Big Take DC: Wall Street Is Running Out of Time to Influence the GOP Nomination

Hi.

I'm Sarah Holder, a host of The Big Take. Today we're sharing the newest episode from our collaborators over at the Big Take DC. They look at why Wall Street donors are waiting to weigh in on the GOP primary. Make sure you subscribe to the Big Take DC feed so you can get episodes like these every Thursday. Just look up Big Take DC available wherever you listen to podcasts, and while you're there, check out the reporting from the Iowa caucuses earlier this week. With that, enjoy the show.

If you look at a list of the top individual contributors to any US election, you're going to notice the pattern. The biggest donors mostly work in finance.

So these are people who run hedge funds, who are big investors and are well known within the finance world.

That's my Bloomberg News colleague, Laura Davison. If you follow Wall Street, you might even recognize some of these names.

Ken Griffin, Jeff Yass Paul Singer.

During the twenty twenty to midterms, those three billionaires gave over one hundred and fifty million dollars in federal political donations. That money went to campaigns, organizations, and political parties. That's enough to fund an entire Senate race. And about a year ago, Laura started calling up some major donors heading into what could be one of the most consequential elections in decades. She wanted to know which candidate they liked best.

And I was making a bunch of calls to different donors. They said, look, none of us like Trump. What we need to do is get behind one candidate and all donate to that candidate.

That's what Laura thought would happen, especially because major donors could be the key to another Republican candidate beating former President Donald Trump for the party's nomination. But now here we are in January twenty twenty four, less than a year away from that very election, and.

Things really haven't changed. Basically, they didn't get behind anyone.

From Bloomberg's Washington bureau. This is the Big Take DC Podcast. I'm your host Salia Mosen. Today on the show, we'll hear from Laura and also I'll introduce a source of mind who's pretty close to this story, investor Kyle Bass. He's plugged into the world of political money and is close with some major donors. Kyle and I dig into what folks in that world want out of this election cycle and what it all means for the twenty twenty

Just to kind of give you like a size and scope here, back in twenty sixteen, which was the last time we had a Republican primary crowded field. By the end of the third quarter, which is the latest data that we have to compare to the top ten Republican donors had given five million dollars to all the Republican presidential candidates. Right now, we only have about one point three million in donations that have so far been reported, so you know, almost a fifth compared to twenty sixteen.

Part of that comes down to the Republican front runner, former President Donald Trump. I talked about this with one big investor, Kyle Bass. He runs a hedge fund called Hayman Capital Management out of Dallas, Texas.

I mean, look, I know Trump's second largest donor. He's a very good friend of mine, someone that donated nine figures Okay, we're talking one hundred million dollars or more, someone that really gave the Donald real money in twenty sixteen, and so far he's not given Trump any money this year.

That's not a one off. Only two of the top ten Republican donors in the last presidential cycle have committed to Trump's twenty twenty four campaign, and at this point in the last cycle, over half of them had already donated. Bass isn't a major political donor himself, but he has thrown his money into some races in the past, and when he looks at the options in front of him this year, like many Americans, he's not that excited. You know.

Look, I don't have a friend that believes Trump or Biden should be our president. Two octogenarians that each have a litany of their own problems as the best that the United States can serve up right now, and I just don't think that's the case.

The possibility of that rematch feels especially real this week. On Monday, Trump ran away with the Republican nomination in the Iowa caucuses by a landslide. But Trump is a tricky candidate. For fiscal conservatives. These donors tend to favor the Republican Party because it supports lower taxes and less regulation of the businesses that they run. But while Trump is a Republican, he isn't consistent his policies and his actions are unpredictable. That makes him feel risky for investors

Again, at its core, they're running a business, and so they want to know what the policy is going to be. Is there going to be a ten percent tariff on all imports? Is he going to get in fights with trading partners or allies or things that could disrupt how they go about doing business. Having consistency and trust in what Washington is doing and that it's not going to disrupt the broader economic outlook is really important to business leaders first and foremost.

And there's another reason these executives may be staying away from Trump. They might not want the liability that comes with being associated with them.

If you run a big business, you have a lot of employees. Trump has been a very divisive figure.

That doesn't necessarily mean they won't support Trump with their dollars and their votes if he takes the Republican nomination. But going into New Hampshire next week in South Carolina a few weeks later, these candidates aren't just vying for state delegates. They're also in a less visible contest, the one to win over GOP donors, who tend to watch these early state level races as they decide which candidates to give money to. Big investors have told Laura they're

I'm in thee.

Let's wait and see and see how this works.

I'm not into the hypothetical world yet, as much as you'd like me to be.

These donors are craving an alternative, a new standard bearer for traditional Republican Party principles like fiscal conservatism, who also offers the stability that their businesses and the markets rely on. The trouble is they've had a tough time committing to one.

Basically, everyone sat around and couldn't decide whether it was going to be Desantists, whether it was Tim Scott, Nikki Haley.

So what did these investors do?

They scattered a little bit of money to several different candidates.

Some of them backed Florida Governor Ron DeSantis early on, but he supported some social policies that aren't so popular with investors, and he doesn't always give donors the kind of attention they expect their money to buy. John Katzimatitis, a billionaire who was donated to the Republican Party, talked about this on CNN and he sounded bewildered.

I have a lot of Florida friends that helped him get elected, and he hasn't returned to any of their clause.

Even DeSantis's biggest donor, a Florida real estate magnet named Robert Bigelow, said he'd made a mistake in offering his support. Other investors have gotten behind Nicki Haley, the former South Carolina governor. That includes major Democratic donor and LinkedIn founder Reid Hoffman and JP Morgan's CEO. Jamie Diamond called on the audience of the New York Times Deal Book conference directly when he said.

He have a very little Democrat I urge, you know, help Nicki Halley too.

Haley's also gotten four million dollars from a group backed by Charles Koch, a billionaire Republican donor. You may have seen headlines that essentially say Wall Street's going for Haley. Her competitors have certainly leaned into that narrative. We heard it this week at Trump and DeSantis rallies leading up to the Iowa caucuses.

Nibi and Krikigo are both backed by war monitors and left wing glocalist Wall Street millionnaires andonaires.

Trump is running for his issues, Hailey's running for the donors' issues. I'm running for your issues, your family issues.

But my colleague Laura told me that the Haley narrative is not so simple.

She did get some big donors, but still not even close to touching Trump as well. As some of these people have been saying, hey, we shoul Supportniki Haley, but haven't necessarily followed up with financial support.

Just listen to some of these investors waiver when they're asked about it. Here's Ken Griffin, the CEO of Citadel, on Bloomberg TV.

Are you supporting her financially yet?

That's a decision that we're actively contemplating.

I mean, we're at the finish line on that choice, yes or no. And here's billionaire investor Ken Langone on Fox Business.

I'm almost there.

I got a couple of things I want to do, but I'm pretty certain.

It's almost comical. The anchors on MSNBC have had a field day with it. Here's Joe Scarborough.

I will say if a donor said they were actively contemplating supporting me, and I was sitting across the table, I do this.

He leans back, crosses his arms and glares. You keep actively content the chet. Kyle Bass isn't planning to donate to any candidate, but from where he sits, the problem is simple. Donors want to return on their investment and at this point it's not clear who can deliver that for them.

No one wants to burn money. They're trying to figure out who the front runner is going to be, and so they're just holding off.

Ken Langone said as much just this week when he was asked about Hayley. He said he was waiting to see what happens in New Hampshire because, as he put it, you don't throw money down a rat hole. But Republican donors are in sort of a chicken and egg situation. They're waiting to see who Trump's top challenger is before throwing money into the race. But no one candidate can become the top challenger without more of their support, and

I think that's the conclusion that a lot of donors have come to that Trump has such a loyal following, you know, between thirty and forty percent of the Republican base, and there's almost nothing that I a wealthy donor, can do to sway that population.

So while they wait it out and hope another frontrunner emerges, these big donors are taking another approach to tip the scale of politics by targeting down ballot races. We'll get to that after the break. We're back. Just like many of US, investors can't figure out who they want in the White House, so instead they're using their money to advance what they want from their government. Part of that strategy is to hedge their bets by getting involved in

Again, they're looking at how can I provide a counterweight either to Trump or to Biden if he's in the White House. That's why you see all this money going into house races, congressional races. They're looking at, how can we get Republicans that align with our sort of pro business, anti regulation worldview into office.

Let's take a moment to talk about how donating money to downballot races can influence policy in a different way than donating to a presidential campaign. First, we have to understand campaign finance.

Campaign finance laws are really complicated. So if the donor wants to give to a specific campaign, are only allowed to give a couple thousand dollars. This limit changes every year. For this year it's thirty three hundred dollars. But when you look at kind of how they're giving in totality, some of the biggest donors are giving, you know, more than one hundred million dollars annually or tens of millions

Packs, pack stands for political action committee, and the essentially funnel money to campaigns to get around those donation caps. So when push comes to shove, big money donors can dole out millions of dollars however they please, and support from one key investor has the power to trickle down because while you or I might not change your votes based on, say, who Ken Griffin decides to back some of the employees or clients at Citadel his investment firm, might.

The way that political fundraising works a lot of these times is a certain person who is a big advocate for a candidate will host a fundraiser at their home or you know, with our country club or some their site and invite all their friends to come, and that's

And what kind of impact can that money have on an election cycle?

So it can have a lot of impact, particularly when you're looking at House and Senate races, when the total budget for a specific candidate for that race might be about a million dollars. If a really wealthy investor comes in and gives, you know, one hundred thousand dollars, that can really sway the race. And of course that investor is, you know, as it's such a big donor, is definitely

It's a bit of a different picture when it comes to a presidential campaign. According to Open Secrets, the twenty twenty election cycle brought in a record five point seven billion dollars.

The numbers we're talking about are just so much bigger on the presidential side. So in that case, it's a little bit more about influence of Okay, can I get a meeting at the Treasury Department if this candidate wins? Can I have a meeting at the White House?

Well?

I invited to a state dinner? That kind of thing of a little bit more soft power.

Laura has poured over Federal Election Commission filings and she's found that the same donors who have given a fraction of what they did in the past to the presidential candidates themselves, they've actually given more to Republicans overall, to House and Senate races, the party in general, and super packs.

At this time in twenty sixteen, they've given eleven million in total. When you look at that number for twenty twenty three, this group has given almost fifty three million. So they're giving a lot more. They're just giving a lot less to presidential candidates.

And because these donors are putting more money into smaller, more local races, there's now an entire ecosystem helping them choose where to spend it.

This is really interesting. There's almost a little cottage industry that has sprung up of people who advise some of these top donors about how to pick candidates. So they are going out, they're doing research, and they're picking maybe twenty thirty congressional districts that they think will be important. They're looking at the Senate map saying you are going to be the competitive races, and then they're going to

These donors get a platform to talk to candidates and express exactly which policies they want advanced.

Ken Griffin has been very clear, I'm interested in education, I'm interested in deregulation and how do we make it possible for innovators and businesses to thrive.

And these down ballot races can sometimes hinge on one major donor, unlike the president race, where money can only go so far. Sure it might get you a dinner party, inviter, a phone call, but it won't decide the race or necessarily shape policy. Sometimes these investors are influencing races from thousands of miles away. An investor based in Florida might

To Gavin because I wanted to get to know him, you know, under the nod eyed Enemy statute in San Francisco.

All this raises a question do billionaires think about everyday people, the voters and families in a particular district, for example, when they get involved in these races. Bass told me he does think about what everyday American voters want because they make up the economy that he invests in.

I was at a meeting of ex fed governors where one of the masked a question. They said, you know, do you think that service workers' wage demands are related to their future expectations of inflation?

In non academic terms.

The question was, do you think bartenders and waitresses are demanding higher wages because they think inflation's going to accelerate in the future or stay high in the future. And I listened to them for forty five minutes. Tobate the Phillips curve.

You don't have to know what the Phillips curve is to know these guys were lost in their academic modeling. They were far from the realities of paying bills and making ends.

Meet.

After forty five minutes, I raised my hand and I said, have any of you spoken with a service worker in the last six months? And they all looked at each other and not one hand one up And I said, well, I have investments in a few restaurants. So I sit down with the bartender, and I sit down with the waitress who now has three jobs, and they only care about one thing. All they care about is paying their rent, their car payment, and their food bill and their insurance.

Be a bit of an exception. Not all big investors, economists, or others with influence over the economy are sitting down to talk with bartenders and waitresses, but they are potentially looking to take cues from everyday people. Who voters pick in the early primaries like New Hampshire next week could determine which Trump alternative Wall Street may rally behind, or whether they end up backing Trump.

I think if you see Nikki Haley have some traction in the first few primaries, you're going to see money come in to Nicki Haley's campaign from the GOP and it's going to be big money. This is all going to come down to the wire, There's no doubt. So I actually think. I do think that big money can sway opinions.

Hearing Bass say that made me think of a moment for my conversation with Laura Davison. Let's think a really big picture here for a second. Trump has a pretty big lead in the polls right now. If a bunch of investors, just every investor with all the money got behind one of his opponents DeSantis or Haley right now, it would make a difference.

At this point, it's too late. Money takes time. You have to hire staff, you have to run advertisements, you to create those advertisements. It's not like you can put it in a campaign and have it give you a bump in your poll numbers immediately. And so at this point, voters are going to the polls. A lot of people have already made up their mind. The kind of leads that Trump has in the polls suggests that he could potentially have this nomination sewed up, you know, March April time.

Thanks for listening to The Big Take DC podcast from Bloomberg News. I'm Sleiah Mosen. This episode was produced by Julia Press and Naomi Shaven. It was fact checked by Molly Nugent. A special thanks to Bill Allison and Laura Davison. Alex Sugia and Blake Maples are mixed engineers. Our story editors are Caitlin Kenny, Wendy Benjaminson, and Michael Shepherd. Sage Bauman is our executive producer and head of Podcasts. If you like what you have, please be sure to subscribe, rate,