05/01/2014
Those who did address the issue at the annual spring meeting of the Democracy Alliance donor club at the Ritz-Carlton sounded not unlike the conservatives who bristle at questions about their own big-money activity. Their donations are animated by a desire to right a country headed down the wrong path, both sides argue.
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CHICAGO — Democratic attacks on the Koch brothers for secretive campaign spending have become a virtual plank in the party’s platform, but it turns out big-money liberals can be just as defensive when their own closed-door activities are put in the spotlight.
During a gathering here of major Democratic donors this week that has raised more than $30 million for liberal groups, questions about the party’s split personality on the issue were dodged, rejected or answered with an array of rationalizations. That is, when they weren’t met with recriminations or even gentle physical force.
The liberal strain of the argument is usually sprinkled with a heaping helping of moral superiority. Their most generous backers are giving to candidates and causes that could hurt their bottom line by raising taxes on the denizens of their elite tax bracket, the argument goes, whereas conservative big donors are seeking to pad their pockets by trying to slash taxes and regulations that impinge on their business.
“The people who are giving money into politics here are interested in changing the system. They’re not interested in getting return on investment,” said former Stride Ride president Arnold Hiatt, who donated $1.9 million to Democratic super PACs in 2012, not including gifts to nonprofits that aren’t required to disclose their donors. “You can focus on the irony, but it’s not hypocrisy because we’re not trying to get something for our donations.”
Recent court decisions have empowered super-rich partisans like the members of the DA, as the group is known, by vastly expanding the types and amounts of cash that can flow into campaigns. In the new landscape, it’s even more important for politicians and operatives to get in front of major donors, so conventions held by the DA and conservative industrialists Charles and David Koch are a hot ticket. They can help form consensus around politicians and exert major influence over the direction of their respective parties from behind closed doors.
And, while many of the donors and operatives gathered here decry the new system — and support measures to reduce the role of money in politics and increase transparency — they are nonetheless active participants.
“Most of these people would love to put themselves out of business,” said David Axelrod, President Barack Obama’s former campaign guru. “Most of these people would prefer a country in which big donors didn’t play as large a role in our politics,” added Axelrod, who in 2012 branded the Koch brothers and other conservative big-donor groups “contract killers in super PAC-land.”
“But so long as money in politics is required, there are going to be people on both sides who are willing to step up and provide it,” said Axelrod, who delivered the keynote at the DA’s Tuesday night dinner.
While sources say the Democracy Alliance has discussed holding open-press sessions that would be more consistent with its support for transparency in politics, for now the group — like the Koch network — goes to great lengths to keep its gatherings private. Locations are a closely held secret, reporters are barred from the sessions, and participants are prohibited from discussing the proceedings.
Few donors or participants spoke to POLITICO on the record. Top Obama White House aide Valerie Jarrett, New York City Mayor Bill de Blasio and Kentucky Democratic Senate candidate Alison Lundergan Grimes all ignored questions about whether Democrats are hypocritical on big money as they walked between a bank of elevators in the lobby and a promenade leading to the rooms hosting the DA panels and speeches.
Jarrett refused to make eye contact with a reporter asking such a question on Monday night, while de Blasio on Sunday night said, “My friend, we’re not doing media right now. We’re happy to talk to you another time,” as a handler stepped between the quick-walking mayor and a reporter. When Grimes, following a closed-door meet-and-greet with major donors Tuesday, was asked about liberal efforts to vilify the Kochs and other major conservative donors, she said, “I sure appreciate your time. You have to go through our communications department,” then stepped into an elevator and stood behind an aide.
Communications staffers for de Blasio and Grimes did not respond to subsequent requests for comment.
Democracy Alliance staff chastised a reporter during an attempt to interview major donor Jonathan Soros as he headed toward a panel on campaign finance reform. “Sir, you’re not allowed to go past here,” said one staffer, as another grabbed this reporter’s arm to prevent him from walking with Soros, who co-founded a super PAC, called Friends of Democracy, that intends to spend as much as $6 million in 2014boosting candidates who support campaign finance reforms including enhanced disclosure.
Soon after, three hotel security officers approached to put the kibosh on additional inquiries.
“If it’s not sanctioned by our PR department, we can’t actually have anybody approach anybody for any kind of interview or sound bite or anything like that,” security supervisor Joe Rios said, explaining that DA representatives had asked him to enforce the charge.
DA spokeswoman Stephanie Mueller later explained that attendees were complaining about “aggressive” interview attempts and urged POLITICO to “respect their privacy.”
Democracy Alliance partners range from rich individuals like billionaire currency trader George Soros (Jonathan’s father) and Houston trial lawyers Amber and Steve Mostyn to deep-pocketed unions to corporations like Amalgamated Bank, which was introduced as a new member in Chicago. Its president, Keith Mestrich, declined to comment when asked why the bank joined the DA.
The group holds two conferences a year, which include a mix of entertainment — donors at the Ritz were treated to a stand-up routine by “The Daily Show” co-creator Lizz Winstead and a private curator-led tour of the Art Institute of Chicago — and panels on elevating progressive issues like income inequality, climate change, drug reform, gun control, abortion rights and the death penalty.
But the real action typically occurs on the sidelines. The Democratic data juggernaut NGP-VAN rented a 13th-floor conference room to hold meetings with operatives throughout the conference. And, on Sunday night, Michael Vachon, a representative for George Soros (who did not attend the conference), huddled with AFL-CIO officials Richard Trumka, Damon Silvers and Michael Podhorzer to discuss ways to rally Democrats using income inequality. No one in the group responded to requests for comment sent later via email, though Podhorzer did accidentally drop his phone into a massive rubber-duck-filled fountain in the middle of the Ritz lobby.
DA partners pay annual dues of $30,000 and are also required to contribute a total of at least $200,000 a year to recommended groups, many of which are nonprofits registered under a section of the Tax Code — 501(c) — that allows them to shield their donors’ identities, including pillars of the left like Media Matters and America Votes.
“These donors have a right to use their money how they chose — whether it’s to entities like super PACs that disclose their donors or to 501(c) entities that don’t,” said Jason Torchinsky, a top election lawyer who represents GOP party committees and many conservative nonprofits, including some in the Koch network. “So, I don’t fault those guys for what they’re doing. I just think that when their side screams about what our side does, they should look in the mirror.”
The DA, since its inception in 2005, has steered $500 million to recommended groups. And the group is adding partners for the first time in years. In Chicago, donors had committed $31 million to recommended groups through Tuesday night — the second day of the three-day conference — according to sources. That was significantly more than at last year’s spring meeting, and the pledged total was expected to continue growing through the conclusion of the conference on Wednesday.
But Axelrod suggested Democracy Alliance donors aren’t in the same league as the Kochs, whose donor network in 2012 steered $400 million to an array of nonprofits, or major donors like Las Vegas casino mogul Sheldon Adelson, whose family dropped $100 million into GOP groups.
“I don’t know if there is a corollary to Adelson or the Koch brothers. I think they’re somewhat unique,” said Axelrod in a Tuesday morning interview conducted in a lower lobby of the Ritz-Carlton away from the watchful eyes of the hotel security and DA staff. “I don’t see anything on the Democratic side like that.”
While it’s impossible to precisely assess how much money is being raised and spent through 501(c)4 nonprofits, Democrats actually have an edge in big-money super PAC fundraising in 2014.
But, according to DA President Gara LaMarche, his donors don’t have the same kind of self-interested motivation to keep digging deep.
“George Soros isn’t trying to get a tax break or relief from regulation or whatever. He is basically saying, let’s have a system where somebody like me would be taxed more heavily,” LaMarche said last week. On other side of the 1 percent aisle, LaMarche asserted, conservative donors treat their political giving as “a business expense.” Their giving “coincides with self-interest in a narrower sense more than it does on the progressive side, so I think that is a distinction that is significant.”
Of course, there are some examples where liberal donors’ causes overlap with their economic interests. San Francisco hedge fund billionaire Tom Steyer, whose aides delivered a Tuesday morning presentation to DA donors on his plan to spend $100 million in the 2014 midterms boosting environmentally minded candidates, has invested in renewable energy initiatives that could be boosted by his advocacy. And DA partners Amber and Steve Mostyn, who declined an interview request in Chicago, have spent heavily against advocates of tort reforms in Texas that could crimp their legal business.
Meanwhile, there are plenty of examples of top conservative donors whose giving is animated by causes unrelated to their bottom lines. While Adelson would undoubtedly benefit from GOP tax policies, he donates mostly on the basis of a single issue — the defense of Israel — that is detached from the casino empire that built his $40 billion fortune. And the Kochs often cite their opposition to ethanol subsidies that benefit their sprawling industrial empire as an example of a political stance that could hurt their bottom line. To be sure, they also take many more stances that could boost or protect their bottom lines — including opposing cap-and-trade legislation and additional environmental regulations — but those positions coincide with their libertarian worldview, and even critics concede it can be tricky deducing a chicken-or-egg effect.
All of that nuance goes out the window in the current Democratic war on the Kochs.
Senate Majority Leader Harry Reid (D-Nev.) has repeatedly denounced the Kochs in hyperbolic terms, accusing them of “actually trying to buy the country” and of being “un-American.”
Asked about the Democracy Alliance gathering in light of Democratic attacks on Koch gatherings, Rob Tappan, a Koch Industries spokesman, defended “the First Amendment rights of all Americans to free speech, free association and to peaceably assemble without fear of reprisal.” But he also took an oblique swipe at the Kochs’ critics, including Reid, arguing “for one individual or group to be treated differently or held to a different standard than another individual or group is not only the height of hypocrisy — it’s un-American.”
Assailing the Koch brothers and other GOP mega-donors is effective “as a call to action” among liberal donors, explained Jon Carson, a former top Obama White House aide who now runs Organizing for Action, an Obama-boosting nonprofit that solicits donations from Democracy Alliance.
“What’s actually going on is a conversation about motivation for why people put money in politics and I think on all sides, some people genuinely have policy views they care about,” said Carson, whose group was poised to host DA partners at its headquarters. While Carson extended an invitation to tour the headquarters some time, he said POLITICO could not join the DA donor tour.
The guarded demeanor of most DA guests stood in contrast to another group of VIPs staying at the Ritz — the Washington Wizards and TNT basketball announcers Marv Albert and Steve Kerr. The basketball team’s players welcomed all manner of well-wishers — including some DA participants — as they wandered around the lobby passing time before their Tuesday night NBA playoff game against the hometown Chicago Bulls.
On Tuesday morning, it was pointed out to Wizards swingman Trevor Ariza that Axelrod, eating breakfast with Carson in the Ritz lobby restaurant, and other Chicago-based Obama loyalists are big Bulls fans.
“That’s funny,” Ariza said. “Hopefully we piss them off.”
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