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Speaking at the Conservative Political Action Conference (CPAC) in Orlando, Florida, Mr Grenell hinted that he may run to lead the most populous state in the US as current governor Gavin Newsom faces a recall effort by Republicans in the state.
“If you want the best case possible for a recall campaign, take a look at my home state of California. California used to be Reagan country, the shining example of business innovation and middle-class success,” said Mr Grenell.
“But now when you think of California, you think of out-of-control wildfires, of rolling blackouts, of schools still closed, of shuttered business, of bans on fracking, and on wealthy people jumping the vaccine line. In my three decades in American politics, I have never seen a better case for a recall than there is right now in California,” he continued.
“And of course, if a public official is still failing to deliver on their promises, and if you can’t limit their term or recall them in time, there’s always one other option: You can run against them yourself.”
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His remarks were met with loud applause from the audience, predominantly comprised of members of the hard-right, pro-Trump wing of the Republican party.
Politicoreports that Mr Grenell will discuss a potential run with Donald Trump during a dinner at his home at the Mar-a-Lago Club in Palm Beach on Saturday night, citing three people familiar with the plans.
In the 2018 California gubernatorial election, Democrat Governor Newsom won with 61.9 per cent of the vote.
While California is generally considered a solidly blue state, the governorship has regularly passed back and forth between the two parties for most of the past century.
The state’s last Republican governor was Arnold Schwarzenegger, who was in office from 2003 to 2011.
Mr Grenell is a staunch backer of Mr Trump and endorsement for a run for political office would significantly boost his chances with the base of the party.
It is unclear how this would play in an election in which winning over both moderate conservatives and swing voters would be key.
When appointed to the position of acting director of national intelligence by Mr Trump, a role he held for six months, Mr Grenell became the first openly LGBT+ person to serve in a president’s cabinet.
Secretary of Transportation Pete Buttigieg became the first Senate-confirmed cabinet member in January of this year.