As polls for the Senate race between Republican Ken Paxton and Democrat James Talarico remain tight, right-wing influencers, media outlets, and Paxton campaign surrogates have taken their shot at ginning up an “October surprise” by spreading at least two extraordinary stories aimed to discredit Talarico. 

The first was that Talarico, who was taking time off the campaign trail early this month to recover from the flu, had actually checked into a psychiatric hospital in Ohio due to a mental breakdown. The second, which unfolded as early voting kicked off, involved unsolicited text messages and mailers sent to Texan voters regarding resources for transgender youth—a topic that Paxton has said is his best line of political attack and that his campaign’s largest financial backer, Elon Musk, has hammered Talarico on in recent weeks.

But both stories turned out to be disinformation, spread maliciously or recklessly in many cases by amateur-ish “influencers” whose shoddy work was easily exposed. (Hillary Clinton’s emails, these would-be scandals are not.)

The first attempted surprise started life around October 8. That morning, Sara Gonzales, a host on Glenn Beck’s BlazeTV network and the vice president of the anti-LGBTQ group Texas Family Project, informed her more than 518,000 followers: “I have received unverified information on James Talarico’s whereabouts. If true, it will END his campaign.” Two hours later, Paxton himself—who remains the state’s attorney general until January—alleged in a post on X that Talarico was having “a full-blown mental Tala-freak-out” and requested “proof of life.”

Within minutes of Paxton’s post, an anonymous X account that uses a photo of a young red headed woman, “TickleTexts,” spun up the allegation into a full-blown theory that Talarico was in a mental facility and by the next day had identified the Lindner Center, a psychiatric hospital in Ohio, as the place where Talarico was hospitalized. A right-wing influencer named Rhein Amacher separately shared a recording of a call purporting to prove the Lindner Center had admitted Talarico. 

Michelle Smith, a senior adviser to Paxton, added on social media that a doctor told a friend of hers that Talarico “has definitely been admitted to a mental institution.” White House Deputy Chief of Staff Stephen Miller and Musk made numerous posts about Talarico’s absence, implying that his campaign was not being truthful. 

But the story then swiftly fell apart. On the evening of October 11, the Linder Center denied that Talarico was ever a patient, and the following day the New York Times reported on home security footage Talarico provided that proved he had been at his residence while recovering from the flu and not in Ohio. 

Even right wingers including Texas journalist Tony Ortiz expressed dismay about the slipshod influencing effort. Conservative commentator Carmine Sabia wrote: “I support Ken Paxton, but the truth matters more than winning on a lie.” 

As one ostensible surprise fizzled, another took its place. Starting around October 11, right-wing influencers began posting on social media about unsolicited texts regarding a “complete guide on bathrooms and beyond for trans kids at school” that linked to the real website of the Transgender Education Network of Texas (TENT), a transgender advocacy group.  

Among the early posters was Gunther Eagleman, an account with more than 1.7 million followers that is operated by Texas resident David J. Freeman, a staunch Paxton supporter. “Nobody asked for this,” Freeman wrote on October 12. “It went straight to a stranger’s phone, linking to a “BACK-TO-SCHOOL TOOLKIT” from a trans activist group. They aren’t even hiding it anymore. They’re going around parents and texting it to whoever they can reach. This is the agenda Gina Hinojosa and James Talarico’s party has been pushing for years. Texas parents decide what their kids learn. Not activists blasting out mass texts. VOTE RED.”

On October 13, Republican state Representative Jeff Leach, who introduced Paxton at an August 2026 Senate campaign event in Allen, sent a formal request to Paxton to open an investigation into “organizations and individuals engaged in encouraging, instructing, or assisting Texans in circumventing, evading, or violating the requirements of [Senate Bill] 12, the Texas Parents Bill of Rights.”

The following day, TENT denied sending the messages and sent cease and desist notices to Peerless Network and Infobip, two mass texting platforms that were used by an unnamed client to send the messages. 

But whoever was impersonating TENT wasn’t done. 

In the following days, some voters began to receive mass mailers that included a “Texas Trans & LGBTQ+ Student Resource Guide,” which also directed readers to the TENT website. Included in the guide was information about child emancipation that was absent from the TENT website. On October 17, TENT updated its website with a disclaimer. 

“We are aware of text messages and now physical mailers that have been circulated concerning TENT that appear to have been issued by or on behalf of the organization,” the website reads. “These text messages and mailers were not authored, authorized, approved, or distributed by TENT and are not affiliated with our organization. The texts do not represent the official position or communications of the organization.”

The next day, despite the disavowal, conservative social media accounts and right-wing influencers including Gonzalez began posting about the mailers.“This was sent to my home,” Gonzales wrote. “Addressed to the ‘students’ of our family from the ‘Texas Transgender Student Union.’ It coaches minors on what to do if their parents are not supportive of their “trans” identity and walks them through getting emancipated. THIS IS EVIL!!!!!”

Gonzales has served as a surrogate for Paxton’s campaign and spoke onstage at his primary-night watch party in Dallas. Her post was picked up in right-wing outlets such as the Dallas Express, whose publisher, Monty Bennett, is a major Paxton donor. 

“Texan residents are now reporting receiving mailers allegedly from the Texas Transgender Student Union,” wrote Dallas Express reporter Carlos Turcios on X. “Are they seriously trying to encourage students and teachers to break state law?” 

Initial reports about the mailers noted that there is no corporation or nonprofit registered in Texas under the name Texas Transgender Student Union, which appears as the sender on the mailers’ envelopes. On October 20, the Observer reported that the Texas Transgender Student Union was registered anonymously as an LLC in Wyoming in September using Northwest Registered Agent, a commercial registered agent provider that has since cut ties with the LLC.

Sources with access to commercial shipping databases told the Observer the barcode on the mailers was linked to Snailworks, a mail tracking company. Snailworks received federal campaign payments from only one group in 2026: the National Republican Congressional Committee (NRCC). In a statement to the Observer, Snailworks confirmed its mail tracking role but would not say who paid them in relation to the deceptive mailers. The NRCC told the Observer it had nothing to do with the mailers. 

On October 23, CBS reported that the United States Postal Service had identified the holder of the bulk mail permit associated with the mailers: Three Z Printing, an Illinois-based company that is owned by the Zerrusen family. Bill Zerrusen has donated hundreds of thousands of dollars to Republican PACs. Both he and his son Matt, who lives in the Dallas area and has donated more than $120,000 to Republican PACs, have been photographed with President Donald Trump. Both are active in Catholic religious circles through their nonprofit, Newman Ministry. 

Bill and Matt Zerrusen did not respond to requests for comment. 

Social media posts indicate Matt Zerrusen has connections to Republican megadonors in Dallas. A 2019 Facebook post shows Doug Deason, a major Paxton donor, with Zerrusen on a private jet flying to Mar-a-Lago. 

“I have nothing whatsoever to do with those mailers,” Deason told the Observer via email. “I did not conceive of the idea, I did not fund them and I do not know who is behind them.”

Deason also said that he was unaware of the mailers until Matt Zerrusen texted him about “conspiracy theories flying around social media”; that he has known Zerrusen for 10 years but hasn’t hung out with him in several years; and that Zerrusen explained early on that Three Z Printing does “projects for all sides.” (The Observer found no records of Democratic campaigns or candidates paying Three Z; the only federal political campaign that has paid Three Z Printing since 2020 was that of Earl Granville, who unsuccessfully ran in the 2020 Republican primary for Pennsylvania’s 8th Congressional district.)

“He can find out who the client is, I am sure,” Deason wrote, referring to Zerrusen. “But, I suspect he would not reveal who it is.”

Deason also made clear his disapproval. “I don’t like those types of covert disingenuous tactics in any situation,” Deason wrote. “Especially politics.”

A similar tactic was previously used in Dallas in 2021, when Bennett, the publisher of the Dallas Express, worked with the controversial California-based public relations firm Crowds on Demand to create a fake Black Lives Matter group that was incorporated in Delaware using a registered agent service and sent letters to white families telling them not to send their kids to Ivy League schools, spurring a major reaction online and in right-wing media. 

Zerrusen also has connections to those in Bennett’s orbit. Sarah Zubiate, Bennett’s wife, commented on an Instagram post Zerrusen made in September 2025 featuring a picture of him with Charlie Kirk. Last year, a pseudonymous author for the Dallas Express quoted Zerrusen in an article about the impact of Kirk’s assassination on youth churchgoing. And Zerrusen’s X account is also followed by Aaron Harris, a Republican political consultant who has been involved in several of Bennett’s political schemes, including managing astroturf efforts. Bennett did not respond to requests for comment.

While the strategy behind these mailers may be familiar, exactly who is behind them is still uncertain. But likely not for long. 

On October 21, Leach sent another letter to Paxton urging him to investigate, citing “new information” that raised questions about the identity and the motives of the sender. “I expect a thorough investigation regardless of who is responsible, what their political affiliation may be, or which political interests they seek to advance,” Leach wrote.

The next day, TENT filed a petition in Travis County seeking permission to take depositions in order to identify unnamed defendants for a possible lawsuit.  Ahead of a hearing scheduled for this week in Travis County, Chris Hilton—a lawyer who worked under Attorney General Paxton, left temporarily to defend him in his impeachment trial, and was ultimately forced out of his position amid sexual harassment allegations—was retained as counsel for the Texas Trangender Student Union.

Paxton’s campaign has denied involvement in the mailers. After the texts and mailers went out, TENT reported threats of violence. Another group mentioned in the mailers, OutYouth, temporarily closed its in-person programs due to security concerns. 

West Texas District Attorney Sarah Stogner, a Republican who did not vote for Paxton during early voting, has separately opened a forgery investigation. She told the Observer she believes the mailers were an obvious ploy to rile up conservative voters ahead of the election and intends to subpoena companies and individuals involved in the mailers. (So far, no prominent liberal influencers seem to have received the nominally pro-LBGTQ mailers.)

“It’s scary to think the government wants to indoctrinate our children,” Stogner posted on X. “It’s not necessarily a legitimate fear, but that doesn’t stop political operatives from using it to influence voters.”

These attempted October surprises have not appeared to weaken Talarico, who is still narrowly leading in polls. Instead of channeling anger toward Talarico, who has supported transgender rights broadly despite recently backtracking on some issues such as sports participation, the shadiness of the apparent Republican propaganda operation has led to backfire. 

John Huffman, the Republican former Mayor of Southlake—where culture wars over LGBTQ+ rights in the public school system became national news—called the content of the mailers “monstrous” while denouncing the dishonest strategy behind them.

“The right-wing grifters responsible for sending these mailers to our children think voters are desperately stupid and that Paxton’s only shot at winning is creating outrage with dirty tricks – not exactly the talisman of a strong campaign or good candidate,” Huffman wrote on X. “My exhortation — If you’re voting Paxton, do it because you genuinely believe he’s the better candidate, not because you fell for some dumb false-flag mailer.”

When Huffman voted early, he left the Senate choice blank.

The post Ken Paxton’s ‘October Surprises’ Are Pure Disinformation appeared first on The Texas Observer.

During a September panel at the Texas Tribune Festival focused on building the Texas workforce, John Kelly, one of BlackRock’s head corporate honchos, pointed to a recent Brookings report indicating that investments in the U.S. data center boom could total up to $10.3 trillion between 2025 and 2032. It was, as Kelly put it, a “generational” opportunity for his company, the world’s largest investment manager with control of more than $15 trillion in assets. Around $500 billion of that is invested in publicly traded companies in Texas.

Referring to his multinational investment firm as the “largest investor” in the state, Kelly, who is BlackRock’s global head of corporate affairs, explained that his clients want the financial behemoth to invest in training programs for electricians to meet the state’s massive data center skills gap. But he went slightly off topic during his answer. “It’s our clients’ money, right? … It’s important,” he said, “and I thank you for letting me tell that story—because in Texas, we’ve not always told our story, so I have to sometimes use opportunities like this.”

That appeared to be a likely reference to the once-embattled asset giant’s almost completely successful campaign to get back in the good graces of Republican state leadership which had, until last summer, blacklisted the firm over its “Environmental, Social, and Governance” (ESG) investment practices—a now-verboten investment strategy that prioritizes shareholder proposals and investments that promote social and environmental justice principles. 

The panel at the Tribune event, for which BlackRock was a “premier” sponsor, followed a May event in which BlackRock CEO Larry Fink joined Governor Greg Abbott at a technical college in Waco to announce the firm’s $30 million philanthropic gift meant to train 12,000 Texans in the electrical trades. BlackRock’s investment in the college represents one of the firm’s largest dealings with a public institution since the passage of Senate Bill 13, the state’s 2021 anti-ESG law, which banned state entities from contracting with companies that divest from fossil fuels. That law was overturned in February, but BlackRock had already worked its way off the law’s resultant blacklist in June 2025.

The Texas Comptroller’s office, which had initially listed the company in 2022, confirmed to the Texas Observer that, since BlackRock was cleared last June, the comptroller’s office—which manages investments for the state, including a new Strategic Bitcoin Reserve—made at least two purchases of a BlackRock-managed Bitcoin exchange product. The Observer also found that the Permanent school Fund paid Blackrock about $8.3 million for investment-related services in recent years, including while the firm was blacklisted.

Despite regaining Texas’ blessing, and despite rolling back its support for environmentally focused shareholder proposals, BlackRock contends it hasn’t abandoned its ESG commitments. As of 2025, it reported more than $1.3 trillion in client assets dedicated to sustainable and transition investment portfolio strategies.

BlackRock is, nevertheless, the largest investor in data centers in both Texas and across the nation. In addition to the firm’s $4.9 billion July investment in a Meta’s 1-gigawatt AI data center campus in El Paso, BlackRock is invested in, owns shares of, or is otherwise financially linked with, at least 28 corporate members of the Data Center Coalition, a national trade organization, according to research compiled by Texas Coalition Against Data Centers. The investments run counter to BlackRock’s stated ESG goals, funding an AI boom whose environmental and energy impacts as a resource-sucking blight on rural Texas communities have become so well publicized that even Governor Greg Abbott has ordered a statewide audit and temporary pause on permitting for new projects.

Aerial view of a data center under construction in Hutto, Texas. (Shutterstock)

When asked how the firm’s AI investments square with ESG principles, Kelly said Blackrock is the largest sustainable investor in the world and repeated his line about simply being a conduit for other people’s money. “It’s our clients’ money, and so we invest when and how they want, whether that is in oil and gas, or whether that is in solar and wind or nuclear,” Kelly told the Observer.

So how did the world’s largest asset manager go from being the Texas GOP’s ESG enemy number 1 to the state’s newly celebrated comeback kid? It’s a nearly five-year-long tale that reflects the profound impact the one-party governing apparatus of Texas can wield against powerful private entities in the name of culture wars, and, in turn, the ability of a corporate giant to rehabilitate itself. It’s a saga that also remains far from over.

“BlackRock made those [ESG] commitments in a different political climate, when that seemed to be the smart bet in this country, and there are … obviously incentives for companies based in America that are doing business abroad to have those sets of goals,” Public Citizen Texas Director Adrian Shelley told the Observer.

Shelley noted that some state anti-ESG policies still remain on the books, like a 2023 law that bars insurance companies from using ESG criteria to set insurance rates. Anti-ESG policies like these, Shelley says, have been bad for Texas. “It’s a misapplication of state resources. It drains talent away from the state, and it prevents us from solving real problems like a looming insurance crisis,” he said.

Witold Jerzy Henisz, a management professor with expertise on sustainable business practices at the University of Pennsylvania’s Wharton School of Business, says that BlackRock’s ESG reversal wasn’t merely a matter of trying to regain its lost Texas funds and the favor of its politicians, but was part of a national effort to distance itself from ESG advocacy while still maintaining climate-aware funds. That effort inherently included a Texas component, which included “greasing the way” with political donations, advertising, and marketing efforts to get off the state’s exclusion list.

“It wasn’t just like [BlackRock CEO] Larry Fink abandoned all this [ESG] stuff, and then he got back into Texas. He had to play a political game. He had to do some lobbying,” Henisz told the Observer. “He had to kind of bend at the knee a little bit and show that Texas was really important to him.”

It was Fink who helped pioneer ESG investing as we know it, declaring in a 2020 letter to corporate execs around the world that BlackRock would begin divesting from coal producers and other firms that present a sustainability risk. He even showed up to the World Economic Forum in Davos sporting a scarf design meant to represent rising planetary temperatures. It was Fink’s clarion call that motivated much of Wall Street to begin joining the same climate-focused ESG investor organizations that BlackRock had joined—groups like ClimateAction 100+ and the Net Zero Asset Managers initiative. It was part of an en vogue movement of corporate players who were, in critics’ eyes, virtue signaling amid the upheavals of 2020. 

The reaction from the heart of oil and gas country in Texas was relatively swift and decidedly harsh. The GOP-controlled Texas Legislature passed SB 13 the following year.

In marked contrast to their once-rigid free market fundamentalism, Republican leaders like Abbott and Lieutenant Governor Dan Patrick were now embracing a newfangled form of petroleum protectionism. “Any Wall Street firm that says, ‘We are turning our back on the oil and gas industry in Texas, and we will not loan them money (and) we will not invest’—Texas is not going to give them any of our money,” Patrick said just before the unveiling of the bill.

Lieutenant Governor Dan Patrick presides over the Senate on May 20. (Jordan Vonderhaar for the Texas Observer)

In 2022, five months after the law was enacted, Patrick wrote a letter directing then-Comptroller Glenn Hegar to place BlackRock “at the top of the list” of investment firms under the new anti-ESG law, arguing the firm was “discriminating” against the state’s oil industry by divesting from firms that lacked net-zero emissions goals.

According to a statement from Patrick’s office, Fink began reaching out to Patrick in 2023, traveling at least twice to Texas to discuss what the firm could do as it lost at least $4 billion throughout 2023, including holdings divested bythe Teachers Retirement System of Texas.

Patrick said that his second meeting with Fink became a “catalyst” for the Texas Power Grid Investment Summit, a cattle call to gin up capital for new power plants the following year, with BlackRock inviting potential investors to Houston to back new fracked gas plant projects with $5 billion in taxpayer-funded loans approved after Winter Storm Uri to stabilize the state’s grid.

A day before the February 6, 2024 summit, then-BlackRock Vice Chairman Mark McCombe was reaching out to then-Comptroller Hegar to tout BlackRock’s $550 million investment in a carbon-capture facility in West Texas, as well as the firm’s work to convene more than $12 trillion worth of “capitol allocators” in Houston for the event, according to email communications from the comptroller’s office that were obtained via open records request. “Your focus on SB 13 and shining a light on the energy sector has been transformative,” McCombe wrote.

The following day, Patrick was praising Fink on stage during a joint appearance, telling the audience of investors that he had “hit it off” with the “king of Wall Street” during their 2023 meetings and that “BlackRock has been a big investor in the fossil fuel industry, but it wasn’t the perception.” Fink, for his part, told investors that the ESG label had become “too politicized.”

Days later, BlackRock pulled out of the Climate Action 100+, citing “legal considerations, particularly in the U.S.” McCombe reached out to Hegar again to notify him of the firm’s withdrawal, writing, “We have been and will continue to be significant investor in the energy sector, particularly in Texas where we have more than $120 billion in energy exposure,” per Comptroller email records. While Climate Action 100+ spokesperson Reginald Zimmerman told the Observer the group would not comment on the specific circumstances of the withdrawal—which was made by BlackRock, Inc., the parent company of the multinational firm—he did confirm that the firm’s international operating subsidiary, the BlackRock International Fund, remains a signatory.

But BlackRock’s backtrack wasn’t yet enough to shore up the firm’s imperiled Texas portfolio. The following month, on March 19, BlackRock’s contract to manage $8.5 billion in the Permanent School Fund, a massive endowment vehicle that funds state public education, was terminated. Texas State Board of Education Chair Aaron Kinsey, who oversees the fund, told Reuters: “That money originates from the oil and gas industry primarily. … If there’s no income, no billion dollars a year from oil and gas, that’s a problem for our fund, obviously an existential long-term risk.” 

According to comptroller records, McCombe wrote a letter to Kinsey asking him to reconsider and had a calendar meeting scheduled with Hegar the day following the contract’s termination. The loss of the $8.5 billion Permanent School Fund was part of $13.3 billion in state-led divestments over its ESG policies as of April 2024, which amounted to about 2 percent of the company’s $641 billion in profits that year.

Governor Greg Abbott speaks at a news conference in Austin. (AP Photo/Eric Gay)

By June 2024, BlackRock, alongside Charles Schwab and Citadel Securities, invested millions into the Lone Star alternative to Wall Street: the Texas Stock Exchange, an endeavor that was championed by Abbott and the GOP Legislature. BlackRock had almost entirely abandoned its climate and environmental commitments by that time, backing just 4 percent of shareholder proposals focused on environmental issues, compared to 47 percent support for such proposals in 2021, according to Forbes. 

Around the same time, BlackRock made its decision to invest more heavily in “telling its story” in Texas. Texas Ethics Commission reports show that BlackRock hired Daniel Hodge, formerly chief of staff to Governor Abbott, at the end of that month to lobby on the firm’s’s behalf, paying him between $107,610 and $215,229.99 that year. In August 2024, Hodge held a call with Whitney Blanton, general counsel of the Texas Treasury Safekeeping Trust Company, a comptroller entity that helps administer the ESG blacklist, telling her in a follow-up email that he really appreciated the “open dialogue,” according to comptroller records. There was no explicit mention of BlackRock in the email, but the correspondence was provided in response to the Observer’s public information request for the office’s communications with BlackRock and its lobbyists.

In another example of pairing its political lobbying with local philanthropy, in October of that year, the BlackRock Foundation made a $4 million contribution to the Commit Partnership, an influential education reform group whose CEO was appointed by Abbott to the Permanent School Fund Corporation board, to support college readiness in Dallas County. 

By mid-November 2024, Hodge was brokering a meeting with Abbott’s current chief of staff Robert Black, BlackRock’s Kelly, and another BlackRock government affairs executive, per calendar records from the Texas governor’s office. 

But BlackRock’s comeback tour in Texas hasn’t been entirely smooth. In late November 2024, Attorney General Ken Paxton launched an 11-state lawsuit in federal court charging BlackRock, Vanguard Group, and State Street Corp. with using their shareholdings in coal companies to extort managers to suppress coal extraction. The suit also cited the companies’ participation in ESG and climate investor groups as part of the pressure campaign. Vanguard paid $29.5 million to settle the case. BlackRock, meanwhile, filed a motion to dismiss.

Paxton talks with his defense attorney Tony Buzbee during last year’s impeachment trial. (AP Photo/Eric Gay)

Then, on January 9, 2025, Abbott held a call with both Fink and Kelly, according to the governor’s calendars. That same day, BlackRock announced its withdrawal from the Net Zero Asset Managers initiative. Alluding to Paxton’s lawsuit in its official statement, BlackRock wrote: “Our memberships in some of these organizations have caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.” 

Hodge has remained as a lobbyist on retainer for BlackRock ever since he was first hired in 2024. The firm has also employed a handful of other lobbyists as well. Both Abbott and Lieutenant Governor Patrick’s offices did not respond to the Observer’s request for comment about BlackRock’s Texas revival.

Come June 2025, BlackRock’s ESG fever had apparently broken enough for Hegar to remove the firm from the state’s blacklist. Hegar specifically cited the firm’s backing of the Texas Stock Exchange, its reversal on ESG shareholder proposals, and its retreat from the Net Zero Asset Managers initiative. BlackRock “has acknowledged the real social and economic costs, both here in Texas and globally, that come from limiting investment in the oil and gas industry,” Hegar wrote.

Despite BlackRock’s official reconciliation with the comptroller, it was nevertheless dealt another blow in August 2025, when a federal district court judge denied BlackRock’s motion to dismiss Paxton’s multi-state lawsuit. The decision allowed the litigation to move forward. “Today’s victory represents a major step in holding them accountable. I will continue fighting to protect Texas and defend America’s energy independence from this unlawful conspiracy,” Paxton’s office wrote.

BlackRock has continued its strategic retreat on ESG into this year, despite the fact that a federal judge has ruled the anti-ESG Texas law violated First Amendment protections. (The Fifth Circuit Court of Appeals stayed the federal court’s motion to enjoin enforcement of the law while a Texas comptroller and Texas attorney general appeal plays out.) 

Fink’s 2026 annual letter to investors underscored the new reality of Wall Street’s “energy pragmatism” when it comes to the global AI energy arms race. Fink wrote that “the old model of global capitalism is fracturing” as nations focus their spending on becoming more self-reliant in energy, defense, and technology. Fink also argued that “the reshuffling of global trade, the inequality that’s risen over the past generation, and how AI threatens to widen the gap without broader market participation” are among the most important forces shaping global finance.

In May, President Trump’s Department of Justice and Federal Trade Commission filed an amicus brief in support of Paxton’s ongoing lawsuit against BlackRock, Vanguard, and State Street. BlackRock characterized the agencies’ support as undermining “the Trump Administration’s goal of American energy independence.” In its statement, it said: “As we made clear in our earlier motion to dismiss, this case is trying to re-write antitrust law and is based on an absurd theory that coal companies conspired with their shareholders to reduce coal production.”

Henisz, the Wharton business professor, characterized the state’s anti-ESG laws, including its policy restricting insurance firms from factoring climate into their policies, as harmful. “There’s been a lot of push back in many states to these very political restrictions that are being passed, and it’s often the financial and insurance industry that is saying, ‘We need this information. This is financially relevant information,’” he said. “There was a political movement that met the hard edge of financial reality that climate is material.”

Claire O’Manique, a public finance analyst for Oil Change International, an advocacy group that has watchdogged the investment giant’s ESG actions, said that BlackRock’s reversal on its ESG commitments in recent years reveals the folly of governments looking to the private sector to finance the energy transition—and to impose ESG standards voluntarily rather than by regulation. “BlackRock is a perfect example of why that model isn’t adequate,” she told the Observer, “because we see how they are happy to roll back on these commitments and things that get in the way of making money.”

Texas Observer News & Politics Editor Justin Miller contributed reporting.

The post How BlackRock Became Texas’ Comeback Kid appeared first on The Texas Observer.

Texans have seen it all this year: Senator John Cornyn twirling Congresswoman Jasmine Crockett on the dance floor; Attorney General Ken Paxton driving his mistresses down to the “Love Shack”; and Texas state Representative James Talarico in a dress singing a tune about transgender people—all made possible by the powers of generative artificial intelligence.

Political ads have long been notorious for stretching the truth with underhanded editing techniques, false claims, and computer generated imagery, but the ability to instantly generate an uncanny mimicry of candidates has taken this year’s attacks to new heights of absurdity and debasement. 

In that way, AI is transforming the political landscape and contorting conventional ideas about truth, free speech, and fair elections. Experts say the law is failing to keep pace as candidates and consulting firms use the rapidly evolving technology to caricature the opposition in new and controversial ways. Nowhere is this more true than in Texas, where a historic $500 million (and counting) in advertisements has flooded TV, radio, and digital platforms for the U.S. Senate race alone.

“We’re seeing questionable ads that are using various AI technologies all around the country, but the ads in Texas take it to a different level,” said Amy Kristin Sanders, a professor of media law at Penn State University. “This kind of synthetic content creation really messes with people’s traditional sense of what they can trust.”

(Youtube screenshot; Cornyn campaign)

AI tools are being used for everything from simple campaign flyers and infographics to fully synthetic videos and deepfakes of candidates. A recent study commissioned by the American Association of Political Consultants (AAPC) found that a majority of consultants are using AI to streamline the research process and perform mundane tasks. Republican consultant and admaker Vinny Minchillo said some agencies are taking it further and deploying AI in the creative process.

“It’s in very small ways that you don’t notice. I have used it as a transition between two shots, or to create an image that’s moving that used to be a still image,” Minchillo said. “But I think when you’re using AI to create something out of whole cloth, you just have to be smart.”

Some of the biggest Republican consulting agencies in the country, like Fifty Plus One (FP1) Strategies are doubling down on the use of AI. Synthetic ads are fast and inexpensive to produce, and they’ve even won the Reed Awards and the Pollie Awards—also known as the Oscars of political advertising.

In one ad during the primary season, the Cornyn camp portrayed Congressman Wesley Hunt with a deepfake where he parades around a puny pomeranian. The amusing video and tagline, “That dog don’t hunt,” were intended to emasculate the congressman. FP1 Strategies said the video was produced in one day by creative director Trent Wisecup, and it won four Reed awards.

“The best AI is deployed in the ruthless pursuit of excellence, and that requires old-fashioned elbow grease,” Wisecup said, describing his creative process on LinkedIn. “Think AI fluffs your ego? My agent teaches me about humility every day.”

(Youtube screenshot; Cornyn campaign)

As silly or preposterous as some of these ads may seem, it’s fully synthetic videos that give legal scholars like Sanders a sense of trepidation. That’s because the law tends to lag behind technological advances. Social media has become the Wild West of expressive content, and deepfakes blur the lines between free speech versus disinformation and defamation. Paxton’s “King James” attack ad is a perfect example. The uncanny deepfake version of Talarico is backdropped by a pride poster as he scribbles all over the Bible in crayon. It works in references to old quotes the Democrat actually said but presents them in a completely made-up context.

“We’re walking a really fine line between types of speech that we’ve historically protected, like parody and satire, and these new forms of synthetic content that have a much higher probability of fooling someone,” Sanders said.

Another survey commissioned by the AAPC found that most voters are deeply uncomfortable with the use of AI in political campaigns, whether it’s to craft a text message or a full blown deepfake. About half of survey respondents said it is unacceptable to use AI to write fundraising emails or texts, while 73 percent said it’s unacceptable to artificially generate an image or video for a campaign ad. Creating a deepfake of an opponent saying something they never said was considered the most egregious use of the technology, with 95 percent disapproval.

“Clients have asked us not to use AI because they feel like it is taking the edge off our message,” said Minchillo, who has worked with various consulting firms and campaigns around the country. “The usage of AI becomes the message rather than the story we’re trying to tell.”

Congress has yet to pass any federal regulations of deepfake campaign ads, so states are handling the dilemma at the local level. In 2019, Texas passed a law that criminalizes the publication of deepfake videos within 30 days of an election with the intent to injure a political candidate or to influence an election. Last year, the Legislature also considered a measure to require disclosures on AI political ads, like in some other states, but the bill never passed the Texas Senate. The House bill, which was carried by the deposed former House Speaker Dade Phelan, drew heavy backlash from the right-wing activist corps in Texas who saw the legislation as an attempt by the political establishment to police political speech. 

A recent controversy in the Texas lieutenant governor race is raising questions about the narrow application of current state law.

In September, Lieutenant Governor Dan Patrick posted two deepfakes on social media of his opponent, Democratic state Representative Vikki Goodwin. In one scene, she wears a Longhorns jersey that reads “Taxes” instead of “Texas.” In another scene, the artificial Goodwin says she supported a capital gains tax, death tax, and state income tax. The ads also included deepfakes of Talarico and Democratic gubernatorial candidate Gina Hinojosa.

Goodwin responded by filing a police report in mid-September, citing the state law against deepfakes in political ads. “This is a video that looks like me. Words are coming out of my mouth, so I just felt it was important to put a stop to it,” Goodwin told the Observer. In a sworn affidavit accompanying the police report, Goodwin said she believed the deepfake was made with intent to “fraudulently influence the outcome of an election.”

Patrick quickly deleted the ads after Goodwin filed the report, which she says has made it difficult to pursue the case any further. A spokesman for Patrick told the New York Times that the deepfakes were an “obvious parody” that were published well before 30 days from Election Day.

Sanders said the 30-day window seems like a somewhat arbitrary boundary that doesn’t account for the real harm deepfakes can cause. “There are large groups of people that do engage in early voting,” Sanders said. “Many voters may make up their mind long before that.”

Ultimately, Goodwin said she would prefer if deepfake attack ads weren’t allowed in political campaigns at all because they’re a harmful distraction from the issues that really matter. That ties in neatly with her opposition to data centers and her plan to end tax subsidies for the corporations who build them. She hopes her case against Patrick can set some sort of precedent against future misuses of AI technology.

A sweeping ban on synthetic content in campaigns might appeal to many Americans, but Sanders said it’s probably impossible to achieve.

“Anytime the government regulates based on the content of the speech, the government has to show that there is a compelling government interest,” Sanders said. “And then of course, they have to show that the law is narrowly tailored to achieve that objective.”

In this case, the government has a compelling interest to preserve the sanctity of free and fair elections, but an outright ban would not be considered narrowly tailored. Sanders said that might discriminate against synthetic AI content without accounting for all the other kinds of political ads that use deceptive techniques, like clipping your opponent out of context. A federal judge in Montana recently blocked officials from enforcing the state law against deepfake campaign ads because it raised First Amendment concerns.

Sanders said candidates could still seek redress through existing civil laws. A candidate could sue for defamation, arguing that the deepfake constituted false speech, which injured their reputation. Under the First Amendment, however, political speech is considered sacred for the functioning of our democracy. There is a high bar for public officials to prove defamation because the courts must preserve the right to scrutinize those in power. Add satire into the mix, and these deepfakes become even more challenging to litigate.

“In some contexts, the law protects speech that isn’t necessarily accurate,” Sanders said. “Some of the most important critiques of our political and social issues of the day are done through the vehicle of parody and satire.”

Sanders said mandated disclosures of AI-generated content in campaign ads might be the only salient regulation that doesn’t significantly intrude on First Amendment principles. AI is here to stay, and voters will need to exercise greater scrutiny of the information they’re getting about candidates, especially as synthetic content becomes normalized in the years to come.

“You’re not going to put that genie back in the bottle,” Minchillo said.

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