Follow the Money
The Shadow Party emerged from the dense thicket of campaign finance reforms engineered by Senators John McCain and Russ Feingold. Thanks to the soft-money ban enacted by the McCain-Feingold Act of March 27, 2002, the Democratic Party entered the current election cycle hard pressed to raise enough money legally to undertake a winning campaign. This created an imperative that found its inevitable loophole (as critics of McCain-Feingold always warned it would). Consequently, the driving force in the political war against George Bush is now a group of billionaires and millionaires operating through the veiled structures of the Shadow Party.
Under McCain-Feingold, political parties and candidates can only accept “hard money” contributions – that is, contributions given to a specific political party for a specific political campaign. Such contributions must be reported to the Federal Election Commission, and are limited to a $2,000 maximum per donor for each candidate, or $5,000 per donor if they are paid to a federally registered political action committee (PAC). Historically, Republicans have enjoyed a 3-1 advantage over Democrats in raising hard-money contributions from individual donors. Democrats have relied much more heavily on soft-money contributions from large institutions such as unions.
Soft money refers to political contributions, which for one reason or another have been exempted from the limits imposed by the FEC. Before McCain-Feingold outlawed such contributions, soft money donors could give as much money to political parties as they wished. Their contributions often numbered in the millions of dollars. McCain-Feingold deprived the Democrats of their soft money, but the Shadow Party has provided an alternate channel for collecting unlimited contributions. For example, government unions used to lavish multi-million-dollar contributions on the Democratic Party – money which the unions drew from their members, through mandatory dues. The unions still collect their membership dues, but, under McCain-Feingold, they may no longer pass that money along to the Democratic Party, at least not directly. The solution? They give it to the Shadow Party instead.
The Shadow Party uses various expedients to evade McCain-Feingold’s limits. First, it works through independent non-profit groups that ostensibly have no connection to the Democratic Party, either structurally or through informal coordination. The Shadow Party contains many types of non-profit groups, but most of its big fundraisers are “527 committees” – named after Section 527 of the IRS code – sometimes called “stealth PACS” because, unlike ordinary PACS (political action committees), they are not required to register with the Federal Election Commission nor to divulge their finances to the FEC (except in special circumstances).
Another expedient used by the Shadow Party is to claim that it is not engaged in electioneering at all. Most Shadow Party groups say they are soliciting funds not to defeat a particular candidate, but to promote “issues” and non-partisan get-out-the-vote drives. Of course their issue promotions have, in most cases, turned out to be savage attacks on the opposing candidates and their get-out-the-vote drives have used sophisticated demographic marketing techniques to target exclusively Democratic constituencies. All of this casts doubt on the Shadow Party’s claim to be aloof from the electoral struggle and therefore exempt from FEC regulation. However, a pliant Federal Elections Commission has conveniently declined to rule on the Shadow Party’s legality until after the election, when it will no longer matter.
Needless to say, McCain-Feingold also bars the Republican Party from raising soft money. However, Republicans never had a problem raising individual contributions for their candidates and never made a habit of raiding union treasuries for “soft money.” Thus Republicans have felt less urgency than Democrats to seek alternative fundraising methods, and they have proved slower in pursuing the 527 escape route from McCain-Feingold. Republicans have built no network of independent, non-profit groups comparable in numbers or scale to the Democrat Shadow Party.
No one knows who first coined the term “shadow party.” The term has become popular among journalists, but likely originated among the freelance fundraisers themselves. In the November 5, 2002 Washington Post, writer Thomas B. Edsall wrote of “shadow organizations” springing up on both sides of the political fence to circumvent McCain-Feingold’s soft money ban.[4] Lorraine Woellert of Business Week
appears to have been the first journalist to apply the term “shadow party” specifically to the Democrat network of 527 groups, in a September 15, 2003 article titled, “The Evolution of Campaign Finance?”[5] Other journalists followed her example.
The Soros Factor
According to conventional wisdom the Shadow Party began taking form shortly after March 27, 2002 – the date President Bush signed the Bipartisan Campaign Reform Act, popularly known as McCain-Feingold. However, the Shadow Party’s earliest origins predate the Reform Act by many years. The principal mover behind the Shadow Party is Wall Street billionaire and leftwinger George Soros. A New York
hedge fund manager, global investment banker and currency trader, Soros has a personal net worth in the $7 billion range. Under his aegis, the Shadow Party has created a new power base for the left, independent of the mainstream party apparatus – a leverage point from which to tilt the party in an ever-more-radical direction.
Only Soros knows when he first conceived the idea of forming this network. However, clear hints of his intentions began to appear as early as the 2000 election. By that time, Soros had already baffled friend and foe alike with his increasingly strident attacks on capitalism – the very system which had elevated him from a penniless Hungarian refugee to one of the world’s wealthiest men. In his 1998 book The Crisis of Global Capitalism, Soros predicted an imminent collapse of the global financial system. Financiers like himself were largely to blame, he wrote, for they had allowed greed to overwhelm their humanity. “The (global capitalist) system is deeply flawed,” wrote Soros. “As long as capitalism remains triumphant, the pursuit of money overrides all other social considerations.” [6]
Soros offered no coherent solution to the problem. He simply continued his long-established pattern of pouring money into a hodge-podge of fashionable leftwing causes, such as promoting mass immigration into the United States; financing anti-gun lawsuits and lobbyists; demanding voting rights for felons; seeking the abolition of capital punishment; exacerbating Palestinian unrest; promoting abortion; feminism; population control; gay liberation; euthanasia; radical theories of education; marijuana legalization and global government.
In 2000, Soros stepped up his attack on the status quo – dramatically raising his profile in U.S. electoral politics in the process – by sponsoring the so-called “Shadow Conventions.” Organized by author, columnist, social climber and political gadfly Arianna Huffington, the Shadow Conventions were counter-cultural events that gave a spotlight to critics of the electoral mainstream, most from the far left. In an effort to lure news crews away from the national party conventions, Huffington held her “Shadow Conventions” at the same time and in the same cities as the Republican and Democratic conventions in Philadelphia and Los Angeles respectively.
The largest single donor to the Shadow Conventions was George Soros, who put up about one third of the cost, according to Time magazine.[7]
Media commentators at the time played the Shadow Conventions for laughs. Yet these events conveyed a serious message; a comprehensive radical agenda which Soros evidently endorsed.
Third Force
The Shadow Conventions promoted the view that neither Democrats nor Republicans served the interests of the American people. Like the New Left of the 1960s and today’s Green Party, both of which dismiss the major parties as instruments of the “corporate ruling class,” Huffington declared that US politics needed a third force to break the deadlock. Among the issues highlighted at the Shadow Conventions were racism, special interest lobbies, marijuana legalization and the allegedly growing concentration of wealth – a radical hobgoblin since Karl Marx first raised its specter 150 years ago. Most speakers and delegates at the Shadow Convention hewed to a hard-left line, their views resonating with the “Free Mumia” chants that erupted periodically from the crowd and with Jesse Jackson’s incendiary charges that Republicans were racists. Huffington herself was a sometime conservative whose cult-like worship of Newt Gingrich had formerly evoked titters of amusement from media gossips. At the Shadow Conventions, she told reporters: “I have become radicalized.”
Not all the speakers were hucksters in the Jackson mold, however. Senator John McCain whose campaign finance crusade had put him at odds with both parties was one of the few mainstream politicians to accept Huffington’s invitation to speak. He made an impassioned plea for campaign finance reform, a crusade which – perhaps not coincidentally – George Soros had been a major force in pushing since 1995.
The Shadow Conventions were symbolic affairs. They represented no party and nominated no candidates for office. However, many of Soros’ activities during the 2000 campaign went beyond symbolism. It was during the 2000 election cycle that Soros first began experimenting with raising money through 527 committees. He assembled a team of wealthy Democrat donors to help him push two of his favorite issues – gun control and marijuana legalization. Soros collected contributions greatly exceeding the $5,000 limit allowed to federal PACs, but he evaded those limits by using 527 committees.
One of Soros’ committees was an anti-gun group called The Campaign for a Progressive Future, which sought to neutralize the influence of the National Rifle Association (NRA) by targeting political candidates whom the NRA endorsed. Mainstream Democrats had backed off the gun control issue when candidate Al Gore learned that 40 percent of union households owned guns. However, Soros was no mainstream Democrat. He personally seeded The Campaign for a Progressive Future with $500,000.[8]
During the 2000 election, Soros’ Campaign for a Progressive Future funded political ads and direct mail campaigns in support of state initiatives favoring background checks at gun shows. Soros and his associates also funneled money into pro-marijuana initiatives, which appeared on the ballot in various states that year.[9]
Donors to Soros’ stealth PACs during the 2000 election cycle included insurance mogul Peter B. Lewis and InfoSeek founder Steven Kirsch, both of whom would turn up later as major contributors to Soros’ Shadow Party during the 2004 campaign.
