WASHINGTON (By Howard Fineman, Newsweek) June 19, 2005 - Hillary Rodham Clinton is expert in the art of appearing publicly oblivious to family tensions. The skill came in handy last week at a Teamsters union fund-raiser in Washington for Jennifer Granholm, the Democratic governor of Michigan. Earlier that day the Teamsters and four other unions had threatened to bolt the AFL-CIO and spark a civil war in the beleaguered labor movement—the grass-roots bulwark of the Democratic Party. But the funder had been planned long before, and Granholm is well liked. So officials from the opposing camps trouped to a top-floor terrace of the Teamsters headquarters, overlooking the Capitol, to listen to speeches, smile icy smiles and shoot dagger glances at each other. No one alluded to possible unpleasantness, especially the junior senator from New York. Framed by a phalanx of beefy union guys, Hillary all but cooed. "I feel so protected," she said.

But even Senator Clinton can't ignore this: the House of Labor is divided against itself, and it's not clear it can stand. For reasons of philosophy, money and ego—the Potomac power mix—the slice of America that used to be called "Big Labor" may soon collapse. A breakup would have broad implications in the workplace, pitting one set of unions, and one vision of unionism, against another. In politics, it would create competing spheres with one of them—the renegades—more willing to work with Republicans and more focused on organizing drives than on electoral politics. "In terms of Democratic politics, it's a disaster," says Rick Sloan, the Machinists communications director. "It would eviscerate our ground capabilities in ways Karl Rove and Tom DeLay will try to exploit."

The family feud has been building for years, and with good reason: the family is falling apart. When the American Federation of Labor and the Council of Industrial Organizations merged in 1955 to create the AFL-CIO, nearly one in three workers was a card-carrying union member. On the golden anniversary of the merger, that number is now less than 10 percent in the private sector, 13 percent if you count the public sector. To protect their clout during the generation-long rise of the conservatives, unions transformed themselves into turbo-charged fund-raising and turnout engines, dedicated (in fact if not by law) to Democrats. Members of union households were 19 percent of the vote in 1992 and rose to 26 percent last year—a tide of about 7 million votes, most of which went into the Democratic column. Yet unions have little to show for all that effort in terms of legislation—and nothing in terms of Democratic control of the Congress.

Enter the "Change to Win" coalition, led by Andy Stern, the obstreperous, intellectually creative—and in the eyes of his many enemies, egomaniacal—head of the Service Employees International Union. The group, comprising SEIU, the Teamsters and three other unions, accounts for about 4 million of the AFL-CIO's 13 million members. If the AFL-CIO refuses to approve a series of reforms at its July convention in Chicago—the main one being a massive shift in spending priorities from politics to field organizing—the group threatens to go its own way. Stern's focus on signing up new workers makes sense: in the rapidly growing retail sector, a mere 650,000 of some 13 million workers belong to unions; the largest retail employer, Wal-Mart, has none. "The easiest thing to do is give money to politicians," Stern tells NEWSWEEK. "It's a lot easier than organizing workers, which is why the AFL-CIO would like to spend their time on what is easy rather than on what's hard."

Followers of AFL president John Sweeney, who has lined up the votes for re-election, remain unapologetic about their strategy—if for no other reason than they regard the Republicans as deeply and reflexively anti-union. The GOP "is a mortal threat," says Mike Podhorzer, the federation's deputy political director. But Stern's assessment of the Democrats is equally as harsh. "They just don't get what working people are looking for," he says—even though his union backed the party's 2004 presidential nominee.

Is the Stern Gang serious about dealing with Republicans? Based on history and recent evidence, yes. The SEIU contributed $500,000 to the Republican Governors Association. And Rich Bond, a respected former chairman of the Republican National Committee, was a paid consultant to the SEIU for several years, and brokered a deal to have the union "commend" President Bush for broaching the topic of immigration reform, while withholding support for his specific ideas. Stern ended up not issuing the statement himself and Bond quit his consultancy after his advisory role became controversial. "I remember somebody in the labor movement kicking the crap out of me about it," Stern recalls.

They're "kicking the crap out of him" again. Some say he has another agenda, which is to take over the AFL-CIO from his former SEIU colleague Sweeney, who is half a generation older and cut from a different cloth: a Dorothy Day social activist from the working-class Bronx, N.Y., versus Stern, whose grandparents were members of an exclusive German-Jewish country club and who is a graduate of the University of Pennsylvania. "I think Andy's got one and a half feet out the door," says Gerald McEntee, president of the American Federation of State, County and Municipal Employees. "It's a bad thing, too, because working men and women in America are facing tougher times than ever... It's the worst time to divide our efforts."

Stern is unrepentant. Individual unions already go their own way politically—they backed three different candidates in the Democratic primaries—and he says he'd be willing to sign "no-raid" deals with other unions if he goes his own way. "When you are going down a road and you don't like where it ends, you get off of that road," Stern says. Word is he and Sweeney will meet next week in a last-minute effort to avoid a split. No outside peacemakers are invited. "We are not looking for mediators," says Bruce Raynor of the union UNITE, a Stern ally. AFL-CIO loyalists say the same thing. Even Hillary might not be able to paper this one over—but she isn't going to be asked to try.

With Tamara Lipper