Sitting on the largest campaign war chest of any House Member of either party, Democratic Caucus Chairman Bob Menendez (N.J.) is clearly eyeing his next move. The question is, will it be up or out? Allies say they’re not sure the House’s third-ranking Democrat knows the answer himself.

First elected in 1992, Menendez represents a solidly Democratic district and faces no challenger as he heads into 2004. Yet he’s amassed $2.8 million in his campaign account, edging out Reps. David Dreier (R-Calif.), with $2.6 million, and Lloyd Doggett (D-Texas), with $2.2 million, for the biggest reserves as of June 30.

Obviously, Menendez is a Member with ambitions, having ascended to vice chairman of the Democratic Caucus in just his fourth term and to its chairmanship by his sixth. He flirted with a Senate bid in 2000, and at age 49 he will almost certainly face another decision between a run for statewide office or bidding for a higher rung on the House leadership ladder.

“There’s a future for him on either track,” said one Democratic Congressional aide familiar with New Jersey politics. “He’s clearly positioning himself. The money is a big statement and three million is a lot.”

Menendez insists he’s simply playing his cards safe and smart, saying that the more money he has in the bank, the better prepared he is for a potential challenge and the more he can give to fellow Democratic Members and candidates.

“I haven’t had a serious challenge in the past, and it’s allowed me to accumulate a certain amount of money,” Menendez said. “But I always believe in being prepared. I don’t want to give anyone sense that I’m not prepared for a challenge.

“The money is an opportunity to be able to strengthen the Democratic Party at home and across the country,” Menendez added.

At the same point in the past cycle, the Caucus leader held $2.3 million in his campaign account. At the end of June 1999, he had amassed $1.7 million.

“It’s prudent for anyone being considered for higher office to try to amass a war chest,” said Rep. Steven Rothman (D-N.J.), a Menendez ally. “My mother used to say, ‘Rich or poor, it’s good to have money.’”

Rothman said Menendez would be on the short list for statewide office if he chooses that path, noting that his New Jersey colleague is held in high regard both on the Hill and at home. Rothman, however, said he doesn’t believe Menendez has decided his next move.

“I wouldn’t assume that Bob’s continued prowess as a fundraiser means he has made a final decision in his own mind about which other opportunities for service he might pursue in the future,” he said.

Menendez didn’t close the door on any potential move, saying his money gives him an opening to “any and all opportunities that might come my way.”

But when asked specifically about a jump to the Senate, Menendez said: “My focus is the House, I’m committed to the House. I had the opportunity to run for the [then-Sen. Robert] Torricelli seat. I had that opportunity and I pursued the House leadership instead.”

Menendez passed up the chance to replace former Democrat Torricelli on the Senate ballot in 2002, when the incumbent withdrew from the race in the face of plummeting poll numbers.

At the time Torricelli stepped aside, it was unclear whether Democrats could hold onto the seat, and Menendez was on the cusp of the leadership election to become Caucus chairman. New Jersey Democrats ultimately enlisted former and now-Sen. Frank Lautenberg to go after the seat.

Nonetheless, several top House Democratic aides and Members say they still believe Menendez has his heart set on the Senate.

“He’s in a noncompetitive House seat,” noted one Democratic leadership aide. “Otherwise, there’s no reason to amass that kind of money.”

With Lautenberg’s term ending in 2008 (when he will be 84), and neither Minority Leader Nancy Pelosi (Calif.) nor Minority Whip Steny Hoyer (Md.) indicating any plans to move on, Menendez may be in a position to continue amassing the mother’s milk of campaigning for a few more years.

“He needs to build up his war chest” if he wants to run for the Senate, said a Democratic strategist close to New Jersey politics. “He’s not personally wealthy. He’s no Jon Corzine. He’d have to raise 20 to 25 million to run for the Senate. In that context, with $2.8 million he probably looks at it as about right for what his priorities are.”

That strategist predicted Menendez will hold at least $4 million by the end of 2003, and give close to a half-million dollars to aid the Democratic Congressional Campaign Committee.

Rep. Bill Pascrell (D-N.J.) said regardless of whether Menendez is looking to move to the Senate is anyone’s guess, but in the meantime his colleague “has every right to fill his campaign treasury as much as possible.”

“He’s the third in the leadership,” said Pascrell, who has also been mentioned as a possible Senate candidate. “I think certainly Bob Menendez is extremely qualified to be a U.S. Senator and others are as well.”

So far this cycle, Menendez has given $150,000 to the DCCC and helped raise another $45,000 for the organization.

He’s also has given $19,000 to “Frontline,” a new DCCC program Menendez heads to raise and give money to vulnerable Democratic incumbents.

So far this cycle, however, his leadership PAC — New Millennium — has been somewhat quiet. The political action committee, for which he is about to have a major fundraiser, had $51,226 on hand as of June 30 and had given just $10,000 to from that fund to candidates.

But in previous years the New Millennium PAC has been more active, giving $706,500 to candidates in the 2002 cycle and $201,328 in 2000.

“I work at raising money,” Menendez said.