The Washington PostDemocracy Dies in Darkness
The Washington Post

Peter Thiel rebuffs Mitch McConnell over Senate rescue in Arizona

The Senate minority leader and the billionaire venture capitalist each say the other should be subsidizing Blake Masters in the final months of his campaign

Former president Donald Trump and Republican Senate candidate Blake Masters take part in a July 22 rally in Prescott Valley, Ariz., in support of the state’s GOP candidates. (Mario Tama/Getty Images)
10 min

After J.D. Vance won the Republican primary for Senate in Ohio, Minority Leader Mitch McConnell (R-Ky.) called Peter Thiel, the billionaire investor who had 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 finance Vance through the general election?

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

Three months later, when Blake Masters — whose bid Thiel had also backed to the tune of $15 million — won his Aug. 2 primary in Arizona, McConnell placed no such call.

In the ensuing weeks, a high-stakes game of chicken would play out between McConnell and Thiel, culminating in a move last Friday by a super PAC linked to the minority leader, the Senate Leadership Fund, to abandon about $8 million worth of TV, radio and digital ads originally booked to boost Masters. The move was preceded by a pair of phone calls last week in which Thiel spoke to McConnell and the Kentucky Republican’s top fundraising lieutenant, Steven Law, who heads the Senate Leadership Fund.

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

Thiel, a co-founder of the payment processor PayPal and the first outside investor in Facebook, bucked left-leaning Silicon Valley by betting big on Trump in 2016. Last summer and fall, the tech entrepreneur contributed to a wide range of pro-Trump congressional candidates, igniting 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 given millions in recent years to Democratic candidates and causes. But Thiel has told associates that he has no plans to spend more this cycle — and that his aim was to elevate younger Republican candidates who would mark a sharp break from the party’s neoconservative wing, not to engage in a tit-for-tat spending war with Democrats.

That hasn’t stopped Republican leaders from coming calling.

McConnell told Thiel over the phone last week that Vance’s race in Ohio was proving more costly for the Senate Leadership Fund than anticipated, that money was not unlimited and that there was a need for the billionaire to “come in, in a big way, in Arizona,” as a person familiar with the conversation described his words. Law, in a call with Thiel the day before his group cut back on the Arizona ads, expressed concern about Masters as a candidate and pessimism about his campaign’s viability. Both Vance, 38, and Masters, 36, are friends and former business associates of Thiel’s; Masters stepped down from roles at Thiel’s investment firm and foundation this year.

The message from McConnell and Law, according to people with knowledge of their pitch, was that they should essentially split the cost, with Thiel cutting a check to their super PAC matching whatever funds they put behind Masters. Another option, these people said, was that the Thiel-funded super PAC could take over the ad reservations initially made by the McConnell-linked group.

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

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

In last week’s call with McConnell, Thiel argued that Vance and Masters have not criticized the Republican leader, unlike other GOP primary candidates, which drew a dissent. “That’s not true at all,” McConnell replied, according to a person with knowledge of his comments, though he added, “I’m not into revenge. That’s Mr. Trump.”

During his primary, Masters called for McConnell to be replaced as GOP leader, expressing his support for Sens. Josh Hawley (R-Mo.) and Tom Cotton (R-Ark.). “I’ll tell Mitch this to his face,” Masters said during a debate in June. “He’s not bad at everything. He’s good at judges. He’s good at blocking Democrats. You know what he’s not good at? Legislating.” Vance has also offered a dim view of McConnell, calling him “a little out of touch with the base” and saying it was time for “new blood.”

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

Among people close to the Masters campaign, there was disbelief that McConnell’s group would back off a race seen as critical to winning a Senate majority. Meanwhile, some Republicans were flabbergasted at the idea that Thiel would sit out the general election after investing so heavily in his preferred candidate’s primary bid.

“I don’t understand the logic of spending $15 million to help Blake Masters in the primary and then [letting] him twist in the wind against one of the best funded U.S. Senate candidates in history,” said a Republican consultant tracking the Senate race, who spoke on the condition of anonymity to offer a candid assessment. He lamented what he called “unforced errors,” including Masters’s 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 best pickup opportunities in the Senate, the consultant said. “Problem is, there’s a candidate who was undisciplined and is offering an immense amount of fodder for Democrats to pick apart.” Now, he said, “I think it’s going to take a massive shift in the national mood to make this race competitive.”

Sen. Mark Kelly, the Democratic incumbent in Arizona, had nearly $25 million on hand in his main campaign account as of the middle of last month. Masters, by contrast, had $1.5 million in his main account.

Masters has recently been calling donors to Arizona Gov. Doug Ducey (R) with success, according to people familiar with his activities, and plans to attend numerous out-of-state fundraisers in September. Those include at least two hosted by Thiel, one in Los Angeles and one in Miami that is being co-hosted by Keith Rabois, an investor and early executive at PayPal who is involved in multiple fundraising events for Masters, some with additional Republican candidates.

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

The National Republican Senatorial 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 placed broadcast ads amounting to $119,000 and $67,000 on cable, according to data from the tracking firm AdImpact.

While recent polling has shown Masters trailing Kelly, the Cook Political Report, a nonpartisan group analyzing elections, still calls the Senate race a toss-up.

The Senate Leadership Fund’s decision to cut its Arizona investments — along with McConnell’s recent comments that “candidate quality” matters — have signaled that Washington Republicans 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, said Barnes, would remove a key pillar of Masters’s success.

“Blake Masters got 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 allowable to the Masters campaign this summer but has not contributed to the Thiel-funded super PAC backing him, called Saving Arizona.

Masters’s support, Barnes said, “is built around the ‘America First’ movement and people generally upset with how things are going — it’s not built on likability or name ID or familiarity with the person.” With Masters “relatively quiet” on the airwaves, Barnes said, “it does not feel like a hot, energetic campaign.”

Still, Barnes argued that with “so much wind at the back of Republicans, so much anger at the Biden White House … Blake still could be carried over 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 investments, Thiel’s thinking about the general election or others’ assessments of the race.

Masters brought on several new hires around the time of the primary, including Henry and a new campaign manager — Daniel Bell, a Florida attorney and friend of Masters’s from Stanford Law School.

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

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

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

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

Yvonne Wingett Sanchez contributed to this report.

The 2022 Midterm Elections

Georgia runoff election: Sen. Raphael G. Warnock (D) won re-election in the Georgia Senate runoff, defeating Republican challenger Herschel Walker and giving Democrats a 51st seat in the Senate for the 118th Congress. Get live updates here and runoff results by county.

Divided government: Republicans narrowly won back control of the House, while Democrats will keep control of the Senate, creating a split Congress.

What the results mean for 2024: A Republican Party red wave seems to be a ripple after Republicans fell short in the Senate and narrowly won control in the House. Donald Trump announced his 2024 presidential campaign shortly after the midterms. Here are the top 10 2024 presidential candidates for the Republicans and Democrats.