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Billionaires for Big Government By: Matthew Vadum and James Dellinger
Human Events | Wednesday, January 16, 2008


The Democracy Alliance (DA) is maturing. After several years of internal strife, management squabbles, a few political purges and frustrating electoral setbacks, the group whose mission is to tilt American politics leftward has found its footing. The DA is becoming what leftist blogger Markos Moulitsas of DailyKos fame called for in 2005: “A vast, Vast Left Wing Conspiracy to rival” the conservative movement. It relies less on traditional Democratic Party “machine” politics, which typically draws upon fat cats, institutions (the party itself, labor unions) and single-issue advocacy groups (pro-abortion rights groups, the National Education Association and other teacher unions). Although it is officially nonpartisan, the DA has cultivated deep and extensive ties to the Democratic Party establishment.

New York Democratic Sen. Hillary Clinton’s good friend, Kelly Craighead, runs the alliance’s day-to-day operations. Clinton brags that she has helped create what she calls “a lot of the new progressive infrastructure.” Last August, Clinton told the YearlyKos convention of left-wing bloggers that she “helped to start and support” Media Matters and the Center for American Progress (CAP), two recipients of DA grants. Media Matters is headed by conservative turncoat David, and CAP is headed by John Podesta, Bill Clinton’s White House chief of staff.

The alliance’s principal architect, Democratic operative and former Clinton Administration official Rob Stein, has promised that the alliance will become less secretive as it starts to fund a wider array of political programs and projects. In fact, the DA has engineered to date more than $100 million in contributions from its wealthy members to liberal groups sympathetic to the Democratic Party, and it has the blessing of Democratic National Committee (DNC) Chairman Howard Dean.

But problems remain. Democrats can’t be sure that they are masterminding a grand reversal of Newt Gingrich’s 1994 Republican revolution. Democrats control Congress, and the prospects for retaining Congress and capturing the White House this year look better than ever. Still, the liberal grip on power is tenuous, and anything can happen. They haven’t forgotten that the resurgence of their party had seemed improbable just three years ago when the alliance was created, a time when the Washington punditry pronounced a national Republican realignment a done deal.

DA members have concluded that the Democratic Party still lacks a coherent message despite its victories in the November 2006 elections. That midterm vote was more against the GOP than for Democrats. “What was done was to fire some people in Washington and give other people a chance,” said Kansas Democratic Gov. Kathleen Sebelius at a Miami meeting of the alliance after the midterms. “But it’s not an endorsement of an agenda.” Podesta said, “We still haven’t cracked the übermessage. We still haven’t gotten into people’s minds a picture of what a progressive America would look like.”

Many alliance members think the Democratic Party’s future success requires ideological re-branding. They may question whether the word “progressive” is a political winner, but they know “liberal” isn’t.
“The liberal brand is tarnished,” said alliance member Rob Glaser, who heads the online multimedia company RealNetworks. He wants to “change the political paradigm” and treat the word “progressive” as a thing “that’s nurtured and managed just like any other brand.” To test his theory, Glaser teamed with CAP and spent $600,000 on TV ads in the Midwest over a three-week period. He proudly claims liberals in the test areas subsequently rechristened themselves progressives. However, CAP research shows that as much as 40% of the public has no clue what “progressive” means.

Origins of the Democracy Alliance

In 2003, Democratic Party activists and supporters began to coalesce around an informal coalition they called the Phoenix Group, which was later renamed the Democracy Alliance. Donors gave millions of dollars to liberal candidates and 527 political committees, but there was no electoral payoff in November 2004. Despondent, a small group of the wealthiest Democrats met in San Francisco a month after the election for sober reflection on Massachusetts Democratic Sen. John Kerry’s failure to win the presidency. George Soros, Progressive Insurance Chairman Peter B. Lewis and S&L tycoons Herb and Marion Sandler felt let down, seduced by the siren song of pollsters and the mainstream media who had assured them that Kerry would triumph over an incumbent President in wartime. Around the same time, another group of wealthy Democratic donors met in Washington, D.C., feeling the same way. “The U.S. didn’t enter World War II until Japan bombed Pearl Harbor,” political consultant Erica Payne told attendees. “We just had our Pearl Harbor.”

In April 2005, Soros and the other major players assembled a large group for a secret planning session. Seventy millionaires and billionaires met in Phoenix, Ariz., to discuss how to develop a long-term strategy. The attendees, including former Clinton White House aides Mike McCurry and Sidney Blumenthal and PBS talking head Bill Moyers, listened as officials from all the pro-Democratic Party 527 groups on which they had lavished millions of dollars explained why they failed to deliver the election to Kerry.

Three quarters of the members at the meeting voted that the alliance should not “retain close ties to the Democratic Party.” A survey showed most members were from 45 to 65 years of age and that three quarters hailed from the East or West coasts. Some 38% described themselves as “progressive,” compared to 24% who called themselves “liberal” and 7% who were content with the label “Democrats.” Not surprisingly, 84% thought the conservative movement was “a fundamental threat to the American way of life.”

Stein urged members to pay closer attention to conservatives who had spent four decades investing in ideas and institutions with staying power. Stein showed his PowerPoint presentation called “The Conservative Message Machine’s Money Matrix,” which showed a series of graphs and charts depicting an intricate network of organizations, funders and activists that comprised what he said was the conservative movement. “This is perhaps the most potent, independent, institutionalized apparatus ever assembled in a democracy to promote one belief system,” Stein said.

Stein believed the left could not compete electorally because it was hopelessly outgunned by the right’s political infrastructure. By his tally, the right spent $170 million a year on think tanks, versus the left’s $85 million. The right spent $35 million on legal advocacy organizations, while the left anted up a mere $5 million. The right spent $8 million to train young conservatives at Morton Blackwell’s Leadership Institute, while the left spent almost nothing. The result, Stein reasoned, was that conservatives not only won elections but also changed the national political debate. By contrast to well-endowed conservatives, liberal activist groups and think tanks were hard up for cash, competing with each other for the same pool of funds rather than working toward shared objectives. Stein’s curious calculus flattered conservatives and shamed the left by finding a great imbalance in their revenues. But oddly, he did not count academic programs and institutes, grant-making by the great foundations or the resources of the mainstream media as adjuncts of the political left. The great delusion of Democracy Alliance donors is that conservatives comprise a “vast right-wing conspiracy.”

Stein felt Democrats had grown accustomed to thinking of themselves as the natural majority party. As a result, the party had become a top-down organization run by professional politicians who cared little about donors’ concerns. He was convinced that the Democratic Party’s hierarchy had to be turned upside-down: Donors should fund an ideological movement that would dictate policies to the politicians. Activists, who had infused the party with new money and new energy, were fed up with perceived Democratic dithering and were demanding more say in party affairs. MoveOn.org Founder and Executive Director Eli Pariser said, “Now it’s our party: we bought it, we own it, and we’re going to take it back.”

Democratic donors aggravated by the GOP’s electoral success latched on to Stein’s vision. “The new breed of rich and frustrated leftists” saw themselves as oppressed both by “a Republican conspiracy” and “by their own party and its insipid Washington establishment,” journalist Matt Bai wrote in his new book, The Argument: Billionaires, Bloggers and the Battle to Remake Democratic Politics. “This, more than anything else, was what drew them to Rob Stein’s presentation.”

Stein’s presentation won converts, and in 2005, the Democracy Alliance was born. It was an odd name for a loose collection of super-rich donors committed to building organizations that would propel America to the left.

Speed Bumps on the Road to Socialism

In its short time on the political scene, the Democracy Alliance has been shaken by dissent and strife, much of which is detailed in Bai’s book.

DA partners booted Erica Payne, the political consultant who invoked the image of Pearl Harbor to rally the troops in 2004. Payne created bad blood when she led an effort to oust Rob Stein as DA chief. Stein’s successor was Judy Wade. But Wade was considered tactless and was fired from her $400,000-a-year job at a post-2006 election meeting of the Democracy Alliance board. Board members promised to streamline the group’s Byzantine grant-making process and brought Stein back to the group’s inner circle. Hillary Clinton’s friend, Kelly Craighead, who was a senior aide to Clinton when she was First Lady, replaced Wade and all but one member of a “reform” slate of candidates pushed by the Service Employees International Union (SEIU) was elected to the board.

Meanwhile, Bernard L. Schwartz, former CEO of Loral Space & Communications and one of the largest donors to the Democratic National Committee in the 1990s, quit the DA because he thought it lacked direction. “They were looking for who they should be when they grow up, and whoever had the latest idea, they went off in that direction,” he told Bai just before the 2006 elections.

In May 2006, Bill Clinton dropped by a DA meeting for a friendly greeting but got into a shouting match when DA member Guy Saperstein asked why Democrats wouldn’t apologize for supporting the Iraq War. Clinton went on a 10-minute tirade, yelling that if he had been in Congress, he would have voted to authorize the war (a position Clinton subsequently contradicted in November 2007 while campaigning for his wife in Iowa).

Angry, Clinton wagged a finger at Saperstein, telling him he was “wrong, wrong, wrong.” Clinton urged DA members to move on: “Look, if that vote was a mistake, then it’s a mistake I would have made, but you’re just wrong. This is not productive! You’re asking people to flagellate themselves! What you do tomorrow is all that matters. Only in this party do we eat our own. You can go on misrepresenting and bashing our own people, but I am sick and tired of it. Stop looking back and finger-pointing, and ask what we should do now.”

Saperstein, an Oakland, Calif., attorney was incensed. “It was an extraordinary display of anger and imperiousness,” he said. Ari Berman of the leftist Nation magazine wrote, “Clinton’s response was a not-so-subtle warning to partners to avoid divisive issues, like the war, that might harm his wife in the next presidential election.”

The DA filed its corporate registration in the District of Columbia in January 2005. Little money passes through alliance bank accounts because it is a middle man that puts donors together with causes deemed worthy of support. At press time, only two grants to the DA showed up in the FoundationSearch philanthropy database, and both went to the Democracy Alliance “Innovation Fund,” which Stein told a Hudson Institute panel is “a very small thing...that makes very small grants” to 501(c)(3) groups. The fund took in a $50,000 grant in 2006 by the Enfranchisement Foundation and a $50,000 grant the year before by the Stephen M. Silberstein Foundation.

Stein explained the group’s legal structure to the Hudson panel: “It is a taxable nonprofit. Think of it as a corporation that does not make a profit and doesn’t aspire to make a profit. We’re an association of individuals. We have a board of directors—13 people elected by the partners. And we file corporate papers regularly and comply with all disclosure requirements.”

In other words, the DA has no interest in asking the IRS to register it as tax-exempt or to allow contributions to it to be tax-deductible. Were the DA to request tax-exemption as a 501(c)(4) lobby group or as a 527 political group, it would have to abide by a dizzying array of legal constraints. DA members may want to impose Big Government bureaucracy and red tape on Americans, but the friends of George Soros are too rich to be bothered.

The DA’s board is a microcosm of the modern left. In the top rungs are a limousine liberal, a labor activist and a peacenik from the 1960s. DA chairman Rob McKay is also president of the McKay Family Foundation, a director of Vanguard Public Foundation, co-chairman of Mother Jones magazine, board member of the Ms. Foundation for Women and a blogger on the “Huffington Post” website. He was born in conservative Orange County, California, and his parents were Republicans. The DA vice chairman is Anna Burger, sometimes known as the “Queen of Labor.” She is secretary-treasurer of the militant SEIU and chairman of Change to Win, the labor federation formed after SEIU joined other unions in breaking away from the AFL-CIO. Gannett News Service called Burger arguably “the most influential woman in the U.S. labor movement.” Drummond Pike, founder of the ultra-liberal Tides Foundation, is the DA’s treasurer. In 2003, Pike endorsed the document, “10 Reasons Environmentalists Oppose an Attack on Iraq,” which was published by Environmentalists Against War.

DA Finances

The Democracy Alliance does not endorse candidates for public office. Stein describes it as a “gathering place,” “learning environment,” “debating society” and “investment club.” The DA is “a big tent, a convener for the full spectrum of center-left thought and perspective.”

This emerging vanguard of the proletariat is hardly open to the common rabble because its members must satisfy one requirement: They must be rich. Members, who are called “partners,” pay an initial $25,000 fee and $30,000 in yearly dues. They also must pledge to give at least $200,000 annually to groups that the alliance endorses. Partners meet two times a year in committees to decide on grants, which focus on four areas: media, ideas, leadership and civic engagement. Recommendations are then made to the DA board, which passes them on to all DA partners. The alliance discourages partners from discussing DA affairs with the media, and it requires its grant recipients to sign nondisclosure agreements.

While the alliance’s structure makes it hard to find precise figures for its grant-making, Matt Bai wrote in a September 23 Los Angeles Times op-ed that DA members have “thus far poured more than $100 million into building what they call a ‘progressive infrastructure.’”

Early DA meetings were guarded by security forces and shredding machines were on hand to dispose of documents deemed sensitive. But at the Hudson panel discussion in late 2006, Stein promised a new era of glasnost. Nowadays meetings, while closed to the public, sometimes include journalists. Stein promised there will “absolutely, positively” be “more transparency from the Democracy Alliance.” However, he dismissed as a “canard” the idea that the DA hid behind a veil of “super-secrecy,” noting that it had cooperated with the Washington Post and the Nation magazine on stories about it. He told the Hudson Institute audience that about 400 organizations in the DA database were eligible for funding but that “roughly 380-something of those groups” had not received any.

No grants were decided at the DA’s April 2005 organizing meeting in Phoenix. However, DA partners pledged $39 million, about $13 million of which came from Soros and Lewis alone, at the October 2005 meeting at the Chateau Elan Winery & Resort in Atlanta, Ga. Some smaller, less prominent groups were reportedly miffed that they were not considered for grants.

The next meeting, held in Austin, Texas, in May 2006, signaled that the Democracy Alliance was perhaps becoming less a gathering of very rich donors and more a meeting of the usual suspects, the interest groups. SEIU President Andrew Stern spoke and money-hungry grant-seekers were allowed to network with DA partners. SEIU pledged $5 million to DA-approved groups. Stern also tried unsuccessfully to get DA partners to fund labor’s public-relations campaign against Wal-Mart. He told attendees that liberals needed to be flexible in their policy prescriptions and resist the temptation to reflexively defend existing government programs. Stern said he wanted national healthcare, child care and better public schools but was open to dismantling some entitlement programs, trying out school choice or revamping the tax code. Even trade, normally a hot-button issue for the labor movement, is on the table. “You can’t stop globalization. You can’t stop trade. That debate is over,” he said. Following Stern’s appearance at the Austin meeting, the rival AFL-CIO thought it wise to purchase membership in the DA.

With an eye on the approaching November 2006 elections, the alliance decided to give another $22 million to 16 groups focused on electoral politics. These groups included the Center for Community Change, USAction, ACORN, EMILY’s List and the Sierra Club.
The alliance reportedly met in Washington, D.C., in early November 2007, but it is unclear what business was transacted.

Selected Grant Recipients

It’s understandable that ultra-successful business people in the alliance have little but disdain for the Democratic Party’s high-priced political consultants and conventional politicking: They think the party should be run more like a business. DA partners have divided their giving into what Rob Stein calls the “four buckets”: ideas, media, leadership training, and civic engagement.

Partners pour cash into those pails and then ladle it out to approved left-wing groups. One group denied funding is the little-known Third Way: Strategy Center for Progressives. Third Way favors free trade and publicly sided with Hillary Clinton when she urged that more troops be used in the fight against terrorism. Third Way’s board of trustees includes Lewis Cullman, Herbert Miller and Bernard Schwartz. (Cullman and Miller are members of DA, but Schwartz left the Alliance in 2006.) A bloc of DA partners led by Guy Saperstein killed Third Way’s funding request. “The alliance, these partners said, didn’t have room for self-described centrists whose main goal was to appease Republicans,” according to Bai.

There is no publicly available tally of Democracy Alliance-approved grants, but here are some grant recipients and amounts reported in the media:

Media Matters for America: This group headed by former conservative journalist David Brock claims to expose right-wing media bias. Its self-described mission involves monitoring “conservative misinformation in the U.S. media.” Brock has generated at least $7 million for Media Matters through the DA. While Brock and Sen. Clinton are reportedly not the best of friends, she has helped Media Matters and has close ties to the group. Kelly Craighead, one of Hillary Clinton’s closest friends, was a top paid advisor to Media Matters when it was set up and is currently the DA’s managing director. In 2007, the group’s website credited her with “aligning more than $60 million in Alliance Partner investments.”

Center for American Progress: Podesta’s think tank has received at least $9 million through the DA. According to Bai, the “vast majority” of the funding came from Soros, Lewis and the Sandlers. CAP aspires to be a counterpart to the Heritage Foundation, uniting disparate factions on the left. Hillary Clinton takes partial credit for creating CAP and maintains close ties to it.

Democracy: A Journal of Ideas: DA partners have given $25,000 to the start-up publication founded by former White House speechwriters Andrei Cherny and Kenneth Baer. Soros’s Open Society Institute gave the Journal $50,000.

People for the American Way: In 2006 the DA approved a grant to this vocal activist group, founded by Alliance member Norman Lear, but the amount is unknown. Its president emeritus is Ralph Neas. Hollywood actors Alec Baldwin and Kathleen Turner, along with socialite Bianca Jagger, sit on its foundation’s board of directors.

New Democratic Network (NDN): This activist group, which encompasses the NDN Political Fund, the New Politics Institute and the Hispanic Strategy Center, is headed by Simon Rosenberg, a former television news writer and producer and political strategist for the Dukakis and Clinton presidential campaigns. The DA approved a grant to this group in 2006, but the amount is unknown.

Progressive Majority: This group, created in 2001, focuses on electing left-wingers at the state and local level and developing a “farm team” of progressive candidates. Its founder and president is former NARAL Political Director Gloria A. Totten. DA grants to this group total at least $5 million.

Citizens for Responsibility and Ethics in Washington (CREW): This Soros-funded group sees itself as a left-wing version of the conservative Judicial Watch. CREW Executive Director Melanie Sloan is a former U.S. attorney and Democratic counsel for the House Judiciary Committee.

Center for Progressive Leadership
: This organization wants to mirror the conservative Leadership Institute. The center’s website describes the group as “a national political training institute dedicated to developing the next generation of progressive political leaders. Through intensive training programs for youth, activists, and future candidates, CPL provides individuals with the skills and resources needed to become effective political leaders.” CPL President Peter Murray acknowledged in July 2006 that donations from alliance members boosted the group’s budget to $2.3 million, up from $1 million the year before.

Association of Community Organizations for Reform Now (ACORN): ACORN is a radical activist group active in housing programs and “living wage” campaigns in inner-city neighborhoods in more than 75 U.S. cities. In recent years it has been implicated in a number of fraudulent voter-registration schemes. The DA approved a grant to this group in 2006, but the amount is unknown.

EMILY’s List: While the group’s political action committee boasts that it is “the nation’s largest grassroots political network,” EMILY’s List is essentially a fundraising vehicle for pro-abortion female political candidates. The DA approved a grant to this group in 2006, but the amount is unknown.

America Votes: Another get-out-the-vote 527 organization, it is headed by Maggie Fox, former deputy executive director of the Sierra Club. The group received a $6-million funding commitment from Soros.

Air America: Described by the New York Observer as “a reliable destroyer of the fortunes of wealthy, well-meaning liberals,” the struggling left-wing talk radio network is said to have lost an astounding $41 million since 2004. After it reportedly received a funding commitment of at least $8 million from the alliance, it filed for bankruptcy protection in October 2006, listing liabilities of more than $20 million and assets of just $4 million. DA member Rob Glaser has invested at least $10 million in the network over the years.

Sierra Club: The influential environmental organization successfully targeted property rights champion Rep. Richard Pombo (R-Calif.), who was defeated in 2006. The DA approved a grant to this group in 2006, but the amount is unknown.

Center for Community Change
: This longtime group dedicated to defending welfare entitlements and leftist anti-poverty programs was founded in 1968. Activist Deepak Bhargava is its executive director.

USAction: This group works closely with organized labor. It is the successor to Citizen Action, the activist group discredited by its involvement in the money-laundering scandal to re-elect Teamsters President Ron Carey in the late 1990s.

Catalist: Formerly called Data Warehouse, this group was created by Clinton aide Harold Ickes and Democratic operative Laura Quinn. Ickes is critical of the DNC under Dean and aims to create a sophisticated get-out-the-vote operation that rivals the Republican Party’s. Soros put $11 million at Ickes’s disposal because he distrusts Dean, the Washington Post reported. Albert J. Dwoskin, a DA board member and real estate developer in Fairfax, Va., is chairman of Catalist.

Employment Policy Institute
: The chairman of this liberal think tank is Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees. Other labor figures such as SEIU’s Stern are on the board. Julianne Malveaux, the black economist who condemned Supreme Court Justice Clarence Thomas as a traitor to fellow African-Americans, is secretary-treasurer.

Center on Budget and Policy Priorities
: This left-leaning think tank is headed by Robert Greenstein, who served in the Carter Administration and received a MacArthur Fellowship (the so-called genius award) in the 1990s.

AmericanForeignPolicy.org
: A new startup headed by University of Connecticut law Prof. Richard Parker claims on its website to have received funding from three DA partners and that Parker authored “a major study” for the DA “on investment gaps and needs in promoting a progressive national security and foreign policy.”



Matthew Vadum is the editor of Organization Trends. James Dellinger is the executive director of Green Watch and Education Watch at Capital Research Center.


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