Rex Sinquefield: The Tyrannosaurus Rex of State Politics

Billionaire Rex Sinquefield's crusade to control Missouri politics sheds light on the power and limits of money in contemporary American politics.
by | June 2015
Rex Sinquefield (Flickr/The University of Chicago)

Republicans are in firm control of the Missouri House of Representatives, and they run a good whip operation. If they can’t get a bill passed with a solid GOP majority, they don’t bring it to the floor. They’d rather not advertise dissension within party ranks. A couple of years ago, however, the leadership made a big exception to that rule. They knew they lacked the Republican support to override Democratic Gov. Jay Nixon’s veto of an $800 million state income tax cut, but they still called the package up for a vote, forcing all legislators to go on record, including 15 Republicans who ended up bucking the party majority and opposing the cut.

Rank-and-file members are convinced this all took place to please one man. A decade after returning to the state with a fortune he earned managing money in California, 70-year-old Rex Sinquefield has become a powerful presence in Missouri politics. Unlike most people who disagree with the positions politicians take, Sinquefield has the resources to make them pay. Last year, he and campaign committees he funded helped recruit candidates to run in primary contests against several of the Republicans who had broken party ranks on the tax cut vote. Each of the challengers was offered six-figure support. “He came after me with a lot of money and a very, very negative campaign,” says Nate Walker, one of the targeted House members. “I had to go and mortgage my house so I could at least fight back a little bit.”

The issues that concern “Rex,” as he is universally referred to in political circles, have become central to the state’s agenda in recent years. In addition to his campaign contributions, Sinquefield has spent millions on lobbying efforts and on the Show-Me Institute, a free-market think tank he established in St. Louis. Last year, he estimated his lobbying operation employed about 1,000 people “the last time I looked at my checkbook.” It’s hard to tell to what extent he was kidding, but he didn’t seem to be joking when at the same event he twice referred to Nixon as an “idiot.” (Sinquefield declined requests to be interviewed for this story.)

Democrats from the governor on down have accused Sinquefield of trying to buy state government. U.S. Sen. Claire McCaskill uses him as the centerpiece of her campaign to bring contribution limits back to the state, arguing that legislators too often ask themselves “What does Rex think?” instead of sticking with the wishes of their constituents. Big majorities in both chambers of the legislature have indeed accepted campaign contributions from Sinquefield. “His influence is enormous,” says Sean Soendker Nicholson, executive director of Progress Missouri, an advocacy group on the left. “Legislators and leaders are very attuned to what he wants and what all of his lobbyists want to see happen.”

What Sinquefield wants to see happen doesn’t always transpire, though. Each of the legislators who was challenged for their votes, including Walker, survived the 2014 election. So did a county judge who had ruled against Sinquefield on a ballot question and subsequently found herself subject to a $300,000 campaign onslaught. To a certain extent, the St. Louis billionaire is like a would-be Michael Corleone ofThe Godfather who targets his enemies but frequently fails to take them out. “Truly, it would have changed the face of politics in Missouri had he unseated us,” says Lyle Rowland, another GOP representative targeted for his 2013 tax vote. “Then it wouldn’t have mattered who we were or what we stood for -- whoever had the most money could win the election.”

Republican state Rep. Nate Walker had to mortgage his house to fend off Sinquefield attacks. (Alan Greenblatt)

Sinquefield has devoted many millions to the idea of eliminating income taxes and replacing them with sales taxes, but the effort has not progressed either at the ballot box or in the legislature. A ballot measure he bankrolled last fall to change teacher evaluation methods and weaken tenure proved so unpopular that the campaign backing it went dormant weeks before the election. It ended up getting only about a quarter of the vote. “I think he has bad instincts overall,” says Ken Warren, a pollster and political scientist at Saint Louis University. “He’s backed a lot of causes that simply lose.”

But while Sinquefield’s batting average isn’t as high as he’d like, he has had some game-changing victories. After the failure on the tax veto override, Sinquefield and his squad tried again last year. That time, legislators succeeded in overriding a Nixon veto, offering Missourians their first income tax cut in nearly a century. Nixon complained publicly about spotting Sinquefield’s fingerprints on parts of the package. Ron Richard, the Republican leader in the state Senate, says Sinquefield deserves some, though not all, of the credit for pushing the tax cut through. “He has the ability and wherewithal to move ideas that need to be debated,” Richard says. Sinquefield devoted $10 million to Missouri candidates and campaign committees in 2014 alone, helping to support more than 160 campaigns.

Win or lose, the ongoing Sinquefield saga in Missouri sheds light on the central role money plays in contemporary American politics, as well as its limits. While many megadonors, such as billionaires Charles and David Koch, continue to be cash machines for federal candidates, others are finding they can get more for their money by focusing on a single state. Not every state has a Sinquefield, but quite a few do. And some of these state moneybrokers, such as Republicans Art Pope in North Carolina and Bruce Rastetter in Iowa, and Democrats Tim Gill and Pat Stryker in Colorado, threaten to amass the kind of clout in individual legislatures that was held more than a century ago by railroads and mining companies, and triggered Progressive Era campaign finance limits in the first place. “It costs less currying favor with state lawmakers,” says Kenneth Vogel, author of Big Money, a book detailing donations in the current super PAC era, “and bills are actually moving. They don’t have the same level of gridlock as Washington.”

There’s no question such donors are playing an outsized role. Their influence is sometimes felt in ways that aren’t easy to detect, such as bottling up bills that may never come to a vote. Nevertheless, they can’t always get what they want. “They’re spending in such a ham-handed way that they become a public villain, in some cases,” Vogel says. “They often seem to prompt a backlash.”

That has happened with Sinquefield. Few Missouri politicians turn down his money, but some are starting to make calculations about whether it’s ultimately more of a handicap than an advantage. Most rural Republicans, for example, have no use for his school reform ideas, and Tom Schweich, the state auditor who committed suicide in February, intended to make Sinquefield’s dollars a central theme of his campaign for governor in 2016. At his campaign announcement, Schweich accused Sinquefield of engaging in “corrosive tactics” through “an army of mercenaries. If they run our state, we won’t have a debate over whether it’s Missour-ah or Missour-ee. It will be Missour-Rex.”

Schweich’s death and the subsequent suicide of one of his campaign aides have cast a pall over Missouri politics and opened wide rifts within GOP circles. Former U.S. Sen. John Danforth, a Schweich ally, received national attention for a eulogy in which he decried negative campaign tactics. There isn’t any indication that Sinquefield had anything to do with a whisper campaign about Schweich’s religious affiliation or an attack ad that called Schweich a “weak candidate.” It is clear that Sinquefield’s favored candidate for governor, former state House Speaker Catherine Hanaway, however, has been thrown off course by the whole affair. She suspended her campaign for a month out of respect for Schweich.

Sinquefield has given $1 million to Hanaway’s campaign. In fact, he’s already contributed heavily to an entire slate of candidates seeking statewide office in 2016, including $1 million to Bev Randles, who is running for lieutenant governor. Whether his preferred candidates end up winning or losing will say a lot about the extent of his reach. “So far, he hasn’t been successful, by and large,” says former Democratic Gov. Bob Holden. “By the same token, if he continues to put money in cycle after cycle after cycle, he could have tremendous impact.”

Sinquefield learned to hate taxes at his mother’s knee. His father died when he was 7, and money was scarce. In straitened circumstances, his mother resented having to pay the 1 percent tax imposed on earnings of people who work or live in St. Louis. “I can’t afford this damned tax,” he recalls her saying.

She was able to keep her older daughters at home, but she placed Rex and his brother in an orphanage for several years. After that, Sinquefield considered entering the priesthood, but he was precociously interested in the stock market and ended up studying business. After earning an MBA from the University of Chicago, he helped pioneer index funds, which track markets broadly rather than picking out individual stocks. Eventually, he cofounded a California-based investment firm, Dimensional Fund Advisors, that was managing $398 billion worth of assets as of March 31. Sinquefield won’t divulge his net worth; Forbes estimates the fortune of his Dimensional cofounder, David Booth, at $1.6 billion.

Retiring back home to St. Louis a decade ago, Sinquefield became a major charitable benefactor. He put the city on the map as a chess capital, underwriting the move of the World Chess Hall of Fame from Miami to his St. Louis neighborhood, where he provides six-figure purses annually for the U.S. chess championships and the Sinquefield Cup. He’s a big backer of chess programs in area schools as well, and a huge donor to scholarship funds. Sinquefield has also given generously to the St. Vincent Home for Children, where he spent part of his childhood. “It’s just home to him,” says Mike Garavalia, development director at St. Vincent. “He has returned and given back to us manyfold, not just monetarily but with his time and commitment.”

Sinquefield, shown in the center waving, played basketball at St. Vincent and was part of the 1958 championship squad. (Alan Greenblatt)

Sinquefield has done a lot of things in St. Louis that Mayor Francis Slay and other prominent Democrats applaud. After the city failed for years in the legislature in its attempt to win control of its own police force, which the state had taken over during the Civil War and never given back, Sinquefield sponsored a successful statewide ballot measure to make that change in 2012. He’s also been a big backer of efforts to get the city and St. Louis County, which are entirely separate entities, to cooperate more on a regional basis.

If all his money went to boosting St. Louis and helping the city cope with its problems, “lots of statues” would be erected in Sinquefield’s honor, says Rowland, the GOP representative. But his charitable giving is vastly exceeded in statewide public attention by the money Sinquefield puts into politics. His single largest political expenditures have come in his efforts to abolish the earnings tax. In 2010, he spent $11 million successfully backing a statewide ballot targeting the tax. Thanks to its passage, citizens in St. Louis and Kansas City now have to vote affirmatively every five years to keep the earnings tax on the books. They’ve done so once already, but city officials and bond rating agencies wonder how the lost revenues could ever be recouped if the tax is voted down.

Altogether, Sinquefield has devoted nearly $40 million to candidates and political committees in Missouri, which is the only state with no limits on campaign contributions or lobbyist gifts. No legislator anywhere wants to be accused of letting money sway his vote, but in Missouri, politicians employ what might be called a police-lineup defense, saying they’ve never spoken to Sinquefield or barely seen him around. “I’ve only met Rex one time,” says Will Kraus, whose campaign for secretary of state received a $100,000 Sinquefield donation last fall. “I think I met him once,” says GOP state Sen. Rob Schaaf, who took in more than $50,000 in Sinquefield funds last year. “He hasn’t influenced me.”

Missouri legislators such as Kraus and Schaaf have semiplausible deniability because money often flows not directly from Sinquefield but through PACs he bankrolls, such as Grow Missouri and the Missouri Club for Growth. Even before limits on individual donors were abolished in 2008, Sinquefield gave as freely as he wished through more than 100 different PACs. That’s why even if Democrats succeed in restoring contribution limits through a ballot measure -- and they’ve been talking about launching such an effort for years, to little noticeable effect -- money from Sinquefield and other large donors will still find its way into the system.

Sinquefield is certainly not shy about his political giving. Donations over $5,000 have to be disclosed within 48 hours to the Missouri Ethics Commission, and for years Sinquefield made a habit of writing checks for $5,001. Politicians tend not to like that. Once they are known to have tapped into the Sinquefield vein, it can be a struggle to convince anyone else that more money might still be required.

Sen. Ron Richard, the GOP leader in the Senate, says Sinquefield money has done a lot of good. (Alan Greenblatt)

Although the bulk of his money has been spent on Missouri politics, Sinquefield and his team have spread the gospel of tax cuts to governors and lawmakers in other states, including Louisiana, Nebraska and Oklahoma. Sinquefield called the big program of tax cuts enacted in Kansas under Republican Gov. Sam Brownback “a stroke of genius.” During an appearance on St. Louis Public Radio in January, Sinquefield said that the growing budget shortfall in Kansas “has very little to do with taxes per se,” blaming it on poor revenue projection instead.

Despite a shortage of evidence from the Kansas experiment thus far, Sinquefield is a believer in the domino theory of state tax rates. If a state lowers its taxes, he argues, its neighbors are sure to follow. Sinquefield wants Missouri to eliminate personal and corporate income taxes altogether, partially replacing the lost revenue with a broader sales tax that would be capped at 7 percent. “He was one of the guys early on who really started to see the connection between low-tax policies and growth,” says Stephen Moore, chief economist at the conservative Heritage Foundation and, along with Sinquefield, co-author of a book last year arguing that lower taxes and anti-union policies drive economic and population growth. “A huge number of states are looking at cutting rates,” Moore says, “and state taxes are a lot lower than they were 10 years ago.”

No one outside Sinquefield’s orbit seems to believe that Missouri is about to eliminate its income tax. But Sinquefield has good reason to believe further tax cuts are coming down the road. Even if Hanaway fails to win the nomination for governor, the eventual GOP nominee will likely favor tax reduction. That’s also the position of the probable Democratic nominee, state Attorney General Chris Koster, who has received large donations from Sinquefield in the past. “We’re playing offense and the other side is constantly and chronically playing defense,” Sinquefield said a few years back.

Even the biggest donor in a state is not going to win every political battle. Still, although Sinquefield has not enjoyed nearly the level of return on his political investments that he found in the financial markets, he clearly has plenty of money left for both charity and political campaigns. “Candidly, they’ve wasted a lot of their money through bad decisions,” says Holden, the former governor, “but they’ve got the money to waste.”

While many legislators have balked at parts of Sinquefield’s agenda, Sinquefield can take some satisfaction in the fact that many of his critics won’t be around all that long. House and Senate members in Missouri are limited to eight years in office; if the current cohort is hard to persuade, the next generation of legislators may feel it’s not worth the aggravation of standing up to him and enduring thousands of dollars in attack ads as their reward. And Sinquefield doesn’t intend to stop writing checks until he can succeed in reshaping Missouri more to his liking. He once grandiosely declared that he refused to die until his favored tax and education policies had been adopted. “There’s more coming down the pike,” says Travis Brown, Sinquefield’s lobbyist. “He’s got a very ambitious agenda.”