By contrast, in the year before the 2012 election Simmons gave a hefty
$20.5 million to American Crossroads, former Bush adviser Karl Rove’s
very conservative political vehicle.86
In contrast to his national level activity, Harold Simmons’s state- level contributions— just as the boundary control theory would predict—
went directly to individual candidates, almost all of them members of the
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dominant Texas Republican Party. Between 2000 (the first year included
in the campaign finance database maintained by the Texas Tribune) and his death in 2013, Simmons contributed more than $11 million— spread
across 1,184 donations— to Texas state politics. At least $1.2 million of that money went to Governor Rick Perry. Between 2000 and his death,
Simmons was one of the most prolific donors in Texas politics, contributing a total amount of money to various politicians that was second only to that given by the late near billionaire Bob Perry, who made a fortune in home building and spent vast sums on a wide range of far right causes.87
Thus a close analysis of Simmons’s political involvement does not reveal any problems related to measurement error on either the dependent or the independent variables. Our case study analysis reveals neither coding errors nor any unexpected contributions that alter our understanding of Simmons’s approach to politics. Most important, Simmons’s contributions fit neatly with the boundary control theory. He did just what the theory predicts a billionaire in his circumstances would do. Simmons was
a paradigmatic boundary controller.
Moreover, Simmons’s contributions appear to have paid off. He got a lot
of value for his money. Most prominently, Simmons owned a waste management firm, Waste Control Specialists, that for decades had sought— but failed— to get permission to build a low level radioactive waste facility in Texas.88 Despite plenty of eagerness among waste facility entrepreneurs,
and despite the authority that Congress gave the states to license low level radioactive waste disposal during the small government era of the 1980s,89
few states have leapt at the chance to build these facilities, probably because of the safety concerns and negative public reactions that they generally provoke.90
Simmons, however, kept on trying. Finally, in 2003— a year in which
Simmons infused more than $200,000 into Texas politics— the Texas legislature opened an unusually brief one month window in which private companies could apply for permits to dispose of waste.91 Simmons’s firm
submitted the only application, and ultimately built the facility. (Other firms may have simply been unable to put together a competitive proposal
in such a short period of time. Or they may have figured that the project was a done deal for insider Simmons.)92
The opening of a short application window was not the only state or local government favor to Simmons. In 2007, three members of the Texas Commission on Environmental Quality (TCEQ) resigned in frustration with the subsequent licensing process. One of them told a journalist that he felt it was inevitable that Simmons’s company would receive a license to build
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and operate the facility, regardless of its potential environmental effects—
including the potential for contamination of groundwater due to the site’s particular geological properties.93 Over the course of 2008 and 2009, Simmons’s Waste Control Specialists— which had recently hired TCEQ’s former executive director as a lobbyist— finally received the licenses necessary to build and operate a waste facility in Andrews County.94
Moreover, in March 2009, the commissioners of Andrews County hastily added a bond measure to the May 2009 ballot to help Waste Control Specialists finance construction.95 The bond measure subsequently passed
by a mere three vote margin over the protests of numerous community
members (including some who formed a nonprofit in opposition named
“No Bonds for Billionaires”).96 Those who voted in favor of the measure
were apparently enticed by the promise of new jobs; it ultimately provided around 180 jobs for individuals who apparently did not mind (or did not know about) exposure to radiation.97 In 2011, the Texas Low Level
Radioactive Waste Disposal Commission— six of the seven members of
which were appointed by Governor Perry— changed the rules governing the facility to allow it to accept out of state waste.98 Finally, also in 2011, Simmons was given unusual permission to use stock in one of his
other companies as financial assurance in case his waste management firm
should go bankrupt or a disaster situation should arise.99
Simmons, seemingly proud of his political efforts, openly boasted
about the actions taken by state and local officials to bring his waste facility to fruition.100
In our quantitative analysis, Simmons was strongly predicted to engage
in boundary control and was scored as having done so. Our more in depth
look has confirmed that Simmons did indeed pursue a boundary control
strategy. And he appears to have gained a great deal of benefit from it.
george soros. The relation of Soros to the boundary control theory is
the polar opposite to that of Simmons. Soros was randomly selected for
a closer look from among several billionaires who tied with extremely
low scores on the four independent variables that predict the use of the boundary control strategy. That is, Soros was strongly predicted not to engage in efforts at boundary control. No billionaire in the quantitative analysis had a lower combined score than Soros did. No one should have
been less likely to engage in boundary control. And indeed, Soros was
coded as not having done so.
George Soros was born in Hungary, attended college at the London
School of Economics, and later immigrated to the United States. He made
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his fortune of $20 billion (as of 2013) in finance. In 1970 he founded Soros Fund Management, the investment and hedge fund firm of which he is currently chairman. Soros made his most famous— and perhaps most
lucrative— financial coup in 1992. It involved large scale “shorting” (borrowing and selling, in expectation of a drop in value101) of the British pound. Soros made $1.5 billion off that move alone.102 The securities and investment industry in which Soros Fund Management has been active is
highly regulated, but it is regulated almost entirely on the national level.
Additionally, it has low barriers to entry and involves few localized costs.
Not a promising combination for boundary control.
The political activities of Soros— who has sometimes been cited as a
left leaning megadonor, as a foil in discussions of the right leaning Koch brothers— are fairly well known. Soros entered national politics in a big way in the 2004 election cycle, angered by George W. Bush’s invasion of
Iraq and other foreign policy moves that Soros felt were damaging to US
interests and to countries around the world, including countries in his native Eastern Europe. Soros was a founding member of the Democracy Alliance, a network of wealthy pro Democratic contributors.103 In recent years Soros has contributed very large sums to numerous political efforts on both the national and state levels. On the national level, Soros has
donated many millions of dollars to the Democratic Party and to liberal
outside groups— including numerous seven figure donations to the super
PAC Priorities USA. On the state level, less than half of Soros’s contributions have gone directly to candidates; most go to outside groups dedicated to specific liberal causes.104
Our close analysis of Soros’s poli
tical involvement revealed no problems
related to measurement error in independent or dependent variables. We
did not find any coding errors or any previously missed contributions that alter our understanding of his approach to politics. There is no new evidence that Soros has engaged in boundary control. Just as the theory predicted, he has not. In fact, he has essentially done just the opposite: ignoring candidates at the state and local level but supporting some at the national level; seeking no state or local favors that we could detect; and working for a relatively active, rather than inactive, federal government.
robert rowling. Rowling was randomly selected among typical cases on the independent variables from within the subset of billionaires who
were coded as engaging in boundary control.105
Rowling— born in Corpus Christi, Texas, in 1953, and currently a resi
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dent of Dallas106— helped his father create the Tana Oil & Gas company.
Rowling’s fortune boomed in 1989, when he and his late father sold a large portion of this business to Texaco for approximately $500 million.107 Rowling used the money from that sale to create TRT Holdings. TRT’s primary assets consist of Tana Exploration, Omni Hotels, and Gold’s Gym (which has more than 700 locations around the world).108 Outside (though
perhaps not totally outside) the business realm, Rowling has served as
a member of the University of Texas Board of Regents and has chaired
the University of Texas Investment Management Company. Rowling’s
highest scoring company on the independent variables used in our analysis was his energy company, Tana Explorations (owned by TRT Holdings).
The energy and natural resources industry is very heavily regulated, mostly on the state and local levels. It has high barriers to entry and involves highly localized public costs that are not entirely offset by local benefits.
All these factors predict efforts at boundary control.
Rowling has been a very active campaign contributor. He personally
gave $6 million to American Crossroads between 2010 and 2012, and during that same period, TRT Holdings gave Crossroads an additional $4.9 million.109 Rowling has also made numerous $10,000– $30,000 contributions to the Republican Party on the national level.110 On the state level, Rowling has donated at least $3 million to candidates and to candidates’ personal PACs, including large contributions to Texas Governor Rick Perry.111 Rowling has also made municipal level contributions, including several to members of the Dallas city government: $10,000, for example, to its Democratic mayor.112
On the national level, Rowling— despite some relatively small party
and candidate donations— has given overwhelmingly to outside groups.
With only two exceptions back in the 1990s (totaling just $2,000), Rowling’s national contributions have gone exclusively to Republicans or to groups aligned with Republicans.113 On the state and municipal levels, by contrast, Rowling’s contributions have mostly gone directly to candidates and their PACs. His state level contributions have gone almost exclusively to members of the dominant Texas GOP.114 On the municipal level, however— which in the case of Dallas involves significantly greater party competition than on the Texas state level— Rowling has donated to members of both parties, including the Democratic mayor.115
The Rowling case was not selected specifically to search for measurement error, but it is nonetheless worth noting that it does not appear to involve any such errors. Upon closer analysis, Rowling’s contribution
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patterns do— just as our quantitative measures indicated— appear to
typify boundary control. No additional information about Rowling contradicts his scores on the independent variables. Our closer look does not reveal any coding errors or any additional contributions that would alter the patterns depicted in the data set.
As in Simmons’s case, the evidence suggests that Rowling has received
direct state and municipal benefits as a result of his campaign contributions.
An indication that Rowling’s prestigious appointments to the University of Texas boards were the result of his contributions to Governor Perry is that these appointments ended (with Rowling’s strongly encouraged resignation) shortly after Rowling had shifted his financial support from Perry to Perry’s 2010 gubernatorial election challenger, Kay Bailey Hutchison.116
And in Dallas, after voters narrowly rejected a ballot initiative that would have prevented public ownership of a convention center hotel, the Dallas
City Council (with the support of the mayor, who had received a $10,000
donation from Rowling), approved a $500 million financing package for
the construction of a city owned hotel that would be developed and operated by Omni, one of TRT Holding’s prime assets. More recently, the city granted TRT Holdings significant tax incentives to move its headquarters
into Dallas.117
Boundary Control and Stealth Politics
These case studies— integrated with our quantitative analyses— help confirm the boundary control theory. We find that a number of the very wealthiest American billionaires— about one tenth of all the billionaires who were still active in business118— have engaged in boundary control strategies. They have supported and worked through the political party that dominates politics in a particular state or locality where they have extensive business interests (usually but not always the Republican Party), in order to win special governmental favors, while at the same time contributing on the national level to “small government” ideological groups that will help fend off any federal interference with their businesses.
One important factor that leads to use of the boundary control strategy is a favorable regulatory setting, in which their businesses are more subject to state level than national level regulation. Another factor is a billionaire’s general alignment with the Republican Party. The striking examples of Harold Simmons and Robert Rowling indicate that the
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boundary control strategy can work well for those who pursue it. Billionaires have successfully used it to win expensive favors from state and local governments.
If the boundary control strategy pays off so well for some of the very
wealthiest Americans, there is reason to suspect that a fair number of less exalted billionaires and multimillionaires may also quietly take advantage of it too. Across the United States as a whole, expensive special favors
won by the wealthy from state and local governments may well add up to
many billions— or tens of billions— of dollars’ worth of lost tax revenue, excessively expensive government purchases, harm to citizens’ health and
welfare, and damage to the environment— all borne by ordinary American citizens and taxpayers.
Taking a broader view, boundary control can be thought of as a special
case of stealth politics, in which billionaires and other wealthy Americans push for public policies that suit their own financial self interest but go against the interests and wishes of most Americans— while the billionaires stay as quiet as possible about what they are doing and why. Indeed, the national- level “small government” side of boundary control strategies closely resembles the stealthy politics concerning taxes and Social Security that we analyzed in chapters 2 and 3. Boundary controllers help advance the national agenda of extreme economic conservatives: low taxes, little federal economic regulation, and severely limited social spending.
Much the same thing is true of billionaires’ broader (but again often very quiet) efforts to reshape state politics by electing conservative public officials and enacting extremely conservative economic policies.
This chapter points to state and local focused dimensions of political action by billionaires: actions
aimed at boundary control, and broader strategies designed to reshape state politics. Both those strategies, like more purely national level stealth politics, are problematic for democracy. Both appear to involve unequal political influence— and certainly involve largely unaccountabl e political action— by billionaires and multimillionaires. No ordinary citizen, acting alone, can hope to match such influence. All Americans taken together may have a hard time controlling it.
chapter six
What Is to Be Done about
Billionaires?
Our study of billionaires has definite limitations, some of which are
inherent in a phenomenon of great interest to us: billionaires’ gen-
eral silence concerning important issues of public policy. It is impossible to conduct a sample survey of billionaires, or (with rare exceptions) to
interview them in depth. No matter how thorough our web scraping, how
careful our scrutiny of public records, or how diligent our use of historical research and investigative reports by other scholars and journalists, we cannot hope to learn exactly what is in the hearts and minds of all
of America’s wealthiest billionaires. Especially frustrating is our (and ev-erybody else’s) inability to know many billionaires’ precise policy preferences. Exactly what billionaires want from government probably matters a great deal, since billionaires have the resources to intervene in a big way (if they wish) in elections and in policy- making processes.
Some hints about the overall thrust of billionaires’ policy preferences
can be gleaned from their officially reported financial contributions to candidates and parties (mostly to conservative Republicans), or— in a few
ca ses— from their vague ideological utterances.1 But those are not always reliable indicators. We simply cannot be sure about the policy preferences of the many billionaires who stay totally silent about the specifics of public policy.
Nor— despite a lot of helpful data gleaned from our web scraping and
from the FEC and various state and local agencies (augmented by the
Billionaires and Stealth Politics Page 19