A Republican who wants to be California’s governor is staking his bid on having run the $700-billion federal bank bailout — even as GOP candidates across the nation distance themselves from the highly unpopular program.
As he courts voters, former U. S. Treasury official Neel Kashkari rarely mentions the Troubled Assets Relief Program (TARP) by name. But he says that it staved off another Great Depression, and he cites his work on the program as proof of what he could do in Sacramento.
“You know what we did, and it almost never happens? We got Republicans and Democrats to work together,” Kashkari told a Republican women’s luncheon at the Palos Verdes Golf Club this week.
His work spanned two administrations, those of Republican George W. Bush and Democrat Barack Obama, he noted, and congressional leaders in both parties supported the bailout in 2008.
Similar bipartisan efforts — with elected officials putting the public good first — could reduce unemployment and poverty in California and improve the beleaguered public schools, he told the group.
He is in an awkward spot. In the 2010 elections, GOP politicians who supported the bailout were pilloried. And this year, the issue has been raised against GOP candidates in Virginia, Kentucky and Louisiana.
As a result, Republicans are “running as fast as their legs can carry them in the other direction,” said Larry Sabato, director of the University of Virginia’s Center for Politics.
But because Kashkari helped draft the framework for the bailout and then ran the program — work that the first-time candidate cites against criticism that he is a political neophyte — he has no choice except to embrace it, Sabato said.
“If you don’t grab the bat and try to hit the ball,” he explained, “your opponents are going to grab the bat and beat you over the head with it.”
They are trying.
Although nearly all of the state’s Democrats in Washington — including then-House Speaker Nancy Pelosi and Sens. Dianne Feinstein and Barbara Boxer — voted for TARP, Democrats began hammering Kashkari about it even before he officially launched his campaign.
“He claims to be a new California Republican, but he … said that bailing out Wall Street banks was the greatest economic policy in history,” Dan Newman, a political spokesman for Gov. Jerry Brown, said in November.
Last month, after Kashkari announced his initial fundraising haul of nearly $1 million, Assemblyman Tim Donnelly, a GOP gubernatorial rival who has struggled to raise money, tried to turn the TARP connection against him.
He noted that donations had gone to Kashkari from former Treasury Secretary Henry Paulson — Kashkari’s boss in the Bush administration during the bailout — and from people associated with Goldman Sachs, which received TARP funds and is where Kashkari once worked.
“They want to buy our governorship,” Donnelly told scores of GOP activists at a Santa Cruz County Republican Central Committee meeting in Scotts Valley in early February.
Donnelly may have been preaching to the choir. Though polls showed voters supported the bailout at the height of the nation’s financial crisis, they did an about-face within months, saying that Wall Street was getting relief while Main Street suffered.
Kashkari clearly understands that. He doesn’t often use the word “bailout” when speaking to voters, instead describing Washington’s efforts as those of “the first responders trying to stabilize the U.S. economy.”
He makes a point of sympathizing with voters’ anger.
“We were a free-market Republican administration,” Kashkari told the GOP women. “We hated the idea of intervening in the markets.”
But once the scope of the potential economic damage became clear, he said, there was no choice but to offer aid. It was structured, Kashkari says, in such a way that taxpayers were not harmed.
Congress authorized $700 billion in taxpayer funds for the bailout. Ultimately, $422 billion was distributed. All of it was repaid, and the government made a $13-billion profit.
“There is no program in American history that has ever done that,” Kashkari told his Palos Verdes Estates audience.
Kashkari’s campaign touts bipartisan praise that he received for his handling of the program, even from TARP opponent Dennis Kucinich, then a Democratic congressman from Ohio and one with whom Kashkari tangled on the issue in congressional hearings.
“He was one of the most capable people that George Bush had working for him,” Kucinich told Bloomberg News late last year as Kashkari weighed a run. “He’s very bright. I think he’s a good person, and I say that as a fan of Jerry Brown.”
The critical question will be how Kashkari’s message resonates in a state of 17.7-million registered voters, less than 29% of whom are Republicans.
It will be especially important for the conservative voters expected to turn out in force for June’s “jungle primary,” in which all voters choose among all candidates and the top two vote-getters advance to November, regardless of any party affiliation.
Voters are split.
Carol Allison-Barnard, 49, described herself as a naysayer when TARP was proposed, saying that she feared “the banks were going to hold us all hostage.”
Though she still wants to hear from Donnelly before deciding how to vote in June, she said after Kashkari’s luncheon appearance that she was impressed by his account of the bailout. “Well, gosh, he says that we even came out with a $13-billion-dollar profit, so to me in the end it was a good idea.”
But Aaron Park, sergeant-at-arms of the California Republican Assembly, the most conservative faction of the state GOP, said he hears more concerns about Kashkari’s role in TARP than about the 40-year-old’s vote for President Obama in 2008 or his support for a legal brief in favor of overturning the state’s voter-approved ban on gay marriage.
“The fundamental problem is moderate and conservative Republicans alike both claim to be fiscally conservative. Here you’ve got a guy, one of his major accomplishments in life is running a government bailout program,” Park said. “That certainly speaks to whether or not you’re a fiscal conservative, I think.”
Sabato said that despite the facts of his argument, Kashkari will have a tough time persuading voters who saw their neighbors’ homes — or their own — foreclosed upon as Wall Street received a helping hand.
“Even if you convince people of the facts,” he said, “they still say they don’t like those damn bankers.”