By controlling 527's, donors believed, they could determine, to a greater extent than ever before, the
message and strategy of Democratic presidential campaign. "This is like post-Yugoslavia," Service
Employees Intl Union president Andy Stern told me. "We used to have a strongman called the party. After McCain-Feingold, we dissolved the power of Tito."
Having financed projects in the former Communist bloc, Soros understood the opportunitites that political tumult can create. He and more
reclusive Peter Lewis began by contributing about $10 million each to America Coming Together (ACT),
largest of the new 527's, which was designed to do street-level organizing for the election; the donations enabled
ACT to expand its canvassing campaign from 5 critical swing states to 17. "I used 527's because they were there to be used," Soros said bluntly during a conversation in his Manhattan office.
Soros's and Lewis's donations made it possible for longtime leaders of Democratic interest groups to do something they had never done in the modern era: work together. Now the insular factions have begun to form alliances. Founders of ACT included Ellen Malcolm & Carl Pope, heads of Emily's List & Sierra Club respectively, Andy Stern from the service employees' union and former A.F.L.-C.I.O political dir. Steve Rosenthal.
Suddenly, because they no longer had to compete with one another for contributions, and because they had such a galvanizing villain in Bush, the leaders of the party's most powerful adjunct groups were able to look beyond the
more limited interests of their own membership.
Strangely, for someone who is supposedly staging a hostile takeover of an entire party, Soros said he is only
nominally a Democrat, and he evidenced an obvious distaste for the business of politics. "I hate this kind of political advertising," he said at one point, complaining about the anti-Bush attack ads he had paid for. "I always hated it, but now that I've sort of been involved in it, I hate it more."
Soros said his only goal is to get rid of Bush, whom he believes is endangering American democracy. After that, he said, he didn't expect to continue meddling in politics at all, and in fact, he seemed eager to be rid of it. Yet, even if they walk away after 2004, both Soros and Lewis have begun to expand on what they started by handing off their political portfolios to the next generation. Both 33-year-old Harvard-trained lawyer Jonathan Soros and 45-year-old restaurateur Jonathan Lewis became deeply involved in monitoring their fathers' political investments day to day.
They have also traveled extensively throughout the country, asking their contacts in different circles, business types for Soros, while Lewis hits up the Hollywood crowd, for million-dollar checks.
Both sons, particularly younger Soros, are also looking to play a deeper role in the future of Democratic politics.
Last January, at the invitation of NY venture capitalist Alan Patricof, one of Democratic Party's most reliable fund-
raisers over the years, both Jonathans attended a hastily planned meeting of wealthy Democrats at Patricof's Park Ave office. George Soros and Peter Lewis were there, too, along with some 45 other Democratic donors. No one at the meeting quite knew why Patricof had summoned them. Then he introduced them to Rob Stein and his PowerPoint slides.
My first meeting with Rob Stein occurred over breakfast at the Four Seasons hotel in Washington. Our conversation was
strictly off the record, a sort of get-to-know-you chat. Our second meeting took place on a sun-bathed balcony
outside a Starbucks near his home in northwest Washington. Stein, who is a young-looking 60, has a full head of
gray curls and an air of serenity about him. He is a native West Virginian, although his accent, oddly, makes him
sound like a Yankees fan. He carried with him a metal loose-leaf binder, which he laid on the table and kept always within his reach. In a short while, Stein said, I would become only the third person in Washington to possess my own copy of his presentation.
By the time we met, in the middle of May, Stein estimated that some 700 people had seen his PowerPoint show.
He told me his story and explained how he had ended up at the center of a minimovement. He had been a
Democratic operative, rising to become chief of staff at the Commerce Dept under late Ron Brown. Then he
managed a venture capital firm.
After 2000, he, like a lot of Democrats, watched with growing alarm as his party ceded ground at every level of
govt. "I literally woke up the day after the 2002 elections, picked up the paper, had breakfast and we were living in a one-party country," he said. "And there it was. That was my wake-up call. "I said: 'O.K., there's now GOP
dominance down the line. It's not only that they control the House & the Senate and the presidency. But it's
growing. There's no end in sight.'
It wasn't only that they had reached a milestone, but they were ascendant."
Stein read a few reports that liberal research groups had published on the rise of the conservative movement. Then he began poring over tax forms from various conservative nonprofits and aggregating the data about fund-raising and expenditures. He spent hours online every night, between about 9 p.m. and 1 in the morning, reading sites like MediaTransparency.org, which is devoted to tracing roots of conservative groups and their effect on the media. To call this an obsession somehow seems too mundane; Stein spent much of the spring of 2003 consumed with connecting the dots of what Hillary Clinton famously called the "vast right-wing conspiracy" and then translating it into flow charts and bullet points.
The presentation itself, a collection of about 40 slides titled "The Conservative Message Machine's Money Matrix,"
essentially makes the case that a handful of families, Scaife, Bradley, Olin, Coors and others,
laid the foundation for a $300 million network of policy centers, advocacy groups and media outlets that now wield
great influence over the national agenda.
The network, as Stein diagrams it, incl scores of powerful organizations, most of them with bland names
like the State Policy Network and the Leadership Institute, that he says train young leaders & lawmakers
and promote policy ideas on the national & local level.
These groups are, in turn, linked to a massive message apparatus, into which Stein lumps
everything from Fox News and the Wall Street Journal op-ed page to Pat Robertson's "700 Club." All of this, he
contends, is underwritten by some 200 "anchor donors"."
This is perhaps the most potent, independent institutionalized apparatus ever assembled in a democracy to
promote one belief system," he said.
"What you need to understand about me is that I try to be respectful & objective about this," Stein went on.
"Not only is it a legitimate exercise in democracy, but I think they came up with some extraordinary ideas." The
problem, he said, was that conservatives had moved beyond those policy ideas, into the realm of attack &
innuendo. Democrats had to understand that they were overmatched.
Nothing in Stein's presentation seemed notably new, even if the details were nicely laid out. I had seen one-time
conservative smear specialist David Brock, who wrote a book about his defection to the other side, draw similar
diagrams of the conservative power structure on a piece of paper. Former White House chief of staff John Podesta echoed many of the same ideas when he founded the Center for American Progress last year. They were, in fact, the basis for that new liberal policy group.
What made Stein's work compelling was the genius of its packaging. For some reason, perhaps because most
political operatives don't function in the business world, no one had ever thought to unearth all the evidence and
put it on color-coded slides in a way that ordinary people could immediately grasp.
"I describe myself as having a master's degree in the right-wing conspiracy," Podesta said. "Rob got the Ph.D."
Stein was convinced that the left needed to focus on the long term, on building its own network of well-financed nonprofit groups, rather than simply strategizing for the next election.
But he was not an especially powerful man in Washington, and all he had to work with was a slide show. For a
while he considered writing a book. Instead, he began lugging his slides around town, hoping someone could tell
him what to do with them. He was like a traveling salesman, convinced he was hawking a valuable new invention
but not quite sure what it did.
In the spring of 2003, a friend Stein knew from the Clinton White House arranged for him to meet Simon
Rosenberg at New Democrat Network. Ambitious & hyperarticulate, Rosenberg once worked for the
Democratic Leadership Council, the centrist group that laid the groundwork for Clinton's '92 campaign, before
splitting off and forming his own political-action committee in 1996.
Although he made his name in the party as a centrist New Democrat, Rosenberg, now 40, saw opportunities for his organization, and, naturally, for himself, in the increasingly confrontational slant of the party's base during the Bush administration. He didn't agree with all of Howard Dean's positions, but Rosenberg was among the first centrist Democrats to embrace Dean, sensing early on the potential of Dean's following.
While the Democratic Leadership Council attacked Dean for his angry brand of populism, Rosenberg looked for a
way to tap into the genuine passion among Democrats for a more creative, more defiant kind of politics. He talked
to donors around the country, like Andy Rappaport, who were angry at the Clintonesque rhetoric that obscured the sharp ideological divide between them and the Rush Limbaugh right; they were desperate for new policy ideas and for a more aggressive, coherent strategy.
Rosenberg had hired a Silicon Valley consulting firm to suggest ways for the New Democrat Network to find a niche in this new world. One recommendation, which Rosenberg embraced, was to bring together a group of progressive contributors to talk about financing new kinds of ventures outside the party structure. It was Erica Payne, his NY director, who put a name to the fledgling project: the Phoenix Group. Business-school graduate and one-time Clinton campaign official Payne seized on the name one night after getting sucked into a Harry Potter book.
To Rosenberg, then, Stein's presentation was like an elaborately wrapped gift on Christmas morning: the deeper
into it he got, the more enthusiastic he became. Stein had given him, in 30 minutes' worth of slides, a jolting
summary of the challenge that needed to be met if the Democratic Party was to avoid total collapse. The idea was inherently neither centrist nor leftist. Here was something he could take to donors and say: This is why you're losing. Forget this election. Plan for the future.
Progressives needed more than a single think tank, like Podesta's group, to counter 30 years of well-targeted
conservative philanthropy, Rosenberg argued. The same kind of donors who were willing to shell out millions for
political 527's could have a greater impact if they also threw their dollars at nonprofit foundations or
institutes. "If you're a 32-year-old state legislator and you're a conservative, you get to go through all these
philosophical trainings," Rosenberg said. "You get all these organizations that are trying to put you through their
leadership institutes. You get all these groups sending you their materials.
"Now, you're a 32-year-old Democratic state legislator, and what you do is you learn how to check boxes," he
continued. "You learn how to become pro-choice. You learn how to become pro-labor. You learn how to become
pro-trial lawyer. You learn how to become pro-environment. You end up, in that process, with no broad
philosophical basis. You end up with no ideas about national security. You end up with no ideas about American
history and political theory. You end up, frankly, with no ideas about macroeconomics and economic policy, other
than that it's scary."
Rosenberg became convinced that the donors had to take the lead. This was already beginning to happen in
reaction to the Bush presidency, wealthy liberals taking it upon themselves to seek out and give money to
entrepreneurs with new ideas. MoveOn.org was founded in 1998, during Clinton's impeachment hearings,
by Wes Boyd, inventor of the once-ubiquitous flying-toaster screen saver; it was a fringe group until Soros
& other donors, mobilized by the debate over Iraq, discovered it in 2003 and started pouring in
money.
MoveOn now has 2.2 million members and is the most dynamic online enterprise in politics. Rappaport adopted
Music for America when it was raising money for the Dean campaign, and he helped keep it going after Dean
dropped out. But these were chance encounters, random collisions of money & ideas. What
Rosenberg envisioned was a "virtual marketplace", patterned very consciously after the kind of incubators that venture capitalists set up in the 90's, in which major investors could systematically get to know like-minded bright, young innovators. Then the investors, given a choice of ideas, could decide which projects they wanted to get behind.
"We will only succeed if we build an entrepreneurial culture in Democratic politics," Rosenberg said. "What we are is this beleaguered group of badly funded, nonscalable nonprofits. You know, Luke Skywalker was able to kill the Death Star with his beleaguered band of warriors, but I'm not sure that that's the model we should shoot for, shoot the thing down the middle of the tube and hope it blows up the Death Star. We need to build our own answer to the Death Star."
Rosenberg introduced Stein to his New York dir. Payne, who in turn hounded 69-year-old venture capitalist Alan
Patricof until he agreed to hold a few screenings of the slide show. Word that the Soroses & Lewises were
involved swelled attendance from a handful of participants at the first meeting to close to 50. The network
spread.
In Silicon Valley, Rappaport began to hold regular meetings, drawing crowds of 80 or more; he & his wife flew into New York to attend a session there as well. In Washington, Indianapolis based Democratic causes donor Bren Simon brought together a Phoenix Group meeting. Last month, another major contributor Chris Gabrieli, held his first showing of Stein's presentation for financial executives and dot-com types in Boston, with Jonathan Soros as the star attraction. In Los Angeles, director & activist Rob Reiner helped set up a chapter for Hollywood liberals, too.
The group's name made it sound like a highly selective hedge fund, but in fact it was more like a self-help program. The gatherings became primarily a forum to air frustrations over the state of the party and ruminate on what a liberal answer to the vast right-wing conspiracy might look like. "The Phoenix Group does not raise money," Patricof said when we first met in May. "The truth is nobody knows why they're coming to these meetings. They don't know what they'll do afterward. We just have an interest in politics."
When I talked to Patricof earlier this month, however, he said the nebulous approach of the Phoenix Group had
started to come into focus. A dozen principals from across the country had gathered in New York to formulate a
plan, he said, and they decided that soon after the election, all the participants will come together for a massive
investor meeting, with, perhaps, regional meetings to follow.
There, they will hear pitches from progressive entrepreneurs with ideas that need money, and it will be up to the
individual members to determine where their money is best spent. No one expects the new progressive
organizations that the Phoenix Group backs to look like mirror images of the Heritage Foundation or other
conservative behemoths. The goal, instead, is to find the equivalent of these 1960's political models for a faster-
moving online world.
Different geographic factions of the Phoenix Group seem to have different ideas about which models should be
financed. In New York, where the financial markets rule, there is an inclination toward investing in proven entities,
people like Podesta & Brock, who recently founded his own organization to monitor the conservative media. In the Bay Area, however, where the new economy already feels old and where jeans & loafers remain standard business attire, Rappaport's group leans toward more interesting &Amp; idiosyncratic kinds of investments.
As Rappaport explained it to me, donors should focus on finding the unknown, young entrepreneurs with risky
ideas and no money to test them. The more projects that are given time and capital to germinate, he said, the
better the chance that one or two would ultimately generate the kind of ideas that might someday match the
momentum of the right wing.
"In Silicon Valley, there is a great belief in the strength and power of individual entrepreneurs who are not yet a part of , and may in fact have exclusively broken off of, the existing institutions of power," Rappaport said. "So there's a natural belief that David can slay Goliath, and that, in fact, Goliath inevitably will be slain. It's only a question of finding the right David. By the way, because it's hard to find the right David, we can tolerate the fact that for every one David that slays a Goliath, there are going to be 99 that won't have so much to show for their efforts. That's O.K."
Given how desperately the activists behind the Phoenix Group want to dispatch Bush this November, the paradox
is that their longer-term goals, from a purely tactical standpoint, may be better served if he wins. Millionaire
Democrats are being driven to act by a perception of powerlessness & deterioration. If Kerry wins, some of the passion will likely drain away, and a lot of Democrats will tell themselves, like gambling addicts after a hot streak at the blackjack table, that everything is just fine and that, despite the statistics and the polling, the party remains as vibrant as ever. Raising $100 million for a bunch of think tanks might no longer be so easy.
If Kerry does not ascend to the presidency, and Democrats fail to make significant gains in Congress, then the
party and its various factions will be as close to debilitating disunity and outright irrelevance as they have been in
almost a century. Leftist investors will see their opening, a chance at last to swoop in and save the party from
empty centrism. The struggle for control in 2008 will begin almost immediately.
"If John Kerry loses, we're going to have a real fight for the soul of the Democratic Party, which began in my
campaign," Howard Dean told me. His new political action committee, Democracy for America, is giving money to liberal candidates in states where Democrats are edging toward extinction. "And whether the progressives win or not," Dean said, "will determine whether the Democratic Party has a future in America."
It is, perhaps, futile to try to predict what the Democratic Party, or much of anything in politics, for that matter, will
look like in 2008 or 2012. Terry McAuliffe, the party's chairman and one of the best fund-raisers in its history, says
the party's continuing relevance in American life is assured, no matter how many rich donors establish their own
competing groups or how many factions vie for dominance. With a new high-tech headquarters, $60 million in the
bank and 170 million names in a voter database, McAuliffe said, the old party apparatus isn't going anywhere. "In
30 years, the institution of the Democratic National Committee will be stronger than it has ever been," he said with characteristic bluster.
Implicit in Dean's prediction are 2 possible outcomes worth considering, if only because they lend themselves to
historical precedent. The first is that the new class of Democratic investors could conceivably end up skewing the party ideologically for years to come. A lot of the political venture capitalists were strong supporters of Dean in the primaries, in the fervent belief that his campaign, which became, in effect, a classic liberal crusade, in the Jerry Brown mold, only with more money, was leading the party back in the right direction.
Although several donors described themselves to me as "pragmatic" in their worldview, the moderate Kerry
seemed to elicit in them all the passion of an insurance actuary (Soros labeled him "acceptable"), and they
manifested a pointed distaste for Clintonism as a political philosophy. The way they look at it, centrist
Democrats spent a decade appeasing Republicans while the right solidified its occupation of American govt.
The donors see themselves as the emerging liberal resistance, champions of activist govt at home and multilateral cooperation abroad.
There is, of course, a striking disconnect between the lives of these new Democratic investors and those of the
party's bedrock voters: laborers, racial minorities and immigrants, many of whose faith in sweeping social programs has been badly shaken and who tend to be more culturally conservative than the well-off citizens of New York and Silicon Valley.
If the multimillionaires harbor even the slightest doubts about their qualifications for solving social and geopolitical
ills, they don't express it. To see the potential effect of such motivated ideological donors on a political party, you
need only study the modern GOP. The families who contributed the seed money for what would
become the conservative movement were philosophical rebels who followed Barry Goldwater. Like the new
venture capitalists, these ideologues started out not with specific policy ideas but with a broad sense of fear, a
notion that the system of free enterprise was under siege from radical forces. (The guy who most kept them up at
night, oddly enough, was Ralph Nader.)
Their money spawned academic proposals, some of which, like privatized Social Security or missile defense, were so far beyond the mainstream of their time as to be considered ludicrous. Not only did these ideas ultimately infiltrate mainstream GOP thought, but much of the agenda ultimately triumphed in the broader arena of public opinion.
That success built a governing GOP majority, but it may have come at a cost to politics as a whole. In 1965, the
GOP was an inclusive organization, comprising not just Nixonian pragmatists and Goldwater zealots but also liberal followers of Nelson Rockefeller and Henry Cabot Lodge. 40 years on, it is getting increasingly difficult to find a true GOP moderate, let alone a liberal, so far to the right has the party's equilibrium tilted.
This was in large part, if not entirely, a consequence of the kind of political philanthropy that Stein &
Rosenberg have come to emulate. Party culture came to reflect the ideology of the men who subsidized it, and the national dialogue, as a result, has grown less temperate and less tolerant.
Perhaps the New Age, liberal analogue of this can already be seen in a group like MoveOn.org, which has
leveraged its big donations to create a remarkably committed & democratized membership; in April, the group raised $750,000 from its followers in a national bake sale. As a reactionary force, it also demonizes Republicans with an apocalyptic fury. MoveOn was castigated by its critics for displaying on its site an amateur ad comparing Bush to Hitler.
Lately, MoveOn has called, repeatedly, for Congress to censure Bush and for Donald Rumsfeld to resign.
Every time I talked with someone about the Phoenix Group, I posed these questions: even if you succeed in
revitalizing progressive politics, might the Democratic Party, like the G.O.P., be pushed toward extremism? And if
so, might that make it all but impossible to repair the party's standing in huge swaths of the country, the South
& the West where Democrats are fast becoming a permanent minority?
"Deep down, that question is in the subconsciousness of all the people who are involved in this, if not in their
consciousness," Stein said. But he didn't have an answer.
Perhaps the most illuminating reply came from former White House aide Robert Boorstin who now works on
national security at the Center for American Progress. "Everything has risks," he said. "I would rather take that risk than keep it the way it was."
The second potential outcome to which Dean alludes, that the Democratic Party, per se, might not always exist in America, might sound, coming from Dean, characteristically overwrought. But it does raise a significant question about the political venture capitalists: what if, in the future, they decided not to support Democrats at all?
Suppose there came along an independent candidate, free from the baggage of Democratic Party politics, who
espoused with conviction the kind of agenda that donors of the Phoenix Group or America Coming Together really wanted to hear? The forbidding barrier to independent candidates has always been money.
527's aren't tied to a party; they can provide unlimited amounts of money to support any cause they want, provided they adhere to certain legal technicalities. When I suggested this to service employees' union president Stern, he thought about it for a moment before answering. "There is an incredible opportunity to have the infrastructure for a third party," he said. Stern assured me that he himself has no interest in that, but, he added, "Anyone who could mobilize these groups would have the Democratic Party infrastructure, and they wouldn't need the Democratic Party."
We tend to think of the two political parties that have ruled American politics for the last 150 years as being
cemented into the framework of the Constitution. In fact, parties, like the political movements that sustain them,
have shelf lives. In the 1840's and 1850's, the Whig Party, at various times, controlled the White House and both
houses of Congress. By 1860, at a loss to coherently address slavery, the defining debate of the time, the Whigs
vanished from the planet like a bunch of pterodactyls, replaced by GOP.
It is not unthinkable that the privatization of Democratic politics is a step toward institutional obsolescence. People like Andy Rappaport and Jonathan Soros might succeed in revitalizing progressive politics, while at the same time destroying what we now call the Democratic Party.
What seems all but certain is that the future of Democratic politics will more closely resemble MoveOn.org than it
will resemble anything that happens on the convention floor in Boston.
On Memorial Day, I spoke with Harold Ickes, who had been running the Media Fund, a 527 charged with airing
anti-Bush ads in the period before this week's convention. Ickes, like his father, who was a close confidant of
Franklin D. Roosevelt's, has spent a lifetime in service to the Democratic Party, reaching its very highest
levels.
As we talked about the influence that millionaires and independent groups will have in the years ahead, Ickes
sounded more weary than excited, like a man who has accepted change in the family business without entirely
embracing it. "When you go out and talk to them, people are much more interested in something like MoveOn.org
than in the Democratic Party," Ickes said. "It has cachet. There is no cachet in the Democratic Party."
"MoveOn raised a million dollars for a bunch of Texas state senators, man," he went on to say. "Plus their bake
sale. If they continue with their cachet and really interest people and focus their people on candidates, boy, that's a lot of leverage. No party can do that. What the political ramifications of that are … " Ickes's voice trailed off. He shrugged. "Who knows?"
