The Kochs claimed devotion to free market principles while shunning the transparency that has always been essential for properly functioning markets. “The secrecy seems hypocritical,” Forbes reported in an otherwise respectful profile. Not coincidentally, their huge political investments were always tied to advancing the company’s economic interests. Because tighter controls on carbon emissions would cost Koch Industries tens or even hundreds of millions of dollars, spending a few million to fund groups devoted to climate change skepticism was a bargain for the brothers. Their good deeds too were often at odds with the company’s record. David, a survivor of prostate cancer, generously underwrote cancer research even as the company lobbied relentlessly against the regulation of carcinogenic chemicals like formaldehyde.
Perhaps the best example of the family’s muscle-flexing was a subsidiary called Koch Supply and Trading LP, one of the world’s largest energy traders. Koch Industries hired lobbyists to pressure the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission to weaken new regulations on derivatives. The term of the progressive CFTC chairman, Gary Gensler, was set to expire at the end of 2013. A Romney victory would likely mean that the Kochs could essentially handpick Gensler’s successor, much as Ken Lay, CEO of the soon-to-be-disgraced Enron Corporation, chose the chairman of the Federal Energy Regulatory Commission, Curtis Hebert, when George W. Bush became president in 2001.
In 1980 the Kochs supported Ed Clark, the third party libertarian alternative to Ronald Reagan, but in the years since they steadily gravitated toward the Republican Party. Starting in 2003, Charles Koch hosted twice-a-year secret retreats at fancy resorts aimed at convincing other superrich conservatives to make multimillion-dollar political donations to the GOP. At the June 2011 conference, held at a Ritz-Carlton near Vail, Colorado, Koch in his welcoming remarks named thirty-two people who had already given at least $1 million to Republican candidates and asked the other three hundred attendees to do the same.
According to a surreptitious taping of his speech, Koch described the election as an investment opportunity, a chance for donors to win “the best possible payoff” for their efforts. But he was also apocalyptic about the stakes. The 2012 election will be “the mother of all wars,” he told the gathering, a battle “for the life and death of this country,” aimed at removing from the presidency the man he described as “Saddam Hussein.”
It was hard to tell whyNational Youth AdministrationTv the Koch brothers were so convinced that Obama was ruining America. Their net worth had increased 58 percent since the recession began in 2008, while for the rest of the country median family net worth dropped 40 percent. Their family fortune grew from $50 billion to $62 billion in 2012 alone, giving the Kochs plenty more to invest in like-minded candidates.
Cyrus McCormick in 1896 had nothing on the Koch brothers in 2012. When a group of midwestern Democratic senators blamed the Kochs for helping defeat the DISCLOSE Act, which required transparency in campaign donations, the Kochs, in a rare moment, fired back publicly, telling workers at Koch-owned companies (like Georgia Pacific) in New Jersey, Illinois, and Michigan to go public with the message that their home state senators were jeopardizing their jobs. Then the Kochs, who for years had specialized in targeting Democrats for political ruin, made their own contribution to the annals of political chutzpah: They accused the senators of composing a Nixonian “enemies list.”
FOSTER FRIESS WASN’T a super PAC billionaire, just a “billionaire wanna-be,” as he liked to say, since his fortune was only several hundred million dollars. But the seventy-one-year-old also differed from the other superrich players in his rejection of negative advertising. His mother had dropped out of school in eighth grade to pick cotton in order to save the Texas family farm, and she took seriously the Baptist admonition “Hate the sin but love the sinner.” Or as his friend Lou Holtz, the former football coach at Notre Dame, told him, “Criticize the performance but not the performer.” So he didn’t pay for Santorum, who had run cutthroat campaigns in the past, to get personal. The closest the Santorum campaign came was “Rombo,” a thirty-second spot featuring a Romney impersonator running through an empty warehouse, using a machine gun to shoot mud at a cardboard cutout of Santorum.
Friess also steered clear of directly funding attacks on Obama. He just thought Obama’s “worldview was 180 degrees opposed to everything [Friess] was trying to accomplish” in the private sector. “He probably never met a payroll or knew people who gained success through our free enterprise system,” Friess said. “Seems like most of his contacts are academicians and political figures.” Friess later gave money to the Kochs, Crossroads, and other super PACs attacking Obama, but, remembering his mother, he could never work up feelings of malice toward the president. “I have to confess that watching his acceptance speech in Chicago in 2008 brought tears to both Lynn [his wife] and my eyes as we saw the joy that exuded from the people gathered there,” he said.
UNLIKE THE KOCHS and Friess, Sheldon Adelson had no background in right-wing politics. “Look, I’m basically a social liberal,” he said after the election. He noted that he was pro-choice, backed stem cell research, supported the DREAM Act, and—after experiencing Israel’s medical system through his wife, an Israeli doctor—declared himself “in favor of a socialized-like health care.” He opposed Obamacare because it let “medical decision be based upon the twentieth century, ov small money” instead of offering “cradle to grave” coverage, as Israel did. Adelson, whose $20 billion net worth had been amassed mostly during the Obama administration, said he was a Democrat until attending the 1992 Republican Convention in Houston, where he realized Republicans were “less selfish” and more focused on the good of the country.
After propping up Gingrich, Adelson pledged $10 million to Restore Our Future (Carl Forti’s pro-Romney super PAC), $10 million to Karl Rove’s Crossroads GPS, $10 million to the Koch brothers’ various organizations, and $10 million to super PACs dedicated to winning Congress for the Republicans. He would eventually pump a staggering $100 million into GOP campaigns—about five times as much as the previous record holder. The 2012 election would be a real-world test of whether one superrich man could affect the outcome.
Adelson made no secret of what he wanted from Romney and the Republicans in exchange for his lucre: an end to all support of a two-state solution to the Israeli-Palestinian conflict, a position to the right of the American Israel Public Affairs Committee and the vast majority of the Israeli public. When Romney went overseas in July, the trip was most noted for his gaffes. But he also made news by attending a fundraiser in Jerusalem with Adelson, who owned a pro-Likud newspaper in Israel and was close to Prime Minister Benjamin Netanyahu. Afterward Romney took time out of the campaign to stop off in Las Vegas for an audience with Adelson. The first trip Paul Ryan made after his selection as Romney’s running mate was to see Adelson.
Adelson liked to say he wasn’t seeking an ambassadorship, just better treatment at the White House Hanukkah party: “If I’m fortunate enough to be invited to another, I want two potato pancakes because the last time I was there [under Bush], they ran out of latkes.” This was charming but incomplete. Like the Koch brothers, Adelson sought to buy the election to protect his business interests. His company, the Las Vegas Sands Corporation, did 90 percent of its business overseas, in Singapore and Macao. He paid a mere 9.8 percent in foreign taxes on those billions. Under its repatriation plan, the Obama administration was committed to making him pay his fair share of U.S. taxes, preferably at 39.6 percent; Romney’s policy was to let him continue to avoid them.
After a former Adelson partner, Steven Jacobs, charged that Adelson’s Macao operation was corrupt, the Obama Justice Department began investigating whether Sands violated the Foreign Corrupt Practices Act, a law from the 1970s that barred U.S.-based companies from engaging in bribery abroad. The SEC launched a separate probe into the casino company’s operations. Adelson, denying any wrongdoing (and threatening to
sue Democrats who recklessly repeated the charges), said he was bankrolling Republicans because of the president’s campaign of “vilification” against him. Friends reported that the seventy-nine-year-old magnate was under the impression that Romney as president would drop the investigations because they had no merit. Given the tsunami of bad publicity this would cause, a Romney White House would be unlikely to do so, at least at first.
Whatever specific policies were affected, the impression of a president in the pocket of a billionaire was disturbing even to some major figures in the GOP. Norquist, who was married to a Palestinian Muslim and supported changes in U.S. policy in the Middle East, said that Romney wanted Adelson’s $100 million so badly that he “would do anything to please him.” Norquist attributed every word Romney uttered on foreign policy to his efforts to kiss up to Adelson.
Not that Norquist objected to separating billionaires from their money. In 2005 he had shocked conservatives by inviting one of their main bogeymen, the billionaire liberal George Soros, to his Wednesday Group meeting, mostly so he could ask him how much he spent trying to elect John Kerry the year before. When Soros said $27 million, Norquist was amazed that a man of his wealth had tried to buy the presidency on the cheap. Seven years later Norquist recounted how little Soros spent and said the Republicans would never make that mistake.
SOROS WAS SORE at the White House for much of the 2012 cycle. The Hungarian American investor and philanthropist, who became famous when he made more than $1 billion on a Wednesday in 1992 betting against the British pound, had given $8 billion away, much of it to build democracy in Eastern Europe. He became a right-wing target after backing the legalization of drugs and vowing to beat Bush, whom he detested. The organization he helped fund in 2004, Americans Coming Together, built grassroots infrastructure that proved essential to Democrats in later c year he hosted the first New York fundraiser for Illinois state senator Barack Obama.
Soros helped Democrats some in 2006, but he wasn’t active in 2008, when the Obama campaign made a big point of discouraging independent expenditures. But the billionaire didn’t see why that should make him radioactive. He was a brilliant man who knew as much about international finance as anyone, and he was incredulous that the president wouldn’t seek his advice beyond a short conversation or two on the phone. Obama knew Soros was erudite and even heroic, but he didn’t think it was prudent to be seen spending time with the world’s most famous speculator, who, not incidentally, had once been convicted by a French court of insider trading. Michael Vachon, a Soros adviser, met with Valerie Jarrett at the White House in 2009 and said, “George would like to have a conversation with the president. He feels like he’s on the team but can’t talk to the coach.” Jarrett replied, “The coach is very busy.”
In September 2010 Soros wanted to discuss climate change with the president, and with the Democrats strapped for cash and the midterms only six weeks away a meeting was finally arranged at a hotel in New York. But by then it was too late for donor maintenance; the two men seemed to be talking past each other. When Soros made some political observations, the president said, in a way that struck Soros as arrogant, that everyone has an opinion about politics, but “this is something I know a little about.” The message was: Leave the politics to me. Afterward Soros felt he hadn’t been heard and that it was pointless to try to stand in front of an avalanche from the other side—that $5 million, $10 million, even $20 million from George Soros wouldn’t change the outcome in 2012.
In 2011 Soros was especially upset not to have been consulted by the administration about the Arab Spring. He had done more than anyone in the world to spread democracy; it was something he “knew a little about.” He had intended to sit out 2012 until he saw the rise of the conservative super PACs. Then he quietly contributed to a few grassroots organizations and congressional campaigns and five weeks before the election gave $1 million to Priorities USA, the pro-Obama super PAC, because he was “appalled by the Romney campaign, which is openly soliciting the money of the rich to starve the state of the money it needs to provide social services.” Soros and his team rejected any comparison_2PPa to the Koch brothers, Adelson, or the Chamber of Commerce. He pointed out that they were promoting policies in their own self-interest. Soros, who opposed the Bush tax cuts and the rest of the Republican agenda and had no business before the Obama administration, argued that he was motivated by the public interest.
THROUGH MUCH OF the twentieth century, class rhetoric was an important part of progressive presidential campaigns. Theodore Roosevelt lambasted the “malefactors of great wealth.” Franklin Roosevelt excoriated “economic royalists” and said, “I welcome their hatred.” Harry Truman argued that Republicans favored “a return to the Wall Street dictatorship” and wanted big business to “take over the country lock, stock and barrel.” John F. Kennedy, hardly a populist, said after steel executives raised their prices, “My father said all businessmen are S.O.B.s but I didn’t believe it until now.”
Then, after defeats in the 1980s, Democrats concluded that their party had moved too far left, and they began to downplay anticorporate arguments and to harvest campaign donations from the wealthy. To raise unlimited “soft money” in the 1990s, Bill Clinton courted Wall Street. In 2008 so did Barack Obama, who ended up raising more money there than did John McCain.
The idea that Obama was somehow antibusiness wasn’t borne out by his record in the presidency. Obama hired an economic team with close ties to Robert Rubin and other fixtures of Wall Street, and he attached few strings to the bank bailouts. His mention of “fat cat bankers” on 60 Minutes in September 2010 was viewed by oversensitive millionaires as evidence of malice toward the wealthy. In fact it was a sign of his inexperience. He was substituting rhetoric for action and would have been better off walking softly in public while wielding a bigger stick. Worried about alienating business, he backed off from an executive order that would have forced corporations doing business with the federal government to disclose their contributions to the Chamber of Commerce. While part of him wanted to exploit the public anger toward bankers, his heart wasn’t in it. Like Clinton, he refused to take class-based politics much beyond championing the middle class.
But if Obama didn’t resent the wealthy, he didn’t believe their material success entitled them to any more authority over public life than anyone else. In his youth, he had actively challenged corporate power abroad, first in the movement to force Occidental College to divest from businesses selling to the South African apartheid regime, and then privately, when he worked for a short time in business. His first job after graduating from Columbia in 1983 was with an outfit called Business International, which compiled reports about economic conditions in foreign countries. His mother, Ann, wrote to a friend that he “call[ed] it working for the enemy” because it was helping businesses prop up foreign dictators. In his book Dreams from My Father, Obama described himself in that period as “like a spy beyond enemy lines.”
Conservative critics crudely superimposed these youthful attitudes on the president, where they didn’t fit. His best friend, Marty Nesbitt, was the CEO of a Chicago-based airport parking business, and Obama felt friendly toward plenty of other business partner, Russ Schriefer, 1V early executives, and not just because they gave him money. But he didn’t feel he needed to spend his time stroking their egos and pretending that he thought they were the smartest people in the world just because they were rich.
AS OBAMA TOOK office, the country was paying the price for the excesses of a second Gilded Age. For three decades Wall Street had steadily transformed the American economy into a wealth-creation machine for the few. In 1950 finance, insurance, and real estate accounted for 11.5 percent of GDP. By the beginning of the new century, these asset-shuffling industries had nearly doubled, to 22 percent of all economic activity in the United States. In 2010 the six largest banks owned or serviced more than half of all American mortgages and more than two-thirds of all mortgages in foreclosure. The big ban
ks, revered by elites but often operating outside the law, had been sanctioned more than two hundred times and coughed up more than $50 billion in fines since 2002. The average compensation for the men who ran them was more than $17 million a year, which was about 250 times that of the average worker. (In the 1950s CEOs made twenty times as much.) They spent more than $30 million a year on lobbying and employed 234 registered lobbyists. It was no wonder that Obama’s friend, Senator Dick Durbin, said of the U.S. Senate, “The banks own this place.”
In Springfield in the 1990s, Obama was appalled at how the financial services industry misled consumers on credit card debt. He read articles on predatory lending by a Harvard Law School professor named Elizabeth Warren, who argued that many people in finance just didn’t want to admit that they made their money by creating “tricks and traps” to squeeze more out of Americans who couldn’t afford extra credit card fees, home equity loans, and all the other debt they were amassing. Warren was a bankruptcy expert but also a cultural critic focused on how certain occupations could corrupt the soul. In private life, before she had to watch her words so carefully, she spoke often about the need of elites to create psychological separation between what they did specifically (working, say, on arts programs for a tobacco company or in the legal department of a bank) from the bad things that others in their companies might be doing. They rationalized their careers by thinking that they weren’t responsible for anything damaging that they hadn’t done themselves. Those in finance felt genuinely that they were engaged in work that was mildly socially constructive as well as lucrative. To discover that they had been part of breaking the backs of millions of American families was hard to admit. These people were not the mafia, Warren said; they gave to charity and thought they led good lives. But after luring unsuspecting Americans into financial trouble before the Great Recession, they suddenly found themselves lowering the boom, spending their days generating profits for their banks by taking away the homes of people earning $42,000 a year, showing no mercy for people working three jobs and struggling to make all of their payments on time.
The Center Holds: Obama and His Enemies Page 23