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Phillips has the credentials of a candidate who can appeal to moderate voters, as proven by his flipping of a former Republican-held district. He can self-fund his campaign and provide a healthy alternative to an unpopular president rather than being a spoiler. If current polling is accurate, Phillips might be Democrats' chance to prevent Trump from returning to the White House.
This isn't a longshot bid, it's a no-shot bid by Phillips. No one outside Minnesota knows who he is, and the entirety of his in-state party has vowed its devotion to Biden. Phillips is just wasting valuable resources that should go toward making sure Biden serves a second term. Phillips might be doing this to boost his own name, but he could tear the party apart in the process.
Democrats claim they want to beat Trump, but polling shows a vast number of Democrats are concerned about Biden's age and don't want him to run for reelection. The DNC might have made a mistake going all-in for Biden without leaving open a chance for a challenger who might better appeal to its constituency. This could put Trump in the driver's seat.