Dark Money

by Jane Mayer

  “in a fifty-fifty deal”: See Louis Kraar, “Family Feud at Corporate Colossus,” Fortune, July 26, 1982.

  “When you’re the only one”: Weiss, “Price of Immortality.”

  “the cheapest person”: Park Avenue: Money, Power, and the American Dream, PBS, Nov. 12, 2012.

  “It’s going to cost them”: Interview with author. For more on David Koch’s resignation from WNET’s board, see Jane Mayer, “A Word from Our Sponsor,” New Yorker, May 27, 2013.

  Later clashes: The Oil, Chemical, and Atomic Workers union called a strike at Koch’s Pine Bend Refinery that lasted nine months starting in January 1973. According to Coppin, “Stealth,” “If he could have Charles Koch would have eliminated the union from his refinery.”

  “Ideas do not spread”: Charles Koch, “The Business Community: Resisting Regulation,” Libertarian Review, Aug. 1978.

  Around the same time: Coppin, “Stealth,” describes the conference and quotes from the papers given there at length.

  The brothers took an even: Charles Koch “liked the idea of being in control of things even though he is not recognized as being in control,” David Gordon, a fellow libertarian activist, told Washingtonian magazine. Luke Mullins, “The Battle for the Cato Institute,” Washingtonian, May 30, 2012.

  “David Koch ran in ’80”: Grover Norquist, interview with author.

  But at the Libertarian Party convention: Marshall Schwartz, “Libertarians in Convention,” Libertarian Review, Nov. 1979.

  “It tends to be a nasty”: See Mayer, “Covert Operations.”

  “They weren’t really on my radar”: Richard Viguerie, interview with author.

  CHAPTER TWO: THE HIDDEN HAND

  “the leading financial supporter”: Robert Kaiser, “Money, Family Name Shaped Scaife,” Washington Post, May 3, 1999, A1.

  “You fucking Communist”: Karen Rothmyer, “Citizen Scaife,” Columbia Journalism Review, July/Aug. 1981.

  In 2009, however: Richard Scaife shared a copy of his memoir with the author and authorized the use of all requested material, other than a small portion dealing with a litigious divorce, some details about which do not appear here.

  “Nowadays there are no”: Lionel Trilling, The Liberal Imagination: Essays on Literature and Society (Viking, 1950), xv.

  “He’s the originator”: Christopher Ruddy, interview with author.

  In 1957, Fortune ranked: Rothmyer, “Citizen Scaife.”

  “How beautifully he summed up”: Richard Mellon Scaife, “A Richly Conservative Life,” 282.

  “a gutter drunk”: Kaiser, “Money, Family Name Shaped Scaife.”

  “My father—he was suckin’ ”: Burton Hersh, The Mellon Family: A Fortune in History (Morrow, 1978).

  “a lightweight”: Kaiser, “Money, Family Name Shaped Scaife.”

  “My political conservatism”: Scaife, “Richly Conservative Life,” 20.

  “He was concerned”: Ibid., 21.

  “Alan Scaife was terribly worried”: Kaiser, “Money, Family Name Shaped Scaife.”

  “From top to bottom”: Isaac William Martin, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent (Oxford University Press, 2013), 25.

  His Union Trust bank: Ibid., 34.

  In an effort to win: Ibid., 45. Mellon argued that if taxes were lowered on the rich, they would be less inclined to invest in tax-exempt bonds, thereby spurring greater revenue for the Treasury and, coincidentally, for financial institutions like the Mellon Bank.

  Sixty years later: The Gerald R. Ford Library contains a June 11, 1975, memorandum from Bob Golden, of the American Enterprise Institute, to Dick Cheney, at the Ford White House, to which is attached a copy of an academic paper by Jude Wanniski on which is scrawled the title “Santa Claus Theory.”

  Once in public office: John B. Judis, The Paradox of American Democracy: Elites, Special Interests, and the Betrayal of the Public Trust (Routledge, 2000).

  “cut the tax rates on the richest”: Isaac William Martin, Rich People’s Movements, 64.

  Not only did his economic theories: Judis, Paradox of American Democracy, 46.

  “I don’t know what”: Scaife, “Richly Conservative Life,” 61.

  “equality of sacrifice”: See Kenneth F. Scheve Jr. and David Stasavage, “Is the Estate Tax Doomed?,” New York Times, March 24, 2013. They note that “equality of sacrifice” was a term used by John Stuart Mill and grew from the nineteenth century into an argument in favor of progressive taxation, particularly in financing wars.

  “When I can’t sleep”: Scaife, “Richly Conservative Life,” 6.

  “making each other totally miserable”: Robert Kaiser and Ira Chinoy, “Scaife: Funding Father of the Right,” Washington Post, May 2, 1999, A1.

  “The first priority”: Scaife, “Richly Conservative Life,” 43.

  “Isn’t it grand”: Ibid., 46.

  Today, they are commonplace: John D. Rockefeller met secretly with President William Taft in an effort to get his support for the creation of the Rockefeller Foundation, but regardless of the effort the U.S. Senate rejected the idea in 1913, according to Rob Reich’s paper “Repugnant to the Whole Idea of Democracy? On the Role of Foundations in Democratic Societies” (Department of Political Science, Stanford University, for the Philanthropy Symposium at Duke University, Jan. 2015), 5.

  “represent virtually by definition”: See Ibid, 9.

  By 1930, there were approximately: Ibid., 7.

  “completely irresponsible institution”: Richard Posner likens perpetual charitable foundations to hereditary monarchies. He suggests that they may be a useful form of self-taxation by the rich but also questions why they should enjoy tax breaks, particularly in the case of foundations run by businessmen who are simultaneously polishing the image of their companies. See “Charitable Foundations—Posner’s Comment,” The Becker-Posner Blog, Dec. 31, 2006, http://​www.​becker-​posner-​blog.​com.

  “The result”: Scaife, “Richly Conservative Life,” 66.

  “advance ideas that I believe”: Ibid., 58.

  “This was the beginning”: Ibid., 70.

  Carrying out this attack: In The Rise of the Counter-establishment: From Conservative Ideology to Political Power (Times Books, 1986), Sidney Blumenthal made the term “counter-establishment” famous and for the first time told much of the early intellectual history of the movement.

  “Attack on American Free Enterprise System”: For more on the origins and impact of Lewis Powell’s memorandum, see Phillips-Fein, Invisible Hands, 156–65.

  “We didn’t have anything”: Piereson’s comments were made in a panel discussion with Gara LaMarche at an Open Society Institute forum, Sept. 21, 2006.

  “lay siege to corporations”: Staughton Lind, quoted in Phillips-Fein, Invisible Hands, 151.

  Powell’s defense of the tobacco companies: See Jeffrey Clements, Corporations Are Not People (Berrett-Koehler, 2012), 19–21.

  Income in America: Isaac William Martin, Rich People’s Movements, 155.

  Powell called on corporate America: Some have questioned whether too much has been made of Powell’s memo. Mark Schmitt of The American Prospect wrote in 2005, “The reality of the right is that there was no plan, just a lot of people writing their own memos and starting their own organization.”

  “single-minded pursuit”: Phillips-Fein, Invisible Hands, 164.

  “tax-exempt refuge”: For more on Buchanan’s memo, see Jason Stahl, The Right Moves: The Conservative Think Tank in American Political Culture Since 1945 (University of North Carolina Press, forthcoming), 93.

  “the artillery”: James Piereson comments at Open Society Institute’s Forum, Sept. 21, 2006.

  One of them: Feulner was a member of the Mont Pelerin Society, an Austrian economics club that Hayek co-founded and attended and that was almost entirely underwritten by American businessmen.

  described himself openly as a “radical”: David Brock, Blinded by the Right: The Conscience of an Ex-
conservative (Crown, 2002), 54.

  After reading Powell’s memo: Lee Edwards, The Power of Ideas: The Heritage Foundation at 25 Years (Jameson Books, 1997).

  “I do believe”: See Dan Baum, Citizen Coors: A Grand Family Saga of Business, Politics, and Beer (William Morrow, 2000), 103. Weyrich added, “Coors is the kind of guy who thinks you can write your congressman and get something done.”

  Convinced that radical leftists: Ibid.

  Scaife’s money soon followed: Before founding Heritage, Feulner had worked at the Center for Strategic and International Studies, which was almost single-handedly funded by Scaife in its early years, so he would have recognized Scaife’s potential as a backer.

  “Coors gives six-packs”: Kaiser and Chinoy, “Funding Father of the Right.”

  “free from any political”: Judis, Paradox of American Democracy, 122.

  “The AEIs and the Heritages”: Ibid., 169. Leaders of conservative foundations such as William Simon might have perceived themselves as merely providing political balance and copying the activism of liberal foundations, but the political scientist Steven Teles pointed out in an interview with the author that there were key differences. The boards of the earlier establishment foundations such as Ford tended to be centrist, while those at the new conservative foundations like Olin tended, he says, to be “ideologically-aligned” and more likely to embrace grant making as a form of movement building.

  “a scholarly institute”: Adam Curtis, “The Curse of Tina,” BBC, Sept. 13, 2011.

  The Sarah Scaife Foundation: Martin Gottlieb, “Conservative Policy Unit Takes Aim at New York,” New York Times, May 5, 1986.

  “As you well know”: L. L. Logue to Frank Walton (Heritage Foundation), Nov. 16, 1976, folder 16, Weyrich Papers, University of Montana.

  “ ‘big business’ pressure organization”: Jason Stahl, “From Without to Within the Movement: Consolidating the Conservative Think Tank in the ‘Long Sixties,’ ” in The Right Side of the Sixties: Reexamining Conservatism’s Decade of Transformation, ed. Laura Jane Gifford and Daniel K. Williams (Palgrave Macmillan, 2012), 105.

  Powell and others: See Stahl, Right Moves. Stahl describes the way that the conservative think tanks upended the notion of expertise with the concept of political balance. He also describes the Ford Foundation’s donation to AEI.

  fight criticism that it was liberal: In 1976, in a move that rocked staid philanthropic circles, Henry Ford II resigned in protest from the board of the foundation bearing his family name, arguing that it wasn’t sufficiently pro-business.

  “That was quite the heist”: The note from the friend to William Baroody Jr. is described in Stahl, Right Moves.

  “Funders increasingly expect”: Steven Clemons, “The Corruption of Think Tanks,” Japan Policy Research Institute, Feb. 2003.

  “We’ve become money launderers”: Claudia Dean and Richard Morin, “Lobbyists Seen Lurking Behind Tank Funding,” Washington Post, Nov. 19, 2002.

  “socialism out and out”: Phillips-Fein, Invisible Hands, 174.

  “I saw how right-wing ideology”: Brock, Blinded by the Right, 77.

  “the unseen hand”: Many of these details are drawn from Michael Joseph Gross, “A Vast Right-Wing Hypocrisy,” Vanity Fair, Feb. 2008.

  “I don’t think he had”: Kaiser, “Money, Family Name Shaped Scaife.”

  “With political victory”: Ibid.

  “We did what comes naturally”: Gross, “Vast Right-Wing Hypocrisy.”

  According to Scaife’s son: Ritchie denied the marijuana anecdote, but Scaife confirmed it in ibid.

  “Ritchie loves Dick”: Ibid.

  “Wife and dog missing”: Ibid.

  “had particularly in mind”: Edwards, Power of Ideas.

  “can order people done away with”: John F. Kennedy Jr., “Who’s Afraid of Richard Mellon Scaife?,” George, Jan. 1999.

  “the development of a well-financed cadre”: Cited in Nicholas Confessore, “Quixotic ’80 Campaign Gave Birth to Kochs’ Powerful Network,” New York Times, May 17, 2014.

  Koch Industries had just become: Ibid.

  Its start-up funding: Michael Nelson, “The New Libertarians,” Saturday Review, March 1, 1980.

  “I said my bank account”: Ed Crane, interview with author.

  “Ed Crane would always call”: Mullins, “Battle for the Cato Institute.”

  “serve as a night watchman”: Schulman, Sons of Wichita, 106.

  In fact, after Watergate: Stahl, in Right Moves, quotes an AEI official making this argument to business leaders after Watergate.

  list of the Heritage Foundation’s sponsors: Box 720, folder 5, Clare Boothe Luce Papers, Library of Congress.

  “that the think tanks”: Piereson comment, Open Society forum.

  Americans’ distrust of government: Judis, Paradox of American Democracy, 129.

  The labor movement: For an excellent, detailed description of labor’s congressional setbacks, see Hacker and Pierson, Winner-Take-All Politics, 127.

  “We are basically a conduit”: Phil McCombs, “Building a Heritage in the War of Ideas,” Washington Post, Oct. 3, 1983.

  “ALEC is well on its way”: George Archibald to Richard Larry, Feb. 3, 1977, Weyrich Papers.

  “the Golden Rule”: See Alexander Hertel-Fernandez, “Funding the State Policy Battleground: The Role of Foundations and Firms” (paper for Duke Symposium on Philanthropy, Jan. 2015).

  Weyrich was particularly adept: Randall Balmer, a historian of American religion, argues in his book Redeemer: The Life of Jimmy Carter (Basic Books, 2014) that the conventional wisdom, which holds that the backlash against Roe v. Wade created the Christian Right, is wrong. Instead, he suggests, it was evangelicals’ opposition to integration that truly launched the movement. Weyrich, he suggests, brilliantly seized on evangelicals’ anger at Jimmy Carter’s refusal to grant tax-exempt status to Bob Jones University because it had an explicit whites-only admissions policy.

  According to Feulner: Dom Bonafede, “Issue-oriented Heritage Foundation Hitches Its Wagon to Reagan’s Star,” National Journal, March 20, 1982.

  He slashed corporate: Congress cut the effective federal income tax rate on the top 1 percent of earners from 31.8 percent in 1980 to 24.9 percent in 1985. In contrast, Congress raised the effective rates on the bottom four-fifths of earners from 16.5 percent to 16.7 percent. It wasn’t a big tax increase for the vast majority of Americans, but it was a substantial tax cut for the wealthy. As a result, from 1980 to 1985, after-tax income in the top 5 percent of earners increased, while it decreased for everyone else, according to Judis, Paradox of American Democracy, 151. See also Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics (Princeton University Press, 2012), 265.

  Scaife, who by then had donated: Ed Feulner describes the scope of Scaife’s giving in the Luce Papers.

  “I was lucky”: Scaife, “Richly Conservative Life,” 22.

  CHAPTER THREE: BEACHHEADS

  uprising at Cornell University: An excellent report on the protest appears in Donald Alexander Downs, Cornell ’69: Liberalism and the Crisis of the American University (Cornell University Press, 1999).

  “the most disgraceful”: David Horowitz, “Ann Coulter at Cornell,” FrontPageMag.​com, May 21, 2001.

  “The catastrophe at Cornell”: John J. Miller, A Gift of Freedom: How the John M. Olin Foundation Changed America (Encounter Books, 2006).

  “saw very clearly”: John J. Miller, How Two Foundations Reshaped America (Philanthropy Roundtable, 2003), 16.

  “These guys, individually”: Lizzy Ratner, “Olin Foundation, Right-Wing Tank, Snuffing Itself,” New York Observer, May 9, 2005.

  Each side would argue: James Piereson, for instance, who regards hugely well-endowed, establishment nonprofit organizations such as the Ford Foundation as liberal, argues that the Right has been routinely outspent by the Left.

  “saving the free enterprise”: Olin’s general
counsel was Frank O’Connell, a labor lawyer who was famously tough on unions.

  Olin followed closely: This account of Olin’s history draws extensively on Miller, Gift of Freedom.

  In the summer of 1970: E. W. Kenworthy, “U.S. Will Sue 8 Concerns over Dumping of Mercury,” New York Times, July 25, 1970, 1.

  Subsequently, the Justice Department: The Olin Corporation dumped mercury into a landfill known as the 102nd Street site, which was also used by the Hooker Chemicals and Plastics Corporation.

  Eventually, the Olin Corporation: The maximum fine for each of the seven misdemeanor convictions was $10,000, thus the maximum fine in total was $70,000. “Olin Fined $70,000,” Associated Press, Dec. 12, 1979.

  For decades, Saltville: “End of a Company Town,” Life, March 26, 1971. See also Tod Newcombe, “Saltville, Virginia: A Company Town Without a Company,” Governing.​com, Aug. 2012.

  “They all knew the dangers”: Harry Haynes, interview with author.

  Dangerous levels of mercury: Virginia Water Resources Research Center, “Mercury Contamination in Virginia Waters: History, Issues, and Options,” March 1979. See also EPA Superfund Record of Decision, Saltville Waste Disposal Ponds, June 30, 1987.

  Life magazine produced: “End of a Company Town.”

  “It’s a ghost town”: Shirley “Sissy” Bailey, interview with author.

  “Common sense should have”: Stephen Lester, interview with author.

  “It is possible”: James Piereson, e-mail interview with author.

  “The Olin family”: William Voegeli, e-mail interview with author.

  “My greatest ambition”: Quoted in Ratner, “Olin Foundation, Right-Wing Tank, Snuffing Itself.”

  “with definite left-wing attitudes”: John M. Olin to the president of Cornell, 1980, in Teles, Rise of the Conservative Legal Movement, 185.

  “It was like a home-study course”: Miller, Gift of Freedom, 34.

  By the late 1960s, Ford: James Piereson describes the Ford Foundation’s leading role as liberal activist philanthropists in an incisive essay, “Investing in Conservative Ideas,” Commentary, May 2005.