The dark-money group No Labels offered to raise $200,000 for two of the so-called Unbreakable Nine — the House Democratic faction blocking the party’s agenda this week — if they would cancel an appearance last Saturday at a Napa Valley fundraiser hosted by House Speaker Nancy Pelosi, according to two congressional sources familiar with the proposal.
Reps. Carolyn Bourdeaux, D-Ga., and Vicente Gonzalez, D-Texas, had both been scheduled to appear at Pelosi’s fundraiser, which was jointly hosted by the Democratic Congressional Campaign Committee. Their appearance would have created awkward optics for No Labels because the group had been working to project a united front of opposition to Pelosi’s legislative agenda, which hinges on a plan to hold back a vote on the bipartisan infrastructure bill in order to maintain leverage over a complementary $3.5 trillion reconciliation package. The larger package includes significant tax increases on the private equity barons and other wealthy individuals who fund No Labels, and the group has unleashed a flood of money in order to stop it.
Bourdeaux attended Pelosi’s fundraiser. Gonzalez canceled his appearance. “Absolutely no such agreement was made,” said Isaac Baker, a senior adviser to Gonzalez. Margaret White, executive director of No Labels, denied there was any such offer. “This is false,” she said.
An official with the DCCC said that despite Gonzalez’s lack of attendance, his campaign will still benefit from the fundraiser.
“Congressman Gonzalez spent the weekend at home in McAllen, Texas, to work on safely evacuating Americans and our allies out of Afghanistan, and to monitor the urgent situation at the border and a spike in COVID-19 cases that is overwhelming local hospitals,” Baker added. Bourdeaux did not respond to texts or voicemail messages requesting comment.
On Tuesday afternoon, after the group secured a promise of a floor vote on the infrastructure plan by September 27, Reps. Josh Gottheimer, D-N.J., the leader of the rebellion; Bourdeaux; Jared Golden, D-Maine; and Kurt Schrader, D-Ore., gathered over Zoom with dozens of No Labels donors for a victory lap. “You should feel so proud, I can’t explain to you, this is the culmination of all your work. This would not have happened but for what you built,” Gottheimer told them, according to a recording of the conversation obtained by The Intercept. “It just wouldn’t have happened — hard stop. You should just feel so proud. This is your win as much as it is my win.”
The call was led by Andrew Bursky, managing partner of Atlas Holdings, a major private equity fund in Connecticut, which operates heavily in the construction and development sectors. “When it comes to their ringleader this is about one thing and one thing only: blocking tax increases on the private equity guys who fill his campaign account,” said one House source, reflecting the broadly held view among House Democrats that the effort by Gottheimer and No Labels was singularly focused on preventing tax increases on the wealthy, corporations, and tax-advantaged sectors like private equity and hedge funds. “No Labels professes to value bipartisanship, but from my experience they value ‘buypartisanship,’” said Rep. Mark Pocan, D-Wis., a former No Labels member who resigned from the group when they declined to disclose donor identities. “Clearly they want to advocate for their donors more than good government, and that means things like corporate tax breaks and the like.”
The efforts by No Labels donors come as corporate groups have pushed to defeat the investments in combating inequality funded through taxes on the wealthy and certain business sectors. The finance industry has deployed dozens of lobbyists on Capitol Hill to block the infrastructure provisions centered on increasing taxes on private equity. Business Roundtable, which represents the chief executives of the largest publicly traded companies in America, has retained former Democratic staffers to fight the tax provisions.
Whether the House’s concession on infrastructure amounts to a win is dubious and hotly debated on Capitol Hill, but there’s no question No Labels has organized its donors to fight the taxing and spending battles of the Biden administration.
In June, No Labels co-founder Nancy Jacobson — the spouse of operative Mark Penn, a mentor to Gottheimer — was explicit in her plan to use donor money to “reward” members of Congress who voted the way the organization insisted, according to audio of another private meeting, which The Intercept obtained that month.
“Now the truth is, there’s no other group in the center that’s putting the hard dollars together,” Jacobson told a group of donors in the June meeting, which also included Sen. Joe Manchin, D-W.Va. The term “hard dollars” refers to money given directly to a candidate for federal office, which candidates find more valuable than outside spending because they have full control over their own funds, whereas super PACs make their own spending decisions. Candidates also have access to discounted television commercial rates, while outside groups pay the full freight. Jacobson noted that while many other dark-money organizations put up “big numbers … that’s a lot of soft dollars, it’s a lot of super PACs, it’s things they don’t control. They” — members of Congress — “love the hard dollars, and I would be hard-pressed to think of any other group that can raise that sort of money. Our hope is at least $20 million over the cycle with this group, and hopefully keep doubling it as we go.”
Jacobson added that the recipients of the largesse remained to be determined. “We’re gonna see what happens with this next vote and we want to reward those people that, you know, get to party solutions,” she said.
By making the linkage between votes — known in the legal ethics world as among a set of “official acts” — and campaign funding so explicit and direct, No Labels isn’t just exposing members of Congress it supports to accusations of run-of-the-mill corruption, but also potentially exposing them to legal liability. On the question of whether accepting campaign funds as a “reward” for the right vote on the infrastructure bill would break the law, a Congressional Research Service summary explains that accepting such money could indeed be off-limits, if it was given because of how they voted: “The prohibition on bribery precludes officials from accepting contributions in exchange for performance of an official act. The prohibition on illegal gratuities does not require that the contribution be made in exchange for the official act, but instead precludes officials from accepting contributions made because of the official act.”
On Tuesday, Gottheimer said that both the White House and congressional leadership had put intense pressure on the group, but the support they had from their donors was key to bucking up their strength. “We got on the phone every single day for a conference call and everyone stuck together. And they beat the shit out of us. Excuse my language. They really, really were tough on us. I mean, they used every single thing, every tool they had to put pressure on us and you know it, and they wanted us to break apart and we wouldn’t break apart,” he said during the Zoom meeting. “You had people from the DCCC threaten our members to cut them off financially. People threatened redistricting, people threatened primaries — our own people, our own leadership. Justice Democrats, which is the Squad, are running ads against me and my colleagues in our district right now. But we fought back and you all really helped us.”
Kurt Schrader, the former chair of the Blue Dog Coalition, told the group Tuesday that the so-called win gives them leverage to target the reconciliation package. “This is a big deal. I just wanna thank you guys so much for your support, having our backs, being a big part of why we are, where we are today,” he said.
“Let’s deal with the reconciliation later. Let’s pass that infrastructure package right now, and don’t get your hopes up that we’re going to spend trillions more of our kids’ and grandkids’ money that we don’t really have at this point,” Schrader said. The Oregon lawmaker went on to note that severing the traditional infrastructure vote from the broader package showed that bipartisanship is still alive and well. “You can build real relationships. … I’ve talked to a lot of our Republican Congress members. It’s a huge win.”
On Monday, Pelosi and her leadership team put the screws to Gottheimer and his crew, deploying the range of threats Gottheimer described later. No Labels put out an ad defending what they dubbed the “unbreakable nine,” characterizing them as heroes of our time and comparing them to the late politicians Abraham Lincoln, Margaret Chase Smith, and John McCain.
Aside from Bursky, the Tuesday evening donor call was attended by a slew of some of the country’s richest people, who all stand to pay high taxes thanks to the multitrillion-dollar legislation’s design to balance its spending with revenue increases on corporations and the wealthy. A variety of approaches have been floated, from raising the corporate income tax rate to increasing funding for the IRS so that the agency could pursue audits of complex, high-end tax returns. The bill’s backers also contemplate changing the structure of the tax code for private equity firms and hedge funds, whose partners currently enjoy much lower tax rates than wage earners.
The call’s list of attendees included billionaire Howard Marks, co-chair of Oaktree Capital Partners; Andrew Tisch of Loews Corporation, whose name is plastered around New York City thanks to the Tisch family’s charitable giving; Gordon Segal, the co-founder of Crate & Barrel, now managing director of the private equity firm Prairie Management Group; Kenneth Schiciano, managing director of major private equity firm TA Associates; Pelican Ventures’ Jim Stanard, founder of RenaissanceRe and former chair of TigerRisk Partners LLC; Jim Tozer, managing director of real estate investment firm Vectra Management Group; John Cushman, chair of global transactions at commercial real estate firm Cushman & Wakefield; Steve Fifield, head of his real estate investment firm Fifield Co.; and former Democratic Sen. Joe Lieberman of Connecticut, a co-founder of the group.
The source who provided the recording acted out of disappointment that powerful donors would come together to try to sink the side of the spending effort focused on “social economic inequities that we see in this nation.”
The broader reconciliation bill — focused on unprecedented investments in free child care, education, and health care — represents the most transformative program in decades to alleviate poverty, benefits that will disproportionately flow to many communities that have experienced systemic racism in the past. The source said the fact that No Labels would mobilize its strength to defeat such a groundbreaking proposal provided the motivation to share the recording with The Intercept.
“For every one dollar investment in the early development of a child, the returns are double digit, in terms of workforce participation, health care, longevity, crime reduction,” said the source.
“These No Labels donors are overwhelmingly old, rich and white people, from finance and from Wall Street,” the source added, noting that deficit concerns are only raised in the context of spending, not when taxes on the rich are slashed. “They don’t mind the tax cuts [they got previously]. And they don’t talk about ‘pay-fors’ when it’s a tax cut. They only care when it’s a program to confront systemic racism that is embedded in the numbers in terms of poverty.”