Inside The Dems' Shadow Party

How they're using soft money and private groups to combat the GOP money machine

In 2002, as campaign-finance reform was about to become law, a few savvy Democratic activists saw the future -- and it was potentially devastating. The problem: While the Democratic Party raised $520 million in the 2000 election cycle, nearly half of it came in big-buck "soft-money" donations that the McCain-Feingold Act would all but eliminate. In the upcoming Presidential election, the Dems would be even more badly outgunned by the GOP, which in 2000 pulled in $712 million -- but only $246 million of it in soft money. To make an end run around the new campaign law, these behind-the-scenes players rushed to set up political committees that can legally collect soft money, pay for issue ads, and encourage voter turnout.

The downside: They cannot give to candidates or be directly connected to a political party. Known as 527s after a provision of the federal code that grants them tax-exempt status, the committees have been spectacularly successful since they got under way last year, having already raised almost $100 million in soft money. More important than the dollars, though, is the highly sophisticated political machine under construction -- a web of interlocking, like-minded organizations that could at once save and partly supplant the Democratic Party. And if the 527s don't give presumptive nominee Senator John Kerry an edge against George W. Bush, they will at least help level the playing field.

This strategy is largely the brainchild of Steve Rosenthal, former political director of the AFL-CIO. His group, America Coming Together (ACT), hopes to raise $95 million to build an elab- orate operation that will spur Democratic voters to the polls in 17 battleground states. ACT is working closely with the Media Fund, set up by former Clinton aide Harold Ickes, which hopes to raise an additional $50 million to target the same voters with issue ads.

These two big committees are coordinating with smaller 527s, as well as with more than two dozen left-leaning organizations such as the Sierra Club and Planned Parenthood (table). The two groups even have jointly hired their own pollsters, opposition research, and public-relations team. "We're a lot like a campaign, but without a candidate," says Ickes.

DIFFERENT AGENDAS? The $300 million or so that ACT and the other 527s intend to raise from the likes of financier George Soros could surpass the hard money raised by the party, experts say. But even if Democratic National Committee Chairman Terry McAuliffe ultimately drums up more cash, many decisions that will be key to victory, such as which message to push and where, will be made by 527s, which under McCain-Feingold are not allowed to communicate with the DNC. In essence, Rosenthal, Ickes & Co. are building something that could -- and in fact legally must -- be an alternative Democratic Party. "It's possible once the campaign gets started that there may be different agendas between these groups; the jury's still out," says New Mexico Governor Bill Richardson, a Democrat who heads America Moving Forward, a 527 aimed at Hispanics.

The heart of Rosenthal's plan is to connect with core Democratic voters such as minorities, industrial workers, and the working poor, much as he did with union members when he ran the AFL-CIO's political operation from 1996 to 2002. In 1992, labor households constituted 19% of the national electorate, according to exit polls. By 2002, they had jumped to 26% -- an astonishing figure, given that unions represent 13% of the workforce.

How did Rosenthal do it? By coordinating thousands of labor activists and local officials who reached out -- in person -- to their union brothers and sisters. Today, dozens of unions turn out volunteers and paid staff to visit colleagues at home and work. Then they follow up with phone calls, e-mails, and leaflets. "We want to apply the lessons we learned with union members," says Rosenthal. "Talk to people as close to them as you can get, and talk to them a lot."

PAID FOOT SOLDIERS. To make that happen, ACT is hiring several thousand foot soldiers in 17 swing states, including Florida and Ohio. Guided by seasoned campaign officials and armed with handheld organizers loaded with voter lists of households likely to lean Democratic, the canvassers have started knocking on doors. They offer to register anyone who's not already signed up. Without mentioning parties or even individual candidates, they also try to engage voters on key Democratic issues like jobs, health coverage, and education.

Canvassers then build a profile of each person willing to listen, entering their positions and other information onto the handhelds to construct a database. Over the next eight months, ACT and its sister 527s, most of which are pursuing the same approach, plan to contact each receptive voter 5 to 10 times.

ACT and the Media Fund, whose offices are two floors apart in a building across the street from AFL-CIO headquarters in Washington, will coordinate troops and ads to maximize their impact. Like the canvassers, Ickes' air war -- which was set to begin a 15-state, $5.2 million ad campaign on Mar. 10 -- will attempt to steer clear of McCain-Feingold by avoiding open partisanship. But like so many of the issue ads that have become commonplace on both sides these days, the Media Fund's views will be clear, Ickes says. ACT canvassers can even play ad snippets on their handhelds during their home visits.

As slick as all this sounds, it's by no means clear that Rosenthal can replicate his labor successes. When union activists call or visit a fellow member, they often know each other. Even if they're total strangers, members often will at least hear out what their union has to say.

By contrast, ACT and the other Democratic 527s are using low-wage canvassers hired off the street to make cold calls to people who have never heard of them or their group. Alvin Anderson, a 48-year-old former Winn-Dixie (WIN ) supermarket worker, was on long-term disability after his arm was crushed by a forklift in 1991. Then last December, a friend introduced him to Voices for Working Families, a 527 set up by unions to register minorities. Today, Anderson guides about 40 mostly minority canvassers as they go house to house in primarily black and Hispanic Miami neighborhoods. While Anderson says his canvassers are largely locals who know the community, it's still hard work. They earn $8 an hour and go out in pairs for two four-hour shifts a day, with each canvasser taking one side of a street.

Nonetheless, Voices Executive Director Suzy Ballantyne says the group already has talked to 16,600 people and registered 7,000 of them since it started in Miami last fall. Says Anderson: "We're saving them a trip downtown to register, so you'd be surprised at the positive response we get."

Even if these new groups can't boost turnout as much as labor, a systematic effort will go way beyond what either party has ever managed. The GOP has an ambitious goal to register 3 million new voters by November. But neither it nor the Democrats traditionally have built long-term, personal relations with voters.

Rosenthal's plan pushes the envelope in another way, too. Under the banner of America Votes, he and other Democratic heavyweights such as Richardson have created a sort of supercouncil that oversees the political committees of traditional organizations such as labor unions and the Sierra Club. Their political directors meet every two weeks to plot strategy and avoid duplication. "The Democratic Party might be more worried because they have less control now, but we've never had such close coordination," says Sierra Club political director Margaret Conway.

There are still plenty of questions about the new 527s that go beyond their ability to turn out voters. ACT and the Media Fund have a joint fund-raising operation, which has pulled in a total of about $75 million so far, say Ickes and Rosenthal. But $57 million of that has gone to ACT, and it's not clear if Ickes can really raise as much as he hopes. In addition, the Federal Election Commission is likely to issue new rules governing 527s in May, which could rein them in.

McCain-Feingold's primary goal was to curb checkbook politics, and Rosenthal argues that 527s do that by breaking the direct link between fat-cat donors and politicians. That may be true, but meanwhile, Democrats seem determined not to be outspent in November.

By Aaron Bernstein, Paula Dwyer, and Lorraine Woellert in Washington

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