It sounds like the beginning of a bad joke: Al Sharpton, Newt Gingrich and Mike Bloomberg–all failed presidential hopefuls–arrive at the White House for a joint meeting with President Barack Obama. Upon leaving the Oval Office, they convene a press conference on the White House lawn.

But far from tearing one another to bits or sniping at the man whose job they coveted, these unlikely comrades–a self-appointed civil rights spokesman, a former Republican Speaker of the House and a billionaire New York City mayor–were in total agreement. The topic of the meeting? Schools.

“You have to hold people accountable, and those that perform should be the ones that teach our kids, and those that don’t, unfortunately our children are just too important,” Bloomberg said, referring to his support for teacher merit pay.

Sharpton intoned, “The nation’s future is at stake, our children [are] at stake.”

Education Secretary Arne Duncan was there to lend the administration’s support. “There’s a real sense of economic imperative,” he said. “We have to educate our way [to] a better economy.”

Though the media portrayed the meeting as one among “strange bedfellows,” in fact Sharpton, Gingrich and Bloomberg are all on the same side of the education policy debate roiling the Democratic Party. The three are spokesmen for the Education Equality Project (EEP), an advocacy group that has attracted widespread media attention since its June 2008 launch, in large part because of its bipartisan call for policies like merit pay and the expansion of the charter school sector. With the support of rising star Democrats like Newark, New Jersey, Mayor Cory Booker and Washington, DC, Mayor Adrian Fenty, the EEP and such allied groups as the political action committee Democrats for Education Reform–have openly pushed back against the influence of teachers unions, community groups and teachers colleges over national education policy. Proclaiming themselves “reformers,” they often borrow their strategies from the private sector, and they believe urban public schools must be subjected to more free-market competition.

On the other side of the divide is a group of progressive policy experts and educators who published a manifesto during campaign season called A Broader, Bolder Approach to Education. They believe teachers and schools will not be able to eradicate the achievement gap between middle-class white children and everyone else until a wide array of social services are available to poor families. They envision schools as community centers, offering families healthcare, meals and counseling.

Theoretically, there is no reason all these people can’t work together. Some charter schools, after all, have had extraordinary success in raising the achievement of low-income students–even, in some cases, with the cooperation of teachers unions. Many younger teachers appear enthusiastic about performance-based pay, although there is no evidence from the cities that have tried it, like Denver, that it improves student achievement. Yet the single-mindedness–some would say obsessiveness–of the reformers’ focus on these specific policy levers puts off more traditional Democratic education experts and unionists. As they see it, with the vast majority of poor children educated in traditional public schools, education reform must focus on improving the management of the public system and the quality of its services–not just on supporting charter schools. What’s more, social science has long been clear on the fact that poverty and segregation influence students’ academic outcomes at least as much as do teachers and schools.

Obama’s decision to invite representatives of only one side of this divide to the Oval Office confirmed what many suspected: the new administration–despite internal sympathy for the “broader, bolder approach”–is eager to affiliate itself with the bipartisan flash and pizazz around the new education reformers. The risk is that in doing so the administration will alienate supporters with a more nuanced view of education policy. What’s more, critics contend that free-market education reform is a top-down movement that is struggling to build relationships with parents and community activists, the folks who typically support local schools and mobilize neighbors on their behalf.

So keenly aware of this deficit are education reformers that a number of influential players were involved in the payment of $500,000 to Sharpton’s nearly broke nonprofit, the National Action Network, in order to procure Sharpton as a national spokesman for the EEP. And Sharpton’s presence has unquestionably benefited the EEP coalition, ensuring media attention and grassroots African-American crowds at events like the one held during Obama’s inauguration festivities, at Cardozo High School in Washington.

“Sharpton was a pretty big draw,” says Washington schools chancellor Michelle Rhee, recalling the boisterous crowd at Cardozo. Rhee is known for shutting down schools and aggressively pursuing a private sector-financed merit pay program. Some of the locals who came out to hear Sharpton booed Rhee’s speech at the same event, despite the fact that her policies embody the movement for which Sharpton speaks.

The $500,000 donation to Sharpton’s organization was revealed by New York Daily News columnist Juan González on April 1, as the EEP and National Action Network were co-hosting a two-day summit in Harlem, attended by luminaries including Chicago schools CEO Arne Duncan. The money originated in the coffers of Plainfield Asset Management, a Connecticut-based hedge fund whose managing director is former New York City schools chancellor Harold Levy, an ally of the current chancellor, Joel Klein. Plainfield has invested in Playboy, horse racetracks and biofuels. But the company did not donate the money directly to Sharpton. Rather, in what appears to have been an attempt to cover tracks, the $500,000 was given to a nonprofit entity called Education Reform Now, which has no employees. (According to IRS filings, Education Reform Now had never before accepted a donation of more than $92,500.) That group, in turn, funneled the $500,000 to Sharpton’s nonprofit.

If one person is at the center of this close-knit nexus of Wall Street and education reform interests, it is Joe Williams, who serves as president and treasurer of the EEP’s board and is also the executive director of Education Reform Now. But it is through his day job that Williams, a former education reporter for the Daily News, exerts the most influence. He is executive director of Democrats for Education Reform (DFER), a four-year-old PAC that has gained considerable influence, raising $2 million in 2008 and demonstrating remarkable public relations savvy.

The group’s six-person team works out of an East Forty-fifth Street office donated–rent-free–by the hedge fund Khronos LLC. In recent months, DFER has had a number of high-profile successes, chief among them a highly coordinated media campaign to call into question the work of Obama education adviser Linda Darling-Hammond, once considered a top contender for the job of education secretary. During the same week in early December, the New York Times, Washington Post, Wall Street Journal and Boston Globe published editorials or op-eds based on DFER’s anti-Darling-Hammond talking points, which focused on the Stanford professor’s criticisms of Teach for America and other alternative-certification programs for teachers. Less than two weeks later, Obama appointed DFER’s choice to the Education Department post, Chicago schools CEO Duncan.

During campaign season, DFER donated to House majority whip James Clyburn, Senator Mark Warner and Virginia swing district winner Representative Tom Periello, among others. The organization regularly hosts events introducing education reformers like Rhee and Fenty to New York City “edupreneurs,” finance industry players for whom education reform is a sideline. DFER is focused on opening a second office, in Colorado, a state viewed as being in the forefront of standards- and testing-based education reform. The group successfully promoted Denver schools superintendent Michael Bennett to fill the Senate seat vacated when Obama named Ken Salazar as interior secretary. Bennett led the school system with the highest-profile merit pay system in the nation.

During the Democratic Party’s national convention in Denver this past August, DFER hosted a well-attended event at the Denver Museum of Art, during which Fenty, Booker, Klein, Sharpton and other well-known Democrats openly denigrated teachers unions, whose members accounted for 10 percent of DNCC delegates. With Clyburn and other veteran members of Congress in attendance, many longtime observers of Democratic politics believed the event represented a sea change in the party’s education platform, the arrival of a new generation. While progressive groups such as Education Sector, Education Trust and the Citizens’ Commission on Civil Rights have long attempted to push free-market education reforms to the Democratic Party, it is only with the arrival of DFER that the movement has had a lobbying arm with an explicit focus on influencing the political process through fundraising and media outreach.

“For a lot of groups that are dependent upon both private money and government money, there’s a tendency not to want to get involved in the nitty-gritty of politics,” Williams said in a March 31 phone interview from Denver, where he was meeting with Colorado politicians, setting the stage for DFER’s expansion there. “Our group–what we do is politics. We make it clear: we’re not an education reform group. We’re a political reform group that focuses on education reform. That distinction matters because all of our partners are the actual education reform groups. We’re trying to give them a climate where it’s easier for them to do their work.”

The education reformers who came to prominence in the 1990s, including the founders of Teach for America and the Knowledge Is Power Program, the national charter school network that fought unionization in one of its Brooklyn schools, often went to great lengths to portray themselves as explicitly apolitical. Nevertheless, “a lot of those people are, politically, Democrats,” says Sara Mead, a DFER board member and director of early childhood programs at the Washington-based New America Foundation. “One of those things that DFER does that’s really important is to help give those people a way to assert their identity as Democrats. It’s important for those groups’ long-term success, but also for Democrats, to the extent that some of these organizations are doing really good things for the kids whose parents are Democratic constituents. It’s important that those organizations are identified with us rather than being co-opted by Republicans, as they were in the past.”

The question remains, though, whether DFER and its allies actually do speak for poor and minority parents and their kids. Who on the left would disagree that the staggering achievement gap between middle-class white kids and poor children of color is a civil rights issue of national importance? Who wouldn’t view the high dropout rates among black and Latino boys as a disgrace? And yet there is no clear national representation for the interests of the urban, mostly black and Hispanic parents whose children’s schools confront these statistics day in and day out.

“On the local level is a certain distrust and despair about schools that makes poor families accessible” to free-market education reformers, says Deborah Meier, an education professor at New York University and the founder of several successful experimental public schools for poor children. “But I think the intersection between poverty and racism can’t just be tackled in this one area, in schools.”

Teachers unions, with their focus on wraparound social services for poor kids and better working conditions for teachers, believe they are the natural spokespeople for poor families. But so do union critics such as Joel Klein, Michelle Rhee and Joe Williams, who are sympathetic to No Child Left Behind and standardized testing, and whose allies support private school voucher programs.

“The DFERs, when they look at vouchers and charters, they don’t look at the underlying conditions,” says Randi Weingarten, president of the American Federation of Teachers. “Parents want to send their kids to charters and parochial schools because they like the smaller class sizes, they like the attention to safety, they like the attention to conditions that public school teachers talk about all the time. They make us the villains instead of the people who have the most power–the superintendents and mayors.”

Weingarten says she likes Williams, who is in fact a reasonable and calm interlocutor; he even walks the walk by sending his children to New York City public schools. Some of DFER’s board members, though, such as investment manager and a Teach for America founder Whitney Tilson, have been known to grow overheated in their attacks on unions, calling them corrupt and claiming that their leaders don’t care about children. Traditional education liberals can be just as harsh on the subject of DFER. Criticizing the group’s lack of commitment to the racial integration of schools, veteran education writer Jonathan Kozol said, “DFER is working in historical oblivion. If they’re going to betray everything that Dr. King and Thurgood Marshall fought for, at least they ought to have the honesty to say so.”

DFER is focused on reaching out to state legislators across the country, pressing them to support policies such as lifting the cap on the number of charter schools allowed to open in a year. DFER is also carefully watching how Congress and the Obama administration dole out the $100 billion for schools included in the February economic stimulus package.

Much of that money will fill local budget gaps, simply allowing school districts to continue their work without resorting to massive layoffs. But a $5 billion “race to the top” fund is intended specifically to foster innovation and reform in a small number of states–perhaps between eight and twelve–that win a competitive grant process. As White House chief of staff Rahm Emanuel said in March, “The resources come with a bow tied around them that says ‘reform.’ Our basic premise is that the status quo and political constituencies can no longer determine how we proceed on public education reform in this country.”

That sounds a lot like a DFER talking point. Indeed, it has become clear that DFER’s idea of education reform is the one driving the Obama administration as it distributes these funds. In a major March 10 address on education delivered to the Hispanic Chamber of Commerce, Obama spoke glowingly of charter schools and merit pay plans. “Too many supporters of my party have resisted the idea of rewarding excellence in teaching with extra pay, even though we know it can make a difference in the classroom,” he said–though education research has yet to offer proof that merit pay is a panacea. Later in the speech, the president called charter schools the national leaders on education “innovation” and called on states to allow their proliferation.

Two weeks later, during a conference call with reporters, Duncan said thirty-six school districts across the country are doing “interesting things around [teacher] compensation” and added he hoped federal stimulus dollars will increase that number to 150. The education secretary called “rewarding teacher excellence” a major priority but would not be more specific about how such “excellence” should be determined.

Darling-Hammond–back at Stanford but still advising the Obama administration–is focusing her latest research on international teacher quality. Nations like South Korea and Singapore have managed to reduce education inequality by building stable, high-quality teacher forces, she says. The key is paying teachers more, across the board, and providing them with better professional training and support. Test-score-based merit pay, according to Darling-Hammond, is a “marginal issue.”

On the ground, however, merit pay has become a major point of contention: in districts like Washington, some teachers have resisted calls for student test scores to heavily influence their salaries, and parents have protested the firings of popular teachers, professionals they believe were making a difference in their children’s lives.

Unexplained teacher firings “are not a way to run a school,” says Ruth Castel-Branco, an organizer with DC Jobs With Justice. “That shakes up the very foundation of stability that schools have to have. There has to be due process and a meaningful way for parents to engage.”

So far, at least, free-market education reformers have struggled with this piece of the puzzle. Lacking a membership base, their movement’s lobbying arm is essentially top-down, financed by New York hedge-funders, supported by research conducted at Beltway think tanks and represented on the ground by a handful of state and local politicians scattered across the country. And while it’s true that charter schools and Teach for America instructors interact with children and parents every day, the excitement around individual schools and classrooms does not easily translate into a national agenda. After all, the vast majority of urban students remain in traditional public schools, taught by teachers who came through traditional teachers college certification routes.

Even the involvement of Al Sharpton can’t change those facts. Joe Williams, who describes himself as chastened by his involvement in the $500,000 payment to Sharpton’s group, will admit that. “I wouldn’t even consider Sharpton grassroots, actually,” Williams says. “But he holds a lot of power. He brings attention to an issue like this.”