Bloomberg News

Wall Street or Hog Castration? An Iowa Campaign Choice

April 08, 2014

2012 U.S. Election

The states they're trying to keep include seven that President Barack Obama lost to Republican nominee Mitt Romney in the 2012 election, including six where he was defeated by at least 13 percentage points. Photographer:John Moore/Getty Images

Mark Jacobs has cut plenty of budgetary pork as a former Goldman Sachs managing director and energy executive. He has just never castrated hogs, an emerging issue in his bid for the U.S. Senate.

An Iowa native who made his fortune elsewhere, Jacobs is one of several former, top-level business executives running in Republican Senate primaries this year. His Wall Street resume -- and wealth -- offer advantages and disadvantages as he competes against, among others, a state senator who’s airing an ad featuring her childhood experience castrating hogs and how that might translate to budget-cutting prowess in Washington.

“Most Iowans have not been executives of large companies and earned millions of dollars a year,” Joni Ernst, the state senator competing with Jacobs for the nomination, said in an interview. “I still do my own laundry and mow my own yard.”

In addition to Jacobs, the ranks of executives seeking public office include former Dollar General Corp. Chief Executive Officer David Perdue and Thom Tillis, a former partner at business consultant PricewaterhouseCoopers. Perdue is ahead in polls for the nomination in Georgia and Tillis, North Carolina’s speaker of the House, is also a leading contender in his state.

Democrats are fighting to hold the North Carolina seat and aiming to pick up one in Georgia, both of which would go a long way in helping them hold their majority. Yet as they survey the national map before November’s election, Iowa is becoming a greater concern.

Democratic Gaffe

Their anxiety was triggered by a gaffe from the party’s presumptive nominee, U.S. Representative Bruce Braley, who was caught on video mocking the state’s popular senior senator, Republican Chuck Grassley, as a potential Judiciary Committee chairman.

Braley, 56, noted that Grassley was “a farmer from Iowa who never went to law school,” a phrase Republicans have labeled as elitist. Iowa, home to about 88,000 farms, is the biggest U.S. producer of corn and soybeans.

“Now that Braley appears more vulnerable, there will be a lot more pressure for donors who have been on the sidelines to jump into this thing,” said Matt Strawn, a former chairman of the Iowa Republican Party who hasn’t endorsed in the race.

“The opportunity and the challenge that Mark Jacobs has is explaining why his work on Wall Street and the capital markets benefits Iowa small businesses, banks and farmers who rely on that flow of capital,” he said.

Senate Control

Republicans need a net gain of six seats to take control of the U.S. Senate. The nonpartisan Cook Political Report lists Iowa as “lean Democrat” in its rankings, one notch away from “toss up.”

Democrats have greater exposure to potential 2014 losses because they’re defending 21 Senate seats, compared with 15 for Republicans. The states they’re trying to keep include seven that President Barack Obama lost to Republican nominee Mitt Romney in the 2012 election, including six where he was defeated by at least 13 percentage points.

Obama won Iowa in 2008 and 2012, although his popularity in the state has dropped significantly. An Iowa Poll by the Des Moines Register newspaper released in March showed Obama’s approval rating at 36 percent, the lowest of his presidency.

The race marks the first time there’s been an open-seat Senate contest in the state since 1974. Senator Tom Harkin, a Democrat who is retiring, first won the post in 1984. Buoyed by rising farm commodity and land prices, Iowa had a February unemployment rate of 4.4 percent, below the 6.7 percent national rate that month.

Money Raisers

Jacobs and Ernst have raised the most money among five Republicans campaigning for the June 3 primary. Jacobs, 52, had invested more than $500,000 of his own money in the campaign as of Dec. 31, the most recent disclosure report available.

In an interview in the offices of the 65-employee photocopier machine sales and service business that his father founded in Des Moines, Jacobs declined to say how much more of his own wealth he’d spend on the campaign.

His financial advantage has meant he has been the race’s only Republican to run broadcast television advertising so far, according to New York-based Kantar Media’s CMAG data. Through March 31, Jacobs had run 573 spots.

The hog-castration ad that gained Ernst national attention hasn’t actually run on broadcast TV so far, the CMAG data show. It has run on cable in the Des Moines area at a cost of about $8,000, said Derek Flowers, an Ernst spokesman.

Ernst, 43, has been endorsed by both Romney and Sarah Palin, the former Alaska governor and 2008 Republican vice presidential nominee, support that she says shows she’s a “full spectrum conservative.”

Ernst Supporters

Iowa Lieutenant Governor Kim Reynolds is also backing her, an endorsement that’s viewed by some as implicit support from the state’s governor, Terry Branstad.

If none of the Republicans wins 35 percent in the primary, the nomination decision will be made at a state party convention on June 14.

In a recent statement, Democrats portrayed Jacobs as a “Goldman Sachs executive” and “Wall Street titan” who would return power to those who “crashed our economy and made millions doing it.” Those are the sort of attacks they used with success in the 2012 campaign against Romney, a multimillionaire former private-equity executive.

Jacobs bristles at such characterizations.

“I don’t come from Goldman Sachs and Wall Street,” he said in the interview. “I come from Iowa.”

Kitchen Work

On the campaign trail, Jacobs stresses his common-man credentials, telling voters that he grew up delivering newspapers and working behind a grocery deli counter. He still washes the dishes after dinner at home, he says.

Jim Cownie, a Des Moines businessman backing Jacobs, said comparisons between Romney and Jacobs aren’t fair. “Romney didn’t really connect with the average Joe from the podium or in a coffee shop,” he said. “Mark connects with people. As he gets around more and more, he’ll limit that stereotype.”

Jacobs hasn’t worked on Wall Street since 1998. He and his wife have assets of between $7.5 million and $33.9 million, his Senate financial-disclosure report shows. The form requires only broad ranges for each stock, commodity and other asset, making it impossible to determine exact figures.

Executive Resume

After 13 years at Goldman Sachs (GS:US)in New York and Houston, Jacobs in 2002 became the chief financial officer at Houston-based Reliant Energy, a retail and wholesale energy provider that was then deeply in debt and in the process of trying to rebuild its credibility after the energy sector was hurt by the collapse of Enron Corp. (ENRNQ:US) After helping restructure billions in debt, he went on to become the company’s chief executive officer in 2007.

A series of mergers and acquisitions resulted in Jacobs becoming president of Houston-based GenOn Energy, now a unit of Princeton, New Jersey-based NRG Energy Inc. (NRG:US) After leaving the company, he moved back to Iowa almost two years ago.

At a local Republican fundraising event last week in Mount Ayr, Iowa, Jacobs’s two top primary opponents made subtle references to their more modest financial backgrounds. Ernst talked about how her mother made some of her clothes and forced her to wear plastic bread bags over her shoes to help keep them clean.

Matt Whitaker, a former federal prosecutor and University of Iowa football player, said he was a small-business owner who had created jobs in Iowa “not in skyscrapers, but in single-story buildings.”

Doug Butler, a vice president of a manufacturing company who attended an event last week where Jacobs spoke, said he’s undecided in the Senate race and a bit anxious that Democrats could target Jacobs as they did Romney.

“I’m concerned, but I think it is a little different than Mitt, who didn’t have a hair out of place,” he said.

To contact the reporter on this story: John McCormick in DesMoines, Iowa at jmccormick16@bloomberg.net

To contact the editors responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net Mark McQuillan


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