Kay Hagan’s October Surprise: Her family’s businesses benefited from $400K in stimulus funds.

October 17, 2014 4:00 AM

Kay Hagan’s October Surprise:
Her family’s businesses benefited from $400K in stimulus funds.

By Joel Gehrke

(Alex Wong/Getty Images)

 

Campaigning for the Senate in 2012, former Harvard law professor cum left-wing populist Elizabeth Warren touched down in North Carolina and told voters, “The game is rigged.”

She was more right than she knew. As it turns out, North Carolina’s Democratic senator was doing some of the rigging. Now, Kay Hagan’s political future may depend on how voters react to the story.

Hagan’s vote for the 2009 stimulus, coupled with revelations that the legislation resulted in taxpayer funding for her family’s businesses, has emerged as an October surprise in a race hitherto marked by her unexpected resilience in a difficult political environment.

The story has received limited attention in local press, but now a Koch-backed free-market group is launching a major TV ad campaign accusing the Hagans of self-dealing.
“Kay Hagan said that the stimulus would help North Carolina — instead it helped the Hagans,” James Davis of Freedom Partners Action Fund told National Review Online. “What voters despise most about Washington is that they aren’t playing by the same set of rules as everyone else. The fact that the Hagan family business received nearly $400,000 taxpayer dollars from the stimulus just reinforces what everyone already suspects. The Hagans got richer and North Carolina paid the price.”
The super PAC plans to spend at least $1 million to bring that message to TV screens across the Tar Heel state, starting next week.
In late September, Politco reported that JDC Manufacturing, a company owned by Hagan’s husband, received almost $400,000 in stimulus grants to help pay for energy-efficiency upgrades. Thereafter, the Carolina Journal reported that Hagan’s husband kept the stimulus money in the family by paying a company he founded with their son to make the upgrades. That decision “appears to be at odds with the conflict of interest policy the company submitted with the grant application,” wrote the Carolina Journal in mid October, noting that the elder Hagan assured the federal government that his company avoids even the appearance of a conflict of interest.
Hagan’s campaign told Politico that she had nothing to do with her husband’s winning the grants. Presumably, she also had nothing to do with his decision to use the stimulus money to hire another family-owned company to make the upgrades.
JDC Manufacturing did Hagan’s campaign no favors when, as the project came in under budget, it “kept all of the savings, sending none back to taxpayers who had funded the stimulus grant,” according to the Carolina Journal. The Freedom Partners ad puts it this way:

Kay Hagan claimed Obama’s failed $800 billion stimulus would help North Carolina, but now we know it was Kay Hagan’s family who profited. . . . And what did the company do? It funneled the money to another company owned by the Hagans to do the work.

This kind of story can damage a candidate, as a liberal super PAC acknowledged in another context. “Voters are connecting the dots when candidates take positions that are not in the best interest of their state or good public policy, but instead financially benefit a candidate’s campaign benefactors,” Christopher Lehane wrote in a memo obtained by Politico for Next Gen Climate. The super PAC, which is backed by environmentalist Tom Steyer, is “on pace to spend $50 million on the 2014 midterm elections” against Hagan’s opponent, Thom Tillis, and other Republicans, according to Mother Jones.
Now Steyer’s counterparts on the right are helping voters connect the dots between Hagan’s position in government and her family’s bank account. The issue has already gained traction among Republican voters. “A lot of the volunteers are really upset about this story,” Donald Bryson, executive director of American for Prosperity’s North Carolina chapter, told NRO. “Whether it’s illegal or not, it doesn’t look good.” Americans for Prosperity, a Koch-supported advocacy group focused on get-out-the-vote efforts in North Carolina, might also have its army of volunteers raise this issue when going door-to-door.
The independent swing voters likely to decide a close election, according to a public pollster in the state, tend to be very concerned about these sorts of allegations.
“Their suspicion of the integrity of government is part of their identity,” says Martin Kifer, a former Democratic staffer who now conducts polls for High Point University. That might explain why, for instance, Peter Schweizer’s book on congressional exemptions on insider-trading laws generated such outrage and immediately prompted action. More than 150 lawmakers co-sponsored the Stop Trading on Congressional Knowledge Act in response to the book, which was spotlighted by CBS’s 60 Minutes. In short order, a bill that had previously received minimal support was signed into law.
Hagan’s access to stimulus funding is obviously different from insider trading, but the story on “how Senator Hagan’s husband won stimulus cash” taps into the same kind of voter suspicions.
With Hagan and Tillis separated by 1.4 points in the Real Clear Politics average of polls, anything that increases the passion of the GOP base while appealing to independents could be decisive.
On Election Day, “if we’re within a few thousand votes of each other, everything matters,” Kifer says.
— Joel Gehrke is a political reporter for National Review Online.