The ATM for Bush’s America

Factor and his wife, Elizabeth, who urged him to get involved with politics.Photo: Michele Abeles

Mallory Factor is sitting in the living room of his Upper East Side townhouse giddily reading aloud from a recent column by Robert Novak. “Representative Richard Baker of Louisiana, the conservative choice to be the next chairman of the House Financial Services committee, privately met about twenty leaders in the Wall Street financial community recently in New York City and impressed them with his command of the issues.” Factor, a 55-year-old banker and former public-relations specialist, looks up from his BlackBerry and says coyly, “I didn’t talk to Novak!”

Five years ago, Factor was a political nobody, a New York right-winger with zero clout. Today, he’s a leader of a tiny but powerful army of New York conservatives whose checkbooks sustain the national Republican majority. Manhattan is the most concentrated source of Republican funds in America, and New York conservatives have invested heavily in Bush and the national party—more than $100 million since 2000.

It is Factor’s ambition to be the steward of these funds, and that’s why he loves the Novak item—to insiders, it conveys proof of his status, even though his name wasn’t mentioned. People who matter would know that Factor organized the secret sit-down between the ambitious Washington pol Baker and the heavy hitters from Wall Street. He’s done it many times before. The way it works is simple. Congressman Baker wants to be chairman of a powerful committee. The suits from Wall Street want to vet Baker before they give him their blessing. Factor is the guy who brings the two worlds together, in this case over lunch at the Union League Club at 37th and Madison. In the process, another key Republican learns that Mallory Factor is now the guy to see to unlock the essential political commodities—money and media—that all GOP candidates come searching for in Manhattan.

Baker was a quick study. Back in Washington, he instructed a young aide to find out as much as he could about Factor. “I don’t know who he is,” the congressman said, “but I think he’s important.”

The core of Factor’s operation is a regular conservative gathering known as the Monday Meeting, which he runs with James Higgins, an investment manager. Factor is the money guy; Higgins is more oriented toward policy. Together, “they have created the Wall Street–Washington nexus,” says Steve Moore, a longtime activist on the right. “Now all these congressmen and senators want to go up to New York City because Mallory has become the gatekeeper to the large conservative fund-raising community.”

Until very recently, this was all going quite well. George W. Bush’s second term got off to a very promising start, as far as his New York constituency was concerned. They liked his courageous talk about Social Security privatization, as well as the strong focus on tax cuts and fiscal discipline. These are the articles of faith among Factor and his group, and they couldn’t have been more delighted that the president seemed to be reading from their script; they were getting what they’d paid for. But now the Social Security plan is stalled, if not totally dead, while Washington braces for a culture-war showdown over candidates for the Supreme Court. Factor is in an awkward spot. It had always been his intention to steer clear of issues that might pit his New York crowd of mostly fiscal conservatives against the social conservatives that dominate much of the rest of America. Now this strategy seems impractical and perhaps even a little embarrassing. Today’s Republican Party is held together by a tenuous agreement between the free marketeers of the party’s donor class and the Evangelical foot soldiers of the party’s voting base. Both sides claim credit for Bush’s reelection. But in the fight over the Supreme Court, the religious right will be ascendant, leaving fiscal conservatives with little to show for their investment. That raises a question: Might it possibly be that these rich, sophisticated New Yorkers have been taken for a ride?

The Monday Meeting is now large enough to be respectable but small enough to maintain its cachet. Held in the ballroom at the Grand Hyatt, it usually attracts between 175 and 225 guests, all screened by Factor and Higgins, who say that there are some 60 more names on a waiting list. Originally, the meeting was modeled on the one that the conservative activist Grover Norquist has held every week in Washington for a decade. About one third of the attendees are donors, people like Oppenheimer Capital founder Charles H. Brunie, a close pal of Milton Friedman’s and Alan Greenspan’s; James J. Burke Jr., the co-founder of the investment firm Stonington Partners; and Georgette Mosbacher, the wealthy GOP Manhattan hostess and CEO of the beauty company Borghese. Another third are leaders of conservative organizations and think tanks, like Mark Mix, the president of the anti-labor National Right to Work Committee, and scholars from the Manhattan Institute. The final third are members of the media, including an assortment of editorial-page writers from the Wall Street Journal, the Post, and the Sun. “We carefully try to control the mix,” says Factor.

For Republican guests visiting from out of town, Factor plays cruise director and books a day of activities in the city. “They try to put together a package,” says Steve Moore. “You will have major big-dollar donors in one-on-one meetings. Then a fund-raising lunch where you can raise 50K. Then you might go to the Wall Street Journal editorial board. It’s a day of meeting all of the people you need to meet with in New York.” Representative Sue Myrick of North Carolina did the full package tour last year, starting at the Mercantile Exchange, where she rang the opening bell, and moving on to the Journal, the Post, and the National Review before ending up at the Hyatt ballroom for the meeting. I caught up with Myrick on her cell phone while she was grocery shopping in Charlotte. She raved about her trip to New York, like a tourist who’d just seen all her favorite celebrities strolling down Fifth Avenue. “Mallory was the one who worked on putting the whole thing together,” she said. “It was an educational process—kind of a whole new world.” Best of all: Several members of Factor’s crowd wrote checks for her campaign.

Before I dropped in on a meeting in May, Factor cockily assured me that I would notice a direct cause and effect between things I saw at the Hyatt and subsequent events. “You’ll actually see things happen because of it,” he told me. “You’ll see something happen in Washington, and you’ll say, ‘Ohhh.’ ” The night I was there, in one corner of the drab ballroom, before the speakers started, a donor committed to spend $100,000 on ads defending Tom DeLay. Sure enough, as I watched CNN a few days later, Judy Woodruff breathlessly reported, “The anti-tax group Free Enterprise Fund says it is spending in the six-figure range to launch a new TV ad in support of Republican House Majority Leader Tom DeLay.”

Over the course of numerous conversations in the following weeks, Factor told me that Republicans in both the House and Senate were about to get behind an exotic Social Security plan championed at the Monday Meeting. The plan would fund private accounts with the Social Security surplus, necessitating either deep spending cuts or massive deficit spending, since the surplus is currently used to fund other government programs. “I see something coming out on Social Security very soon,” he told me with the same sort of I-can’t-believe-how-cool-it-is-to-be-in-the-middle-of-all-this enthusiasm as when he read me that Novak column. “We have had conversations with the members of the leadership, and I think you may see legislation in both the House and the Senate coming about.”

In June, Senators Jim DeMint, Lindsey Graham, and Rick Santorum introduced the plan. All three have appeared at the Monday Meeting, and DeMint and Graham are particularly close to Factor. In fact, Graham told me he got the idea from the Monday Meeting. At the same time, the Wall Street Journal editorialized in favor of the plan, and the Free Enterprise Fund, which Factor is now in charge of, generated extra buzz in the press.

All the power centers represented at the meeting worked in perfect unison. Getting the legislation introduced was undoubtedly the group’s greatest postelection victory. There is but one minor glitch—the bill doesn’t have a chance in hell of passing. So the whole process ends up looking like an ideological exercise.

Factor prefers to see it as laying the groundwork for future breakthroughs. He intends to grow his group’s political influence the way he grew his business. He made his own significant fortune (somewhere in the eight-figure range) as a Wall Street flack, running his own lucrative public-relations firm and expanding it over the years into the related arts of special events, investor relations, and financial advising. His career has included a dubious achievement or two; after parting ways with the client Sensormatic, a company that makes shoplifting-prevention equipment, he went directly to work for its chief competitor, telling stories about Sensormatic to associates who then got rich shorting its stock. Through it all, though, Factor learned how information can be spun into cash.

For years, while focusing on business, Factor merely kept a toe in politics. Ronald Reagan appointed him to a committee created to help clean up the savings-and-loan mess, and Factor was once recruited to run for Congress from his old home district in southwestern Connecticut. However, his wife didn’t share his love of politics, and he declined to enter the race. They eventually divorced.

As Republicans took over Washington in the nineties, Factor was a mostly idle observer. According to federal records, he wrote a single check—to a losing Senate candidate—from 1990 through 2000, the period of Newt Gingrich’s Contract With America and George W. Bush’s rise to power. But all that changed when he met his second wife. A self-described “cradle Republican,” Elizabeth Factor was practically bred to be a conservative activist. She went to Andover—“like the president did,” she helpfully explains—and served as editor of a think-tank-funded newspaper at Columbia. After they married in the fall of 2000, Mallory set about transforming himself into a political player. “My wife pushed me to get involved,” he says.

Factor and James Higgins, left, his co-organizer for the Monday Meeting.Photo: Jeff Mermelstein

Back in the Factors’ living room, over a light lunch and white wine, Elizabeth, now a tax attorney and mother of three, is explaining the significance of her husband’s political operation. She alternates between a seductive motherly charm and a stern businesslike demeanor. Slipping into the latter, she describes the grand ambition behind her husband’s monthly soirée for conservatives. “The Monday Meeting is not about conversion,” she explains. “We’re not interested in drawing new converts. What the meeting is about is having a room where someone coming from Washington can access everything that New York conservatives have. They can access the media, they can access the donors, they can access a publicity machine, they can access a grassroots movement. It’s not about having your friend Joe, who might be a Republican and might want to give a couple of bucks, come and maybe he’ll be converted to free-market principles.”

Before the Monday Meeting could become this kind of networking tool, Mallory had to establish himself as a big-time fund-raiser. He did it by tapping into the frustration of high-dollar political donors tired of being treated like money machines by candidates parachuting into New York for withdrawals. Mining his Wall Street contacts, Factor hosted fund-raisers at his home where politicians were welcome only if they played by Mallory’s rules of etiquette: The candidate must stay through dessert, and he or she must rotate to a new table of donors for every course.

The dinners were a hit, in part because the rules were real and applied to everybody. Factor tells me that attendees at one dinner were stunned when he canceled the evening’s main attraction—a person he repeatedly describes to me as a “major player”—because he would drop into the dinner only for twenty minutes. “I said, ‘My mom always told me that when you get invited to dinner, you at least stay until dessert,’ ” Factor says. “So I canceled him. Everybody was shocked.” I ask who it was. From another room, Elizabeth’s ears perk up and she warns her husband that he was treading onto thin ice. “Let’s not even hint about it, please,” she orders. But Mallory presses on, dropping a few more hints and teasing me. “This was a major player.” When I guess that it must have been Karl Rove or Dick Cheney, he just flashes me a mischievous smile.

Along with his new mode of fund-raising (“People refer to it as a salon more than a fund-raiser,” he says), Factor needed to find his own niche within the GOP’s competitive world of buck-raking. “Remember, I want to have an impact,” he says. “So you sit down and say, ‘Well, where can you have the impact?’ ” The answer was the United States Senate. For the conservative movement, the Senate was the last frontier left to conquer in Washington. When Factor seriously entered the fund-raising fray back in 2001, the upper chamber was split down the middle between the two parties and threatened to be a graveyard for Bush’s entire agenda. “The big problem is you can’t get anything through the Senate,” says Factor. “That’s why we started focusing on it.”

In some ways, this was a novel concept for the Wall Street crowd. Factor convinced them that helping elect hickish pols with social views many Manhattan conservatives consider Neanderthal was essential. After all, if Christian conservatives could help elect the Republicans who would loosen corporate regulations, why not harness that power? So what if they also want to tinker around with the Constitution on various social issues.

Factor convinced the Wall Street crowd it could be to their benefit to help elect hickish pols with social views they might consider Neanderthal.

It worked. In the past four years, Republicans have toppled the Senate’s Democratic leader, Tom Daschle, and increased their seats from 49 to 55. “He’s in the top tier of people who helped win those Senate races in 2002 and 2004,” says Lindsey Graham, who was elected to the Senate from South Carolina in 2002. “Mallory raised a lot of money for me and others.”

“We were nine-for-nine in the last cycle,” Factor says triumphantly.

All nine of those senators, it should be noted, were carried to victory in part by their avowed opposition to abortion rights and gay marriage, issues that almost never come up at the fiscally oriented Monday Meeting. In fact, though there are a smattering of hard-core abortion opponents among the regulars, most studiously ignore social issues. As far as I could determine, the Monday Meeting has never had a speaker devoted to the issue of a Supreme Court vacancy, an event that social conservatives have been preparing for as if it were Armageddon. “The paradigm of lower taxes, lower spending, smaller government—there is near-universal agreement on those points among New York conservatives,” says Rick Lazio, the former Long Island congressman who is now a JPMorgan Chase executive. “But when it comes to social issues, it’s not so much that there is a divergence of view on that, it just tends to be de-emphasized. New York conservatism is still a different brand than in other parts of the country.”

The majority of New York conservatives, especially in the donor community, have always been social libertarians, and not much has changed on that front. Conservative Christian groups still support their own activities by shaking money out of lots of angry $50 donors in red states, not by reaching into the pockets of Wall Street. What has changed is that the economic agenda of Manhattan conservatives has become far more radical—so radical that many of them are willing to cede plenty of ground on social issues if they can get the other stuff they want.

The problem is that the Monday Meeting has recently hit a brick wall in terms of its influence in Washington. Though it has, to some observers, eclipsed Norquist’s meeting (now considered to be a lobbyist free-for-all), Factor hasn’t defined a clear role for his group in the coming Supreme Court battle, which, if it’s bloody, could wipe out the entire Wall Street agenda. In addition to the Social Security plan, other casualties could be legislation to give companies immunity from asbestos-related lawsuits, a seemingly obscure issue that people like Factor had pushed to the top of Congress’s to-do list; the free-trade agreement known as CAFTA; and making Bush’s tax cuts permanent. The Monday Meeting crowd has also been desperate for the big-spending president to veto an appropriations bill, but he’s less likely to flex political muscle on a veto while in the midst of a potentially unruly Supreme Court confirmation battle. Wall Street had also been making progress at getting Congress to weaken the new corporate-accountability law known as Sarbanes-Oxley, but that effort is now stalled, too. One common sight at a Monday Meeting is a Wall Street executive lecturing a Republican senator about out-of-control taxes and spending despite a decade of GOP congressional rule and four years of the Bush presidency. Bush’s reelection was supposed to be the moment when these economic heresies ended. Instead, Washington will spend the next couple of months discussing abortion, the Ten Commandments, and sodomy laws.

All this has Factor and Higgins rethinking their instincts not to get involved in the Supreme Court battle. Other factions in the corporate wing of the GOP have recently signaled a willingness to simply get behind the Christian-right leaders who will be the loudest voices in this fight and not risk splitting the party. The U.S. Chamber of Commerce, which usually doesn’t make Supreme Court vacancies a high priority, has been slipping White House aides dossiers assessing potential court nominees on their friendliness to business. Noting with horror the high court’s recent Kelo v. New London decision, which makes it easier for the government to seize private property, Higgins and Factor have started conversations about steering Bush toward a more economically conservative jurist. “Kelo has really galvanized believers in economic liberty in a way I have never seen any court decision do,” says Higgins. “The idea that it is a legitimate function of government to take the homes of poor homeowners by force and hand the property to wealthy developers is like something out of France under the ancien régime … I think Kelo made it clear that property-rights cases are not some secondary issue but should be central to the selection of judges. We have plenty of people in the Monday Meeting on each side of the abortion debate, but while we haven’t taken a poll, I suspect that at least 90 percent and maybe 100 percent would agree that Kelo was a disaster for basic American values.”

When Social Conservatives have dropped by the Monday Meeting, they have gone out of their way to bridge the obvious divide in the party. Take Senator Rick Santorum of Pennsylvania, whose strident anti-abortion views and famous reference to “man on dog” sex in an interview about gay marriage have turned him into the face of religious wingnuttery in Washington. Santorum has a tough reelection coming up next year and needs a lifeline to the New York donors, so he decided to visit the Monday Meeting to fix his cartoonish image. In front of a skeptical audience at the Hyatt, he argued that economic freedom is threatened if the traditional family breaks down, winning over many in the crowd. At a dinner afterward, two donors said they would co-host a fund-raiser for Santorum. Elizabeth Factor, who like her husband is socially liberal on most issues, told me that Santorum’s speech “was one of the most fascinating ten minutes that I have ever spent in my entire life. He is going to have to come to New York for money, and he did himself a real service.”

Having the power to force someone like Santorum to kneel before them hints at the influence of the meeting. However, politics is a zero-sum game. Santorum and other senators like him will always care way more about abortion than the capital-gains tax. To Mallory and friends, a Santorum is preferable to a Democrat, but the danger is that every Santorum they help send to Washington increases the leverage of the GOP’s social-conservative agenda at the expense of its economic one. Factor insists the Santorums of the world can do both. “If they work on the Christian-right issues, that’s fine,” he says. “We’ll solely judge them on how they do on the economic issues.”

Factor shows no signs of being discouraged and is thinking ahead, trying to position the Monday Meeting as an essential stop for Republican presidential hopefuls. “A lot of the most savvy 2008 people are lining up to come now,” says Elizabeth. Mitt Romney, the governor of Massachusetts, who has been extremely aggressive in positioning himself for 2008, has confirmed to speak this fall. Senator George Allen of Virginia is now trying to get a date. Senator Sam Brownback of Kansas has already stopped by. Factor is ecstatic about the role the meeting has taken on. Asked about its significance for the men and women who want to succeed Bush, Factor says simply, “It’s a test.”

The old generation of wealthy activists who tried to exert influence on politicians operated in the shadows. Their influence often rested on longtime personal relationships with the powerful. Today, anyone with enough money and the proper skills can become a player. The key is figuring out how to build the perception of one’s influence. You can’t just whisper in a politician’s ear, you have to let others know you are whispering. Factor recently had dinner with the former senator Connie Mack, the head of the committee appointed by Bush to come up with proposals to revamp the tax code. I know they had lunch, because Factor told me. He also recently talked with Rudy Giuliani’s chief of staff; met with Emmet Tyrrell, the editor of the American Spectator; and hosted a dinner at his home to “vet” the idea of the United States’ returning to UNESCO before President Bush formally proposed the plan. He reveals these things partially because as a novice ear-whisperer he can hardly contain his excitement. But he also knows that if people don’t know you’re a political player, then you aren’t one. Factor wants you to know.

The coming battle over the Supreme Court will be a defining moment for the Republican Party. The brand of conservatism peddled in New York at the Monday Meeting will collide with the brand that actually dominates the party. While the Christian right condemns Sandra Day O’Connor as a sellout, Wall Street praises her near-perfect pro-business record. Social conservatives despise O’Connor as a principal obstacle to overturning Roe v. Wade, while the Milton Friedman worshippers at the Monday Meeting admire the stirring defense of property rights she penned in her dissent to the hated Kelo decision. Social conservatives push for ever-greater independence at the state level, while the business community wants a court that will federalize things like awards in liability cases and certain regulations. In short, the Supreme Court nominating process will not only overwhelm the issues Wall Street cares about, it will force it into an ideological street fight with Evangelicals for which it has barely prepared.

Factor is characteristically chipper about all this. He insists that the GOP’s economic agenda will roll on. In fact, he sees a bright side to the new political landscape. “I think we’ll have a better opportunity with the Supreme Court stuff going on than we would have without it,” he argues. “A lot of the energy of the bad guys is going to be all spent on the Supreme Court issue. I’m not minimizing the issue of the Court, but you watch: Other things are going to be happening, and nobody’s going to be writing about it, except on page 17.” Perhaps there are small payoffs to Wall Street that might slip under the radar, but it’s delusional to think that Social Security is going to be transformed or Bush’s tax cuts made permanent when nobody’s looking.

Factor admits that his team hasn’t done much strategizing about the Court. When I ask what the plan is, he says, “I feel strongly about issues like Kelo v. New London, and I think we’ll be addressing some of those issues.” In other words, there is no plan. Obviously, he doesn’t speak for the whole New York donor crowd, but one does get the sense we are witnessing a massive bait and switch. The New York conservatives who financed the Republican ascendancy are suddenly looking a whole lot like simple ATM machines rather than the agents of change the Monday Meetinåg was designed to create. Factor even concedes he may have been used. “I totally agree with you that it is a danger,” he says. But he’s already concentrating on electing another GOP senator. “If we get one more after the midterms,” he gushes, “the window to get stuff done will open up again. I’m not predicting that, but if it does happen, wow!”

Mallory Factor’s Rich & Influential Friends
A sample of donors among the regular attendees at Factor’s Monday Meeting. The dollar figures are the total each has given to Republican candidates, party committees, and leadership PACs in the 2003–2004 election cycle.Leo Kayser III
An Alabama-born attorney and partner at Kayser and Redfern. Knew both John Kerry and George W. Bushat Yale. Charles E. Dorkey III
Head of litigation for Torys LLP, he was appointed by Governor Pataki to head the Hudson River Park Trust.Georgette Mosbacher
CEO of Borghese, whose dinner parties at her Fifth Avenue apartment are a hot ticket. Rick Lazio
Now at JPMorgan Chase, he was the congressman from Long Island who lost to Hillary Clinton in a 2000 Senate run. Charles H. Brunie
Money manager who founded Oppenheimer Capital and is close friends with Milton Friedman and Alan Greenspan.

Who Among Us Helps the GOP?
The following New Yorkers were the top donors to the Republican Party in 2003–2004, based on contributions to GOP candidates, party committees, and leadership PACs.$292,602
Thomas A. and Mary Saunders III
Founding partner of the investment firm Saunders Karp & Megrue.$270,817
George B. and Calvert Moore
George is a founding partner of the law firm Johnson Johnson Moore. Calvert, his wife, is the daughter of Thomas Saunders. $235,520
Richard and Gail Siegal
Richard is the CEO of the Bistate Oil Company. $210,046
Thomas E. and Paula McInerney
McInerney is the general partner at Welsh Carson Anderson and Stowe, and an early contributor to Senate Majority Leader Bill Frist.$192,172
Bippy and Jacqueline Siegal
Bippy is the CEO of the venture-capital firm Raycliff Capital, currently backing mini-DVDs that attach to fast-food beverage-cup lids. $181,200
Andrew and Denise Saul
The president of Saul Partners, an investment firm, is also a trustee for the Manhattan Institute.$163,500
Peter and Mary Kalikow
Peter, a real-estate developer and former owner of the New York Post, is chairman of the MTA. $159,054
Marvin and Donna Schwartz
Schwartz, the managing director of Neuberger Berman, is a big donor to the Central Park Conservancy, including $2 million to restore the wrought-iron fencing around the reservoir. $158,535
Stephen Schwarzman
A founder of the Blackstone Group, he once held the record for buying the most expensive Manhattan apartment: $38 million in 2000. $157,411
Leonard and Emily Blavatnik
A Russian oil magnate who is worth $2 billion and has still managed to be rejected by two Manhattan co-op boards.Source: Center for Responsive Politics; additional reporting by Eric Wolff

The ATM for Bush’s America