AMY GOODMAN: We’re joined now by National Journalreporter, Peter Stone. We first saw him at the Democratic Convention, and as usual, he is on the money trail. Welcome to Democracy Now!.

PETER STONE: Thank you very much.

AMY GOODMAN: Peter, before we talk about Ralph Reed and also Rudolph Giuliani and his corporate connections, we wanted to focus on a piece you had done right before the Democratic Convention and continue to follow and has become more pertinent, and that is the issue of the 527’s. Please explain what they are, and why they’re relevant?

PETER STONE: Well, the 527’s are outside groups that during this campaign cycle have proliferated. The Democrats really pioneered the development of them. A few Democratic groups have gained national prominence, one is called The Media Fund that was started by Harold Ickes, former deputy White House Chief of Staff to President Clinton, and a sister organization called America Coming Together. Together these groups to date have raised almost $120 million. They have two primary functions. One is The Media Fund has been running hard-hitting ads in many battleground states that are focusing on President Bush’s record and going after issues that they think will resonate with Democrats and build support for Kerry. They have spent over $25 million so far, well over $25 million in battleground states, and parallel to that is another organization called America Coming Together, which is aimed at doing 'get out the vote' activities, voter mobilization in the same battleground states. They got a big leg up and jump on the Republicans. The Republicans for various reasons held back, partly because of concerns that these might be in violation of campaign finance laws. That was their allegation early on. That they — and they opposed these organizations. And also probably because the Bush campaign was very well funded. One of the main rationales for the Democrats getting in earlier was that they feared that Kerry would be vastly outfund-raised, outspent by President Bush’s campaign. As it turns out now, Bush has broken all records for an incumbent, raising over $240 million in hard money, while the Kerry campaign, to many people’s surprise, has raised close to $190 million in hard money. Making it much more competitive than people suspected it would be. But the Democrats, as I said, feared that this would not be the case, and so outside groups with ties to leading Democrats, Harold Ickes, being the most prominent, decided, and Steve Rosenthal who is active with — sort of the political director of America Coming Together, former political director of the AFL-CIO, were very effective in raising a lot of money, and in Boston, particularly, they decided it was a great place to be, because that’s where many of the party’s leading donors and fund raisers were.

JUAN GONZALEZ: Let me ask you, what permits them to raise unlimited money? How are they able to get around the campaign finance reform?

PETER STONE: Well, the basic — there are couple of loopholes. Primarily they’re allowed to do this, quote, as long as they’re independent. As they’re independent of the president’s campaign, and independent of the National Party Committees. They claim that they are totally independent, not coordinating anything, and hard documentary evidence is, you know — there are a lot of appearances of ties certainly, on both sides. There are appearances of ties. but as long as they don’t coordinate their campaigns, they can raise unlimited soft money, the big contributions, the six-figure contributions that were banned in the major campaign finance reforms known as McCain-Feingold. The National Party Committees can no longer do this. In a sense, these groups have come in to fill a vacuum that the National Party Committees used to do and spend the money in things that the National Party Committees spent it on, which are heavy advertising, and get out the vote activities.

AMY GOODMAN: Isn’t this what the scandal just in the last few weeks was all about in the Republican Party that the counsel for the Bush-Cheney re-election campaign had to resign because he was advising the —

PETER STONE: He was also the legal counsel to Swift Boat group.

AMY GOODMAN: Right.

PETER STONE: And it was certainly an appearance problem with there, too. Both sides have in some ways have pushed the envelope in this effort. Both Ickes and Ginsberg say they have legal opinions supporting them and what they’re doing is absolutely fine under the new law. They’re being very careful. I’m sure they’re being very careful, but the appearance problem and the whole ambiguity of the law has created a lot of confusion and a cloud over these groups.

JUAN GONZALEZ: The essence, again, of the groups is that they cannot have advertisements supporting a particular candidate, but they can on obviously criticize —

PETER STONE: They can’t say 'vote for' or 'vote against' they are supposed to focus on issues and they’re obviously heavily identified with Bush and Cheney —- or Bush or Kerry on the other side. Go after the record. They go off the record of the opponent, but they don’t go to the next stage, ’vote for—’

AMY GOODMAN: The top adviser for George Bush, Karl Rove, granted a rare interview to John King of CNN, where he said, he thinks 527’s should be abolished. George Bush has also been not wanted to attack the Speed Boat ads, the Speed Boat Veteran for Truth ads directly without saying that all of the 527’s should be gotten rid of.

PETER STONE: Well, this seems like a good tactic for the Bush campaign to take and for the President to take. It’s easier to advocate complete abolition of the 527’s, and they have a good ally, certainly, in Senator McCain, who has been probably the leading champion of campaign finance reform, and who is early on voiced strong concerns in opposition to these 527’s. It was obviously interesting when McCain came out particularly against the Swift Boat ads, and was very critical of them, and perhaps urged the President to speak out against them, Bush decided to respond by saying, let’s get rid of all of the 527’s. So, that’s where we are on that issue right now.

JUAN GONZALEZ: But the Federal Elections Commission has, in essence, said it’s not going to make a ruling in this election cycle?

PETER STONE: Unlikely it will act before this election season, yes.

JUAN GONZALEZ: Now the Republicans have begun to develop their own 527s?

PETER STONE: The 527’s were percolating on the Republican side for some time. They held back because the Bush campaign was well financed also because of concerns they were unnecessary and illegal and they charged they were illegal. But now with the Democrats having such an advantage on this area, they have decided to mount, you know, a significant effort, whether they can catch the Democratic groups at this point is anybody’s guess. But they have had apparently some real success in the last month or two. And the leading group there is called Progress for America Voter Fund. That group actually got going in — actually got going and another group related to it, Progress for America, got going a year ago. They did early spade work in terms of fund raising. Last year, they put together a board of well connected Republicans and they actually held some briefs in Washington with potential donors late last year that were informational briefings about the new campaign finance laws and about issues that drew the likes of Ed Gillespie, the chairman of the RNC and Ken Melman, the chairman of the Bush campaign. That group, early on, was seen as one that had the impremature blessings of the GOP and gave it a leg up. But serious fund raising apparently didn’t get going until the last couple of months. Now, they claim they have raised and have commitments for about $35 million. In recent weeks they have started running ads in key battleground states. There are another set of ads that I believe are starting this week or next in more battleground states and they’re talking about staying on the air until — up until the election.

JUAN GONZALEZ: I understand one of the largest media executives, Gerald Perenchio of CEO of Univision, one of the major funders of this 527.

PETER STONE: He has given a seven-figure donation. Larger donations have come from Alex Spanos. A lot of people supporting the groups have been soft money donor GOP or the Democrats. They’re active here in New York this week. Much as Ickes and Rosenthal and Ellen Malcolm, head of Emily’s List, who is also affiliated with the Democratic groups, had strong presence in Boston centrally located in hotels where leading Democratic donors were staying, so that they would have easy access to them, Progress for America has taken their queues from Harold Ickes and has set up shop in the Ritz Carlton in New York where lo and behold, GOP’s leading donors are staying.

AMY GOODMAN: Peter Stone, we only have a few minutes and we want to get to two other issues. Very quickly to Rudolph Giuliani who gave the keynote on the first night of the Republican National convention, last night, sitting together with vice president Dick Cheney. You have been on the money trail looking at what Rudolph Giuliani is doing behind the scenes at this convention.

PETER STONE: Giuliani is engaged in fund raising to help members of congress. His PAC has recently been revived and he’s raising money. He had a fund-raiser this week that had help congressional candidates this fall. He also did a fund-raiser for John Thune, senate candidate in South Dakota, certainly one of the most important races for the GOP this year. These efforts coupled with many things that Giuliani is doing, mostly to support the Bush campaign this week, are seen as, one of Bush’s leading allies at this point. Very important ally in terms of moderates. Very important ally, even more, in terms of making the case as he tried to do the other night about bush’s effective leadership in the war on terrorism and the importance of continuing that leadership for another four years. This week, you know, Giuliani has been seeing many state delegations, also doing visits to groups that are important for potential candidates down the road, such as APAC, the American-Israel Public Affairs Committee, farm state delegations and some analysts who watched Giuliani think, you know, this could be a harbinger to run in 2008.

AMY GOODMAN: Peter Stone, since we only have a minute-and-a-half, we want to get a thumbnail sketch of a major force in the Republican Party, Ralph Reed.

PETER STONE: Ralph Reed is also here in New York this week. Obviously, he has been a major force for the Bush campaign this year. He did play a role in 2000 in the campaign with some important responsibilities, but this year his role has been significantly elevated. He is a regional southeast regional coordinator for the campaign, in charge of five states, most and important far and away is Florida. He has been also an adviser to Ken Melman, close friend and trusted adviser on various issues, including outreach to social conservatives, religious conservatives, and Reed is also seen as a good fund-raiser for the Bush campaign. He was a Ranger. He raised over $200,000. Melman told me in an interview five or six weeks ago, that he basically is one of the key people he turns to on many issues.

AMY GOODMAN: We have to do part two with you tomorrow on Ralph Reed because as he is a key force, but right now, as we wrap up the show, we want to thank Peter Stone of the National Journal.</>