Nick Rathod is a career Democratic operative who started and will run SiX. EXCLUSIVE Democrats create an ALEC-killer Activists are asking donors to help reverse the Democratic decline.

Chastened by the conservative movement’s startling success at using national money to dominate state legislatures, liberal activists this week will ask top donors to support a plan to reverse the precipitous Democratic decline in state governments, where the party was trounced yet again on Tuesday.

President Barack Obama’s former liaison to the states will launch a major new state-focused organization called the State Innovation Exchange — or SiX for short — before donors on Friday at the annual winter meeting of the Democracy Alliance liberal funding club.


SiX’s goal is an ambitious one: to compete with a well-financed network of conservative groups — including the American Legislative Exchange Council — that for years have dominated state policy battles, advancing pro-business, anti-regulation bills in state after state.

( Also on POLITICO: The war over Obama's new war in Iraq)

SiX ultimately plans to raise as much as $10 million a year to boost progressive state lawmakers and their causes — partly by drafting model legislation in state capitols to increase environmental protections, expand voting rights, and raise the minimum wage — while also using bare-knuckle tactics like opposition research and video tracking to derail Republicans and their initiatives.

“Progressives are looking around to figure out where to go to push back, and there has not been a vehicle to do that at the state level — it’s the biggest missing piece in the progressive infrastructure,” said Nick Rathod, a career Democratic operative who started and will run SiX.

Rathod — who served as President Barack Obama’s liaison to state officials and directed state campaigns for former New York City Mayor Michael Bloomberg’s gun safety group — has his work cut out for him.

After Tuesday’s elections, during which Republicans netted more than 300 seats, the GOP had full control of at least 29 state legislatures — its biggest edge since the 1920s.

( Also on POLITICO: Rand's grand plan)

Rathod’s supporters contend that Democrats, having essentially ceded state-level battles in recent years, are approaching a tipping point. If they don’t mount an effective and well-funded response soon, liberals fear Republicans could use their state-level supremacy to severely damage the political clout of Democrats and some of their key constituencies, including organized labor and African-Americans.

With strong, deep-pocketed assistance from ALEC and its allies, Republican lawmakers in dozens of states in recent years have pushed legislation to roll back union power and enact voting restrictions that disproportionately affect African Americans. ALEC also helped craft GOP base-revving legislation like the controversial Stand Your Ground measures, which are now law in 30 states.

Such state policy fights likely will help shape the agenda of the 2016 presidential election, as they did in 2008 and 2012, and, perhaps more importantly, the redrawing of congressional district boundaries after the 2020 census.

The national political parties have increasingly targeted the once-a-decade redistricting process as a chance to fundamentally shape the balance of power in Washington for at least the next decade. Democrats got clobbered in the 2010 redistricting, which Rathod called “a wake-up call to progressives that legislatures matter, not only in state policymaking but inevitably at the federal level. We effectively gave away the House of Representatives for a decade.”

( Also on POLITICO: They Like Me, They Really Like Me)

Conservatives and their groups, including ALEC, deserve credit, conceded Paul Booth, an official at American Federation of State, County and Municipal Employees. “They made a sound strategic decision to prioritize activity at the state level and they beat us to the punch. They were smarter than we were,” said Booth, who has been working with Rathod to help launch SiX.

Rathod spent the summer traveling the country quietly holding meetings with state lawmakers, union officials and rich donors,using a PowerPoint presentation to illustrate the spread of GOP control and conservative legislation across the country. He appears to have won support from some influential and deep-pocketed liberals, but a receptive audience from the Democracy Alliance this week would go a long way toward determining whether the group can meet its ambitious goals.

The Democracy Alliance’s member donors in the past decade have given more than $500 million to club-recommended groups. And SiX appears to be on track to score a coveted endorsement, depending on how it’s received at this week’s annual winter meeting, which starts Wednesday and lasts four days — with most of the proceedings held behind closed doors at Washington’s Mandarin Oriental hotel.

In an email sent on Friday to confirmed attendees, Democracy Alliance president Gara LaMarche wrote that, though the four-day confab will be held in Washington, “it is the rest of the country — the states where progressive power must be built and restored — that will be our primary and urgent focus.”

LaMarche, who assumed the reins of the Democracy Alliance last year, conceded in an interview that the group and major liberal donors more generally haven’t always prioritized the states, instead focusing disproportionately on higher-profile national politics.

“There is not a lot of history of donors stepping up to give to state legislative races in places that they don’t have a connection to,” he said. “And in order to get this job done over the next five or six years, there has to be in effect a nationalization of the state strategy.”

The liberal disadvantage isn’t just on the policy side.

The Republican State Leadership Committee, which invests in key state races and is considered a major player in a national network of deep-pocketed groups conceived by uber-operatives Karl Rove and Ed Gillespie, raised $26 million in 2014 . That compares to $9 million raised by its Democratic counterpart, the Democratic Legislative Campaign Committee, which has sometimes struggled to win support from national donors.

Follow @politico

SiX’s emergence comes as major players in big-money Democratic politics are increasingly turning their attention to the states. David Brock, who helms a raft of liberal groups that focus on national politics, has had conversations with major donors and allies about deploying his opposition research group, American Bridge, and his ethics watchdog, Citizens for Responsibility and Ethics in Washington, to target Republican state lawmakers ahead of the 2020 redistricting process.

The agenda for this week’s Democracy Alliance conference, reviewed by POLITICO, includes multiple panels on channeling cash to state battles, including redistricting and state legislative campaigns.

The Friday panel at which SiX’s plan will be presented to donors is called “The Progressive State Power Deficit: A Plan to Build Progressive Power in State Legislatures.” And the co-host list, which often dovetails with the donor rolls of the effort in question, suggests SiX should have no problem raising money. Panel sponsors include big-fish donors Cookie Parker and Steve Silberstein of California, a pair of major teachers unions and AFSCME, which Booth confirmed is helping to fund SiX.

Rathod hopes to be able to raise between $3 million and $5 million for SiX’s first year to demonstrate that the concept can be effective, and then plans on expanding in subsequent years to a budget of between $8 million and $10 million.

That would fund a team of policy experts from universities, think tanks, law firms and liberal organizations who could craft legislation for state lawmakers on a range of progressive issues, including reducing carbon emissions, expanding voting rights and increasing the minimum wage and union power.

SiX is inviting several hundred progressive state lawmakers to a December conference at a Northwest Washington hotel to receive communications training and policy assistance. That effort, which mirrors ALEC’s strategy on the right, will be backed up by sharper attacks on state conservatives. SiX plans to bring together a team of opposition researchers, trackers and rapid response pros to undercut conservative opponents. Such an approach, reminiscent of the tactics of Brock’s national groups, some of which are also supported by Democracy Alliance, is harder-hitting than has traditionally been deployed in inter-state politics.

“We’re going to be much more aggressive than ALEC,” said Rathod, who’s received encouragement for his efforts from the White House, Hillary Clinton’s allies and other Democracy Alliance-supported groups — all of which could benefit from an aggressive push in the states.

But past efforts to boost Democratic prospects at the state level have floundered. In recent years, liberal groups and academic think tanks have failed to mount a unified push across states, struggling to gain traction in the states or raise the funds necessary to sustain organizations of any heft and often cannibalizing one another.

AFSCME’s Booth was involved in one of the last major efforts, a group called the Progressive States Network. It seemed like it might make a go of it back in 2011, when it raised $1.3 million — not peanuts, but a far cry from ALEC’s $9.2-million budget that year. The Network’s funding plummeted to $344,000 in 2012, however, and it found itself in competition with a group started in 2011 called American Legislative and Issue Campaign Exchange (or ALICE — a play on ALEC’s name).

Neither organization caught hold, and when Rathod was hired in April to run ALICE, he moved quickly to consolidate the liberal forces. He got the Progressive States Network and its sister political group, Progressive States Action, as well as a more academic group that worked with governors’ offices called the Center for State Innovation, to agree to merge with ALICE. In an email to the various groups’ supporters, he explained “the movement has lacked a unified strategic approach to supporting legislators and advancing issues of importance to progressives in the states.”

His efforts quickly caught the attention of the other side.

When word of the merger made news in July, ALEC blasted out a fundraising email asserting “The Left is extending ALEC the greatest form of flattery — imitation. Liberal groups announced they will create a state-based organization to replicate the ALEC model in the states.”

Lisa B. Nelson, ALEC’s chief executive, sounded the same note on the creation of SiX, calling it “an indicator that states matter and the ALEC model of engagement is sound.”

“While ALEC’s proven model has long been the focus on criticism by progressive groups … the merger, and plan for future engagement with legislators by the newly formed organization, is a sign that past claims of impropriety on the part of ALEC are unfounded,” Nelson said in a statement.

For his part, LaMarche insisted that ALEC and other groups pushing conservative tax- and regulation-slashing policies in the states have a built-in fundraising advantage.

“There is, in the case of the support of something like ALEC, a huge amount of economic self-interest involved and that just isn’t present in the same way on the progressive side,” LaMarche said. “So you have to make a different kind of case.”

Nonetheless, Rathod said his group is open to raising corporate money, though many publicly traded corporations have grown leery of backing political organizations, thanks partly to liberal attacks on ALEC.

“We do not want to unilaterally disarm and not work with the business community,” Rathod said. “However, we will have strict rules on who we take money from and why,” he said,asserting his group would pursue “a people’s agenda … not a corporate one.”

Like ALEC, SiX is not be required to disclose its donors, but Rathod said it plans to do so voluntarily, partly to differentiate it from ALEC.

SiX’s lawyers plan to file paperwork this week with the Internal Revenue Service to officially create the group as a two-pronged outfit by changing the names of two of the groups it annexed to the State Innovation Exchange. Since the groups were registered under different sections of the Tax Code — ALICE under 501(c)(3) and Progressive States Action under 501(c)(4) – SiX will be able to engage in both policy and political advocacy.

While SiX initially does not intend to play directly in state legislative elections, Rathod said that, if all goes well, his group will do so in subsequent year by forming a political action committee called — cleverly — SiX PAC.