Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (54 page)

He and his brother had built and financed a private political machine that had helped cripple a twice-elected Democratic president and begun to supplant the Republican Party. Educational institutions and think tanks all over the country promoted his worldview, doubling as a talent pipeline. A growing fleet of nonprofit groups mobilized public opinion behind his agenda. The groups trained candidates and provided the technological and financial assistance necessary to run state-of-the-art campaigns. The money they could put behind their chosen candidates was seemingly limitless. Congressmen, senators, and presidential hopefuls now flocked to their secret seminars like supplicants, eager to please them in hopes of earning their support.

Rare was the Republican candidate who wouldn’t toe the Kochs’ line.
John Kasich, the iconoclastic governor of Ohio, prompted an angry walkout by some twenty donors at the Kochs’ April 2014 summit for criticizing the Koch network’s position against Medicaid expansion. In answer to Randy Kendrick, who had questioned his pro-Medicaid position, Kasich retorted, “I don’t know about you, lady. But when I get to the pearly gates, I’m going to have an answer for what I’ve done for the poor.” He added, “I know this is going to upset a lot of you guys, but we have to use government to reach out to people living in the shadows.” The Kochs never invited Kasich back again.

Donald Trump, the New York real estate and casino magnate whose unorthodox bid for the Republican nomination flummoxed party regulars, was also left off the Kochs’ invitation list. In August 2015, as his rivals flocked to meet the Koch donors, he tweeted, “I wish good luck to all of the Republican candidates that traveled to California to beg for money etc. from the Koch Brothers. Puppets?” Trump’s popularity suggested that voters were hungry for independent candidates who wouldn’t spout the donors’ lines. His call to close the carried-interest tax loophole, and talk of the ultrarich not paying its share, as well as his anti-immigrant rants, made his opponents appear robotically subservient, and out of touch. But few other Republican candidates could afford to ignore the Kochs.

Among their most astonishing feats, the Kochs had succeeded in persuading hundreds of the other richest conservatives in the country to give them control over their millions of dollars in contributions, in effect making them leaders of a conservative billionaires’ caucus. Most of the other partners, as they called themselves, were silent. Their names rarely if ever appeared. When, in response to criticism, the Kochs invited the media to cover snippets of their summits, they insisted that the reporters agree not to name the other donors. Yet this secretive, unelected, and unaccountable club was changing the face of American politics.

Charles Koch denied he had ever given any dark money.
“What I give isn’t ‘dark.’ What I give politically, that’s all reported,” he told CBS News in a 2015 interview. “It’s either to PACs or to candidates. And what I give to my foundations is all public information.” Perhaps he believed it, but during the previous five years alone, he, his brother David, and their allies had contributed
over $760 million to mysterious and ostensibly apolitical nonprofits such as the Freedom Partners Chamber of Commerce, the Center to Protect Patient Rights, and the TC4 Trust. From there the money had been disbursed to dozens of other nonprofits, some of which were little more than mailboxes, which had then spent the funds promoting the donors’ political interests both directly in elections, and indirectly in countless other ways. As for the transparency of Charles Koch’s foundations, two of them had made grants of nearly $8 million between 2005 and 2011 to DonorsTrust, whose stated purpose was to mask the money trail.

“
It’s extraordinary. No one else has done anything like it,” said Rob Stein, the Democratic activist who tried to create a progressive counterweight called the Democracy Alliance. “It takes an enormous amount of money, and many years, to do what the Kochs have done. They’re deeply passionate. They’re disciplined, and they’re also ruthless.”

In an interview, Brian Doherty, libertarianism’s historian, said of the Kochs, “
There are few policy victories you can lay directly at their feet.” But he suggested that “if you look at the larger ecosystem of libertarianism they were absolutely key.” Because of them, he said, “the general sense of valuing Free Markets—the intellectual zeitgeist—now recognizes libertarianism in a way it never did twenty years ago.”

Less than a decade later, the influence of the Kochs and their fellow “radicals for capitalism” extended well beyond just zeitgeist. They still might not have been able to take credit for many positive legislative accomplishments, but they had proven instrumental in obstructing those of their opponents. Despite the radicalism of their ideas, which had developed in a direct line from the John Birch Society, the Kochs had fulfilled Charles’s 1981 ambition not just to support elected politicians, whom he regarded as mere “
actors playing out a script,” but to “supply the themes and words for the scripts.”

By 2015, their antigovernment lead was followed by much of Congress. Addressing global warming was out of the question. Although economic inequality had reached record levels, raising taxes on the runaway rich and closing special loopholes that advantaged only them were also nonstarters. Funding basic public services like the repair of America’s crumbling infrastructure was also seemingly beyond reach. A majority of the public supported an expansion of the social safety net. But leaders in both parties nevertheless embraced austerity measures popular with the affluent.
Even though Americans overwhelmingly opposed cuts in Social Security, for instance, the Beltway consensus was that to save the program, it needed to be shrunk.

Obama’s Affordable Care Act had survived, and polls showed that it was growing in popularity. But after nonstop battering, and the Obama administration’s own serious fumbles, its reputation, and Obama’s, had been damaged, even though the country’s health-care costs and medical coverage, like the economy as a whole, were far better off than before he took office. Unemployment was down, and incomes and markets were up. Yet faith in government reached new lows. Obama could make progress on his environmental and other goals by taking executive actions, but in Congress ambitious new programs were out of the question.

Equally hopeless, it seemed, was campaign-finance reform. An overwhelming bipartisan majority of Americans disapproved of the amount of money in politics and supported new spending restrictions. Yet the Republican Party was now overrun by minority views, including opposition to virtually all limits on campaign spending, that seemed outlandish when the Kochs expressed them in 1980.

The radical rightists in Congress had gained so much sway by September 2015 that they effectively forced the resignation of House Speaker John Boehner, whom they had threatened to depose for not acceding to their latest demands. Leading the charge against Boehner had been Representative Mark Meadows, the North Carolina Tea Party Republican whose election had been greased by gerrymandering and other help from dark-money groups. On his way out, Boehner took a parting shot at “
false prophets” and “groups here in town” who “whipped people into a frenzy believing they could accomplish things that they know, they know are never going to happen.”

C
onventional political wisdom measured power on the basis of election outcomes, chalking up 2012 as a loss for the Kochs, 2014 as a win, and 2016 as a test whose results remained to be seen. But this missed the more important story. The Kochs and their ultra-wealthy allies on the right had become what was arguably the single most effective special-interest group in the country.

The Kochs hadn’t done it on their own. They were the fulfillment of farsighted political visionaries like Lewis Powell, Irving Kristol, William Simon, Michael Joyce, and Paul Weyrich. They were also the logical extension of the legacies of earlier big right-wing donors. John M. Olin, Lynde and Harry Bradley, and Richard Mellon Scaife had blazed the path by the time the Kochs rose to the pinnacle of their power.

During the 1970s, a handful of the nation’s wealthiest corporate captains felt overtaxed and overregulated and decided to fight back. Disenchanted with the direction of modern America, they launched an ambitious, privately financed war of ideas to radically change the country. They didn’t want to merely win elections; they wanted to change how Americans thought. Their ambitions were grandiose—to “save” America as they saw it, at every level, by turning the clock back to the Gilded Age before the advent of the Progressive Era. Charles Koch was younger and more libertarian than his predecessors, but, as Doherty observed, his ambitions were if anything even more radical: to pull the government out “at the root.”

The weapon of choice of these wealthy activists was philanthropy. The early concerns that private foundations would become undemocratic forces of elite political power were long forgotten a century later. Leapfrogging beyond a failed political experiment by the liberal Ford Foundation in the late 1960s, the conservative rich created a new generation of hyper-political private foundations. Their aim was to invest in ideology like venture capitalists, leveraging their fortunes for maximum strategic impact. Because of the anonymity that charitable organizations provided, the full scope of these efforts was largely invisible to the public. The conservative philanthropists were, as Edwin Meese once said of Scaife, the “unseen hands.”

As they began to gain ground, their war spread from “beachheads” in academia and law to corporate front groups purporting to represent public opinion. At each step, they hired the smartest and slickest marketers that money could buy, policy entrepreneurs like Frank Luntz who were skilled at popularizing the agenda of wealthy backers by “framing” their issues in more broadly appealing terms. As their efforts grew increasingly political, the funders continued to cloak these projects under the mantle of philanthropy. Few of the sponsors of this radical reorientation of American thinking were known to the public. Some carved their names in the institutions they built or attached them to the academic chairs they underwrote. But they rarely ran for office, and when they did, they even more rarely won. They exercised their power from the shadows, meeting in secret, hiding their money trails, and paying others to front for them. The dark-money groups masquerading as “social welfare” organizations during the Obama era were merely the latest iteration of a privately funded, nonprofit ideological war that had begun forty years earlier.

These political philanthropists defined themselves as selfless patriots, motivated by public, not private, gain. In many instances, they were likely sincere. Almost all gave generously not just to political projects but also to the arts, sciences, and education and, in some cases, directly to the poor. But at the same time, it was impossible not to notice that the political policies they embraced benefited their own bottom lines first and foremost. Lowering taxes and rolling back regulations, slashing the welfare state, and obliterating the limits on campaign spending might or might not have helped others, but they most certainly strengthened the hand of extreme donors with extreme wealth. “
Giving back,” as Peter Buffett, the son of the legendary billionaire financier Warren Buffett, observed, “sounds heroic.” But he noted, “As more lives and communities are destroyed by the system that creates vast amounts of wealth for the few,” philanthropists were frequently left “searching for answers with their right hands” to problems that they had “created with their left.” Whether their motives were virtuous or venal, in the course of a few decades a handful of enormously rich right-wing philanthropists had changed the course of American politics. They created a formidable wealth defense movement, which had become a sizable part of what Buffett dubbed “the charitable-industrial complex.”

M
uch as they had achieved by 2015, there was still a major item on the Kochs’ shopping list: the White House.
Anyone paying attention knew that 2014 was just a trial run for the presidential race in 2016. Phil Dubose, the former Koch Industries manager who spent twenty-six years working for the Kochs before testifying against them in court, had no doubt that they now had their sights on all three branches of government. “
What they want is to get their own way,” he said. “They call themselves libertarians. For lack of a better word, what it means is that if you’re big enough to get away with it, you can get away with it. No government. If it’s good for their business, they think it’s good for America. What it means for the country,” he added, speaking from his modest home in rural Louisiana, “is it would release the dogs. The little people? They’d get gobbled up.”

On the last weekend of January 2015, as was their custom, the Kochs again convened their donor summit at a resort in Rancho Mirage, outside Palm Springs, California. Marc Short, the president of Freedom Partners, acknowledged that “2014 was nice, but there’s a long way to go.”
To get there, according to one ally, that weekend Charles and David Koch each pledged to give $75 million. If so, their contributions would still represent a mere fraction of the network’s new fund-raising goal announced that weekend.
This time, the Koch network aimed to spend $889 million in the 2016 election cycle. The sum was more than twice what the network had spent in 2012. It rivaled the record $1 billion that each of the two major political parties was expected to spend, securing their unique status as a rival center of gravity. The Kochs could afford it. Despite their predictions that Obama would prove catastrophic to the American economy, Charles’s and David’s personal fortunes had nearly tripled during his presidency, from $14 billion apiece in March 2009 to $41.6 billion each in March 2015, according to
Forbes
.

To Fred Wertheimer, Washington’s battle-hardened liberal crusader against political corruption, the sum was almost beyond belief. “
Eight hundred and eighty-nine million dollars? We’ve had money in the past, but this is so far beyond what anyone has thought of it’s mind-boggling. This is unheard of in the history of the country. There has never been anything that approaches this.”