'Circular firing squad': Democratic power players are split on the Virginia blame game and how to prepare for the midterms

  • Democratic Party officials and donors are split over whom to blame for losses in several state-level races this month
  • They're also divided over how the party can recover going into the 2022 midterm congressional elections.
  • Several wealthy donors have signaled they are done fundraising for and contributing to the Democratic National Committee.

Democratic Party officials and donors are split over whom to blame for losses in several state-level races this month – and they're also divided over how the party can recover going into the 2022 midterm congressional elections.

The biggest losses came in Virginia, including Republican Glenn Youngkin's triumph over former Gov. Terry McAuliffe in the gubernatorial election. In New Jersey, several Democrats lost in local races while Gov. Phil Murphy overcame a tougher-than-expected challenge from Republican Jack Ciattarelli. 

Several wealthy donors have signaled they are done fundraising for and contributing to the Democratic National Committee, which is the political arm of the White House when a Democrat is president, and assists in campaigns across the country.

These donors believe the DNC didn't do enough to help their favored candidates, especially McAuliffe, according to people familiar with the matter. Some of the people who commented for this story declined to be named out of fear of seeing retribution from party leaders.

John Morgan, a Florida based businessman who has raised and contributed to Democrats for years, was among a group of donors who told CNBC earlier this month that they're done giving to the DNC, and may hold back on financing the Democratic Congressional Campaign Committee if House Speaker Nancy Pelosi, D-Calif., decides to retire. The DCCC is the campaign arm for House Democrats, who are fighting to keep their majority.

"I will never give another penny to DNC. If Pelosi does not run I will never give another penny to DCCC. I did not sign up to be a socialist," Morgan, who has hosted McAuliffe for previous fundraising events, said in an email after the recent election losses. "I don't ever see myself having a fundraiser ever again."

Data from the nonpartisan Center for Responsive Politics shows Morgan contributed $35,500 to the DNC in August 2020. He was one of Biden's bundlers during the 2020 election cycle. Pelosi has not indicated whether she will retire ahead of next year's midterms, when Republicans are expected to take back the House.

Millions invested in Virginia campaign

The DNC has said it invested nearly $6 million into the Virginia elections, which the committee said was its largest-ever investment ever in the state. The DNC also said it invested an additional $500,000 to turn out the vote for McAuliffe and Democrats up and down the ticket in the final weeks of the campaign.

A spokesman for the committee told CNBC in an email Tuesday that it invested $1 million into the New Jersey fight. The representative also explained that so far this year, the committee has raised more than $127 million through September, the most campaign cash it says it's ever raised during a nonpresidential year.

McAuliffe, a former Virginia governor, has ties to establishment party heads such as the Clintons, and to influential financiers. His campaign raised more than $57 million going into Election Day earlier this month.

Data from the Virginia Public Access Project shows top individual donors to his campaign this year included billionaire George Soros, billionaire philanthropist Pat Stryker, Chicago businessman Fred Eychaner and Wall Street veteran John Griffin.

Several donors said they're concerned that Jen O'Malley Dillon, a deputy chief of staff to President Joe Biden in the White House and his former 2020 campaign manager, may be holding back DNC Chairman Jaime Harrison from hiring the staff he wants. They are also worried she could have too much sway over how the committee spends money, some of these people said.

An advisor to the president told CNBC that O'Malley Dillon doesn't make hiring decisions for the DNC. This year the DNC brought on Roger Lau, who was Sen. Elizabeth Warren's, D-Mass., campaign manager, as well as fellow Warren campaign alum Kristen Orthman.

Harrison, the DNC chair, recently told The Associated Press that he meets two to three times a month with O'Malley Dillon and they are building a friendship. "I'm going to continue to push, I'm going to continue to be creative, but Jen and I are working hand in glove in terms of trying to make this work," he said.

In a statement to CNBC, Harrison denied there is any tension between him and the White House.

"As I've said on the record numerous times, the White House, myself, and the entire DNC staff have a close working relationship and anything to suggest otherwise is flatly untrue. Anyone who knows me knows that I treat the people I work with like family — and that's exactly what we are down to every last staff member," Harrison said in an emailed statement Tuesday. "While many people seem to not understand the role the DNC historically plays when our party is in control of the White House, our focus remains on promoting President Biden's agenda and continuing to deliver for the American people."

Concerns about the DNC have convinced some Democratic lawmakers in reliably blue New York state to stay away from seeking its help in next year's elections, according to one person familiar with the matter. 

A White House spokesman did not respond to questions seeking comment.

But other key figures in the party are calling out other potential reasons for Democrats' issues. They believe that these latest elections saw unexpected Republican turnout. They also say that Democratic campaigns need stronger messaging promoting their party's accomplishments going into the midterms. These officials said that neither the White House, the DNC nor the state parties are to blame.

"It's a circular firing squad," said a prominent fundraiser and campaign advisor.

Bradley Beychok, co-founder of Democratic super PAC American Bridge, told CNBC that attacks on the DNC are "misguided."

"Democrats need to band together, stop pointing fingers, pass a bill and get to work selling it for the midterms. It's more complicated than that," Beychok said. Biden on Monday signed the $1 trillion infrastructure bill and Democrats are likely to campaign on that legislation in the upcoming elections. Democrats have yet to pass the nearly $1.8 trillion social spending proposal but Senate Majority Leader Chuck Schumer, D-N.Y., says the Senate will approve the plan before Christmas.

A head of another influential Democratic outside group says the blame going around for the loss in Virginia is largely being directed at McAuliffe's campaign and the fact that Congress has been struggling to pass key legislation.

Ed Rendell, former governor of Pennsylvania, hosted a virtual DNC fundraising event featuring Biden himself shortly after the recent elections. Rendell told CNBC the event raised just more than $375,000 with over a dozen people contributing to access that gathering.

Rendell said party leaders can't single out the DNC because it works closely with the White House.

"When your party has the White House, you can't single out the DNC and say, 'How did they do running it?' They run it with the political arm of the White House. They made some mistakes. But they did some decent things, too," Rendell told CNBC. 

'Take a deep breath'

Rendell, and other leaders such as New York State Democratic Party Chair Jay Jacobs, believe that the party's messaging and its efforts to pass legislation on Capitol Hill have to improve going into the midterms.

Rendell and Jacobs both told CNBC that a reason the party saw losses in local races is because of the struggles lawmakers were having passing key legislation at the time, such as the now-signed-into-law infrastructure bill, and how Democrats failed to counter some of the narratives being pushed by Republicans.

Jacobs said the elections should show that if Democrats don't turn their messaging away from the progressive side of the party, they will see massive losses in the midterms.

"If the Democrats are seen as too far to the left, then I think we risk an awful lot. We will then lose voters in the middle," Jacobs said. He added that if the economy improves, the infrastructure bill kicks in and the country starts to turn around, Democrats could see gains in the midterms.

Rendell wants panicking donors to calm down a bit.

"Take a deep breath. Wait and see how things develop. If they pass the two bills and people get a clear understanding of what those bills are doing, then wait and see see what the temperature is on St. Patrick's Day," Rendell said.

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