Rove Rides Again

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The linchpin of Rove's coup is American Crossroads – a shadow version of the RNC for the party's richest donors. Organized under the same part of the tax code that gave us Swift Boat Veterans for Truth, the fundraising group can collect unlimited contributions from individuals and corporations. Before the Citizens United decision rewrote the rules of campaign finance, these so-called "independent expenditures" could only be used to support issues, not candidates. But now groups like American Crossroads can use their funds to openly back GOP candidates – or quietly work to destroy Democratic opponents by investing in the dirty tricks of which Rove is a Jedi master.

The group is intended, Gillespie tells Rolling Stone, to become a fixture in GOP politics for 2010 and beyond: "The idea is that there needs to be an institutional entity – a transparent, professionally run Republican operation – that will be there every cycle." The strategic logic behind the group is simple: to narrow the fundraising deficit that has daunted the GOP since Democrats discovered how to raise megabucks online. "Obama had $1.1 billion in 2008," says Gillespie, who chaired the RNC under Bush. "John McCain and his supporters spent $634 million. That's a sizable gap." American Crossroads, he boasts, will be the place where the real money goes to "play."

In the weeks since its secretive launch in March, the group has already secured commitments of more than $30 million. That's halfway to the $60 million it plans to spend by November – nearly equaling the $80 million that the RNC itself spent in 2006. That startling sum, according to one lobbyist, can be chalked up to the formidable one-two punch of Gillespie's salesmanship and Rove's Rolodex. Officially, the two men are described only as "advisers" to American Crossroads. But party insiders reveal that Rove is calling the tune, just as he controlled the RNC from the White House as an adviser to Bush. Even the cast of deputies is the same: The directors of American Crossroads are all former top officers whom Rove installed to run the RNC. "American Crossroads is not the return of the old RNC," confides one prominent committee member. "It is the return of Rove." (Through his chief of staff, Rove refused to comment.)

Gillespie maintains that American Crossroads isn't meant to displace the RNC. "I've urged people to give money to American Crossroads, but I believe their first dollars should go to the RNC," he says. And what about the timing of the group's launch, just as top party donors like billionaire Richard Melon Scaife have been abandoning the RNC? "Coincidental," Gillespie insists.

But the story of American Crossroads' creation and Michael Steele's rise and fall at the RNC are inextricably linked. At the beginning of 2009, in what marked a firm rebuke of Rove's brand of GOP politics, the man he had installed to run the RNC – Robert "Mike" Duncan, an experienced fundraiser and wealthy bank executive linked to Rove through their days in the College Republicans – was ousted by party activists hungry for change. He was replaced by Steele, a former lieutenant governor of Maryland, who had little experience raising big money. With Steele running the RNC, the corporate interests that Rove considers the party's true "base" suddenly found their pre-eminence threatened by a loose cannon who vowed to give the party a "hip-hop" makeover and empower the GOP's grass roots. The party's establishment, Steele warned, needed to get in line or "get ready to get knocked over."

Duncan's ouster also represented a blow to Rove's chief ally in the Senate: Mitch McConnell, the party's minority leader and most fervent champion of big-money politics. Duncan, a former fundraiser for McConnell, was supposed to help coordinate the midterm campaigns. "The plan was, McConnell would lead the Republicans from the Senate, and Duncan would run the RNC," says a high-level official in Kentucky politics. "Well, a funny thing happened – Duncan loses the election."

As soon as Steele took control of the RNC, Rove and McConnell began scrambling to keep the party's big money together – under their control, rather than Steele's. The plot to form American Crossroads was hatched over breakfast at the Mayflower Hotel in early 2009 by their lieutenants, Gillespie and Steven Law, McConnell's former chief of staff and a ruthless advocate for big business. As a top deputy to Bush labor secretary Elaine Chao – McConnell's wife – Law had steered a "modernization" of the nation's labor laws that stripped 6 million middle-class workers of the right to overtime pay. He then decamped for the U.S. Chamber of Commerce, where he spearheaded a $20 million campaign to block a new law that would facilitate unionization. Today, Law serves as the CEO of American Crossroads, overseeing the group's day-to-day operations, while the board of directors is run by Duncan and another Rove ally, former RNC communications director Jim Dyke.

With these top aides in place, Rove and Gillespie blessed American Crossroads as the destination for the GOP's big money. Since last year, they've helped the group raise millions from elite donors like Harold Simmons, the Dallas billionaire who pioneered the leveraged buyout. The move represents a dramatic transformation of the traditional approach to party fundraising. "This is the plutocratic wing of the GOP getting together and deciding that, in the era of unlimited corporate contributions, they don't need a formal Republican Party anymore," says a top Democrat. "It's all about the accumulation of power. McConnell and Duncan are not movement conservatives. They are establishment guys – absolutely unapologetic for that. They've got all the money they need – and now they don't have to put up with those pesky, true-believing activists."

All that was left for Rove to do was to sit back and wait for Steele to alienate the party's top donors. It didn't take long. Within months of taking office, Steele was standing up donors at fundraising dinners, describing them as "ego-driven" in a leaked strategy document, and spending their money on limos, private jets and Hawaiian retreats for RNC staff. But it wasn't until March that Steele handed Rove and Co. the ammunition they needed, when it was revealed that RNC staffers had blown $2,000 partying at a lesbians-and-leather burlesque show in Hollywood. As Steele was engulfed by a media maelstrom, Rove was only too eager to twist the knife. "The chairman of the Republican National Committee, for good or for ill, is the steward of the party's money," Rove said during a stop on his book tour. "The question is whether the procedures are in place to spend money on elections – and not on jets and bondage clubs."

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