Dark Money The Hidden History of the Billionaires Behind the Rise of the Radical Right

March 9, 2016
By Greg Waldmann
Open Letters Monthly (March 3, 2016)

One of the cornerstones of the campaign Senator Bernie Sanders is waging for the presidency is his opposition to our corrupt campaign finance laws. He often names the Koch brothers as a prime exhibit of the dangers of unregulated big money in politics, and for good reason. In her new book, Jane Mayer traces how the Koch brothers are trying to buy our politics. Greg Waldmann introduces us to what Mayer has found. 

Dark Money
by Jane Mayer
ISBN-13: 978-0385535595
At some point in mid-2011, John Boehner, Speaker of the US House of Representatives, traveled to New York and asked billionaire industrialist David Koch for help—“begged,” according to a Koch adviser. House Republicans were refusing to vote to raise the debt limit – a routine bipartisan measure in eras past – and threatening default on the national debt. Boehner wanted David Koch to help him control the Republican congressmen he was supposed to be leading because David and his brother Charles (sporting a net worth of about $40 billion apiece) sat at the top of a vast network of influence that far exceeded his own.
As Jane Mayer puts it in Dark Money, a frighteningly comprehensive account of the modern right-wing donor class and its two kings:
the spectacle of the Speaker of the House, who was among the most powerful elected officials in the country, third in line in the order of presidential succession, traveling to the Manhattan office of a billionaire businessman to ask for his help in an internecine congressional fight captures just how far the Republican Party’s fulcrum of power had shifted toward the outside donors by 2011.
For decades Republicans had been pushing to loosen the rules governing political funding, but they didn’t count on how little power this would leave them over their own party. They should have: the Koch brothers, like many of their allies, grew up with no particular allegiance to the Republicans, who they disdained for their supposed moderation.
Mayer begins her narrative with their father, Fred Koch, who in addition to starting the family’s energy business was a founding member of the reactionary John Birch Society, a far, far right anti-Communist group which came to life in 1958, when Charles and David were in their 20s. The brothers joined, but Charles’ interest seems to have been half-hearted, designed at least in part to “please the old man,” who wanted him to take over the company. Charles, the second-born and most formidable of Fred Koch’s four sons, was more taken with the Freedom School, a quasi-anarchist group as disdainful of the American government as it was of Soviet communism. As Mayer explains,
The school taught a revisionist version of American history in which the robber barons were heroes, not villains, and the Gilded Age was the country’s golden era. Taxes were denigrated as a form of theft, and the Progressive movement, Roosevelt’s New Deal, and Lyndon Johnson’s War on Poverty… were ruinous turns toward socialism.
Before he died in 1967, Fred Koch set up a charitable trust so his sons wouldn’t have to pay inheritance taxes as long as the interest went to charity for 20 years. Ironically, this would be a model for the sons’ future efforts to reshape the American government their father so mistrusted.
At first the Kochs played a relatively small part in the right-wing response to the cultural and political changes of the 1960’s and 70’s: Charles donated to the Freedom school, what Mayer calls a “first step” toward the massive political philanthropy of later years. The Kochs were one of many rich donors who, along with business groups, began building a loosely organized but startlingly effective rear-guard action against industrial regulation, environmental protection, and social welfare programs.
If the mega-donors were only loosely organized, they were following a plan, and if that plan can be said to have a creator, it was Lewis Powell. He was a well-connected corporate lawyer who Nixon appointed to the Supreme Court in 1971. Just before that he wrote a memo called “Attack on American Free Enterprise System,” what Mayer calls “nothing less than a counterrevolutionary call to arms for corporate America.” Powell argued that the business community needed to wage (his words) “guerrilla warfare” against those forces seeking “insidiously” to undermine it through “the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences” and the “politicians.” They needed to re-exert influence over those people and institutions through “careful long-range planning and implementation” and a “scale of financing available only through joint effort.”
Powell’s analysis was hugely popular: five years later Charles Koch delivered similar remarks at a conference held by the Center for Libertarian Studies (a group launched with $65,000 in Koch money). Several attendees, Mayer reports, believed they “needed to organize synthetic ‘grassroots’ groups and issue meaningless titles to volunteers, without yielding any real control.” Charles, by way of analyzing the John Birch Society, advocated a secret political community: “In order to avoid undesirable criticism,” he wrote, “how the organization is controlled and directed should not be widely advertised.” It must use “all modern sales and motivational techniques” and solicit donors by bringing them to comfortable, appealing places. All of this they do today.
The Kochs are not the leaders of the right-wing donor class, only its most powerful and well-connected members. Some other names, possibly familiar, are casino magnate Sheldon Adelson, hedge fund manager Paul Singer, the industrialist John Olin, the Bradley family of Wisconsin, and the recently deceased Richard Mellon Scaife. In the forty years since Charles delivered his address to his friends, they’ve perfected the methods behind a system of influence peddling that has silently remade America’s political and economic system.
The key is charity. Philanthropic organizations are not subject to the same disclosure laws that political groups are forced to accept. They provide donors with anonymity. Money comes in, goes out to other “charities,” or trade groups (which are similarly secretive), and then on to school programs, pressure groups, and think tanks. In election years the money makes its way to political groups and issue campaigns, some longstanding and well-known, some obscure, registered to a mailbox in the middle of nowhere. It’s a legalized form of money laundering.
There’s no need to be quite so secret when you’re funding a scholarship, research center or conference, but it’s especially helpful when you need to affect government policy, elect compliant politicians, or fund and influence a “grassroots” political organization like the Tea Party, which in its various guises received tens of millions of dollars from the moneyed rightwing. These “foot soldiers” did not and do not know very much about this, which is exactly the point. As Mayer puts it:
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.
The Tea Party was the culmination of this four-decade project. It began much earlier, with schools and think tanks. It was probably the Ford Foundation, Mayer suggest, which was donating to liberal causes in the 1960’s, that provided the model for activist philanthropy. Ironically, the Ford Foundation would then be pressured into donating to the right-wing American Enterprise Institute, just as the New York Times would be pressured into hiring conservative columnist William Safire, for fear of being labeled liberal. They were both better described as establishment rather than liberal organizations, but the label stuck, and when right-wing foundations began appearing in droves, they had foils to point to.
A lot of money went to universities for things like campus newspapers (in that respect, popular extremists like Dinesh D’Souza, Marc Theissen and Laura Ingraham are all products of Olin Foundation money), but the most fruitful seeds were in economics and law, where well-funded right-wing programs churned out lawyers, analysts, professors, talking heads, and politicians espousing supply-side economics, disparaging international law, and advocating things like the innocuous-sounding “Law and Economics” school of thought, which emphasized the economics effects of public-interest laws and regulations. The proliferation of right-wing scholarship, fraternal organizations, think tanks and professional associations was unprecedented, forming a discrete ecosystem, re-peopling large swathes of the policy elite with new generations of conservatives, and, crucially, providing support and direction from cradle to grave: judges flew gratis to plushly-appointed ideological conferences, lawmak
 ers were prodded to submit laws drafted by corporate interest groups, and anyone with power who needed advice could find plenty of it.
Kevin Gentry, who is both vice president for special projects at Koch Industries and vice president of the Charles Koch foundation, explained how some of it works to attendees at a 2013 Koch network summit. Mayer quotes his closing lines:
“So you can see, higher education is not just limited to an impact on higher education.” The students were “the next generation of the freedom movement,” he said. “The students that graduate out of these higher-education programs populate the state-based think tanks and the national think tanks. And,” he said, they “become the major staffing for the state chapters” of the “grassroots” groups. Those with passion were encouraged to become part of what he called the Koch’s “fully integrated network.” At this point, he paused and said, “I got to be careful how I say this.” He paused again. “They populate our program.”
Gentry had to be careful because many of the non-profit entities in the Koch network are, by law, forbidden from being political enterprises.
Still, the economic policies these people and their support groups advocate are pretty unpopular with the electorate at large. They were lucky for the cultural upheavals of the 1960’s and 70’s; the counter-revolution provided the voters and activists, often religious, who elected the Republicans they preferred. But these “foot soldiers” were, for business-minded libertarians like the Kochs, too preoccupied with culture and Christianity. Which is why the Great Recession and and the new President seemed so fortuitous. Barack Obama, black and liberal, was the avatar of everything the right didn’t like about America in the 21st century, and the Great Recession helped to cast the dichotomy in economic terms. To observers the effect seemed galvanizing, but at least as important was money, which was dispensed through front groups as quietly as possible. As Mayer explains,
the actual number of hard-core Tea Party activists was not, by historical standards, all that large. But the professionalization of the underground infrastructure, the growth of sympathetic and in some cases subsidized media outlets, and the concentrated money pushing the message from the fringe to center stage were truly consequential.
Now, it seemed, the right-wing donors had everything they needed: idea factories, sympathetic media, vast stores of campaign money, and, what they’d been seeking since David Koch ran for President as a Libertarian in 1980, a grassroots movement to support their policies. And what, exactly, were those?
The economic nostrums of the American right are broadly familiar: less regulation, lower taxes. But the beliefs of the Kochs and their peers are more specific and extreme. Robert Lefevre, who ran the Freedom School that so captivated Charles Koch, believed in virtual economic anarchy (he preferred “autarchy,” a less loaded, more obscure term): a country where freedom largely meant free reign for the movements of industry. It’s reminiscent of the weird, apocalyptic imagination of Ayn Rand, who in her fiction rapturously celebrated her industrialist heroes, and wrote gleeful, pornographic death scenes for the anti-capitalist “looters” who opposed them—the average people who she disdained so very much.
There is something kindred, a touch of sociopathy, in the Kochs’ behavior toward the outside world. Toxic waste, exploding pipes, price-gouging, theft, poisoned workers: Koch Industries has been guilty of all of it, and guilty too of trying to discredit and destroy their accusers and victims. Dark Money has many such stories, but perhaps the most disturbing is this: Danny Smalley’s daughter, Danielle, burned to death alongside her friend Jason when the ignition in her father’s car lit an invisible cloud of butane gas that had been leaking from a poorly maintained Koch pipeline. Koch Industries knew the pipe was defective; they offered Danny money to drop the wrongful death suit. When he refused they went to war:
The pretrial maneuvering was fierce, with Koch Industries reportedly hiring a fleet of top-flight lawyers and a private investigator to tail Smalley. Smalley’s lead lawyer, Ted Lyon, meanwhile, suspected that his law office was being bugged. He hired a security firm to inspect, which discovered that tiny transmitters had been planted in his office.
This is a long-standing pattern of behavior toward people whom the Kochs find threatening. They seem to have done it to everyone: victims of benzene poisoning and butane explosions, Senate lawyers, FBI agents, even Jane Mayer herself, who tracked their efforts to smear her to private investigators in New York. A lawyer for the U.S. Senate, which in the late 1980s was investigating Koch Industries for stealing oil from Native American land, told Mayer, “It wasn’t like politics; it was like investigating organized crime… [Charles Koch] is a scary guy to take on. Most people back off, rather than tangling with [the Kochs].These people have amassed an amazing amount of unaccountable power.”
It’s not surprising, either, that most of the high rollers in the Koch network appear to be similarly unfriendly with the law (tax evasion, bribing foreign governments, and massive environmental pollution are just a few of their crimes), or that the groups they fund are often willing to use Nixonian dirty tricks to get their way. Front groups linked to the Koch network, for instance, poured millions into slandering and harassing climate scientists, and many times more into a successful campaign to sow skepticism of climate science in the American population. One of the most depressing statistics in the book is that the percentage of Americans who believe in global warming declined 14 points in the two years after this campaign started.
As the new century moved into its second decade, the Kochs could deploy overwhelming force in the public square. By 2012, Mayer writes,
They had hired top-level operatives, financed their own voter data bank, commissioned state-of-the-art polling, and created a fundraising operation that enlisted hundreds of other wealthy Americans to help pay for it. They had also forged a coalition of some seventeen allied conservative groups with niche constituencies who would mask their centralized source of funding and carry their message.
2012 may have been the first year in the modern era when the political parties were outspent by outside interest groups. 2014 saw further movement of political power away from the Republican party, as it was forced to concede the Koch network had better voter data, which it reluctantly purchased. Some inside the GOP grumbled that they were taking over the party.
But 2012 demonstrated one of the ironies of the new Gilded Age. In some ways it began as you might expect it would, with the front-runner, Mitt Romney, changing his position on global warming in order to appease the Koch network (he went on to pick their darling, Paul Ryan, for Vice President). Yet the problem with a loose network of extraordinarily rich people is that it must corral the extraordinarily large egos of its members. The Republican primary dragged on and on without resolution because different candidates appealed to the individual caprice of particular donors: Sheldon Adelson poured millions into Newt Gingrich’s campaign, egged on by Gingrich’s willingness to say horrible things about Palestinians (Israel is Adelson’s pet issue); when Gingrich faded, the investor Foster Friess kept the dull, moralistic Rick Santorum’s campaign alive (Friess’ pet issue was Christian values). This see-sawing shrank the window Romney needed to consolidate his victory and prepare f
 or the general election. Romney was a deeply unappealing candidate, and may never have won in any case, but the disorder among his donor base did not help.
Mayer, understandably, closes her book on a note of pessimism:
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 … to $41.6 billion each in March 2015.
In late 2015, John Boehner, who was a little too prone to deal-making, was finally deposed, and the Ayn Rand-loving Paul Ryan emerged as his successor. The “Kochtapus,” as the Koch network is sometimes called, has, among other things, turned Congress into an obstruction machine, stymied the recovery of the American economy, done possibly irreparable harm to the fight to stop global warming, and generally sown hatred across the land. Yet for all the damage they’ve done, their agenda, in its particulars, is deeply unpopular with the population at large, even in the Tea Party they helped to create. In 2016, as Dark Money went to press, their experiment spun out of control.
The conservative voters of America are not doctrinaire libertarians. Theirs is a politics of personal affinity and well-being, and of anger. They are not succeeding in plutocratic America, and they’ve learned too well the message that the right-wing money machine has been feeding them for 7 years: they hate Barack Obama, they hate government, they hate Washington, they hate politicians. So they’re voting, in astonishing numbers, for Donald Trump, a self-aggrandizing comic monster who cares nothing for the Koch’s beliefs. The conservative donors now have the mass movement they’ve been pining for, but their foot soldiers aren’t employees or politicians: they don’t follow orders, and they’re marching the new Gilded Age into unknown territory.
Greg Waldmann is the Editor-in-chief of Open Letters Monthly, and a native New Yorker living in Boston with a degree in International Affairs.


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