”

He served three months under Barack Obama, whom Kashkari, a lifelong Republican, voted for after they met during the financial crisis. He came back to California in 2009 to work for Bill Gross at Pimco, starting that company’s first equity funds. “I’m not a stockpicker,” he says of his role building the business. “I hired the stockpickers.” The funds were not stellar performers. He left in early 2013 after a meeting with George W. Bush in Texas, where he asked the former president if he should run for governor. “He could have told me, ‘Neel, this is stupid.’ But he didn’t.”
Brown is running unopposed on the Democratic side of the primary and will likely win reelection. He has presided over an economic recovery and has a 59 percent approval rating. No Republican holds statewide office, and Democrats enjoy large majorities in both houses of the state legislature. “If anyone tells you the Republican Party in California is in good shape, they are lying,” says Reed Galen, a GOP strategist and political consultant. At 29 percent statewide registration, the party is increasingly in the hands of far-right activists. At the moment, the moderate Kashkari is trailing Donnelly and, in some recent polls, a registered sex offender named Glenn Champ. “I don’t think I’m the most likable person in the world,” Kashkari concedes. “But I’m fine. I think I’m offering a vision.”

“This is a first pass. This is a getting-to-know-you contest,” says Larry Gerston, a political science professor at San Jose State University and author of Not Too Golden After All: The Rise and Fall of California. “I don’t think he expects to win. He knows he won’t win the general, but Jerry Brown is out in 2018, and Kashkari will have this dry run, get to become a better speaker, figure out how to connect with people, make his case. As an engineer, he’s thinking downstream.”

Kashkari speaks at the Friendly Hills Country Club on May 9
Photograph by Bryan Sheffield

Donnelly, the Republican front-runner, is channeling the resentment so many California Republicans feel after six years of Obama and three terms of Brown, and particularly their anger about the governor’s plan to build a costly, high-speed rail link between the Bay Area and Southern California. Donnelly sits in a restaurant in Hollywood, dipping French fries into blue cheese sauce. With his receding hairline, goatee, red face, and rapid-fire diction, he’s a cross between the motivational speaker from Chris Farley’s famous Saturday Night Live sketch and firebrand Texas Representative Louie Gohmert. He rides around in a bus named the Liberty Express and calls his 17-year-old son, Daniel, his campaign manager. The former owner of Donnelly Plastic Equipment, he claims he was driven out of business by excessive government regulation. The Minutemen co-founder gave a speech in 2006 in which he compared rooting out illegal immigrants to the war in Iraq. He was arrested in 2012 for carrying a loaded firearm into an airport. When asked during an interview if he was packing, he cackled and said he no longer discusses his personal security.

A veritable Tea Party sound bite machine, Donnelly uses words such as freedom, liberty, and justice as a form of punctuation, as in this answer to a question about his platform: “Rather than bring a message about issues, I have to tie it to the human experience. Republicans haven’t been able to. Justice. I believe our platform, well, freedom—freedom is the antidote to injustice.” He fervently opposes any path to citizenship for undocumented residents, wants to eliminate all business and environmental regulations, and doesn’t want the government “to dictate our lives,” he says.

That message plays well with what remains of the Republican Party in California, and watching him address a room of conservatives after Kashkari has given his measured self-introduction is like watching someone feed gazelle entrails to hungry lions. Donnelly’s story, of driving to California from Michigan with $300 in his pocket, building a business, marrying his Filipino American wife, and raising five children—with steady doses of how the California dream has been ruined by liberals, illegal immigrants, drug cartels, Jerry Brown, Barack Obama, and Obamacare—makes him the embodiment of California’s angry Republican id. “The moderate appeal doesn’t energize voters in a primary,” Claremont McKenna’s Pitney says. “The base doesn’t get excited about moderation.”
Kashkari, who lives in a $10 million house in Laguna Beach, likes to walk his dogs along the Pacific in the early evening. The two slobbering Newfoundlands are named Newsome and Winslow, after two Cleveland Browns tight ends. It’s safe to say Newsome and Winslow have no idea of the critical role they play in their owner’s campaign. While Donnelly excites the base with his promise to bring “more country into the country club,” Kashkari and his consultants deploy the hounds when they want to present the candidate’s nonwonky side.

On a recent walk, he describes himself as Hindu, though not practicing, and says his libertarian views stem from that faith’s many representations of God: “Hinduism believes there are many paths to God. I’m not here to tell you your path is wrong.” Kashkari is surprisingly disconnected from pop culture and current events. He’d never heard of actress Mindy Kaling, who coined the phrase “culturally Hindu” to describe the outlook of second-generation South Asian Americans such as herself and Kashkari. He says he’s not surprised at how the race has shaped up, that he anticipated a battle between the moderate and far-right elements in the party. It’s just that he imagined he’d be winning the battle. “It’s been hard, because so many Republicans have given up hope,” he says.

If Kashkari doesn’t win the primary, he says, he can’t run a perpetual campaign. He’ll have to go back to the private sector. “I’m not Mitt Romney. I can’t run for office continuously. I need to work.” A losing race for governor could even help him find a job back in public service. An incoming Republican administration in Washington in 2016 would certainly take a long look at him. By then Kashkari will be 42, and there’s another governor’s race in 2018.

Back at home, Kashkari discusses his longer-term prospects. Newsome laps water from a bowl next to a fountain. The dog finishes, swipes his huge tongue over his face, and sits, panting. Kashkari studies the massive amounts of slobber descending from the dog’s mouth, wraps the leash around the fountain stanchion, and goes digging around in a palm tree planter. He emerges with a short twig he uses to spool up Newsome’s drool as if reeling in a fish. Kashkari tosses the twig into a trash can and checks his work. One more problem solved.

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