How No Labels Went From Preaching Unity to Practicing the Dark Arts

As House Republicans were crafting their Obamacare repeal bill in the spring of 2017, Nancy Jacobson, the founder and CEO of No Labels, a group that promotes bipartisan governance, wanted to spice up her organization’s Twitter feed.

So she turned to someone known for provocative political takes: her husband, longtime political operative Mark Penn.

In a tweet that March, written under Penn’s direction, No Labels took the unconventional position that Democrats were to blame for not being more willing to work with Republicans in the destruction of their party’s signature piece of modern legislation.

The blowback was harsh both inside and outside the organization, so much so that the tweet was subsequently deleted and Penn was taken off the handle. Asked about this episode this past week, Melanie Sloan, a spokesperson for No Labels, initially said that Penn had never been given effective control of the group’s account. But Jacobson later confirmed it.

“Has he given some ideas for six tweets? He gave ideas for six tweets, because I was saying there’s no edge here,” Jacobson conceded. “No more than 10, ever, in a one-week period, in God knows whatever month it was.” Later, she settled on saying he’d helped craft a “handful.”

A search for “edge” seems to be the prevailing ethos of Jacobson and No Labels these days. A group created with the goal of promoting political consensus and compromise has increasingly veered into explicit and occasionally heated political combat. And it’s not just by handing over its Twitter handle to one of Washington, D.C.’s most notorious operatives.

The group, which was founded as a champion of political bipartisanship, has been quietly courting donations from some of the most notoriously partisan money men and women in politics.

According to internal documents obtained by The Daily Beast, No Labels encouraged financiers known for backing hyperpartisan causes to back its own super PACs. Among those courted were individuals who’ve bankrolled massive parts of the Republican Party’s infrastructure, including David Koch, former AIG head Hank Greenberg, and billionaire hedge-fund manager Paul Singer; as well as top supporters of President Donald Trump, including PayPal founder Peter Thiel, businessman Foster Friess, and Home Depot founder Ken Langone. No Labels also courted liberal-minded moneymen, including Michael Vachon, a top political adviser to George Soros (one of the biggest funders of Democratic and progressive causes) and Reid Hoffman, an investor and entrepreneur who has called Trump “worse than useless.” The group also targeted Wendi Murdoch (ex-wife of Rupert and rumored Ivanka Trump pal), uber-agent Ari Emanuel, and Dallas Mavericks owner and oft-rumored presidential aspirant Mark Cuban. Another possible 2020 candidate, former New York City Mayor Michael Bloomberg, was also among dozens of high net-worth individuals approached about donating to No Labels’ super PACs.

Most of those targeted for financial support didn’t end up donating to No Labels super PACs. But some notable names did, including former Major League Baseball Commissioner Bud Selig, who was encouraged to donate by former Democrat-turned-independent Senator Joe Lieberman, according to internal records.

The attempt to recruit these financiers was, according to sources, part of a concerted effort by No Labels to steer emphasis away from its nonprofit arm and toward campaign operations designed to boost preferred political candidates and target those deemed too extreme or impediments to its policy agenda.

By the end of the 2018 cycle, six No Labels-affiliated super PACs—No Labels Action, Forward Not Back, United Together, Govern or Go Home, Citizens for a Strong America, and United for Progress—had collectively raised more than $11 million from 53 individual donors. The average contribution to the groups was about $124,000, illustrating their reliance on high-dollar donors rather than grassroots financial support.

To court those deep-pocketed donors, No Labels leaned on individuals with ties to other prominent potential givers. The group appears to have sought support from Mitt Romney, the former Republican presidential candidate who was just elected to the U.S. Senate, though it’s unclear whether it hoped that support would be financial, political, or both. In internal company notes, No Labels proposed having Lieberman contact Brad Bloom—the leader of the private-equity firm Berkshire Partners and a high-dollar donor to a pro-Romney super PAC in 2012—“to discuss Mitt” and arrange a meeting with other potential supporters in Boston. Internal documents also note that another super PAC donor prospect, financier David Nierenberg, is a “close friend of Mitt Romney.”

As it privately sought more money for its campaign activities, No Labels also grew more outwardly political. In early 2016, as the presidential primaries raged, No Labels hosted an event in New Hampshire, in which it applauded six candidates for taking its “Problem Solver Promise.” Individuals inside the group were rankled that Donald Trump was among those afforded the distinction. They also were disturbed by the price-tag of the event, which Jacobson confirmed was more than $1 million.

“To build an event for 1,500 people and put people up for a year and then pull this off, that’s OK,” Jacobson said. “That’s what it costs these days.”

Donald Trump, the group now concedes, has not turned into the consensus-builder that he apparently appeared to be in early 2016.

Stymied by congressional leadership that has refused to bring No Labels-favored legislation to the floor, and determined to build a larger bloc of votes that it can command, No Labels decided during the 2018 cycle to get more deeply involved in direct efforts to elect and defeat candidates for office—and to vilify those who stand in its way.

In early 2018, No Labels contemplated launching a campaign to turn House Democratic Leader Nancy Pelosi into a “bogeyman” after she only offered tepid support for Rep. Dan Lipinski (D-IL) in his primary race this past cycle (a race he won, with significant support from a No Labels super PAC). According to another source, Jacobson flirted with supporting a general-election challenger to Rep. Jim Himes (D-CT) after he said something regarded as offensive about the No Labels-affiliated Problem Solvers’ caucus. Himes office did not respond to a request for comment.

The strategy hasn’t been without success. Though Jacobson was talked out of launching an anti-Pelosi campaign, the group did raise and spend more than $8 million to support 17 Democrats and more than $7 million to support an equal number of Republicans in the 2018 cycle. And its engagement in the speaker’s race allowed it to score some of the rules reforms it had sought, including swifter ways for bipartisan bills to come up for consideration and increases in transparency around the legislative process.

But those wins have come with costs, too. Officials tied to the organization said they are disillusioned with how much emphasis has been placed on raising and spending money.

“The more one looks under the rock, the more one turns over that rock, it is not an attractive picture. It is a big fundraising operation run with limited results,” said one former No Labels official. “You go in first, there are donors, they’re having discussions and you think it’s healthy. And then you’re in it for a few months and you wonder, what are we doing?”

The overtly political approach has also landed No Labels in legal drama. The group is being sued by the firm Applecart, formerly one of its top political consultants, which has accused No Labels of not paying them for millions of dollars of work and of firing them in favor of consultants with personal ties to Jacobson. No Labels alleges Applecart’s performance was error-filled and ineffective and in an emailed statement, Dan Webb, counsel for No Labels’ political groups, blamed Applecart for the leaks of internal documents.

“No Labels is currently in litigation with Applecart, which limits what we can say at this time,” Webb wrote. “Having botched their work for the PACs, Applecart has chosen to sue their political clients and now, apparently, to leak emails and other confidential information in an effort to harm the PACs and No Labels.”

A spokesperson for Applecart declined to comment, but did direct The Daily Beast to a glowing testimonial that Jacobson had previously given for its website.

At the center of No Labels and its evolution is Jacobson. The group’s founder and president is one of the most plugged-in behind-the-scenes operators in all of Washington. At 56 years old, she has been in Democratic politics for decades, working for, among others, Gary Hart and Bill Clinton. Along the way, she served as the Democratic National Committee finance director, where she made a host of connections that would prove advantageous in years to come.

“As a female, it was a way to get a seat at the table,” she said of her time as a Democratic fundraiser.

A proud, self-professed centrist, she said she felt disillusioned with the bitterness of politics when her last and closest boss, former Sen. Evan Bayh (D-IN), chose to leave office. “This process wore him down,” she recalled. So Jacobson set out to tone down the rancor.

In December 2010, Jacobson launched No Labels. The defining purpose was to “advocate & educate for greater bipartisan cooperation throughout all levels of government.” Though the launch event featured citizens from all 50 states, the concept was also catnip for the wealthy, who tend to see two solutions to every thorny problem: stoic leadership and gobs of money.

To get those wealthy individuals to open their wallets, No Labels proposed consensus-building concepts and bipartisan ideas; and they did it all with a touch of glitz. For its launch, it debuted a “No Labels Anthem” recorded by Akon.

The group also enlisted some of its top supporters to try to court high net-worth individuals on its behalf. Lieberman and Bayh have been integral to those efforts, personally soliciting donors on phone calls and in meetings. And they’ve been remarkably successful. According to internal documents obtained by The Daily Beast, some of the most prominent executives from Fortune 500 companies and leading financial-services firms have contributed to No Labels’ 501(c)(4) dark-money group and its affiliated 501(c)(3) charitable arm. They include:

• Josh Bekenstein, CEO of Bain Capital, who gave $250,000 in 2015.
• John Douglas Arnold, head of Centaurus Advisors, LLC, who gave $200,000 in 2017.
• John Catsimatidis, president, chairman, and CEO of Gristedes Foods, who gave $100,000 in 2016 and was labeled a “reoccuring donor.”
• Douglas Durst, ‎president of the Durst Organization, who gave $10,000 in 2016 and was labeled a “reoccuring donor.”
• Carl Ferenbach, co-founder of Berkshire Partners LLC, who gave $20,000 in 2016 and was labeled a “reoccuring donor.”
• Former Rep. James Charles “Jim” Greenwood (R-PA), who gave $15,000 in 2016.
• Kerry Healey, former lieutenant governor of Massachusetts, who have $25,000 in 2016 and was labeled a “reoccuring donor.”
• George Hume, president and chief executive of Basic American Foods, who gave $25,000 in 2017.
• Ted Kellner, a Milwaukee business executive, who gave $20,000 in 2017.
• Franklin Pitch Johnson, Silicon Valley venture-capital pioneer, who gave $25,000 in 2016 and was labeled a “reoccuring donor.”
• Howard Marks, co-founder and co-chairman of Oaktree Capital Management, who gave $125,000 in 2016 and was labeled a “reoccuring donor.”
• Nelson Peltz, founding partner of Trian Fund Management, who gave $500,000 in 2016 and was labeled a “reoccuring donor.”
• Marc J. Rowan, co-founder of the private-equity firm Apollo Global Management, who gave $150,000 in 2016 and was labeled a “reoccuring donor.”
• Andrew Tisch, co-chairman of Loews Corp., who gave $62,500 in 2016 and was labeled a “reoccuring donor.”
• Christy Ruth Walton, a Walmart heiress, who gave $25,000 in 2017.
• Eric Zinterhofer, founding partner of Searchlight Capital Partners, who gave $50,000 in 2016 and was labeled a “reoccuring donor.”

All told, the document revealed that donors had pledged to give $4,792,000 to the No Labels nonprofit arm in 2017. The source who provided these documents asked that they not be published in full so as to not reveal their origins. Metadata confirms that they were company documents, as they were last edited in March 2017 by No Labels Chief of Staff Sasha Borowsky.

While Lieberman and Bayh’s association with the group, and the impression that it’s backed by some of the biggest names in finance, has given No Labels a stately reputation, behind the scenes, numerous ex-officials say the organization more closely resembles a disorganized campaign apparatus.

Ex-aides said there is incredibly high turnover. And according to one former staffer, No Labels executives would ask employees to write positive reviews on the job-posting and workplace review site Glassdoor to counteract the more numerous bad ones. Asked if that was the case, Jacobson simply shrugged and casually said, “yeah.”

There have also been internal disagreements over the organizational mission. In one March 2018 email, Ryan Clancy, the group’s top strategist, expressed fears to Jacobson that Pelosi would advise her caucus to shut out No Labels if they went after her. She could, Clancy wrote, “go all Harry Reid on us.”

The reference was to an episode that remains part of internal No Labels lore. During the 2014 cycle, the group endorsed Rep. Cory Gardner (R-CO) in his challenge to Sen. Mark Udall (D-CO), after the congressman embraced their “Problem Solver” label and Udall declined to do so. Then-Majority Leader Harry Reid (D-NV) was furious and, according to his former communications director Adam Jentleson, leaned on his members to dissociate themselves from the group. Sen. Joe Manchin (D-WV) subsequently did, noting in part that Udall’s record was strong on bipartisanship.

“It seemed like they wanted to flex, to say if you’re not willing to be a ‘problem solver’ they might throw you under the bus,” said a source who previously worked for a member of the No Labels’ Problem Solver caucus. “The message was that all the bipartisanship didn’t count if you didn’t accept their branding.”

But instead of tamping down the politics after that 2014 episode, the group picked it up. And some officials say it has coincided with a larger role for Penn.

Best known for his work for both the Bill and Hillary Clinton presidential campaigns, Penn’s reputation is that of a numbers-crunching centrist who championed the concept of “micro-targeting” voters by their commercial, cultural, and political interests. His firm advised numerous clients before he left to do a stint at Microsoft. In 2015, he founded the Stagwell Group, a private-equity firm. And within months, the firm had acquired SKDKnickerbocker, a powerhouse Democratic consultancy with a number of executives who worked on or with Clinton’s 2016 presidential campaign.

Though he has no formal affiliation with No Labels, Penn’s imprints are evident. He was once listed as a press contact for the group’s tax-exempt arm, The New Center. And according to a source who worked with No Labels super PACs, Penn and two SKDK executives—Managing Director Bill Knapp, a close friend of Jacobson and Penn, and political ad production director Andrew Shipley—helped produce and place ads, and signed off on their substantive contents.

Internal emails sent in 2018 and obtained by The Daily Beast show Shipley editing the contents of one ad subject to Jacobson’s approval. Another shows Shipley briefing No Labels staff on the contents of another ad, and getting direct sign-off from both Jacobson and Penn to put the final product on air.

In another email thread, Penn instructed Knapp to “scope” an ad buy for a No Labels super PAC. Asked whether SKDK or another firm would make the actual buy, Penn wrote, “I’ll decide who to use based on which one I like better.”

Penn did not respond to a request for comment, though a source confirmed that he did personally see questions pertaining to the role that he has played. His presence within the No Labels orbit has caused a fair amount of consternation there, especially as he has emerged as one of the most vocal critics of special counsel Robert Mueller’s investigation into Russia’s 2016 election meddling—a posture those who’ve worked with Penn assume he has adopted as a way to ingratiate himself with Donald Trump.

In statements prepared by No Labels for The Daily Beast, both Lieberman and Bayh took umbrage with any suggestion that Penn was the force behind the curtain; though, of the nearly dozen sources contacted for this piece, none made such a suggestion. Jacobson pushed back herself, calling “the fundamental premise” of such questions both “shameful and sexist.”

“If a man were running No Labels, would you be making the same suggestion—based on little to no evidence—that his spouse is serving as the puppet master behind the scenes?” Jacobson asked. “Eight years ago, I came up with the idea for No Labels and have led it, as a full-time volunteer, ever since. I have put my life into this work with the singular goal of helping to heal our bitterly divided country and to support leaders who want to work together to solve America’s problems. I set the direction for No Labels, not my husband.”

Those who have worked with Jacobson said they weren’t surprised by her pushback. Despite running one of Washington’s higher-profile organizations, and being a fixture of the D.C. elite, she rarely does television and is incredibly protective of her reputation. Nor were they surprised when Jacobson personally emailed The Daily Beast hours later, requesting that its reporters come to her office the next day to talk in person.

“You don’t know me however you stand ready to tear down the work I have done for the past 10 years because you are being fed stories from disgruntled employees and contractors,” the email read. A meeting was subsequently set up for Friday morning.  

Unlike the outward glitz that it exhibits, the No Labels’ office space is bland and generic. A pit of cubicles occupies a modest open space floor in downtown D.C. with private, glass-walled rooms off to the side. There are a dozen or so staffers, virtually all seemingly in their mid-twenties, accompanied by a group of executives, seemingly all of them female. Jacobson’s own office is pedestrian by Washington standards—a small room with no windows—though her presence is outsize. Staffers occasionally stood up from their desks when she called on them to tout the group’s projects.

Inside the conference room, under large framed portrait photos of Tip O’Neill and Ronald Reagan, Jacobson, who has never taken a salary from her group, detailed the story of No Labels’ founding and the hurdles she has and continues to face, both as a female leader in a tough-love city and as someone trying to bring what she calls “kumbaya” bipartisanship to national politics.

“Almost everybody here is female, let me just make that really clear. We are a sisterhood and we believe in the impossible,” she said. “I just wanted to create an organization where we could take the temperature down, and figure out a way that Republicans and Democrats could finally figure out how to get problems solved for the American people, period, full stop, nothing more than that.”

It is, she said, a tough task considering the current climate, made tougher by the fact that she’s operating amid a sea of naysayers. But when pressed to address why the group itself had become more and more aggressive in the politics it practices, Jacobson declined to comment, citing ongoing litigation with Applecart. Instead, she touted the projects that her organization has launched and those that it has coming up.

Among those initiatives is a reprise of its controversial 2016 event where Trump was feted as a problem-solver. “We already have 250 citizens going,” Jacobson previewed. “We have a founder of Panera Bread who is going to be kicking it off, it’s going to be a town hall. There’s a lot of excitement here.” No Labels hopes to get commitments from presidential candidates to appoint a bipartisan cabinet, and to pledge not to campaign against any official who “works with that president.”

Jacobson discussed how excited she and her organization are for that event. But it wasn’t what seemed to dominate her attention during the 35-minute conversation. Instead, she repeatedly referenced the mockery that she insists No Labels has endured since its 2010 launch.

“Trust me, they’ve tried to kill us many a time,” she said at one point. “They’ve mocked us for years.”

Asked who “they” were, Jacobson shrugged, as if the answer was self-evident. They, she explained, was the press.

“When we first started, this was the ‘kumbaya group,’” she said. “It seemed as if it was frivolous. Maybe it seemed [that way]. But we’re believers. I’m passionate. I’m on a crusade. And it is a crusade for me personally. It’s my life’s work.”