Peter Thiel pushes back at Mitch McConnell over Arizona Senate bailout

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After JD Vance won the Senate Republican primary in Ohio, Minority Leader Mitch McConnell (R-Ky.) called out Peter Thiel, the billionaire investor who pumped $15 million into a super PAC backing Vance, to congratulate him but also to make a request: Since McConnell’s resources were limited, the senator said, would Thiel continue to fund Vance until the general election?

Thiel hesitated, according to a person familiar with May’s exchange who, like others interviewed for this article, spoke on condition of anonymity to describe private discussions.

Three months later, when Blake Masters — whose bid Thiel had also backed $15 million — won its Aug. 2 primary in Arizona, McConnell made no such call.

In the weeks that followed, a high-stakes game of chicken would play out between McConnell and Thiel, culminating in a decision last Friday by a super PAC linked to minority leader the Senate Leadership Fund to drop about 8 million of television, radio and digital advertising dollars originally earmarked to boost the Masters. The move was preceded by two phone calls last week in which Thiel spoke with McConnell and the Kentucky Republican’s top fundraising lieutenant, Steven Law, who heads the Senate Leadership Fund.

The details of the conversations, which have not previously been reported, shed light on usually veiled negotiations with major donors critical to the battle for the Senate. They also illustrate McConnell’s vexed relationship with candidates bred by former President Donald Trump and donors, such as Thiel, sympathetic to Trump’s worldview.

Thiel, co-founder of payment processor PayPal and first outside investor in Facebook, bucked leftist Silicon Valley by betting big on Trump in 2016. Last summer and fall, the tech entrepreneur helped a wide range of pro-Trump congressional candidates, raising hopes among some Republicans that he was positioning himself to become a megadonor on the scale of libertarian brothers David and Charles Koch, or former New York Mayor Mike Bloomberg, who has donated millions in recent years to Democratic candidates and causes. But Thiel told his associates he has no intention of spending more this cycle – and that his goal is to elevate young Republican candidates who would mark a clean break from the neoconservative wing of the party, not to engage in a tit-for-tat spending war. with the Democrats.

That didn’t stop Republican leaders from calling.

McConnell told Thiel on the phone last week that Vance’s run in Ohio was proving more expensive than expected for the Senate Leadership Fund, that the money was not unlimited and that it was necessary that the billionaire is “stepping in, big, in Arizona, as one person familiar with the conversation described his words. Law, on a call with Thiel the day before his group cut ads in Arizona, expressed concern about Masters as a candidate and pessimism about the viability of his campaign. Vance, 38, and Masters, 36, are both friends and former associates of Thiel; Masters left his role at Thiel’s investment company and foundation this year.

McConnell and Law’s message, according to people familiar with their pitch, was that they should essentially split the cost, with Thiel cutting a check to their super PAC to match the funds they were putting behind Masters. According to these people, another option was that the Thiel-funded super PAC could take over ad bookings originally made by the McConnell-linked group.

Thiel told them he was not interested in such arrangements – a posture, say people around the venture capitalist, who is informed by his approach to investing early and the belief that more of his money would be used as a Democratic talking point; he’s still hosting fundraisers for the Masters in the coming weeks.

McConnell previously expressed displeasure with Thiel’s decision to fund independent super PACs backing Vance and Masters, telling the billionaire investor last year that his money would go further if he donated it to the Senate Leadership Fund, which “can give a real lead on the target,” a person familiar with the exchange recalled.

During last week’s call with McConnell, Thiel argued that Vance and Masters did not criticize the Republican leader, unlike other GOP primary candidates, who drew dissent. “That’s not true at all,” McConnell replied, according to a person familiar with his comments, though he added, “I’m not into revenge. This is Mr. Trump.

During his primary, Masters called for McConnell to be replaced as GOP leader, expressing his support for the Senses. Josh Hawley (R-Mo.) and Tom Cotton (R-Ark.). “I’m going to tell Mitch to his face,” Masters said during a debate in June. “He’s not bad at all. He is good at judging. He is good at blocking Democrats. You know what’s not good? Legislate. Vance also offered a dark take on McConnell, the caller “a little disconnected from the base” and saying it was time for “new blood”.

A spokesperson for the Senate Leadership Fund and a McConnell adviser both declined to comment. A spokesperson for Thiel also declined to comment. The fact that the two spoke was reported earlier by Puck News.

Among those close to the Masters campaign, there was disbelief that McConnell’s group would back down a race seen as essential to winning a Senate majority. Meanwhile, some Republicans were flabbergasted that Thiel would not contest the general election after investing so heavily in his favorite candidate’s primary candidacy.

“I don’t understand the logic of spending $15 million to help Blake Masters in elementary school and then [letting] let him writhe in the wind against one of the best-funded U.S. Senate candidates in history,” said a Republican consultant who follows the Senate race, who spoke on condition of anonymity to offer a candid assessment. He lamented what he called “unforced errors,” including Masters’ shifting stance on abortion and his suggestion during a debate that “maybe we should privatize Social Security”.

Arizona should be one of the GOP’s top Senate pick-up opportunities, the consultant said. “The problem is that there is a candidate who was unruly and offers an immense amount of fodder for the Democrats to separate.” Now, he said, “I think it’s going to take a massive shift in the national mood to make this race competitive.”

Senator Mark Kelly, the incumbent Democrat in Arizona, had nearly $25 million on hand in his main campaign account in the middle of last month. Masters, on the other hand, had $1.5 million in his main account.

Masters recently successfully called for donors to Arizona Gov. Doug Ducey (R), according to people familiar with his business, and plans to attend many out-of-state fundraisers in September. These include at least two hosted by Thiel, one in Los Angeles and one in Miami which is co-hosted by Keith Rabois, an investor and PayPal CEO who is involved in several Masters fundraising events, some with additional Republican candidates.

The Senate Leadership Fund still has $8 million earmarked in Arizona for October, and an affiliated nonprofit group called One Nation is spending an additional $1.1 million there.

The Republican National Senate Committee recently canceled airtime worth about $2 million in Arizona, before rebooking some ads in the state, amid a broader cash crunch. The NRSC and the Masters campaign jointly aired ads worth $119,000 and $67,000 on cable, according to data from tracking firm AdImpact.

While recent polls have shown Masters trailing Kelly, the Cook Political Report, a nonpartisan election-analyzing group, still calls the Senate race a coin toss.

The Senate’s decision for Senate leadership to cut its investments in Arizona — along with McConnell’s recent comments that “candidate quality” matters — signaled that Republicans in Washington do not view the Masters race as a good investment, said Stan Barnes, a GOP strategist in Arizona. A lack of further investment from Thiel, Barnes said, would remove a key pillar of Masters success.

“Blake Masters has to be the Republican nominee for two reasons – Peter Thiel’s money and Donald Trump’s endorsement,” he said. Trump’s leadership PAC, Save America, gave the maximum $5,000 allowed to the Masters campaign this summer, but did not contribute to the Thiel-funded super PAC called Saving Arizona.

Masters’ support, Barnes said, “is built around the ‘America First’ movement and people are generally upset with the way things are going – it’s not based on sympathy or name identification or familiarity with the person.” With Masters “relatively quiet” on the airwaves, Barnes said, “it doesn’t sound like a hot, high-energy campaign.”

Still, Barnes argued that with “so much wind behind Republicans, so much anger at Biden’s White House…Blake could still be moved into the winner’s circle.”

Zachery Henry, a spokesman for the Masters campaign, declined to comment on the Senate Leadership Fund’s decision to cancel the investments, Thiel’s thinking about the general election or others’ assessments of the race.

The Masters recruited several new recruits by the time of the primary, including Henry and a new campaign manager — Daniel Bell, a Florida attorney and friend of the Masters from Stanford Law School.

Campaign advisers urged Masters to be more careful with his words in the primary, according to a person familiar with the conversations, but Masters resisted being “scripted.” Democratic attack ads focused on Masters’ comments on Social Security and abortion, despite the candidate’s efforts to backtrack on his words.

“I shouldn’t have said ‘privatize,'” Masters said in July. “I don’t think we should like the mess with Social Security.” In a interview with the Arizona Republic shortly after winning the GOP nomination in August, Masters called Arizona’s 15-week abortion ban a “reasonable solution” and said he supported a national ban specifically for third trimester abortions and “partial birth abortion”.

During the primary, he suggested supporting a much stricter national ban.

“If we got a personality amendment, even if it was, you know, two months or three months away … it would still save hundreds of thousands of lives a year,” he said at the start of this year. Asked last year on One America News if he would support a nationwide ban similar to an Arizona law from the 1800s that “bans all abortions,” Masters said yes.

Yvonne Wingett Sanchez contributed to this report.

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