Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (35 page)

In 2010, Young took full advantage of the newfound freedom to spend. He contributed 80 percent of the money spent that year by SpeechNow.org’s super PAC, all of which paid for television ads targeting Wisconsin’s Democratic senator Russ Feingold. Feingold was a particularly symbolic target.
He had been the Senate’s premier supporter of strict campaign spending laws. Standing on principle, he urged outside groups not to spend on his behalf. That fall, he went down to defeat.

In the view of defenders,
Citizens United
and its progeny did not represent the black-and-white contrast of progressives’ nightmares so much as it clarified gray areas. But this alone was extremely important. By flashing a bright green light, the Supreme Court sent a message to the wealthy and their political operatives that when it came to raising and spending money, they now could act with impunity. Both the legal fog and the political stigma lifted.

Soon, the sums pledged at the Koch donor summits began to soar from the $13 million that Sean Noble raised in June 2009 to nearly $900 million at a single fund-raising session in the years that followed. “
This Supreme Court decision essentially gave a Good Housekeeping seal of approval,” acknowledged Steven Law, president of American Crossroads, the conservative super PAC formed by the Republican political operative Karl Rove soon after the
Citizens United
decision.

Critics, though, including Obama, saw the change as far more consequential. In his 2010 State of the Union address, Obama made headlines by denouncing the Court’s decision, saying that it “reversed a century of law that I believe will open the floodgates for special interests—including foreign corporations—to spend without limit in our elections.” In response, the associate Supreme Court justice Samuel Alito Jr., who attended the address, was seen shaking his head and mouthing the words “
not true.”

Another consequence was that the
Citizens United
decision shifted the balance of power from parties built on broad consensus to individuals who were wealthy and zealous enough to spend millions of dollars from their own funds. By definition, this empowered a tiny, atypical minority of the population.

“
It unshackled the big money,” David Axelrod contends. “
Citizens United
unleashed constant negativity, not just toward the president, but toward government generally. Presidents before have been under siege, but now there is no longer the presumption that they are acting in the public interest. There’s a pernicious drumbeat.” After the ruling, he said, “we felt under siege.”

As donors gathered in Palm Springs at the end of January for the first Koch summit of 2010, the desert air was full of optimism. “It was just a week or two after the special election in Boston,” one participant recalled. “Feeling was running pretty high.”

A torrent of contributions from undisclosed donors had helped deliver the surprise election of Scott Brown in Massachusetts earlier that month, making him the first Republican elected to the Senate from the liberal state in thirty-eight years. Organizing much of the cash from behind the scenes had been Sean Noble, who was by then on the payroll of the Kochs. Early on, when many others dismissed Brown as a hopeless long shot, Noble had decided that the payoff would be so rich that backing him was worth the gamble. Brown’s victory was calamitous for Obama. By filling the seat that had long been held by Ted Kennedy, the legendary Democrat who had died in August, Brown transformed the balance of power in Congress. The Democrats still held the majority in the Senate, but their loss of one seat crippled their power in one key way. Just as Obama was desperately trying to pass a final version of his health-care bill, it deprived the Democrats of the sixty-vote minimum necessary to overcome a Republican filibuster. The Democrats were left without the numbers necessary to bring the bill to a new vote. Brown’s triumph appeared to be the Affordable Care Act’s downfall.

Brown hadn’t won without a lot of help. The numbers told part of the story.
Although Brown was a low-profile Republican state senator best known for posing nude for
Cosmopolitan
magazine, he had unexpectedly outspent his Democratic opponent, Martha Coakley, by roughly $8.7 million to $5.1 million during the six weeks after the primaries. An unusual amount of this, almost $3 million, had come from shadowy out-of-state nonprofit groups funded by undisclosed donors.
Two of the most active of these dark-money groups, the American Future Fund and Americans for Job Security, had received large infusions of cash from the mysterious “social welfare” group that Noble had registered the spring before, based at an Arizona post office box. For months, the post office box otherwise known as the Center to Protect Patient Rights had been filling with fistfuls of secret cash from Randy Kendrick and other members of the Koch network in an uphill battle to stop the passage of the Affordable Care Act. Noble had redirected much of this money into the front groups spending against Coakley in the Massachusetts special election. The hope was that if Republicans could turn one Senate seat, they could block the health-care bill and mortally wound Obama. So when the plan worked, Brown’s win electrified the donors. Many felt that they had personally turned the tide on Obamacare. “
We thought we had it won!” the seminar participant recalled.

Obama had been so flummoxed by Brown’s election that at a White House senior staff meeting the next morning he had beseeched his staff accusingly, demanding to know, “What’s my narrative? I don’t have a narrative!” His administration’s momentum had been buried in outside money.

Lifting the donors’ spirits further was the Supreme Court’s
Citizens United
ruling, which had been handed down on January 21, two days after Scott Brown’s victory in Massachusetts, and shortly before the Kochs’ summit. Brown’s race now seemed a promising dress rehearsal for even more outside money, which the Court had ennobled as free speech. So as the self-described “investors” came together to plan for the 2010 midterm elections, they were in a buoyant mood.

Sean Noble, looking dashing with a tan, had been elevated by then from merely moderating a panel at the June 2009 summit six months earlier to now speaking on one. His congressional staff job and unpaid student loans were remnants of the past. As the Web site of his political consulting firm proclaimed ebulliently, “It’s not what you know but who you know.”

The panel discussion was titled “The Opportunity of 2010: Understanding Voter Attitudes and the Electoral Map.” Noble spoke optimistically about the health-care fight, which he believed had awakened a national rebellion. Joining him on the dais were three other men, each representing aspects of the underground political operation that would rout the Democrats in the year ahead.

The best known of the panelists was Ed Gillespie, a top national political tactician who had become the chairman of the Republican National Committee in 2003 at the age of forty-one. Gillespie had made a fortune in lobbying, estimated at as much as $19 million. He was a former Democrat, and the firm he co-founded, Quinn Gillespie & Associates, was bipartisan, more concerned with making deals than political purity.
Its clients ranged from Enron, the huge energy company that went scandalously bust, to a health-care group promoting individual insurance mandates akin to those that Obama’s opponents called treasonous. The son of an Irish immigrant, Gillespie, according to Capitol lore, had started out parking cars and worked his way up to the top of Washington’s booming influence-peddling industry by dint of his easy affability and quick political instincts.

As soon as the Court handed down its
Citizens United
decision, Gillespie grasped its promise.
Within weeks, he set out to Texas with his fellow Bush White House alumnus Karl Rove to pitch deep-pocketed oilmen at the Dallas Petroleum Club on a plan to fund a new kind of shadow political machine. Instead of giving just to the Republican Party or its candidates and having the size of their donations limited, the high rollers could now legally funnel limitless amounts of cash to “outside” organizations that Rove and Gillespie were about to create, the two operatives explained. These new groups would act as the privatized auxiliary force Rove had been dreaming of for years. Rove told the moneymen, “
People call us a vast right-wing conspiracy, but we’re really a half-assed right-wing conspiracy. Now,” he emphasized, “it’s time to get serious.”

Even before the
Citizens United
decision, Gillespie had been busy. While many other conservatives were despondent during the early months of the Obama administration, when the president’s approval ratings were stratospherically high, Gillespie had come up with an ingenious plan to exploit the only opening he could see. With Obama dominating Washington, Gillespie looked to the states. He knew that 2011 was a year in which many state legislatures would redraw the boundaries of their congressional districts based on a new census, a process that only took place once a decade. So he put together an ambitious strategy aimed at a Republican takeover of governorships and legislatures all across the country. Capturing them would enable Republicans to redraw their states’ congressional districts in order to favor their candidates. While the mechanics of state legislative races were abstruse and deadly dull to most people, to Gillespie they were the key to a Republican comeback.

“
It was all conceived sitting in Ed’s office in Alexandria, Virginia…it was entirely his vision,” Gillespie’s associate Chris Jankowski later told
Politico
. “It seems like an obvious strategy now, but you have to turn back the clock to realize how demoralized we all were…He was saying, ‘Here’s something smart we can do.’ ”

Gillespie called the plan “REDMAP,” an acronym for the Redistricting Majority Project. To implement it, he took over the Republican State Leadership Committee (RSLC), a nonprofit group that had previously functioned as a catchall bank account for corporations interested in influencing state laws. All he needed was enough money to put REDMAP into action.
By the end of 2010, with the help of million-dollar donations from the tobacco companies Altria and Reynolds, as well as huge donations from Walmart, the pharmaceutical industry, and rich private donors like those at the Koch summit, the RSLC would have $30 million, three times its Democratic counterpart. “
It was three yards and a cloud of dust,” Gillespie later recalled of his scramble for money. “It was a constant working, and working, and working,” especially at honeypots like the Koch summit.

Joining the panel with Noble and Gillespie was a short, balding figure with a seemingly inexhaustible command of political minutiae. With his North Carolina drawl and his glasses slipping down his nose, he might be mistaken for a southern shop clerk. But James Arthur “Art” Pope was actually a shop
owner
, in fact the multimillionaire chairman and CEO of Variety Wholesalers, a family-owned discount-store conglomerate with hundreds of outlets stretching up and down the mid-Atlantic and the South. Pope was also a charter member of the Koch network. A longtime friend and ally, he shared Charles’s passion for free-market philosophy and credited a summer program he attended at the Cato Institute with exposing him to conservative icons like Hayek and Ayn Rand. After graduating from the Duke School of Law in 1981 and taking over his family’s private company, he began to transform the Pope family foundation, which had assets of nearly $150 million, into a remarkable political force.

In the previous decade, Pope and his family and the family foundation had spent more than $40 million in efforts to push American politics to the right. In addition to regularly attending the Kochs’ secret planning summits, he served on the board of the Kochs’ main public advocacy group, Americans for Prosperity, as he had on its predecessor, Citizens for a Sound Economy, and had joined forces with the brothers on numerous other political enterprises. Tax records showed that Pope had given money to at least twenty-seven of the groups supported by the Kochs, including organizations opposing environmental regulations, tax increases, unions, and campaign spending limits. Pope, like the DeVos family, was a supporter of the James Madison Center for Free Speech. Indeed, Pope’s role in his home state of North Carolina was in many respects a state-sized version of the Kochs’ role nationally. While he wasn’t well-known outside the state, his growing influence at home had led the Raleigh
News & Observer
to begin calling him “the Knight of the Right.”

What Pope brought to the panel that weekend was the chance for donors to help him turn North Carolina into a laboratory for REDMAP. Historically, North Carolina had been a pivotal swing state. It was both the face of the New South and the stomping ground of Jesse Helms’s race-baiting National Congressional Club. But Obama had carried it narrowly in 2008 and remained popular in 2010. Democrats also dominated the state legislature; the Republicans hadn’t controlled both houses of the North Carolina General Assembly for more than a hundred years. “Not since General Sherman,” the joke went. Winning a legislative majority in 2010 wouldn’t be easy. But no one was better situated than Pope to make it happen. He both was a master of arcane election law and had a fortune that few individuals could match. But like the Kochs and the DeVoses, he had had little luck over the years persuading voters to follow his lead. While he had served in the state legislature in North Carolina, he had been soundly defeated when he ran for lieutenant governor in 1992, his one bid for statewide office. “
He was a terrible candidate,” recalled Bob Geary, a political reporter for the
Indy Week
, an alternative newspaper in Durham, who covered the race. “I’ve never seen him smile. He was very introverted and pedantic.” With the precision he was known for, Pope admitted, “
I’m not a charismatic stump speaker.”

Flipping the state would require political artistry and some guile. For this, the panel turned to its fourth member, Jim Ellis. The Kochs were notoriously picky about who received coveted invitations to their summits but didn’t seem to mind that he was under indictment at the time for violating campaign-finance regulations. Ellis, an old friend of Noble’s, was there to make predictions about the outcome of the 2010 races, but he had other specialties too.

Ellis had a history of creating fake movements in support of unpopular corporations and causes. In the 1990s, he had headed a company called Ramhurst, which documents revealed to be a covert public relations arm of R. J. Reynolds, the giant tobacco company.
Under his guidance, Ramhurst organized deceptively homegrown-looking “smokers’ rights” protests against proposed regulations and taxes on tobacco.
In 1994 alone, R. J. Reynolds funneled $2.6 million to Ramhurst to deploy operatives who mobilized what they called “partisans” to stage protests against the Clinton health-care proposal, which would have imposed a stiff tax on cigarette sales. Anti-health-care rallies that year echoed with cries of “Go back to Russia!”

If the outbursts bore a striking resemblance to those against Obama’s health-care proposal fifteen years later, it may be because the same political operatives were involved in both. Two of Ellis’s former top aides at Ramhurst, Doug Goodyear and Tom Synhorst, went on in 1996 to form DCI Group, the public relations firm that was helping Noble foment Tea Party protests against the Affordable Care Act.

Ellis, meanwhile, had moved into the heart of Washington’s Republican money stream. He became what some news reports described as the “right-hand man” to Tom DeLay, the powerful House Republican leader from Texas who was infamous for his “K Street operation,” which serviced corporate lobbyists while shaking them down for campaign contributions. DeLay made him executive director of his political action committee. The duo’s high-handed approach resulted in both men getting indicted for campaign-finance violations in 2005. In time, DeLay’s conviction was overturned, but Ellis was less lucky.
In 2012, he pleaded guilty to a single felony count and paid a fine. Undaunted, he airbrushed DeLay’s name from his corporate résumé and kept on. Asked about his career in manufacturing protests for pay, Ellis sounded untroubled. “
The grass roots was designed to give people the right to exercise their voice,” he said with a shrug. As he addressed the big donors on the “opportunity of 2010,” Ellis’s legal status was uncertain, but his acquaintance with politics’ seamier side was beyond doubt.

The donors left Palm Springs optimistic about 2010, inspired by Noble and the other members of his panel, but their elation over killing Obamacare soon proved premature. “The assumption in Washington and everywhere else was that when they got Scott Brown, it was the death knell for health care,” Axelrod recalled. “The guy who wouldn’t accept that was Obama. He said, ‘We’re going to do this underground and find a path.’ ”