Former AFL-CIO Political Director Steve Rosenthal is trying to launch a $20 million tax-exempt group that would boost pro-labor candidates during the 2004 election cycle.

Word of the proposal for a new union-funded political operation, which labor leaders are still reviewing, comes as AFL-CIO President John Sweeney is prepared to announce a successor today for Rosenthal, ending a five-month search rife with behind-the-scenes jockeying by union insiders seeking to fill the void left by his departure, as well as continued questions over Rosenthal’s future influence with the powerful labor federation.

Rosenthal, who is staying on as a consultant to the AFL-CIO, plans to set up at least one tax-exempt 527 group to help with the AFL-CIO’s get-out-the-vote efforts next year. Rosenthal wants to steer $20 million or more from the AFL-CIO and other unions to his nascent organization, according to labor and Democratic Party sources.

During the search for Rosenthal’s replacement by the AFL-CIO, questions have arisen within the federation over how much authority the successor will be given, what financial resources will be available for labor’s political efforts this cycle and what kind of relationship that individual will able to forge with Sweeney, who is very close to Rosenthal.

Denise Mitchell, the AFL-CIO’s communications director, characterized the search effort as a “very good process” and added that Sweeney would disclose his choice today to a meeting of the federation’s political committee.

Mitchell confirmed that the AFL-CIO had interviewed a number of candidates for the job, including Larry Scanlon, political director of the American Federation of State, County and Municipal Employees, as well as Karen Ackerman, the acting AFL-CIO political director.

Scanlon, for his part, said he was happy to stay at AFSCME, itself a very politically active union.

“I think I have the greatest political job in Washington, and besides, the AFL-CIO hasn’t made me an offer I could refuse,” said Scanlon.

[IMGCAP(1)] Several other Democratic strategists were also approached in recent months to gauge their interest in the post, although two have since taken other jobs. They include Andy Grossman, who was recently appointed executive director of the Democratic Senatorial Campaign Committee, and Luis Navarro, the former political director of the Service Employees International Union, who is now working for Sen. John Kerry’s (D-Mass.) presidential campaign.

Mitchell said several other candidates had also been interviewed by AFL-CIO officials, although she declined to name them. “It’s been very smooth,” Mitchell said of the search process.

But a number of union insiders said the quest for Rosenthal’s successor has been more difficult than AFL-CIO officials let on, and suggested a number of different factions within the federation had been battling to fill the vacuum created by Rosenthal’s exodus. “They’ve really got themselves in a quandary over this,” said one top labor strategist.

Along with the concerns about Rosenthal’s future role with the AFL-CIO and the money he’s soliciting for his 527 group, there have been questions raised over the influence of Gerald Shea, who is Sweeney’s assistant for government affairs. Rosenthal, who served as political director for seven years, had strong personal ties to Sweeney and often served as a counterweight to Shea, something his replacement may not be able to do.

“Rosenthal was perfect for that job,” said a senior labor strategist. “He had the respect of all the union presidents. He had Sweeney’s respect. It will be hard for somebody else to duplicate that.”

Whoever eventually gets the job will face several major challenges, not the least of which is a Republican president who seemingly thrives on political combat, a Democratic Party searching for both a message and a messenger after its disastrous showing in the November midterm elections, and a new campaign finance environment that restricts the use of one of Big Labor’s favorite political tools — soft money.

With the end of federal soft-money contributions to the national parties, more than $30 million of which went to Democrats last cycle from unions, labor leaders are still searching for a way to use their financial muscle to help influence the political process.

The ban on soft money hurts labor, which loses some of the leverage it has with Democrats because unions can no longer give directly to the national party. And while many of the biggest unions have strong political action committees, soft money was easier for union officials to raise and use.

“There is a big question about what financial clout unions have with the Democrats in a world without soft money,” said a Democratic operative familiar with the Rosenthal situation. “That’s all still up in the air.”

Rosenthal has lobbied several union presidents to back his plan to pump $20 million or more into at least one 527 tax-exempt group, according to several well-placed sources. Rosenthal aims to boost turnout among women, minority groups and union members in eight to 12 key states heading into the 2004 election cycle.

But several AFL-CIO member unions have yet to sign off on Rosenthal’s project, which is expected to be publicly unveiled in the next several weeks.

“There’s no clear sense of mission yet, and that’s a big problem,” said a union official who has spoken with Rosenthal about his plans. Another top labor strategist said the unions are “moving very cautiously” in the post

McCain-Feingold world because so many legal questions, such as which parts of the legislation will survive court challenges, are still unresolved.