Politics & Government

Kashkari tests limits of moderation in California GOP

Neel Kashkari traveled to San Diego to announce his “Students for Kashkari” coalition late last month. Looking at the 11 students gathered, he acknowledged an obvious concern.

“You’ve probably seen the polls that have come out,” said Kashkari, whose campaign for governor barely registers at 2 percent.

Kashkari told the students at University of California, San Diego, “it’s still early.” While most Californians don’t know who he is, the “good news,” Kashkari said, is they are unfamiliar with other Republicans running, as well.

Yet Kashkari was once expected to be a more distinguished candidate. A former Goldman Sachs executive and U.S. Treasury Department official, he entered the race with a superior fundraising network and the support of prominent Republicans who hoped his relative youth, Indian heritage and focus on the middle class could help improve the party’s standing with minorities and young voters.

Criticizing Gov. Jerry Brown for the state’s high poverty and unemployment rates, Kashkari positioned himself as an unusually moderate Republican in California’s highest-profile race. But he has met resistance from the party’s conservative base. Now running behind one month before the June election, his candidacy has become a measure of how limited the party’s appetite for moderation may be.

“You turn on the national news and you see a party that’s against gay rights, arguing for the rollback of civil rights legislation, arguing against the poor, calling them ‘takers’ and ‘moochers’ and things like that,” Patrick Schmitt, chancellor of the West Valley-Mission Community College District, told Kashkari at a Rotary Club lunch in San Jose last month. “How do you run with that party around your neck?”

Kashkari has made jobs and education the focus of his campaign. He calls Brown “lazy,” and GOP activists applaud when he promises to cancel the state’s $68 billion high-speed rail project.

But Kashkari’s signature government experience, managing the $700 billion bank bailout known as the Troubled Asset Relief Program, remains deeply unpopular, and Republicans repeatedly ask him about his vote for Barack Obama in the presidential election in 2008.

Kashkari’s answer is always the same: He says he voted for Obama because he was receiving better economic advice than the Republican nominee, John McCain, and then he turns his audiences’ attention to how deeply disappointed he became in Obama, and how steadfastly he supported Mitt Romney in 2012.

He says California Republicans, with statewide registration below 30 percent, can resurrect their party around a “positive, inclusive image focused on economic issues and lifting ... everybody up.”

“I want the Republican Party, I want our party, to be the biggest tent you’ve ever seen in your life, and the unifying principles are hard work and personal responsibility,” Kashkari said at a candidate forum in Thousand Oaks in late April.

Following his speech, Dianne Alexander, a member of the Conejo Valley Republican Women Federated, hugged Kashkari and whispered “excellent, excellent, excellent, excellent, excellent,” while Alyce Klussman, another member of the group, said, “I love him. He is the absolute kind of person we need.”

No Republican is likely to unseat Brown, a popular Democrat running for an unprecedented fourth term. But whoever finishes second in the June election will advance to a runoff against him in the fall.

Kashkari lags behind Tim Donnelly, the tea party favorite, in the most recent Field Poll. Nearly two-thirds of likely voters have no opinion of Kashkari at all.

“I’ll be honest with you, that’s been a surprise,” Kashkari said of his lack of recognition in a recent interview. “It’s a surprise that with all the press that we’ve done these last three or four months, it’s just, it’s so surprising how little dent it’s made.”

A curious listener

Kashkari, 40, was born in Akron, Ohio, and grew up in Stow, a suburb of the city. His father, an engineering professor, and his mother, a pathologist, emigrated from India in the 1960s, and Kashkari and his friends described his upbringing – pickup football, summer jobs, a fascination with cars and the Cleveland Browns – as middle class.

His first exposure to politics came watching political talk shows Sunday mornings with his dad. Kashkari said he became captivated with President Ronald Reagan when he was about 11 years old, a recollection shared by his older sister, Meera Kelley, and his friends. The Iran-Contra hearings, Kashkari said, “seemed very exciting.”

In high school at Western Reserve Academy, an exclusive institution in Hudson, Ohio, Kashkari left a positive enough impression on his teachers that they recall him as an exceptional student. But Kashkari said he spent his high school years “goofing off” and was a “bored underachiever.” He raised his eyebrows when he heard his high school football coach and biology teacher, Patrick Smith, described him as a talented defensive back.

“I was terrible,” Kashkari said.

Kashkari said he was a “B” student in high school and in his first three years at University of Illinois at Urbana-Champaign. Friends and colleagues describe him not as brilliant, but as a curious listener and gifted synthesizer of other people’s ideas. He was also ambitious, and in his senior year in college he became engrossed in a competition building and racing a solar-powered car.

“He was in the lab at all hours of the day and night,” said Jonathan Kimball, who worked with Kashkari on the project and is now a professor of electrical and computer engineering at the Missouri University of Science and Technology.

Kashkari stayed at Illinois to earn a master’s degree in mechanical engineering, then moved to Redondo Beach to work for NASA contractor TRW Inc., later acquired by Northrop Grumman, on the James Webb Space Telescope. He would say years later, in a speech at his high school, that he “loved engineering, but I didn’t want to be in the R&D labs for the rest of my life.” He sold his Corvette, took out student loans and enrolled at University of Pennsylvania’s Wharton School. From there he joined the burgeoning ranks of the financial sector at the investment bank Goldman Sachs.

In 2006, Kashkari was an executive helping raise capital for technology companies when Goldman’s Henry Paulson was recruited to become Treasury secretary. Kashkari had just been rejected from a White House fellowship program, and he called Paulson.

“I said, ‘Listen, remember me? You probably don’t,’ ” Kashkari told the students at Western Reserve in 2009. “ ‘You signed a letter of recommendation on my behalf. If you’re putting together a team, I want to come with you.’ ”

At the time, Kashkari said, “I had no idea what the Treasury Department did.”

Kashkari’s tenure at Treasury would come to define his career and, having never held elected office, provide the only political experience to point to in his campaign for governor. Managing the bank bailout in the final year of President George W. Bush’s second term and at the start of the Obama administration, he gained prominence as a focal point for controversy about the federal government’s response to a financial crisis.

Michele Davis, then a senior Treasury Department official, recalled Kashkari preparing for congressional testimony with mock hearings designed to expose him to “the worst possible questions asked in the most nasty way.”

“The tendency for a lot of people in that situation is to joke about it, not treat it as real,” she said. “He took it very seriously.”

Kashkari’s attitude, Davis said, was “I’m going to get horrible questions. I’ve got to be as persuasive as I can be that this is the right thing to do.”

In retrospect, many observers have judged the program instrumental in averting a depression, while faulting Treasury for failing to do enough to help homeowners facing foreclosure. Politically, however, TARP became a liability for many Republicans whose constituents viewed it as a handout. If Kashkari advances to the November runoff election – and if Democrats take him seriously enough to campaign against him – there is no shortage of video of lawmakers of both parties excoriating him on Capitol Hill.

“The day before my first really hostile hearing, I had a call with (then-Rep. Dennis) Kucinich – and I was testifying before him – and he ended the call by saying, ‘I just want you to know tomorrow’s not personal,’ ” Kashkari said. “And then he just unloaded on me the next day.”

Through a spokeswoman, Kucinich declined to comment, but he told Bloomberg last year that Kashkari “was one of the most capable people that George Bush had working for him.”

‘The most powerful force’

Kashkari’s colleagues at Treasury recall him working 15 hours a day or more and sometimes sleeping at his office. He gained weight and suffered headaches. When he left Treasury in 2009, The Washington Post wrote about him chopping wood and building a shed in a “Washington detox” at his mountain home in Truckee.

Kashkari returned to the private sector later that year, and he was working at Newport Beach-based Pacific Investment Management Co. when Romney lost the presidential election and Democrats gained supermajorities in both houses of the California Legislature in 2012.

Kashkari was frustrated by what he said was an unfair portrayal of the Republican Party in the 2012 elections.

“Our party had been cast as the party of ‘No,’ the party that doesn’t care about regular people, the party that doesn’t care about women, the party that doesn’t like minorities, the party that’s only for big business, right?” he said. “That’s what they said. And I heard that, and I said, wait a second, that’s not right. That’s not why I’m a Republican. I’ve been a Republican my whole life because I believe economic growth is the most powerful force we have to lift people up.”

Kashkari flew to Texas a month after the 2012 elections to meet with former President George W. Bush. He told him he was considering running for governor, and he said Bush encouraged him.

Kashkari quit his job, assembled a team of political advisers and spent most of last year canvassing the state, meeting with hundreds of potential donors and visiting community centers, homeless shelters and schools. He began working on economic and education policies, including proposals to send more money to individual public schools instead of districts and to provide free college tuition to some students in exchange for part of their future earnings.

He also came up with a slogan: “Jobs and Education. That’s it.”

Early in the process, one of Kashkari’s childhood friends, Sanjay Sharma, said he asked Kashkari over dinner at Kashkari’s home how he planned to raise his profile with the electorate.

“He’s like, ‘I’m hitting the road early, I’m getting to know people, I’m getting to know their issues,” said Sharma, an entertainment lawyer in Los Angeles.

Sharma said Kashkari told him, “I’m just going to keep grinding and grinding.”

But Kashkari has had difficulty recreating for a California audience the standing he left behind in Washington. On the East Coast he was the “$700 billion man” and was included in People magazine’s 2008 issue of the “sexiest men alive.”

In California in March, a TV reporter asked him how to spell his name.

Kashkari has posted a series of videos online to introduce himself to voters. In a recent installment, he said his massive Newfoundland dogs, Newsome and Winslow, named for former Cleveland Browns players, are “like my kids.” He chased after them on a patch of grass overlooking the ocean on a recent walk near his Laguna Beach home, and he carried a stick to wipe drool from their coats.

Kashkari filed for divorce from his wife, Minal, in 2011. He described their separation as amicable, and Minal, in a written statement, said she supports his campaign. They still jointly own the Truckee home.

Minal is remarried. Kashkari is dating a woman he declined to identify.

Fundraising a challenge

Initially, Kashkari’s campaign appeared likely to benefit significantly from his Wall Street connections. But after raising nearly $1 million in the first two weeks of his campaign, his fundraising tapered off.

Kashkari has drawn heavily from the financial industry for his fundraising, which now totals about $1.8 million. His effort has been complicated by a Securities and Exchange Commission rule limiting the contributions of investment advisers to public officials who have control over public pension funds. Greg Johnson, president of Franklin Resources Inc., was announced as a member of Kashkari’s finance committee, but Kashkari said he withdrew in light of concerns about the rule.

Kashkari acknowledges broader reasons fundraising has been “a challenge.”

“It’s a challenge because some Republicans think no Republican can win in California,” he said. “Some Republicans have said, you know what, let’s just, you know, give up on California, and I just fundamentally don’t agree with that.”

He said, “The onus is on me to show them that there’s a path.”

The Republican Party has withered in California in recent decades. While the state has become more liberal and diverse, the party’s members are older and more conservative than they were when Kashkari grew up watching Reagan on TV.

Donnelly, the Legislature’s most outspoken gun rights advocate and opponent of illegal immigration, is running first among Republicans in the race despite a major fundraising disadvantage.

Kashkari, who initially dismissed Donnelly’s candidacy, has agreed to debate him in Anaheim on May 15.

Kashkari, who supports same-sex marriage, abortion rights and a path to legal status for undocumented immigrants, has attempted to make inroads among the most conservative elements of the party. At a meeting in Kashkari’s hotel room at the state party convention in March, Aaron Park, a conservative blogger and official with the conservative California Republican Assembly, said Kashkari told him, “Yes, I’m a social libertarian. I know you don’t like that, but the point of it is, I’m not going to rub your face in it.”

Park, whose group endorsed Donnelly, said, “In so many words, that was exactly what he said, where he just made a strong appeal to say, ‘Look, we need to work together, we need to come together as a party.’ ”

Last week, in the first mail piece of the campaign, Kashkari appealed directly to the GOP base by introducing himself as “Conservative Republican Neel Kashkari.” The mailer described Kashkari as a “political outsider” and featured photographs of him chopping wood with an ax near his Truckee home.

Kashkari said he has time to reach voters with direct mail, and he is getting limited outside support. William Thompson, a former PIMCO chief executive officer, and Michael Hayde, chief executive officer of the real estate company Western National Group, each reported independent expenditures of $50,000 for mailers supporting Kashkari.

Kashkari recently announced endorsements from Romney, former California Gov. Pete Wilson and former Florida Gov. Jeb Bush. He said the endorsements “are going to be very helpful for us to raise the resources we need.”

In a hotel hallway outside a voter forum in Anaheim one week ago, Kashkari told a supporter, “We’re about to make the jump to light speed.”

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