Free Enterprise Fund Walks the Walk

Posted July 26, 2005 at 6:03pm

If the Free Enterprise Fund has a rallying cry, it may well be, “We’re not a think tank. We’re a do tank.”

Those are the words of Mallory Factor, the fund’s volunteer president and chairman, who takes pride in the fact that his group is “actually helping to make legislation.”

Factor, a New York-based investment banker with a soft spot for witticisms, also said that his group doesn’t have “retreats,” but rather “advances.”

“Washington has done a lot of retreating and thinking, not enough doing and advancing. Our sole goals are the economic issues to make this country a better place,” he said.

The Free Enterprise Fund — a spinoff established by conservative activist Stephen Moore after he left the Club for Growth — has been around only as long as this Congress has been in session, and in that time, it has focused its energy, and its reported initial budget of about $1 million, on some of the biggest debates now raging, including Social Security privatization, trade policy and the estate tax (or as Factor calls it, “the vulture tax”).

The fund is not registered to lobby, but between its political action committee, its 501(c)(3), its 501(c)(4) and its 527, it has been intensely involved with what’s being discussed on the floor of the House and Senate.

Just to be on the safe side, the group will most likely register to lobby shortly.

Larry Hunter, the Free Enterprise Fund’s vice president and chief economist, said that legal definitions aside, “we’re basically lobbyists — we lobby for a diverse membership that shares a set of intellectual ideas and policy, rather than corporations.”

The fund’s membership is not public, and the group isn’t publicizing its PAC goals for the 2006 election cycle, either. Peter Roff, the fund’s political director and vice president responsible for the PAC, said it will raise “enough to make a difference.”

Hunter said that in many ways, the fund’s activities are similar to those of the Club for Growth. Indeed, the two groups have a tension-filled and much publicized recent past.

When Moore was ousted from the Club for Growth over his management style, he took with him that group’s advocacy arm and renamed it the Free Enterprise Fund. Moore soon joined The Wall Street Journal’s editorial page, but the group has continued without him.

The groups’ sparring climaxed this spring after Moore sent a three-page letter to members of the Club for Growth encouraging them to support FEF — a move that the club viewed as an attempt to poach its base. Club members even said in news reports that the group was considering action against FEF for stealing its donor lists.

The matter is now behind them, officials say. Former Rep. Pat Toomey (R-Pa.), who heads the Club for Growth, did not return calls for this story.

Hunter joined FEF in February. The group also has Social Security reform pioneer Peter Ferrara on its roster. And former Rep. Jack Kemp (R-N.Y.) serves as co-chairman of the group’s policy council.

“We have a PAC [and] we’re interested in electing the very best candidates,” Hunter said. “Where we differ from the club is … you can elect the best people, but once they get elected they have this bad habit of drinking the water. If you hope to have success in changing the agenda, we concluded you have to have an active advocacy operation.”

To be sure, other conservative groups like the Club for Growth also maintain an active operation in grass-roots and advertising advocacy. The club, for example, has taken on a role in the heated debate over the Central American Free Trade Agreement, pushing for its passage.

Grover Norquist, president of the conservative group Americans for Tax Reform, has worked with the fund on several issues including CAFTA. “I think it’s a good collection of talent, and Mallory’s a good political leader and fundraiser,” Norquist said.

As for whether there’s enough room in Washington to support another like-minded group, Norquist said, “It’s a big country. We need more economic, free market groups.”

Norquist added that the FEF and the Club for Growth “will have a healthy rivalry in the sense that they will do a lot of the same things.”

Hunter said that the fund, in its short existence, has collaborated with such groups as the American Conservative Union, Americans for Tax Reform, Institute for Policy Innovation and the American Family Business Institute.

The FEF has hosted discussion events on such issues as Social Security reform and the estate tax.

And the new group recently teamed up with the American Family Business Institute in an estate tax ad campaign that targets Sen. Maria Cantwell (D-Wash.) and five other Senators.

In addition to the estate tax, the fund has been most active in pushing for personal retirement accounts as part of Social Security reform. Hunter said he helped push the idea of using the Social Security surplus to fund individual accounts with members of the House leadership. Many of the ideas the FEF supports are embodied in the GROW Act, he said.

Factor asserted that “we restarted the debate on Social Security. It started dying, and it’s our guys that got it going again.”

Like many similar groups, the FEF has entered the business of scoring Members’ voting records. The fund had hoped to have a snazzy online “real-time” scorecard up and running for the vote on CAFTA this week, but Hunter said it’s not clear if it will be ready.

“It’s one of the things that’s been preoccupying our computer people,” he said. “We’re hoping to have the thing up for our CAFTA vote. We wanted to bring it into the Internet age.”

While CAFTA is a priority for the fund, Hunter said the group hasn’t “been down in the trenches on it the way we’ve been working Social Security and tax reform.”

The group has also worked frequently with freshman Sen. Jim DeMint (R-S.C.). DeMint, Hunter said, has been a key ally for the group when it comes to tax reform, an area that the FEF expects to heat up next year.

Hunter said he and members of his group have been working with DeMint’s office on a bill they expect to be introduced later this year that would repeal the federal income tax and replace it with a national retail sales tax and another tax for corporations.

When it comes to the lobbying operation, Hunter said the group is small, though having a veteran like Kemp affiliated with the group helps “because he knows all” the Members.

“The one thing Kemp impressed upon me over the years, is you have to find exactly the right point and if you put a little bit of force you get” a big change, Hunter said.