Dark Money

by Jane Mayer

  “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.”

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  Conventional 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.”

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  Mu
ch 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.”

  Wertheimer was a public interest lawyer who had been waging an uphill battle to stem the rising tide of money in politics since the Watergate days. From his perspective, the country’s democratic process was in crisis. “We have two unelected multibillionaires who want to control the U.S. government and exercise the power to decide what is best for more than 300 million American people, without the voices of these people being heard.” He added, “There is nothing in our constitutional democracy that accepts that two of the richest people in the world can control our destiny.”

  As was clear from the more than $13 million a year that Koch Industries spent lobbying Congress, the Kochs had enormous financial stakes in the U.S. government. The idea that they and their allies were spending nearly $1 billion for completely selfless reasons strained credulity. Of course, money wasn’t always the determinant of American elections, but there was little doubt that if the American presidency was on the auction block in 2016, the Kochs hoped to make the winning bid.

  In an interview with USA Today, another instance in which he said that all he wanted was to “increase well-being in society,” Charles Koch bristled at the idea that he was motivated by an interest in boosting his bottom line. “We are doing all of this to make more money?” he asked. “I mean, that is so ludicrous.”

  Some of course might have used the same adjective to describe the two-decade-long legal battle that he and his brothers waged against each other after each inheriting hundreds of millions of dollars, in order to get a bigger share. But sharing was never easy for Charles Koch. As a child, he used to tell an unfunny joke. When called upon to split a treat with others, he would say with a wise-guy grin, “I just want my fair share—which is all of it.”

  AUTHOR’S NOTE

  In many ways, the research on this book began three decades ago when I arrived in Washington to cover Ronald Reagan’s presidency for The Wall Street Journal. During the intervening years, I’ve interviewed countless political players in all forms of public life, from presidents to voters, and watched as American politics increasingly has been shaped by an ever-rising tide of private money. This book is based on hundreds of interviews conducted during the past five years with a wide range of sources spanning from the main characters and their family members, friends, and ideological allies to their business associates and political competitors.

  In an ideal world, every interview would be conducted on the record. Several of the sources to whom I owe the most, however, have asked to have their names withheld. I apologize in advance to readers for not being able to fully identify these sources, but where possible I have tried to indicate their expertise and outlook, and where not possible I have tried to be scrupulous in vetting their accounts for accuracy. I also regret that several of the major characters in this saga were unreachable. Some, such as Richard Mellon Scaife, provided access to some of their papers, while others, such as Charles and David Koch, declined to participate or, like John M. Olin and Lynde and Harry Bradley, had long since passed away.

  Dozens and dozens of other named sources, though, took time from their busy lives, and in some cases risked reprisal, to help me tell this story. I am immensely grateful to all of them. I also am hugely indebted to the authors of the hundreds of outstanding books, articles, studies, and news stories on which I drew. At the risk of accidentally leaving some out or of bogging readers down, I have tried to give credit in the text or the notes.

  In addition, I want to give special thanks to those on whose writing I leaned most heavily. There is no way that I could have written this book without the path-blazing work of the Center for Media and Democracy, the Center for Public Integrity, the Center for Responsive Politics, Democracy 21, ProPublica, Mike Allen, Neela Banerjee, Nicholas Confessore, Clayton Coppin, Brian Doherty, Robert Draper, Lee Fang, Michael Grunwald, John Gurda, Mark Halperin, Dale Harrington, John Heilemann, Eliana Johnson, John Judis, Robert Kaiser, Andy Kroll, Chris Kromm, Charles Lewis, Robert Maguire, Mike McIntire, John J. Miller, Kim Phillips-Fein, Eric Pooley, Daniel Schulman, Theda Skocpol, Jason Stahl, Peter Stone, Steven Teles, Kenneth Vogel, Leslie Wayne, Roy Wenzl, and Bill Wilson.

  Many, many others were essential to this enterprise as well, but none more so than my brilliant editor at Doubleday, Bill Thomas; my ever-resourceful literary agent at ICM, Sloan Harris; and the amazing team at The New Yorker that shepherded into print the original 2010 article on the Koch family that inspired this book: David Remnick, Daniel Zalewski, and the heroic checking department. I owe huge thanks also to those who helped with the book’s exhausting research and fact-checking: Andrew Prokop and Ben Toff. There are no others with whom I’d rather share a foxhole.

  NOTES

  INTRODUCTION

  As a former member: Charles Koch was an acolyte of Robert LeFevre, whom Brian Doherty, the libertarian author of Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (PublicAffairs, 2007), described in an interview with the author as “an anarchist figure who won Charles’s heart.” For more on LeFevre, see chapter 2.

  For the most part: During Ronald Reagan’s presidency, which I covered for The Wall Street Journal, there were constant divisions between the establishment Republicans and the conservative purists, whom many in the Reagan White House still regarded with suspicion as outliers.

  George Soros: See Jane Mayer, “The Money Man,” New Yorker, Oct. 18, 2004.

  “The Kochs are on a whole”: Jane Mayer, “Covert Operations,” New Yorker, Aug. 30, 2010.

  “there was a sense”: John Podesta, interview with author.

  “the mercantile Right”: Craig Shirley, interview with author.

  “It was obvious”: Matthew Continetti, “The Paranoid Style in Liberal Politics: The Left’s Obsession with the Koch Brothers,” Weekly Standard, April 4,
2011.

  “When W. Clement Stone”: Dan Balz, “ ‘Sheldon Primary’ Is One Reason Americans Distrust the Political System,” Washington Post, March 28, 2014.

  “We’re not a bunch”: Continetti, “Paranoid Style in Liberal Politics.”

  Participants at the summits: See Kenneth R. Vogel, Big Money: 2.5 Billion Dollars, One Suspicious Vehicle, and a Pimp—on the Trail of the Ultra-rich Hijacking of American Politics (Public Affairs, 2014), for an excellent account of the Koch seminars.

  In order to foil: Michael Mechanic, “Spying on the Koch Brothers: Inside the Discreet Retreat Where the Elite Meet and Plot the Democrats’ Defeat,” Mother Jones, Nov./Dec. 2011.

  “There is anonymity”: Vogel, Big Money.

  the combined fortunes: Known participants at Koch seminars worth $1 billion or more as of 2015 valuations include the following:

  Charles Koch: $42.9 billion

  David Koch: $42.9 billion

  Sheldon Adelson: $31.4 billion

  Harold Hamm: $12.2 billion

  Stephen Schwarzman: $12 billion

  Philip Anschutz: $11.8 billion

  Steven Cohen (represented by Michael Sullivan): $10.3 billion