By Matthew Mosk
Washington Post Staff Writer
Monday, April 21, 2008; A01
With Sen. John McCain facing the prospect of being dramatically outspent in the race for the White House, a collection of major Republican donors and party leaders that includes former Bush strategist Karl Rove is scrambling to catch up with the efforts of liberal groups aiming to influence the outcome in November.
"The folks on the right may have a rude awakening when they see how sophisticated the infrastructure is that's been built up on the left," said Clifford May, who heads the Foundation for Defense of Democracies, which could figure into the Republican effort. May, who said he has discussed the imbalance with Rove, added: "We're the little leagues compared to them."
Outside advocacy groups, most notably the Swift Boat Veterans for Truth, which dogged Sen. John F. Kerry (D-Mass.), played a pivotal role in the 2004 presidential contest. While individuals face strict limits on how much they can give directly to candidates for federal office and party organizations, many of the outside groups can accept unlimited donations and face a much lower bar for the disclosure of their activities.
This year, allies of President Bush such as Rove, billionaire T. Boone Pickens, New York financier Paul Singer and Florida developer Mel Sembler, who helped harness and direct millions of dollars to the 2004 campaign, are working to rekindle those efforts. But they are finding the 2008 landscape to be more challenging, according to Republican sources familiar with the ongoing talks.
Some donors have shied away from involving themselves in efforts to aid McCain, a persistent critic of back-channel campaign funds. Others have succumbed to the broader malaise among Republicans. Still others are skittish about heightened scrutiny from regulators who have vowed to crack down on outside efforts to influence this year's campaign.
"The soft-money landscape has changed," said Philip A. Musser, a Republican consultant advising the American Future Fund, another group that could play a central role in the 2008 elections. "There are a lot of organizations interested in taking on various slivers of this election, but nothing has coalesced around the presidential contest in the way we saw in 2004."
The Republican-allied organization once expected to play that role, Freedom's Watch, endured a tumultuous month of March, with a leadership change and internal disagreements about its direction. Now, the group appears poised to concentrate on competitive congressional contests. It has already run television ads in special elections for congressional seats in Ohio and Louisiana.
But a vacuum remains for Republicans in the presidential contest.
"I hear rumblings," said Brad Freeman, a Bush donor in California. "People keep asking the question, 'What are we going to do this time?' "
Sembler, a big Bush donor and former finance chairman of the Republican National Committee, confirmed that he and others are working to identify a group that could help shape the agenda for the presidential campaign and steer major donors to it. A motivating factor, he said, is the sense that Democrats are much further along in their efforts.
"They are very organized. They started a whole lot earlier," Sembler said. "We are not quite as organized. But our efforts are still going forward."
During the 2004 presidential race, Democratic operatives built what amounted to a shadow party machinery from scratch. This time around, their plans center on groups that are already up and running, with names such as the Atlas Project, America Votes, Fund for America and Progressive Media USA.
Last week, Progressive Media USA launched the first of what it said would be $40 million worth of advertising casting McCain as a third act of the Bush presidency.
A Democratic-aligned umbrella group, America Votes, is overseeing activities by about 40 organizations, each with its own target audience. One of them, Women Voices Women Vote Action Fund, says it will dedicate nearly $30 million to register unmarried women. Another, MoveOn.org, plans to spend $10 million prodding progressive voters in suburban and exurban communities to vote. America Votes will attempt to ensure that each group targets different voters and will help provide organizations with access to mailing lists and voter data.
"We're full steam ahead," said Eli Pariser, MoveOn's executive director.
Fund for America is raising money for the combined efforts and has taken in contributions of more than $11 million so far. Some of its funds will come from billionaire George Soros, a perennial patron of Democratic causes, said Michael Vachon, who manages Soros's political contributions. Vachon noted that although Soros has committed $3.5 million to Fund for America, he "does not intend to become involved on anywhere near the level that he became involved in 2004."
The Atlas Project, the creation of veteran field organizers Steve Rosenthal, Mary Beth Cahill and Michael Whouley, has been working for months on "road maps" in each potentially competitive state to ensure that the collected lessons of past races will be aggregated under one roof.
While faring better than their GOP-aligned counterparts, those close to the Democratic effort acknowledge that raising money has been tougher than they expected, due in large part to the ongoing primary battle between Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.). Obama reported last night that he raised $41 million in March, giving him $135 million in contributions during the first quarter of 2008, while Clinton is expected to report about half of that March haul.
As that race grows more contentious, Democratic operatives are becoming concerned that donors allied with the losing candidate will be reluctant to open their wallets for advocacy groups in the fall.
Republican fundraisers said major donors and operatives have been waiting to see which organization will emerge as the counterpoint to Fund for America.
The reasons for the hesitation have varied. One is McCain's continued and vocal opposition to the formation of 527 groups, named for the section of the tax code that covers their activities, which provide a channel for unregulated and unlimited donations to pay for thinly veiled political ads.
Last week, during a forum shown on MSNBC, host Chris Matthews asked McCain if he would "sit down with the Democratic nominee . . . and agree to them that there will be no outside sleazeball attacks by either side, that you will tell your people you will condemn any attack, like a swift-boating, and you will both agree to do that upfront, right after you get the nomination?"
"I would love to do that," McCain replied. "During the primary, there was a 527 that sprang up. And I asked them to stop."
McCain's statements on outside spending have not been ignored by potential donors, according to one GOP fundraiser.
"Frankly, Senator McCain has made very publicly known his distaste for third-party advocacy, and I think that weighs heavily on people's minds," the fundraiser said.
McCain campaign manager Rick Davis said Friday that he understands the cause and effect and is not bothered by it. He conceded that he has been surprised that no one group has emerged on the Republican side, in spite of the candidate's comments. "I would have thought by now someone would occupy that space," Davis said.
Another obstacle this year has been the effort by federal regulators to clamp down on the role of outside organizations in federal campaigns. After the 2004 cycle, when political money flowed to the 527 groups, the Federal Election Commission issued a series of rulings and fines saying they had skirted campaign finance laws. This year, partisan activists are planning to make greater use of issue advocacy groups organized as nonprofits under the tax designation 501(c)(4). Under tax laws, as long as more than half of their work is geared toward nonpolitical goals, they can also engage in election-related activity.
But those groups make some donors nervous, too, because they are regulated not by the FEC but by the IRS. "No one wants the IRS breathing down their necks," said Meredith McGehee, policy director at the Campaign Legal Center, which tracks campaign finance issues.
Washingtonpost.com staff writer Chris Cillizza and staff researchers Alice Crites and Madonna Lebling contributed to this report.