Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (39 page)

He protested caricatures that portrayed him as greedy and self-serving, saying he deeply cared about the people of North Carolina but believed they were better served by private enterprise than government social programs. He therefore believed in cutting personal and corporate income taxes, abolishing estate taxes, and cutting state spending. Friends explained that Pope believed it was the role of charities, to which he contributed, not the government, to look after the poor and disadvantaged.

The Pope fortune was highly dependent on low-income patrons. In 1930, Pope’s grandfather established five small dime stores in North Carolina that he sold to the next generation. Pope’s father was a tough and thrifty merchant who expanded the family business into an empire spanning thirteen states. Pope then worked his way up in the company, becoming CEO. Variety Wholesalers owned several chains, including Roses, Maxway, Super 10, and Bargain Town. The company favored a specific demographic: neighborhoods with median incomes of less than $40,000 a year, and populations that were at least 25 percent African-American.

Despite the controversy it stirred, the triumph of Pope and “outside” money in North Carolina in 2010 was sweeping. Of twenty-two local legislative races targeted by Pope, his family, and their organizations, the Republicans won eighteen. As Gillespie and he had hoped, this placed both chambers of the general assembly firmly under Republican majorities for the first time since 1870.

According to the Institute for Southern Studies, three-quarters of the spending by independent groups in North Carolina’s 2010 state races came from accounts linked to Pope. The total amount that Pope and his family and groups backed by him spent—$2.2 million—was not that much by national standards but was enough to exert crucial influence within the confines of one state.

The pattern did in fact repeat itself all across the nation. “
The Obama team has done some amazing things, those guys are really something, but the Democrats plain got skunked on the state houses,” the former Republican congressman Tom Reynolds, the chairman of REDMAP, later told
Politico
. Gillespie’s deputy, Chris Jankowski, later admitted, “At first I was a little panicked, they weren’t out there really competing. I thought I was going to get hit by a sucker punch.” But then, he said, “I realized what was happening and it was like, how much can we run up the score?”

In the final month before the midterm elections, Obama’s political advisers realized there was almost nothing they could do to prevent disaster. “
We lost all hope in October,” one White House aide later admitted. “We didn’t feel much of anything. We just had to let the ship hit the iceberg.”

In a last-ditch effort, Obama tried to warn voters that Republicans were trying to steal the elections with secret, special-interest cash. He began speaking out on the campaign about how
Citizens United
had allowed “a flood of deceptive attack ads sponsored by special interests using front groups with misleading names.” He even made a barely veiled reference to the Kochs, suggesting that big companies were hiding behind “groups with harmless-sounding names like Americans for Prosperity.” Obama said, “They don’t have to say who, exactly, Americans for Prosperity are. You don’t know if it’s a foreign-controlled corporation”—or even, he added, “a big oil company.”

In the final days before the election, the Democratic Party aired a national ad accusing “Bush cronies,” Ed Gillespie and Karl Rove, and “shills for big business” of “stealing our democracy.” The spot depicted an old woman getting mugged. The image, though, was hackneyed, and the message simplistic. It was almost impossible to explain to the public in sound bites the connections between the sea of dark money, the donors’ financial interests, the assault on Obama’s policies, and their lives.
The conventional wisdom among professional political consultants was that Americans either didn’t get it or just didn’t care.

It’s likely given historical trends and an unemployment rate topping 9.5 percent that a Republican wave in 2010 was inevitable, but the unmatched money from a handful of ultrarich conservatives helped turn the likely win into a rout. Noble had made so much progress that by the final weeks in the campaign he was aiming beyond his third-tier candidates at congressmen no one had ever believed were vulnerable. After noticing how little money Jim Oberstar, a Democratic congressman from Duluth, Minnesota, had raised, Noble bought local television time and aired an ad thrown together by McCarthy casting Oberstar as a disco-era relic who cared more about himself than about his constituents. Oberstar, to almost everyone’s surprise, became another notch on Noble’s belt.

On November 2, 2010, the Democrats suffered massive defeats, losing control of the House of Representatives. Just two short years after he soared to power amid predictions of a lasting realignment, Obama’s party, and his hopes of prevailing on any ambitious legislation, were crushed. Republicans gained sixty-three seats in the House, putting them firmly in control of the lower body. It was the largest such turnover since 1948. Pelosi, the first female Speaker and Luntz’s favorite target, was exiled to minority status after only four years. The Ohio Republican John Boehner, the new Speaker, now had a caucus bursting with Tea Party enthusiasts who had ridden to power by attacking government in general and Obama in particular. Several had won primaries against moderates. Many owed their victories to donors expecting radically conservative change. Compromise wasn’t in their interest.

The Democrats’ setbacks were huge at almost every level. Republicans picked up half a dozen Senate seats. At the state level, the Democratic losses were even more staggering. Across the country, Republicans gained 675 legislative seats. They won control of both the legislature and the governor’s office in twenty-one states; the Democrats had similar one-party rule in only eleven. The map looked red, with small islands of blue.

As a consequence of their gains, Republicans now had four times as many districts to gerrymander as the Democrats. By creating reliably safe seats, they could build a firewall protecting the Republican control of Congress for the next decade.

Clearly, REDMAP’s payoff for a relatively modest investment was impressive. For the Republicans, as Glenn Thrush of
Politico
observed, it became “the gift that keeps on giving.” Newly Republican states like Michigan, Wisconsin, Ohio, and North Carolina soon became breeding grounds for attacks on Obama’s core agenda. They undermined his policies on health care, abortion, gay rights, voting rights, immigration, the environment, guns, and labor.

“It feels bad,” Obama admitted at a press conference the day after the election. What hurt especially, he said, was having to make condolence calls to Democrats who had gone out on a limb to defend him and his policies, such as Ohio’s governor, Ted Strickland. “The toughest thing in the last couple of days is seeing really terrific public servants not being able to serve more,” he said. “There’s not only sadness about seeing them go, but there’s also a lot of questioning on my part in terms of could I have done something differently, or something more.”

Waxing professorial, he suggested, “This is something that I think every president needs to go through,” but then he paused and joked wanly, “Now, I’m not suggesting for every future president that they take a shellacking like I did last night.”

One of the biggest, though least-known, winners of the evening was Sean Noble. When he had worked as a congressional aide on Capitol Hill, he had earned a salary of $87,000 a year. In contrast, by 2011 he was wealthy enough to make two major real estate purchases in addition to the two houses that he and his wife owned in Phoenix. He spent $665,000 on a Capitol Hill row house and an undisclosed amount on “
a 5,700-square-foot, eight-bedroom house in Hurricane, Utah,” Bloomberg News reported. And best of all, the record spending on the 2012 election was just around the corner.

Total Combat, 2011–2014

There’s class warfare all right.

But it’s my class, the rich class, that’s making war, and we’re winning.

—Warren Buffett

The official opening of the 112th Congress took place on January 5, 2011, when Nancy Pelosi, the Speaker of the House, handed off an oversized ceremonial gavel to her successor, John Boehner. But a new era of ultraconservative billionaire influence had already begun. Before the public swearing-in ceremony got under way, David Koch,
whose donor network had spent at least $130.7 million on winning a Republican majority, was in the new Speaker-to-be’s ornate office, chatting amiably with his staff. “The People’s House” was under new management and, critics would suggest, new ownership.

While Koch was a very public presence in the Capitol, his political adjutant, Tim Phillips, the president of Americans for Prosperity, was deep in the inner sanctum of the congressional committee that mattered most to the bottom line of Koch Industries. Phillips’s most important destination that day was the House Energy and Commerce Committee, which under the new Republican majority had now increased its power to block President Obama’s environmental agenda in Congress. The committee could bury progress on climate change and harass the Environmental Protection Agency for the foreseeable future.

David Koch’s public appearance that day signified a remarkable transformation. The Kochs had come far from their days as Libertarian losers. As the
Los Angeles Times
noted a month later, “
Charles and David Koch no longer sit outside Washington’s political establishment, isolated by uncompromising conservatism.” Instead, their “uncompromising conservatism” now dominated one of Congress’s two legislative chambers, as well as one of the country’s two major political parties. As the paper’s headline put it, “Koch Brothers Now at Heart of GOP Power.”

That afternoon, after Boehner was sworn in, Koch donned a herringbone tweed overcoat and a camel-colored cashmere muffler and strode out across the Capitol grounds toward Independence Avenue to celebrate. Before he could get far, though, he was stopped by Lee Fang, the dogged liberal blogger for
ThinkProgress
who had been chronicling the Kochs’ rise to power for months. After Fang introduced himself, he and a videographer stuck a microphone in the billionaire’s face and asked, “Mr. Koch, are you proud of the Tea Party movement, and what they’ve achieved in the past few years?”

“Yeah,” Koch said, looking a little befuddled. Phillips, who was at his side, tried to cut the questioning off. “Hey, David, Lee here is a good blogger on the LEFT,” he warned his boss with a nervous smile. But Koch, who had impaired hearing in his left ear, either didn’t grasp the warning or didn’t care, because he kept talking. “There are some extremists there,” he acknowledged, “but the rank and file are just normal people like us. And I admire them. It’s probably the best grassroots uprising since 1776 in my opinion!”

Phillips by this point was trying to drown out the interview without appearing rude on camera, insistently repeating, “Lee—Lee—I’m very disappointed in you—Lee—you’re better than this—Lee,
LEE
—THE INTERVIEW IS OVER!”

Fang soldiered on nonetheless, asking Koch what he wanted from the new Congress under Speaker Boehner. “Well,” Koch answered, with growing animation, licking his lips as he habitually did, “cut the hell out of spending, balance the budget, reduce regulations, and uh, support business!”

Later, in a round of image-repairing interviews, the Kochs would portray themselves as disinterested do-gooders and misunderstood social liberals who championed bipartisan issues such as criminal justice reform. But when put on the spot and stripped of public relations help, David Koch made his priorities clear. He regarded his self-interest and the public interest as synonymous.

In
Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else
, the journalist Chrystia Freeland describes how
those with massive financial resources almost universally use them to secure policies beneficial to their interests, often at the expense of the less well-off. In the United States, a number of studies have shown that in recent years this tendency has distorted politics in very specific ways. In a study he conducted for the nonpartisan Sunlight Foundation, the political scientist Lee Drutman found that increasingly concentrated wealth in America resulted in more polarization and extremism, especially on the right. Very rich benefactors in the Republican Party were far more opposed to taxes and regulations than the rest of the country. “
The more Republicans depend upon 1% of the 1% donors, the more conservative they tend to be,” he discovered.

T
he 112th Congress soon unfolded as a case study of what David Frum, an adviser to the former president George W. Bush, described as the growing and in his view destructive influence of the Republican Party’s “radical rich.” The “
radicalization of the party’s donor base,” he observed, “propelled the party to advocate policies that were more extreme than anything seen since Barry Goldwater’s 1964 presidential campaign.” It also “led Republicans in Congress to try tactics they would never have dared use before.”

Hard data supported this. Harvard’s Theda Skocpol found that the House “
took the biggest leap to the far right” since political scientists began recording quantitative measurements of legislators’ positions. There was no better example than the Kochs’ newly won influence over the House Energy and Commerce Committee.

In the previous Congress, the panel had been chaired by Henry Waxman, the liberal Democrat from California who had quarterbacked the House’s successful passage of the cap-and-trade bill, only to see it die in the Senate.
Now the new Republican leadership stocked the committee with oil industry advocates, many of whom owed huge campaign debts to the Kochs. Koch Industries PAC was the single largest oil and gas industry donor to members of the panel, outspending even ExxonMobil. It had donated to twenty-two of the committee’s thirty-one Republican members and five of its Democratic members, too. In addition, five out of the six Republican freshmen on the committee had received “outside” support from Americans for Prosperity.

Meanwhile, many of the new committee members had
signed an unusual pledge swearing fealty to the Kochs’ agenda. They promised to vote against any kind of carbon tax unless it was offset by comparable spending cuts—an unlikely scenario. The “No Climate Tax” pledge was invented by Americans for Prosperity in 2008 when the Supreme Court cleared the way for the EPA to regulate greenhouse gases, as it did other pollutants. The Kochs’ pledge was modeled on the enormously successful one that the antitax crusader Grover Norquist had used to intimidate Republican lawmakers from raising taxes, but in this instance it served not a cause so much as a company.

By the start of the legislative session in 2011, fully 156 members of Congress had signed the Kochs’ “
No Climate Tax” pledge. Many returning members of the House Energy and Commerce Committee had already taken the pledge, and of the twelve new Republicans on the panel nine were signatories, including five of the six freshmen.

A prime example of the symbiotic relationship between the Kochs and the committee was Morgan Griffith, who had defeated Rick Boucher in the district that represented Saltville, Virginia, and was among the wave of new appointees to the Energy and Commerce Committee who were openly indebted to the Kochs for their seats. Americans for Prosperity’s operatives were guests of honor at a victory rally soon after the election, at which Griffith gushed, “I’m just thankful that you all helped me in so many ways.”

The Kochs’ investment soon paid off. Once in office, Griffith became an outspoken skeptic of mainstream climate science, drawing national ridicule for lecturing scientific experts, as they testified in Congress, that they needed to consider the possibility that Mesopotamia and the Vikings owed their success to global warming and that melting ice caps on Mars showed that humans were not its cause on Earth.

Congressman Griffith also became a lead player in the House Republicans’ “war on the EPA,” demanding that the agency be “reined in.” Within a month after he took office, he and other House Republicans gutted the EPA’s budget by a punishing 27 percent. The Senate objected but eventually agreed to cut 16 percent from the agency that had halted the flow of mercury into Saltville’s streams.
By then, the 1980 Superfund law that had charged polluters like the Olin Corporation for the cleanup costs had expired, and the $3.8 billion that had accumulated in the fund had run out. Nearly half of America’s population lived within ten miles of a toxic waste site, according to one study, but in towns like Saltville, taxpayers rather than corporations were left to clean up the mess.

Koch Industries could breathe a bit freer, but the same couldn’t be said of those living near its plants. On just one short street, South Penn Road in the blue-collar town of Crossett, Arkansas, eleven of the fifteen households had been stricken with cancer. Many residents were convinced their plight was caused by chemical waste dumped by the nearby Georgia-Pacific paper mill, owned by Koch Industries. The air stank so badly that young and old residents stayed indoors, breathing from respirators. The company denied responsibility and pointed out that the cancer claims had earlier been “
rejected in a class action suit.” But David Bouie, a black minister who lived on the street, was trying desperately to get the EPA involved. “
All along our street here we have case after case of cancer,” he told the liberal investigative filmmaker Robert Greenwald. “We have a problem in this community, for this many people to be sick or dead. Why is the cancer rate so high? Does the paper mill have anything to do with it?”
Two years earlier,
USA Today
had published a devastating investigative report based on EPA air pollution data that pinpointed a school in Crossett as among the most toxic 1 percent in the country and identified the Georgia-Pacific plant as a major cause. Lisa Jackson, the EPA’s administrator, vowed action, but the congressional budget cuts were huge constraints on doing anything.

The numbers regarding Koch Industries’ pollution were incontrovertible. In 2012, according to the EPA’s Toxic Release Inventory database, which documents the toxic and carcinogenic output of eight thousand American companies, Koch Industries was the number one producer of toxic waste in the United States. It generated 950 million pounds of hazardous materials that year.
Of this total output, it released 56.8 million pounds into the air, water, and soil, making it the country’s fifth-largest polluter. The company was also among the largest emitters of greenhouse gases in America, spewing over twenty-four million tons of carbon dioxide a year into the atmosphere by 2011, according to the EPA, as much as is typically emitted by five million cars.

Company officials didn’t dispute the statistics but argued that they merely reflected the size of its operations and the kinds of products it made. They stressed that they had achieved a record of compliance that compared favorably with other manufacturers of their ilk. As Steve Tatum, president of Koch Minerals, put it,
“The investment banks, they don’t pollute very much, because they don’t make anything. We make stuff.”

Another defender on the committee was Mike Pompeo, a freshman Republican from Koch Industries’ hometown of Wichita, Kansas, who was so closely entwined with the billionaire brothers that he became known as the “congressman from Koch.” The Kochs had once invested an undisclosed amount of money in an aerospace company that Pompeo founded. By the time he ran for office, the Kochs were no longer investors in his business but had become major backers of his candidacy. Their corporate PAC and Americans for Prosperity also weighed in on his behalf. After his election, Pompeo turned to the company for his chief of staff, choosing Mark Chenoweth, a lawyer who had worked for Koch Industries’ lobbying team.
Within weeks, Pompeo was championing two of Koch Industries’ legislative priorities—opposition to Obama’s plans to create a public EPA registry of greenhouse gas polluters and a digital database of consumer complaints about unsafe products. Without publicly accessible data, of course, it would be extremely difficult to track any company’s toxic output. (Ultimately, the Kochs lost the battle, and the database was created.)

Koch Industries’ lobbying disclosures showed that the company spent over $8 million lobbying Congress in 2011, much of it on environmental issues. The best measure of its new congressional clout might have been the “
naked belly crawl,” as the political reporter Robert Draper termed it, performed by the Michigan congressman Fred Upton in hopes of snaring the Energy and Commerce Committee’s chairmanship. Prior to 2010, Upton had been known as an environmental moderate. In fact, in 2009, before the Tea Partiers and their patrons took charge, he had said, “Climate change is a serious problem that necessitates serious solutions,” adding, “I strongly believe that everything must be on the table as we seek to reduce carbon emissions.” In 2010, however, Upton, like many Republican moderates, faced a potentially career-killing primary challenge from the right. Upton survived, but others who accepted the growing scientific consensus on climate change, such as Robert Inglis of South Carolina, were defeated, serving as cautionary warnings to the rest. Inglis became convinced of the reality of global warming on a congressional trip to Antarctica during which scientists showed him polar ice samples containing rising amounts of carbon dioxide following the Industrial Revolution. He was a Christian conservative, but he couldn’t in good conscience deny the reality. In the deep red state of South Carolina, his scientific awakening proved his political downfall. “
It hurts to be tossed out,” he conceded afterward. “But I violated the Republican orthodoxy.”

In contrast, Upton became a born-again doubter. By 2010, he had renounced his previous climate apostasy and co-authored an op-ed piece in
The Wall Street Journal
with Tim Phillips, the president of Americans for Prosperity, in which they called the EPA’s plans to regulate carbon emissions “
an unconstitutional power grab that will kill millions of jobs unless Congress steps in.” Upton also joined lawsuits ginned up by Americans for Prosperity aimed at stopping the EPA. The belly crawl paid off. As the new session of Congress began, Upton secured the chairmanship, promising to drag the EPA administrator, Lisa Jackson, to testify before his committee so often, he bragged, that she would need her own congressional parking space.