09.10.09

Don't Do It, Ladies

The California GOP is pinning its hopes for revival on ex-CEOs Carly Fiorina and Meg Whitman. Joe Mathews on why the odds are stacked against them.

To: Meg Whitman and Carly Fiorina
From: Joe Mathews
Re: CEO Candidates Running for High Office in California

I would advise each of you to run for the hills. But the hills are on fire.

The national media have been full of stories about how California Republicans are “pinning their hopes” on the two of you—former CEOs who are running next year for governor (Meg) and U.S. Senate (Carly is exploring a challenge to Barbara Boxer).

Your decisions to run as Republicans in this state, at this time—raises questions about your judgment. The party has just 31 percent of the state’s registered voters, its lowest point ever.

The argument for your candidacies, as recently outlined by the Wall Street Journal, has three components.

1. That there’s something attractive about having seasoned business executives as candidates.
2. That the California Republican Party could be revived by the two of you and
3. That the two of you stand a very good chance of winning.

Wrong on all three counts. Let’s take them one at a time.

1. CEO candidates such as the two of you actually start campaigns at a decided disadvantage. Which is not to say that business experience provides no advantages. Being a good CEO—managing bureaucracies, hiring the right people, handling budgets, making difficult decisions under time pressure, negotiating high-stakes deals--can be terrific preparation for conducting the actual business of government. But to reap those benefits, you have to win office first. In campaigns, being a corporate executive has proven to be a serious handicap.

California has been a graveyard for those seeking to jump from the executive suites into political office. Northwest Airlines co-chairman Al Checchi famously flamed out in the Democratic primary in 1998. In 2002, Republicans nominated a business executive, Bill Simon Jr., who was such a weak candidate he couldn't even knock out Gray Davis, a damaged incumbent who was recalled less than a year after the election.

“I don't believe there is any advantage whatsoever to being a former CEO when running for governor,” says Garry South, a consultant who ran Davis’s campaigns against Checchi and Simon, and is working for San Francisco Mayor Gavin Newsom, a Democratic candidate for governor. “In both '98 and '02, California voters had a chance to vote for wealthy CEOs who promised to run government like a business, and they decided in both cases those two had no business running the government.”

Checchi and Simon came under attack for their business records, but their problems weren?t all personal. In general, Americans have never trusted corporate executives. Since Gallup began measuring public opinion of executives more than 30 years ago, on average only 19 percent of those surveyed have said they had a “high” or “very high” opinion of the honesty and ethics of business executives. In 2008, only 12 percent did. (The number is almost certainly lower now, after an economic collapse that most of the public blames on the executive suites.) The public’s low level of trust in CEOs almost perfectly matches its low level of trust in politicians. Bankers and—gasp!—journalists have more credibility with the public than corporate executives.

In a hotly contested political campaign, you’ll find that your opponents will keep reminding voters about all the things you had to do as CEO that didn’t go so well--each layoff, each poorly considered merger, and any internal scandal, whether it was your fault or not. “The sins of your former employer are visited upon you,” says Darry Sragow, a longtime Democratic strategist here who is now a partner in a law firm in Los Angeles. “You are held accountable for everything that entity did.”

For you Meg, this isn’t so bad. Your company, eBay, is well known and popular (an estimated 12 million Californians have used eBay). And during your tenure, the company grew so fast that you didn’t have to do the downsizing that could be turned into negative ads. You’re also not the first eBay executive to run for California governor; your former colleague Steve Westly made an unsuccessful bid for the Democratic nomination in 2006. (Sragow, who advised him, says: “There certainly were people who have been advisors to Steve Westly who wished that he would have talked about eBay more than he did.”) And Meg, when I interviewed you earlier this summer, you made a strong case for how as governor your experience in the tech world would lead you to focus on three issues—jobs, education, and making government more efficient. “You have to deploy technology to deliver better customer services at a lower cost,” you said. “You have to consolidate purchasing across a vast organization to save money. You have to think about changing policies that allow you to save money. That’s what you have to do in business to stay alive. And it has not been done in Sacramento."

But a quick read of the 2005 Harvard Business School case study of your career and your decision-making at eBay offers plenty of details for opponents to question. You’ll be asked about layoffs at Hasbro Inc.’s preschool division when you were there. Some wing nuts will be angry about your decision to eliminate auctions of guns and ammunition. Democrats will blast you for putting eBay customer support employees in Salt Lake City instead of San Jose. All of these appear to have been solid corporate decisions, but that may not spare you political fallout.

Things will be worse for you, Carly. You’ve already had to re-litigate your famously difficult tenure at Hewlett Packard. Get ready to do it again. In your defense, you were dealing with a dysfunctional board. But whether you were right or wrong, the hard political problem is that every minute you spend defending your record is a minute that you won’t be talking about what you could deliver for California in the Senate. Since you’re new to politics (in fact, neither you nor Meg has bothered to vote all that diligently), convincing people that you’re focused on government and politics is a huge challenge. These days, since you’re just exploring a candidacy—as opposed to Meg, who’s already running—you’re not giving interviews.

In overcoming such obstacles, both of you would benefit from the backing of a serious political organization. Unfortunately, each of you has chosen to cast your lot with?

2. the California Republican Party.

More than anything you’ve done so far, your decisions to run as Republicans—in this state, at this time—raises questions about your political judgment. Meg, you were an independent—the fastest-growing part of the electorate—but re-registered two years ago in a GOP that is collapsing faster than Kevin Costner’s career.

The party has just 31 percent of the state’s registered voters, its lowest point ever. Not a single legislative district in California—state Assembly, state senate or Congressional—has a Republican majority. It’s likely that neither of you could win a race for dogcatcher in your home region, the Bay Area, which has all but outlawed Republicanism.

This smaller California GOP is the last bastion of older, white males in the nation?s most racially diverse state. Looking so different from the state can be deadly in a general election. It’s also why…

3. each of you will have a hard time winning a Republican primary.

Meg, you’re running against two white guys (former Congressman Tom Campbell and current Insurance Commissioner Steve Poizner). Carly, you’re running against one, Assemblyman Chuck DeVore.

The rule of thumb in trying to predict the winner of a California Republican primary? Never bet against the boring white guys.

According to figures from Allan Hoffenblum, publisher of the California Target Book, a guide to state elections, 18 of the 19 Republican members of Congress from California are white males. (The exception is Mary Bono Mack, widow of Congressman Sony Bono). Of the 15 Republican state senators, 13 are white males. Of the 29 Republican members of the Assembly, 25 are white males. Yes, Gov. Arnold Schwarzenegger is a white male, too, but he’s in his own category. And he would have had a harder time getting elected if he’d had to run against a boring white guy or two in a GOP primary rather than in the wide-open 2003 recall.

Yes, I know that early polling shows Meg with a lead over the other Republicans, but it’s only a narrow one. Carly also has a lead. But about half of Republican voters are undecided. The election is still nine months away.

Worse still, both of you are trailing in hypothetical match-ups against the likely Democratic nominees. It will be hard to turn those numbers around. Yes, Carly, Boxer is more liberal than the electorate, but she’s an experienced politician who will be nearly impossible for a political novice to unseat. And Meg, even if you survive the primary, you’ll probably have to beat a California institution, former Gov. Jerry Brown, in the general election. He’s won four statewide elections in California. You’ve won none.

For each of you, the most likely outcome of next year’s elections is a costly defeat that consumes your wealth, energy and time.

So please remember: when it comes to running for office, it’s not too late to change your minds.

Joe Mathews is a journalist, an Irvine senior fellow at the New America Foundation, and a contributing writer at the Los Angeles Times. He previously served as Justice Department reporter for the Wall Street Journal and as a city desk reporter at the Baltimore Sun. He is the author of The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy.