October 29, 2010


The New Democrats: The Coalition Pharma and Wall Street Lovey

From Names on a List to Power Players

The New Democrat Coalition was formed as a House caucus in 1997, following in the footsteps of the Democratic Leadership Council and President Bill Clinton’s “third way” policies, designed to make Democrats and their platform more business friendly. When launched, the group lacked a fundraising PAC and had no legislative staffers. However, they did have allies at the highest levels of the Democratic Party and access to the party's political and fundraising machine.

The New Democrats were as pro-business then as they are now. Many of the group's members, including Kind and Crowley, supported the 1999 Gramm-Leach-Bliley Act, which repealed marquee financial legislation passed after the Great Depression and paved the way for financial institutions to become "too big to fail." A year later, many also voted for the Commodities Futures Modernization Act, which curtailed regulation of financial derivatives, including the products that played a major role in the collapse of energy firm Enron in 2001 and helped to bring the world economy to the brink of disaster in 2008.

Though the driving force behind both bills was Sen. Phil Gramm, a Texas Republican who left Congress just after their passage to lobby for the Swiss bank UBS, they were pushed hard by Clinton administration officials like Robert Rubin and Larry Summers, signed into law by Clinton, and supported by congressional groups like the New Democrats.

When Republicans took control of Congress and the White House, institutional support for the New Democrats dried up. For a time, membership in the group was like being “just a name on the list,” Ron Kind has said. Only groups like the Blue Dogs, with their own fundraising and policy arms, were able to thrive during the height of the Bush years.

In February 2005, the New Democrats reorganized. They cut their roster in half, made membership dues and meeting attendance mandatory, and launched a political action committee to raise money. Then-Rep. Ellen Tauscher, an investment banker from Northern California, became the group's leader, with Kind and Crowley serving as her deputies.

When their party won back Congress, the New Democrats were handed a huge fundraising opportunity. Before the 2006 election, the group's PAC had raised only $636, 471, but it more than doubled that amount over the next two years, pulling in $1.5 million. At the second annual retreat in 2007, the list of attendees read like a guide to Washington's new lobbying elite. Representatives of AIG, PhRMA, UBS, Wellpoint, and many others headed to a Maryland resort for what was billed as “an opportunity to discuss important and challenging issues facing Congress," with 20 New Democrats, including Tauscher, Kind and Crowley.

In early 2009, Tauscher left Congress for a State Department appointment, and Crowley became chairman. The congressman from Queens is known in Washington both for being a fundraising powerhouse and for never passing up a chance to play his guitar in public. Since 2005, he has chaired the business council of the DCCC, which serves as the key fundraising arm for House Democrats. From this post, Crowley has had an inside track to many of the Democratic Party's biggest K Street donors. By the time he became the DCCC's vice chair last year, he had raised $5 million for the organization.

With Crowley in command, the New Democrats have collected more campaign cash from lobbyists than ever before. By the end of August, the group had already pulled in nearly $1.7 million for the current election cycle. Individuals who donate $2,500 and corporate PACs that give $5,000 get a seat on the NewDemPAC Steering Committee and access to regular coffee breaks and happy hours with members of Congress and their staff, according to fundraising invitations and event notices posted online.

The New Democrats have also used less transparent ways to raise money from their most loyal K Street supporters.

Federal election law prevents corporate PACs from giving more than $10,000 to other PACs and prevents groups like the NewDemPAC from passing along more than $10,000 to an individual member's campaign during an election cycle. To get around these limits, the New Democrats created the Keystone Group, which is run by Rep. Jason Altmire, a former federally registered lobbyist, and Helen Milby, the NewDemPAC's chief fundraiser. Lobbyists who join the Keystone Group pledge to donate at least $500 directly to the campaigns of individual New Democrats at events organized by the coalition's PAC.

Functioning like an invisible PAC, the Keystone Group directs contributions to caucus members without filing papers with the FEC, leaving no record of the New Democrats' role in facilitating the transfer of funds. It’s impossible to say precisely which lobbyists are involved in the group and how much money it has raised. However, at the annual retreat in May, Altmire thanked Keystone members for raising $500,000 in the program's first year and a half. Neither Altmire nor Milby would speak with ProPublica about the project or the group’s fundraising.

Even when taken together, the NewDemPAC and Keystone represent only a small fraction of the coalition's fundraising muscle. The same 243 PACs and 63 individuals who donated to the NewDemPAC gave another $16.8 million directly to the campaigns and leadership PACs of the group’s lawmakers between January 2009 and the end of August, a ProPublica analysis of FEC data shows.

In addition to helping raise funds, lobbyists involved with the New Democrats have offered their services as mentors and advisers, particularly to the group's most junior members and staffers.

One group, Majority Under 40, "whose mission is to help new Democrats in Congress adapt to life in Washington," was founded by two lobbyists who have personally given a combined $26,000 to the New Democrats during the 2010 election cycle. The group has organized more than 50 off-the-record meetings between lobbyists and freshmen lawmakers in the past three years, many of them with members of the New Democrat Coalition.

"We will have gotten to know them as freshmen. That's what we're hoping. It will be nice to get in on the ground floor," founder David Thomas told Roll Call when the project launched in 2007.

The New Democrats continued