Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (13 page)

That scandal paled, however, in comparison with the couple’s spectacular breakup. After hiring a private detective who trailed Scaife to a roadside motel where rooms rented by the hour, and after documenting trysts between Scaife and a tall, blond woman named Tammy Vasco who had an arrest record for prostitution, Ritchie herself was arrested for “defiant trespass” at her husband’s house, for peeping into his windows and crawling in after spying servants setting a romantic, candlelit dinner table for two. The charges were dismissed, but the scorned wife soon came to blows with Scaife’s housekeeper over custody of the couple’s yellow Labrador retriever, Beauregard. After Ritchie succeeded in absconding with the dog, Scaife posted a sign in his front yard reading, “
Wife and dog missing—reward for dog.”

These skirmishes were a minor prelude to the epic fight over their divorce settlement. Over the advice of his lawyer, Scaife had declined to insist upon a prenuptial agreement with Ritchie, a mistake he regretted bitterly in his memoir. Scaife maintained he hadn’t meant to humiliate his former wife, explaining that he just believed in having “an open marriage.” It was an issue, he joked, “that Bill Clinton and I have in common.” Tammy Vasco, meanwhile, stayed in Scaife’s life through his final days, accompanying him on trips to his houses in Nantucket and Pebble Beach, California, to the chagrin of his household staff and the disdain of Pittsburgh society. A friend of Scaife’s said that despite her arrest record for prostitution, he kept a photograph of Vasco by his bedside as he lay dying of cancer.

All of which calls into question how in 1990 the Scaife Foundation could justify pressing the Heritage Foundation, of which it was the largest funder, to focus more on conservative social and moral issues and in particular family values. Heritage’s president, Ed Feulner, quickly complied with his donor’s request, hiring William J. Bennett. Soon after, Bennett, an outspoken social conservative who had been the secretary of education under Ronald Reagan and the director of National Drug Control Policy under George H. W. Bush, was appointed Heritage’s new distinguished fellow in cultural policy studies. Lee Edwards, who wrote Heritage’s official history, confirms that the Scaife Foundation “
had particularly in mind the disintegration of the family, an issue which became a major Heritage concern.” Bennett also served as a Scaife Foundation director.

Equally hard to fathom is how Scaife rationalized his foundations’ funding of an obsessive investigation of President Clinton’s marital infidelities during the 1990s that came to be known as the Arkansas Project. Hiring private detectives to dig up dirt from anti-Clinton sources, the project funneled smutty half-truths to
The American Spectator
magazine, which was also funded by Scaife’s family foundations. Scaife’s foundations also poured money into lawsuits against Clinton, all of which helped whip up the political frenzy that led to the Clinton impeachment hearings.

Scaife, meanwhile, succumbed to a far-fetched conspiracy theory positing that the death of the Clinton White House aide Vincent Foster, which police had ruled a suicide, was actually a murder and, as he put it at one point, “the Rosetta Stone to the Clinton Administration.” Scaife even insisted in an interview that Clinton “
can order people done away with at will…God there must be 60 people [associated with Clinton] who have died mysteriously.”

Scaife’s extraordinary self-financed and largely tax-deductible vendetta against Clinton demonstrated the impact that a single wealthy extremist could have on national affairs, and served as something of a dress rehearsal for the Kochs’ later war against Obama. Presidents might surround themselves with Secret Service agents and phalanxes of lawyers and operatives, but Scaife proved how hard it was to defend against unlimited, untraceable spending by an opponent hiding behind nonprofit front groups.

Eventually, however, the Arkansas Project got so out of hand that Scaife found himself ensnared in a serious legal mess, subpoenaed to testify before a grand jury about possible charges of tampering with a federal witness. One of the two pilots he kept on his staff flew him down to Arkansas in his private DC-9 to testify. No charges were brought. Enraged, however, Scaife cut off
The American Spectator
from his foundation’s funding and turned against his longtime aide Richard Larry, who had led the anti-Clinton charge. Soon after, Larry resigned.

Then, in a stunning turnaround in 2008, Scaife met with Hillary Clinton, who had fingered him as the ringleader of what she called a “vast right-wing conspiracy” to torment the Clintons. Conservative political pundit Byron York declared, “Hell has officially frozen over.” After a pleasant editorial board chat, Scaife came out and wrote an opinion piece in his own paper declaring that his view of her as a Democratic presidential contender had changed and was now “very favorable indeed.” The rapprochement testified both to Hillary Clinton’s political skills and to Scaife’s almost childlike impressionability. Repeatedly in his memoir, he changes his political views after meeting antagonists in person, whether the liberal Kennedy family member Sargent Shriver or the Democratic congressman Jack Murtha. “Like many billionaires, he lived in a bubble,” concluded his friend Ruddy (whose relations with the Clintons also thawed). Contrary information rarely penetrated it. Instead, Scaife’s family fortune enabled him to build a political bulwark reinforcing his ideology and imposing it on the rest of the country.

I
n Wichita, meanwhile, where he was rapidly expanding his family’s company and searching for more effective means than electoral politics with which he could spread libertarianism, Charles Koch, too, was galvanized by Lewis Powell. In 1974, Charles gave a speech to a group of businessmen gathered at a hotel in Dallas, quoting Powell. “As the Powell Memorandum points out,” Koch warned the group, “business and the enterprise system are in trouble, and the hour is late.”

Koch urged his fellow business leaders to “undertake radical new efforts to overcome the prevalent anti-capitalist mentality.” He declared that “
the development of a well-financed cadre of sound proponents of the free enterprise philosophy is the most critical need facing us today.” Opponents of “socialistic” regulations, he said, should “leverage” their power by investing in “pro-capitalist research and educational programs.” That way, he argued, their efforts would have a “multiplier effect.”

Charles’s anger at the government by this point was more than merely philosophical.
Koch Industries had just become the target of federal regulators. One month earlier, the government had charged the company with violating federal oil price controls. By 1975, the government had also cited a subsidiary of Koch Industries for overcharging $10 million for propane gas. More serious government allegations against the company were to come.

Not long after echoing Powell’s call to arms, Charles too set up a think tank, transforming his private foundation into the Cato Institute. The name paid homage to the nom de plume used by the authors of a series of pro-liberty letters during the American Colonial period.
Its start-up funding, according to one account, dwarfed even Scaife’s early contributions to the Heritage Foundation, with Charles giving an estimated $10 to $20 million of tax-deductible donations to the nation’s first libertarian think tank during its first three years.

According to Ed Crane, a young, rakish California financier who shared Koch’s enthusiasm for libertarianism but lacked his checkbook, the idea for the think tank was his. After the Libertarian Party candidate was predictably crushed in his 1976 presidential quest, Crane, who had been instrumental in the campaign, was ready to go back to the private sector. Instead, Charles, whom he’d met during the campaign, took him aside and asked what it would take to keep him in the libertarian movement. “
I said my bank account is empty,” Crane later recalled. “He said, ‘How much do you need?’ ” “A libertarian think tank along the model of Brookings or AEI might be nice,” Crane answered. To which, he said, Charles instantly replied, “I’ll give it to you.”

Crane became Cato’s president, but early employees at Cato described Charles as single-handedly exerting absolute iron control. David Gordon, a libertarian activist who worked at Cato in the early days, told
Washingtonian
magazine, “
Ed Crane would always call Wichita and run everything by Charles. It was quite clear that Koch was in charge.” Another early Cato employee, Ronald Hamowy, added, “Whatever Charles said, went.” Despite Crane’s antipathy toward government, by 1977 Cato was based in Washington, D.C. It soon hired a slew of scholars whom the mainstream media respectfully quoted as nonpartisan experts.

Fundamentally, though, Cato was devoted to espousing Charles Koch’s vision: that government’s only legitimate role was to “
serve as a night watchman, to protect individuals and property from outside threat, including fraud. That is the maximum,” as he told the Wichita Rotary Club in the 1970s. The Kochs consistently depicted Cato and other ideological projects their philanthropy supported as nonpartisan and disinterested. But from the start, the Kochs’ ideology and business interests dovetailed so seamlessly it was difficult to distinguish one from the other. Lower taxes, looser regulations, and fewer government programs for the poor and the middle class all corresponded to the Kochs’ accumulation of wealth and power.

I
t’s impossible to know exactly how much money private foundations and trusts, funded by a handful of extraordinarily wealthy families, poured into the right-wing think tanks beginning in the 1970s or how effective it was. Their grants were soon mixed with those from corporate donors, who cautiously followed the families’ bold lead. Unlike other forms of paid political influence, much of this money was never revealed. Gifts to nonprofit groups could be concealed from the public. The new think tanks thus became fast-growing, sub-rosa corporate arsenals.
In fact, after Watergate the conservative think tanks pitched themselves to businesses as the safest way to influence policy without scandal. By the early 1980s, a
list of the Heritage Foundation’s sponsors found in the private papers of one of its early supporters, Clare Boothe Luce, is crammed with Fortune 500 companies. Amoco, Amway, Boeing, Chase Manhattan Bank, Chevron, Dow Chemical, Exxon, General Electric, General Motors, Mesa Petroleum, Mobil Oil, Pfizer, Philip Morris, Procter & Gamble, R. J. Reynolds, Searle, Sears, Roebuck, SmithKline Beckman, Union Carbide, and Union Pacific were all by then paying the think tank’s bills—while the think tank was promoting their agendas.

James Piereson, the scholar and key figure in conservative philanthropy, has suggested at a minimum “
that the think tanks and conservative foundations made conservative ideas respectable.” Before the surge in spending, he said, conservatives were seen as “cranks” on America’s political fringe.

One measure of the movement’s impact was that starting in 1973, and for successive decades afterward, the public’s trust in government continually sank. If there was a single unified message pushed by those financing the conservative movement, it was that government rather than business was America’s problem. By the early 1980s, the reversal in public opinion was so significant that
Americans’ distrust of government for the first time surpassed their distrust of business.

Another early sign that the investment was yielding real results on the national scale was the Republican wave that swept the 1978 midterm elections. That year, Republicans gained three Senate seats, fifteen House seats, and six governorships. In Georgia, in a development that would have unforeseen future repercussions, Newt Gingrich was elected to Congress. External events such as the energy crisis and “stagflation” of course played into the election results, too. But the new conservative think tanks and other right-wing political organizations fanned the discontent and shaped the dominant narrative.

Aiding the conservative resurgence was a newly organized and shockingly aggressive independent campaign offensive funded by donors on the right, run by the National Conservative Political Action Committee, or NCPAC, which introduced a whole new level of privately financed attack ads to American campaigns.

Growing conservative clout was apparent in Congress, too.
The labor movement, which had expected ambitious gains under Jimmy Carter’s presidency, instead soon suffered a series of devastating setbacks dealt by the ascendant business caucus backed by the expanding network of think tanks and outside lobby groups. Weyrich’s hand was key here, too. He cemented the movement’s influence in Congress by creating the Republican Study Committee, a caucus that united outside activists and conservative elected officials. For years, Heritage Foundation personnel were the only outsiders allowed to regularly caucus with Republican members of Congress because of this hybrid organization.
“We are basically a conduit to and from the Heritage Foundation to and from conservative members of the House,” its director, Don Eberly, said in 1983.

Weyrich, with Scaife’s financial backing, launched several other ingenious political organizations during this period. One was the American Legislative Exchange Council (ALEC), a group aimed at waging conservative fights in every state legislature in the country. From 1973 until 1983, the Scaife and Mellon family trusts donated half a million dollars to ALEC, constituting most of its budget. “
ALEC is well on its way to fulfilling the dream of those who started the organization,” a Weyrich aide wrote to Scaife’s top adviser in 1976, “thanks wholly to your confidence and the tremendous generosity of the Scaife Family Charitable Trusts.” When one ALEC administrator complained that Scaife’s foundation had too much influence over the organization’s agenda, a Scaife employee retorted that they operated on “
the Golden Rule—whoever has the gold rules.”

Weyrich, meanwhile, dramatically enlarged the conservative groundswell by co-founding with Jerry Falwell the Moral Majority, which brought social and religious conservatives into the pro-corporate fold.
Weyrich was particularly adept at capitalizing on white anger over desegregation.