Money & Politics | Daily Report

Photo by stevepoizner.comInsurance Commissioner Steve Poizner

On Saturday, April 10, Steve Poizner, the state insurance commissioner and Republican candidate for governor, spoke to an audience of only 130 people in Modesto.

A Los Angeles Times/USC poll released the previous week showed Poizner trailing GOP rival Meg Whitman by 40 points. Meanwhile, Whitman, the wealthy former CEO of eBay, had announced she was pumping another $20 million of her own money into the race.

With all that downbeat news as backdrop, Poizner gamely sought to persuade the little gathering that “he’s still in the fight to become California’s next governor,” as the Modesto Bee put it.

Now, little more than a month later, Poizner has shaved 38 points off Whitman’s seemingly insurmountable lead, surging to within only two points of the front runner, according to a SurveyUSA poll commissioned by four California TV stations, including KABC in Los Angeles and KPIX in San Francisco.

The trend line is so positive that for the past week, Poizner’s press operation has indulged in some trash talking, putting out press releases headlined “The Whitman Collapse” and calling her “the most expensive melting glacier in political history.”

The GOP primary, which seemed settled in Whitman’s favor only a month ago, could go down to the wire.

What turned the race around?

Democratic operatives who are closely watching the GOP race say the momentum shift came when the issue of Whitman’s ties to the Goldman Sachs investment bank emerged, first in news reports, then in TV ads.

Whitman’s relationship with the Wall Street giant – as investor, former corporate director and recipient of insider stock deals and campaign donations – was detailed in a California Watch/San Francisco Chronicle collaboration that was published on April 11, the day after Poizner’s Modesto campaign swing.

Her campaign parried, saying Whitman’s connections to Goldman were flimsy and old news. But five days after the story broke, the Securities and Exchange Commission sued Goldman for fraud, accusing the firm of selling toxic investments to unsuspecting European banks. Goldman denied wrongdoing, and Whitman, who left Goldman’s board in 2002, had nothing to do with the wrongdoing alleged in the lawsuit.

But the SEC filing kept Goldman in the headlines in California, and then Poizner seized on the Whitman-Goldman connection for a series of tough TV ads.

Voters are mad at Wall Street and more than willing to blame the investment banks for the debilitating national recession, one Democratic operative said. In that context, an association with Goldman is a deal-breaker for some voters.

In focus groups, male voters who are told of Whitman’s ties to Goldman “get mad at her,” this Democrat said, while female voters are “disappointed, because they wanted to like her.”

With her financial advantage, it seems unbelievable that Whitman won’t still win, another Democrat operative said. But he also said that it’s tough to reverse a dramatic downward slide in the closing weeks of a campaign.

For its part, the Whitman camp has steadfastly maintained that Poizner's gains were expected, largely because of the anti-Whitman advertising blitz.

Poizner put “$15 million of negative advertising” on California airwaves, said campaign spokesman Tucker Bounds, while labor unions and Democratic independent expenditure committees put out their own anti-Whitman ads.

Poizner’s campaign “has been co-opted by the liberal established interests that are backing Jerry Brown,” he said.

When the state Democratic Party unleashed another Goldman-Whitman ad barrage last week, Team Whitman accused Democrats of meddling in the GOP primary to ensure that the weaker candidate won.

Whitman’s advisers argue that Poizner's strategy has made him dangerously unelectable in the general election – he’s swinging hard to the right on issues like immigration in order to appeal to conservative primary voters, they say.

“We’re now in a debate over whether Steve Poizner will lose huge, lose medium, or lose a little tighter,” Whitman strategist Mike Murphy said in a conference call last week.

To some extent, the Republican primary is playing out just as some strategists predicted it would last fall. Whitman has used her massive personal fortune to buy radio and TV airtime for months, building up a big lead. Poizner turned on the jets late, burning millions in a
concentrated ad blitz designed to rocket him past Whitman in the election's final days.