Rep. Ed Zschau Enters GOP Race for Senate

He has a name few Californians have ever heard--or can even pronounce. But on Monday, Rep. Ed Zschau (say it like “shout” but without the “t”) of Los Altos entered the Republican race for the U.S. Senate in 1986, bringing with him a $1-million war chest and the potential for heating up what has been a crowded but lackluster Senate primary.

“We’re in a battle of ideas in this country, and one of the major issues is whether or not the economic philosophy of President Reagan will be the permanent foundation for our nation’s future,” Zschau told a Los Angeles press conference. “That’s a philosophy based on a strong belief in the free enterprise system and the entrepreneurial spirit. . . . This philosophy epitomizes California and gives hope to people.”

Then, mentioning the name of the Democratic senator he would like to replace, Zschau charged, “Alan Cranston doesn’t subscribe to this philosophy. He puts his faith in government programs rather than in the potential of individual endeavor.”

According to his campaign manager, Ron Smith, Zschau has already raised $800,000. With another $200,000 left over from his 1984 House race, that makes Zschau the only Republican candidate in the race to have $1 million in the bank. In fact, he is at least $500,000 ahead of his nearest competitors.

But then, Zschau needs to be ahead because, as Smith puts it, “With his name we may need $4 million to win this primary.’

Zschau, a 45-year-old former businessman and professor, is known throughout the high-tech industry as the man who, as a private citizen, carried on a two-year battle to persuade Congress to halve the capital gains tax in 1978. At the time, Zschau was president of System Industries, which made computer storage discs, and he argued--successfully--that cutting capital gains would invite investment and create new jobs.

Elected to Congress from the so-called Silicon Valley around San Jose in 1982, Zschau has used his position on the Foreign Affairs Committee to loosen export controls on some computer-related technology.

All of this has made him very popular with the high-tech industry and the venture capitalists who bankroll it. Most of the campaign money Zschau has raised so far has come from such bankers and the heads of computer-related firms.

However, Zschau said Monday that he got his campaign theme from someone in one of the country’s older industries.

He recalled a talk show he was on recently in which the first caller was an auto worker from Detroit.

“I thought, ‘Uh oh, here it comes,’ ” said Zschau, a staunch opponent of protectionism.

To his surprise, he said, the caller criticized protectionism and challenged the Japanese auto industry to a fight, saying, “We can be the best.”

That will be the campaign theme, Zschau said. The challenge, he acknowledged, will be “to teach Californians my name and my views.”

Nowhere will that task be tougher than in Southern California, where 70% of the Republican voters reside and where Zschau is virtually unknown outside corporate circles.

Despite his name problem, however, Zschau may prove formidable if, as some Republican strategists contend, the profile of the new California Republican is someone who is 45 or younger and fond of conservative fiscal policies and moderate stands on social issues.

Zschau, who has three children, believes abortion is a woman’s choice. He is opposed to a constitutional amendment allowing prayer in schools and supports the equal rights amendment.

On fiscal matters, Zschau believes a balanced federal budget should be required by the Constitution. He has supported much of the Reagan Administration’s military buildup but angered the President by voting against the MX missile as too expensive. He was an early critic of the Pentagon in opposing the Sergeant York anti-tank gun, which was recently abandoned as expensive and unworkable.

Zschau contends that he can seize the middle ground against Cranston, who has easily defeated ultraconservative opponents in the past.

Even the people around Zschau describe him at this point as a “long shot.” But they took heart from some of the people who met them as they traveled around the state Monday to kick off the campaign.

In Los Angeles, Dick Lee, who works in Arco’s marketing division, contended that Zschau could catch on with Southern California conservatives “because he’s been on the cutting edge in business.”

A banker in San Diego, who requested anonymity, agreed. But he put it this way: “As a businessman, Ed has battled the bureaucrats and the red tape. Conservatives like that.”

The other declared candidates for the Republican nomination are state Sen. Ed Davis of Valencia, economist Art Laffer and state Assemblyman Bob Naylor (R-Menlo Park.)