Kerry's Inner Circle Expands

But the difference in structure between the Kerry operation and then-Vice President Al Gore's campaign in 2000 is "black and white," said Bianchi, who formulated economic and budget policy for Gore as well. Back then, Gore had a wealth of policies already formulated by the Clinton administration. After eight years in power, weary Democratic policy experts weren't clamoring to share new ideas. A stripped-down campaign policy shop existed mainly to push proposals that moved only incrementally beyond then-President Bill Clinton's or to ensure Gore's campaign proposals were consistent with the administration's record.

Kerry's campaign was not always so expansive. On economic policy, for instance, a core group of four once held the key to the policy process: Bianchi, campaign economic aide Jason Furman, investment banker Roger C. Altman and Gene Sperling, former top economic adviser in Bill Clinton's White House.

Now, things are more complicated. Three more economists -- London Business School Dean Laura D'Andrea Tyson, Princeton University's Alan S. Blinder and the Brookings Institution's Peter R. Orszag -- are consulted on virtually every policy decision. Former Treasury secretary Robert E. Rubin also weighs in on major policy pronouncements.

Another circle, including Akerlof, University of California at Berkeley economist Alan J. Auerbach, Princeton's Cecilia E. Rouse, and Harvard University labor economist Lawrence F. Katz, advises on specific issues.

A separate "New York group" -- including investment bankers Eric Mindich, Blair Effron and Steven Rattner -- tutors Kerry on matters of domestic and international finance, while helping to raise money and woo business support.

This spring, when Kerry was pushed to put policy flesh on his political rhetoric about "Benedict Arnold CEOs" and jobs moving abroad, it took weeks and "innumerable meetings" to formulate a proposal, said one of the participants.

There were labor and the Democratic lawmakers, such as Rep. Sander M. Levin (Mich.) and Sen. Ernest F. Hollings (S.C.), who wanted strong curbs on tax loopholes promoting overseas expansion but also assurances that any revenue gains from foreign corporate tax hikes would be spent at home. There was the fiscally conservative wing, led by Rubin but including think-tank economists and Wall Street financiers, that wanted a stronger focus on deficit reduction. Business backers and fundraisers pushed for an across-the-board cut in the corporate income tax to temper the sting of Kerry's populist rhetoric.

From his ski-vacation home in Idaho, Kerry phoned in to the final conference call, deciding a corporate rate cut would signal that his intention was business tax reform, not a tax hike, Bianchi said. Overriding some economists, he also insisted that a provision be added to allow multinationals based in the United States to continue deferring taxation on overseas sales to customers in local markets.

"In the end, he's the guy who makes the call," Sperling said.

According to Bianchi, Kerry had to contend with three different power centers -- Boston, New York and Washington -- in formulating his signature, $653 billion health care plan. The Boston group was pushing federally mandated health care coverage from employers. David Cutler, a health care economist at New York University, led a push to mandate individuals to buy insurance. Harvard University health policy expert Robert Blendon insisted that any policy offering would be a political trap and that Kerry should serve up only broad principles.

In Washington, Sperling and a group of economists objected to any mandates and tried to push back on costs, again worried that nothing would be left of Kerry's tax increases on the wealthy to reduce the deficit.

While most advisers agreed that the uninsured should be addressed through expanding existing federal programs such as Medicaid, it was Kerry who demanded something to reduce costs for the already insured. That led to one of the most important parts of his proposal, a "catastrophic" plan that would give the federal government responsibility for the most expensive ailments.

Those policies were difficult to finesse, even though they involved a relatively small group, aides said. The far larger universe of advisers in what is called "the outer ring" has taken on a more nebulous role. On May 19, about 30 economists, congressional aides and interest group representatives packed into a stuffy, cramped conference room at campaign headquarters to hash over economic policy. Another 30 were on speakerphone.

"It was very hot," Bianchi said. "I left."

The meeting had been slated for a far larger room, but Kerry and independent presidential candidate Ralph Nader -- meeting for a long-awaited tête-à-tête -- had kicked them out.

One participant, who spoke on condition of anonymity because he did not want to alienate the campaign, said half the meeting was consumed by introductions.

Aides say such meetings do occasionally yield a useful nugget. At one such meeting, Harry Holzer, the chief economist in Clinton's Labor Department, brought up the high youth unemployment rate and efforts by the Bush administration to eliminate Youth Opportunity Grants. The suggestion that this connection be made publicly found its way quickly into campaign rhetoric.

And experts have been enlisted to draft policy memos on issues -- from the technical to the obscure -- that just may crop up between now and November. Advisers have crafted briefings on Microsoft billionaire Paul G. Allen's private spacecraft, African trade agreements, a manned mission to Mars and federal tax deductibility of state sales taxes.

Mostly, however, the outer ring serves another purpose. By casting a wide net, Bianchi said, the campaign is always ready with an expert when an unexpected issue crops up suddenly. Many members of the policy councils can also be effective Kerry advocates in their far-flung communities, she said.

And by being expansive in its policy apparatus, the campaign can make donors feel wanted for more than their money and make dissonant voices in the party feel heard.

"It seems to be working, in the sense of making the outside people feel warm and fuzzy, like they've been consulted," said one close economic adviser. "It's mostly so all these people can say they're working with the Kerry campaign."