Quotes of the Day

In recent days, Ohio voters have probably seen a TV spot ripping Democratic "stimulus and debt" policies, courtesy of a group calling itself Crossroads GPS. They may also have caught an ad by an outfit called the American Action Network praising Republican Congressmen Pat Tiberi and Dave Reichert for "standing up for fiscal responsibility." Meanwhile, Ohio Governor Ted Strickland, a Democrat, is under attack from the Republican Governors Association (RGA) for being a "bad governor," while the U.S. Chamber of Commerce has been touting the "pro-business" record of GOP Senate candidate Rob Portman.

All of these groups are based in D.C., not Ohio. And only one of them, the RGA, is required to disclose its donors — and only a few times a year. Which makes Ohio look less like a boxing ring for the candidates than a chessboard for invisible well-funded operatives hundreds of miles away.

Ohio is hardly unique. From Washington to Florida this election season, candidates risk being drowned out by a flood of advertising from a robust new network of little-known conservative political outfits. "Shadow Republican groups formed by longtime party officials and party operatives are raising and spending hundreds of millions of dollars in this election," says Fred Wertheimer of Democracy 21, a nonpartisan campaign-finance-reform group, "most of which is going to come in the form of secret undisclosed contributions."

While the 2010 campaign narrative has focused on grass-roots Tea Party activists defying the Washington GOP establishment, a potentially more important story involves that establishment's quiet creation of what amounts to a new kind of unofficial but totally coordinated national Republican campaign machine. The result, Democrats fear, could be a $300 million Republican spending blitz this year, as well as a network of GOP groups primed and ready for the 2012 presidential election. The liberals' alarm is compounded by the Democrats' failure to create a similar operation of their own. While Democrats have their own firepower in the form of big-spending labor unions, the new GOP effort now appears certain to outmatch them. "These groups," says a Washington Democratic operative, "are a punch to the stomach."

At the Crossroads
One way to understand how much has changed since 2008 is to visit one office building in downtown Washington. On the 12th floor are the offices of American Crossroads, which plans to spend more than $50 million influencing the midterm elections. American Crossroads was the brainchild of a group of top Republican insiders, including two of George W. Bush's closest White House political advisers, Karl Rove and Ed Gillespie, both of whom remain informal advisers. (Neither would talk for this article.)

Running the group's day-to-day operations, with a staff of about 10, is a GOP establishment insider named Steven Law. A silver-haired, genial veteran of Republican politics — he is a former chief of staff to Senate Republican leader Mitch McConnell — Law sits behind a tidy desk as he boasts about his group's grand plans. They include a fall advertising blitz that in the past month has already targeted Democratic candidates in at least six states, including Colorado, Nevada, Missouri and California, as well as a monster $10 million national get-out-the-vote campaign that will include 40 million pieces of political mail and 20 million phone calls to voters in key states. "I catch my breath every time I say it," Law says of the huge numbers.

At the same time, American Crossroads is helping coordinate a network of some two dozen conservative independent groups, planning ad campaigns and mailers, to ensure that they aren't duplicating or interfering with one another's work — "like kids' soccer, where they all run to the ball instead of spreading out," Law says.

Sometimes that coordination is as easy as walking across the hall. Sharing office space with American Crossroads is the American Action Network (AAN), a group led by former Minnesota Senator Norm Coleman, a Republican, which may spend up to $25 million this year. Originally billed as a conservative think tank, the AAN has increasingly turned to raw politics, having spent more than $1 million on ad buys targeting Democrats such as Senators Patty Murray in Washington and Russ Feingold in Wisconsin. ("We definitely can't afford him," an AAN ad says of Feingold and his alleged free-spending record.)

Or it can be as simple as picking up the phone and calling a friend. Mississippi Governor Haley Barbour, the current chairman of the RGA, is an adviser to the AAN. The RGA, in turn, is on pace to spend even more than American Crossroads this year — at least $65 million and perhaps far more — in an effort that will be coordinated with Law's group. A key RGA fundraiser is Fred Malek, a top GOP moneyman who is also on the board of the AAN. (Gillespie has joined Malek on at least one fundraising trip to New York for their respective outfits.) To make things really easy, Gillespie, Malek, Barbour, Law, Coleman and several other Republican fundraisers gather regularly to coordinate strategy. The attendees, who first convened at Karl Rove's home, even have a nickname for themselves: the Weaver Terrace group, named for the Washington street on which Rove lives.

Adding more potency to this conservative network is the U.S. Chamber of Commerce, the Washington arm of the business community, whose 2010 political budget is likely to reach $75 million — more than double what the group spent in 2008. The chamber, which is furious with Democrats over health care reform and Wall Street regulation, has already run blistering ads against California Senator Barbara Boxer and Democratic Pennsylvania Senate nominee Joe Sestak and in support of Republican Senate candidates in Ohio, Florida and Illinois. And should the chamber ever have a question about what other conservative groups are doing, it won't have trouble getting an answer: before he joined American Crossroads, Steven Law was the chamber's general counsel.

Mystery Money
That Washington insiders are directing this money pipeline is something of a reality check at this moment of Tea Party mania. The Republican establishment may be under attack from within. But it is still directing the heavy firepower — much of it funded by big corporate and Wall Street interests for whom the Tea Partyers have little love — that could decide who controls Congress after election day. This hustling is necessary, Republicans say, in part because of the weakened state of the Republican National Committee (RNC). The RNC's chairman, Michael Steele, has been defined more by his verbal miscues and reports of dubious spending (including an infamous $2,000 strip-club tab) than by consolidation of his party's position. "The RNC has the worst chairman in our history," says one prominent Republican fundraiser. "And that created a vacuum" — which restless party operatives have filled by reviving old groups like the RGA and creating new ones like American Crossroads.

Republicans say their new efforts merely level a playing field that Democrats and their allies — with the help of Barack Obama — have owned for several election cycles. Moreover, whatever the Republican groups are doing, Democrat-friendly labor unions are set to put some $150 million of their own money into the fall elections. Other groups, such as Emily's List and the League of Conservation Voters, will kick in several million more. But this kind of cash is different from what the GOP groups are generating. Much of that union spending involves member-to-member communications, which Democratic operatives say are less effective than TV ads. And ads from unions and single-issue groups tend to be less effective than those from a purely tactical group like American Crossroads, which can tailor a flexible message.

Meanwhile, Democrats claim something sinister is afoot. It's not just the dollar figures, they say; it's the disclosure. Unlike official party committees, the new conservative outfits are almost entirely unregulated by campaign-finance laws. That means they can raise funds in the millions of dollars — unlike federal candidates, who are limited to a few thousand per election cycle. And while some of these groups are required by federal law to report their donors at least quarterly, many are able to keep their benefactors secret. American Crossroads, like Swift Boat Veterans for Truth, was founded under the 527 section of the tax code, which allows it to collect unlimited campaign contributions as long as it periodically reports its donors to the IRS. But its spin-off group, Crossroads GPS, defines itself as a nonprofit 501(c)4 organization under the tax code. The IRS says such a group "may intervene in political campaigns as long as its primary purpose is the promotion of social welfare." Ostensibly, that means that a group like Crossroads GPS conducts what it calls "hard-hitting issue advocacy." In practice, that means thinly veiled ads on behalf of Republican candidates, like an ad bashing Democratic Kentucky Senate nominee Jack Conway's support for Obama's health care reform, which ends with the memorable kicker, "It's the wrong way, Conway."

More important, perhaps, it also means that Crossroads GPS does not have to publicly disclose any information about its donors. And that, says Wertheimer of Democracy 21, "is a complete joke. Karl Rove and Gillespie did not create this organization to influence issues in America. The organization was created to elect Republicans and defeat Democrats." What information has become public reveals that some ultra-wealthy conservatives are bankrolling this effort, including Rupert Murdoch, whose News Corp., the parent company of Fox News, recently gave $1 million to the RGA; companies controlled by the billionaire Texas oil mogul Harold Simmons have given $2 million to American Crossroads. Steven Law protests that some conservative donors might not want their names made public for good reasons. "People are concerned about intimidation," he says. But reformers argue that disclosure has been a central part of campaign-finance law since Watergate, with few examples of political harassment.

A Weak Democratic Response
Democrats may condemn these Republican efforts. But in truth, they would love to match them. Some party operatives have been trying but with little success. "Our donors just haven't been interested" in big outside-group ventures, laments one Democrat with experience in such groups, "at least not yet." This strategist points to several factors: Wall Street donors who gave generously to the party in recent years now feel burned by Barack Obama's condemnations of the big banks; voters who were inspired by the prospect of the first African-American President have disappeared this cycle; and Democratic donors motivated by U.S. support for Israel are frustrated with Obama's policies toward the Jewish state. Democrats may also be the victims of their own success. The Obama campaign was so eager to neuter aggressive Republican outside groups in 2008 that it discouraged party donors from supporting independent liberal outfits, like a 527 operation run by MoveOn.org, which shut down as a result. Meanwhile, it's Republicans who can assure their donors of real bang for their buck. "A lot of [liberal] donors are smart business people, and the perception that Democrats are going to lose is chilling them from contributing," says Tom Matzzie, a former top official with MoveOn.org. "Why throw good money after bad?"

Adding to the sting for Democrats is the realization that Republicans are beating them at their own game. Crucial to the Democratic wins in 2006 and 2008 was the formation of a network of independent groups that could accept six- and seven-figure contributions from wealthy megadonors. Groups like America Coming Together and the Media Fund spent more than $135 million mobilizing voters and airing anti-Bush ads. Law has been studying those efforts. On his desk sits a copy of The Argument: Billionaires, Bloggers, and the Battle to Remake Democratic Politics, a book describing how ultra-wealthy Democrats like billionaire George Soros and Progressive Insurance Companies chairman Peter Lewis helped fund the party's return to power. He's also immersed himself in Obama 2008 campaign manager David Plouffe's recent tome. "This is the photo negative of what Republicans experienced in 2006 and 2008," he says with a smile. ("Republicans are following our road map," Matzzie concurs.)

But Democrats and some campaign-finance watchdogs say the Republicans today have a new advantage that makes them more potent than the Democrats ever were: a January Supreme Court ruling in the Citizens United case, which struck down a 2002 federal campaign-finance law prohibiting unions and corporations to spend money directly advocating for or against candidates. While corporations had previously been able to fund indirect issue advocacy, Wertheimer says many were spooked by ambiguities in the law. Because of the latest ruling, a corporate CEO may see such spending as "an exercise of your First Amendment rights rather than a potentially questionable circumvention of campaign-finance laws," Wertheimer says.

Republicans note that labor unions, which typically support Democrats, will also benefit from the ruling, and Law says he has not heard any donors say they are giving because Citizens made it easier. But because groups like Crossroads GPS don't have to disclose their donors (this was true even before the Citizens ruling), while the origins of union money are obvious, it's difficult to say just how much corporations may be pumping into the midterm campaigns. And the story is far from over. This summer, companies in both the health care and coal-mining industries began discussing possible efforts to form issue-specific groups to target Democratic candidates, according to media reports.

For Republicans like Law, 2010 is only the beginning of a much larger effort. The voter lists and polling data that groups like American Crossroads develop in the coming weeks won't be thrown away after Nov. 2. They will provide the basis for a potentially greater offensive around the next presidential election. "We're definitely building a foundation," Law says. "We hope to be an important player in 2012." Which means voters in Ohio — and elsewhere — will be hearing plenty more from those mysterious groups on their televisions.

• Michael Crowley
• How Republicans are outraising and outspending Democrats with the help of a network of little-known conservative political outfits based in D.C.