Fred Smith, president of the Competitive Enterprise Institute sent us a letter in response to this post last week.
To the Editor of the National Journal:I write in response to your recent article about CEI encountering "financial woes."
Times are tough at the free-enterprise-oriented non-profit Competitive Enterprise Institute.
CEI, which just celebrated its 25th anniversary, is still run by its bearded, Schumpeter-quoting founder, Fred Smith, and remains popular with conservative foundations and corporations. Its combination of free-market analysis with pro-industry advocacy on a broad range of environmental and consumer issues infuriates opponents, and has been a magnet for contributions in years past. The group's fudning rose nearly 70 per cent between 2004 and 2007, peaking at $5.2 million (the group's fiscal year ended September 30th 2008.)
But this year, amidst economic turmoil, contributions are down 15 per cent and the group is running a deficit of roughly 10 per cent, Smith told National Journal's Under The Influence. That comes to about $450,000 worth of red-ink--though some sources suggest the hole may be deeper. Smith says the group's reserves have cushioned the loss and that he has seen an uptick in fundraising recently.
But the Institute's financial woes may have precipitated another loss: its Center for Risk, Regulation and Markets has decided to leave the institute and affiliate with another conservative think tank, taking most of its five person staff and likely much of its roughly $500,000 budget with it.
The Center, run by Eli Lehrer, has been especially active in fighting state-sponsored natural disaster insurance pools that compete with private reinsurers, and had opened an office in Florida to wage a steady war of words with the state government on the issue; it is poised to open a second office in Texas.
Smith and Lehrer insist the split was amicable, and mutually agreed upon. Smith said he was uncomfortable with the Center's opening of branch offices, arguing that such arrangements haven't worked well for other think tanks; Lehrer said the split was because "our project had grown a good deal, where as the rest of CEI had not."
Lehrer said he plans to decide soon between a couple competing offers to house the Center, while the Institute says it plans to continue doing work on insurance issues as well.
(Photo of Fred Smith from CEI)
The Obama administration, leery of trolling K Street for experts, has been recruiting heavily from some Washington think tanks. Indeed, the administration (with an assist from the Democrat-controlled Congress) may have nearly put two newish think tanks out of business: The foreign policy focused Center for a New American Security and the Brookings Institution's Hamilton Project.
Obama tapped CNAS President and Cofounder Michele Flournoy to become under secretary of Defense for policy, and the center's other cofounder, CEO Kurt Campbell, is widely thought to be in line to become assistant secretary of State for East Asia and Pacific affairs. In addition Obama hired away the group's chief operating officer, and two of the group's board of directors: Dennis Blair and William Lynn.
Meanwhile, between Obama and the congressional leadership, the Brookings Institution's Hamilton Project has been pretty much cleaned out. Obama made Larry Summers -- a member of Hamilton's advisory council and one of its leading thinkers -- the head of the President's National Economic Council, and named Jason Furman -- who quit as Hamilton's director to advise Obama's campaign-- as Summers' deputy at the NEC. Furman's replacement, Doug Elmendorf, was snapped up in January by another repeat recruiter: the Congressional Budget Office. The CBO had already spirited away Hamilton's first director, Peter Orszag, only to lose him to Obama's Office of Management and Budget.
Since both think tanks were founded in recent years largely to help set the agenda for a Democratic administration, they could have declared victory and closed up shop. But instead, both are hoping to reinvent themselves. CNAS is replacing all those tapped by Obama: retired Army Officer John Nagl, the co-author of the Army's counterinsurgency manual, will be the group's new president, and former marine officer Nathaniel Fick is its new COO.
The Hamilton Project is still searching for replacements, but Brookings Institution Vice President for Economics William Gale says the project wants to continue to fill "the niche it carved out for itself [helping government officials] think more than five minutes ahead, which is hard given the pressures" of being in office.
-- Julie Kosterlitz
Here's what is new in this week's National Journal: (all stories require a subscription)
He's Back!....Ralph Neas is a bit of a Washington institution and a longtime power player in activist liberal circles. Now he is going to be taking over as chief executive officer of the National Coalition on Health Care.
Neas is the former president and CEO of People for the American Way, a position that afforded him substantial influence with Democrats on judicial nominations. During a battle over U.S. Circuit Court of Appeals nominee Judge Charles Pickering, The Wall Street Journal editorial page described Neas as the "liberals' puppet master" for Senate Judiciary Democrats. In a release sent out by the National Coalition on Health Care, the group even points out Massachusetts Democratic Sen.Ted Kennedy's description of Neas as the "101st Senator for civil rights." Neas has also served as executive director of the Leadership Conference on Civil Rights.
Given his ties to Democrats, it's easy to forget that Neas was an aide to two Republicans on Capitol Hill: then-Sens. Edward Brooke, R-Mass. and David Durenberger, R-Minn. Brooke was known as a progressive Republican and a co-author of the 1968 Fair Housing Act; Durenberger later endorsed Sen. John Kerry, D-Mass., for president in 2004 and disassociated himself from the GOP. Neas graduated from University of Notre Dame and got his law degree from University of Chicago, where he also taught.
--Gregg Sangillo
Alyssa Rosenberg at Government Executive has the story that the Council for Excellence in Government is closing its doors after 25 years. The majority of its staff and programs will join the nonprofit Partnership for Public Service.
"The current economic climate has made it extremely difficult to raise the funding required to continue and grow these vital programs," John Macomber, chairman of the council's board of trustees, tells Rosenberg. "Moving these programs to the partnership will improve efficiency, increase their impact, and provide needed services to more government executives and organizations."
Lanny Davis, the high-profile lawyer, lobbyist, columnist, commentator and Democratic insider, has a new gig -- he's signed on as a volunteer senior adviser and spokesperson for The Israel Project, the international nonprofit that provides information to the media and the public about the Middle East. Davis also has close ties to incoming Secretary of State Hillary Rodham Clinton -- he was special counsel to President Clinton from 1996 to 1998 and was a major supporter of Hillary Clinton's presidential campaign.
At TIP, Davis joins another member of the far-flung Clinton network -- strategic communications specialist Jennifer Laszlo Mizrahi. She founded the 501(c)(3) in 2002 (and is still its president), and has built it into a major player among independent groups that focus on the region. With offices in Washington and Jerusalem, Mizrahi says TIP "does not speak on behalf of the Israeli government" and that Davis will appear on U.S. and international media outlets as a private citizen and "will be speaking independently only for himself."
With the war in Gaza at the top of the news, Davis says, his role is to help get "all the facts out as soon as possible -- to help correct misinformation and misstatements in the media." That's a role he has long projected in domestic politics even as he has continued to represent clients as a partner at the firm Orrick, Herrington & Sutcliffe.
-- Robert Gettlin
Hanging chads. Diebold. Bernard Madoff? Voting rights advocates have a new name on their enemies list after the trader bankrupted one of the election reform community's leading benefactors.
The Manhattan-based JEHT Foundation, whose initials stand for justice, equality, human dignity and tolerance, announced Monday that it will close in January after its only donors, Jeanne Levy-Church and Kenneth Levy-Church, were wiped out by Madoff's $50 billion fraud. The foundation's abrupt collapse has sent shock waves through voting reform circles: Just last week, JEHT made a $4.15 million pledge to "Making Voting Work," a joint initiative with the Pew Center on the States aimed at bringing the nation's electoral system into the 21st century. JEHT has already handed over $1 million of that pledge, but the rest won't be forthcoming. Since its inception in 2007, JEHT has been a junior partner in Making Voting Work, contributing $2.5 million of the $16.5 million invested so far.
The project will soldier on without JEHT, explained Rebecca Rimel, president and CEO of the Pew Charitable Trusts. But voting research will be delayed until Pew either finds new partners or digs into its own coffers to cover the $3-million-plus shortfall. "This work is too important to leave to financial crises and unfortunate situations," Rimel said. "We've got to continue this work."
The JEHT Foundation "promoted reform of the criminal and juvenile justice systems; ensured that the United States adhered to the international rule of law; and [worked] to improve the voting process." Just last week, JEHT and Pew hosted federal and state election officials, voting reformers and tech gurus at their "Voting in America" summit.
The Levy-Churches established JEHT in 2000 and funneled more than $20 million a year into the foundation in recent years. Unlike most charities, the vast majority of that money was spent directly, not saved, which made for rapid results but no cushion for rainy days. The couple reportedly had their entire fortune invested with Madoff.
JEHT Foundation President Robert Crane was not immediately available for comment.
--David Herbert
