Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (24 page)

According to most conventional wisdom, the Tea Party movement sprang to life in America spontaneously, unsullied by vested financial interests. As with most creation myths, however, the reality is quite another story.

The often-told tale was that the remarkable awakening of antigovernment rage that spread across the country in 2009 was triggered by an unplanned outburst on live television from Rick Santelli,
a former futures trader, who was a regular on-air contributor to the CNBC business news network. The date of Santelli’s tirade was notably early in Obama’s presidency, February 19, 2009, less than one month after Obama was sworn in as president. At the time, Obama enjoyed approval ratings of over 60 percent. A year later, a congressman championing Obama’s health-care proposal would be spat on, and two years later his party would lose control of the House of Representatives, effectively ending his ability to enact “change you can believe in,” as promised in his campaign. Arguably, the precipitous downhill slide began that day.

Pundits, opponents, and disillusioned supporters would blame Obama for squandering the promise of his administration. Certainly he and his administration made their share of mistakes. But it is hard to think of another president who had to face the kind of guerrilla warfare waged against him almost as soon as he took office. A small number of people with massive resources orchestrated, manipulated, and exploited the economic unrest for their own purposes. They used tax-deductible donations to fund a movement to slash taxes on the rich and cut regulations on their own businesses. While they paid focus groups and seasoned operatives to frame these self-serving policies as matters of dire public interest, they hid their roles behind laws meant to protect the anonymity of philanthropists, leaving more folksy figures like Santelli to carry the message.

What came to be known as Santelli’s “rant” started slowly and built as he held forth from the floor of the Chicago Mercantile Exchange.
The immediate provocation was the previous guest. Minutes before Santelli appeared, Wilbur Ross Jr. had denounced a proposal Obama had floated the previous day to provide emergency help in restructuring mortgages for millions of homeowners facing foreclosure.
Ross, a personal friend of David Koch’s, wasn’t a disinterested policy analyst.
His private equity company, WL Ross & Co., a so-called vulture fund, was heavily involved in servicing mortgages.

Santelli, who tended in general toward tough-guy, free-market pronouncements, excitedly agreed with Ross that the government shouldn’t help. “Mr. Ross has nailed it!” he began. He denounced Obama’s plan as Cuban-style statism. Stressed homeowners in his view were “losers” who deserved their fate. He objected to the government playing a redistributive role, casting his argument in moral terms. By helping to bail out homeowners who made bad financial bets, he argued, the government was “promoting bad behavior.”
Critics would later point out that his indignation had not been similarly stirred by the Bush administration’s bailouts of the country’s largest banks, about which he had grumblingly conceded, “I agree, something needs to be done.” Yet when Obama proposed help for the over-extended underclasses, Santelli looked into the camera and shrieked, “This is America! How many of you people want to pay your neighbor’s mortgage that has an extra bathroom, and can’t pay their bills? Raise their hand. President Obama, are you listening?”

As his fellow traders whistled and cheered, he went on to say, “We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” From the start, the analogy was inapt. As Michael Grunwald, author of
The New New Deal
, a richly reported book about Obama’s stimulus plan, observed, “
The Boston Tea Party was a protest against an unelected leader who raised taxes, while Obama was an elected leader who had just cut them.”

Nonetheless, Santelli’s spontaneous invocation of the Boston Tea Party, according to most accounts, was what launched the movement. For instance, the Kochs’ political adviser, Richard Fink, said, “
It was the guy in Chicago, yelling on the stock exchange floor,” that started it. He added, “Our programs had nothing to do with it.”

In April 2009, as the Tea Party movement was gathering force, Melissa Cohlmia, a spokesperson for Koch Industries, also denied that the Kochs had any direct links to the unrest, issuing a statement saying, “No funding has been provided by Koch companies, the Koch foundations, or Charles Koch or David Koch specifically to support the tea parties.” A year later, David Koch continued to insist in
New York
magazine, “
I’ve never been to a tea-party event. No one representing the tea party has ever even approached me.” When asked by a sympathetic interviewer for
The Daily Beast
, Elaine Lafferty, if
The New Yorker
’s report on the Kochs’ involvement was true, he responded,
“Oh,
please
.”

Such denials helped shape the early narrative of the Tea Party movement as an amateur uprising by ordinary citizens, “
a new strain of populism metastasizing before our eyes,” as Mark Lilla wrote in
The New York Review of Books
. Its members were described as nonpartisan everymen, incensed by the “Democrats and Republicans, national debt and other assorted peeves,” as National Public Radio reported.

T
hese reports of spontaneous political combustion weren’t entirely wrong. But they were far from the whole story. To begin with, the Tea Party was not “a new strain” in American politics. The scale was unusual, but history had shown that similar reactionary forces had attacked virtually every Democratic president since Franklin Roosevelt. Earlier business-funded right-wing movements, from the Liberty League to the John Birch Society to Scaife’s Arkansas Project, all had cast Democratic presidents as traitors, usurpers, and threats to the Constitution. The undeniable element of racial resentment that tinged many Tea Party rallies was also an old and disgracefully enduring story in American politics. Nor could the Tea Party accurately be described as nonpartisan. As a
New York Times
poll later showed, over three-quarters of its supporters identified as Republican. The bulk of the remainder felt the Republican Party was not Republican
enough
. Finally, although many of its supporters were likely political neophytes, from the start the ostensibly anti-elitist rebellion was funded, stirred, and organized by experienced political elites. On closer inspection, as the Harvard political scientist Theda Skocpol and the Ph.D. student Vanessa Williamson observed in their 2012 book,
The Tea Party and the Remaking of Republican Conservatism
, the Tea Party movement was a “
mass rebellion…funded by corporate billionaires, like the Koch brothers, led by over-the-hill former GOP kingpins like Dick Armey, and ceaselessly promoted by millionaire media celebrities like Glenn Beck and Sean Hannity.”

Behind the street theater were some of the country’s wealthiest businessmen who had painstakingly been trying to build up the “counter-establishment” since the 1970s and now saw the public’s unrest as an amazing opportunity to at long last mobilize popular support for their own agendas. As Bruce Bartlett, the economist, put it, “
The problem with the whole libertarian movement is that it’s been all chiefs and no Indians. There weren’t any actual people, like voters, who gave a crap about it. So the problem for the Kochs has been trying to create an actual movement.” With the emergence of the Tea Party, he said, “everyone suddenly sees that for the first time there are Indians out there—people who can provide real ideological power.” The Kochs, he said, immediately began “trying to shape and control and channel the populist uprising into their own policies.”

In fact they and a handful of other wealthy allies had made repeated efforts to foment antigovernment rebellions well before Santelli’s rant, often invoking the image of the Boston Tea Party. The history stretched back decades, to Charles Koch’s blueprint for a libertarian revolution in the late 1970s and Richard Fink’s three-part plan, “The Structure of Social Change,” in the 1980s. By the 1990s, nonprofit “grassroots” advocacy groups funded by the Kochs and a few close associates had begun explicitly pushing the antitax Tea Party theme. But the early efforts, as Bartlett suggested, got little traction.

In 1991, Citizens for a Sound Economy promoted what was advertised as a massive “re-enactment of the Boston Tea Party” in Raleigh, North Carolina, to protest tax increases. Among those present, the press corps nearly outnumbered the clutch of protesters in Revolutionary War, Uncle Sam, and Santa Claus costumes. The following year, Citizens for a Sound Economy was involved in another plan to stage a Tea Party protest. This one was secretly funded by tobacco companies to fight cigarette taxes and was canceled after its covert funding was exposed. By 2007, Citizens for a Sound Economy had split up. The Kochs’ new organization, Americans for Prosperity, tried to stage another Tea Party protest against taxes, this time in Texas. It too was a dud. Nonetheless, by the time Obama was elected and the economy was melting down, the rudiments of a political machine were in place, along with a network of paid operatives expert in creating colonially garbed “Astroturf” groups to fake the appearance of public support.

What Obama was up against was a new form of permanent campaign. It was waged not by politicians but by people whose wealth gave them the ability to fund their own private field operations with which they could undermine the outcome of the election. So-called outside money—that spent by individuals and groups outside of the campaigns themselves—exploded during the Obama years. Much attention was paid to the portion of this spending that was directed at elections. Less attention was paid to the equally unrivaled role that outside money played in influencing the way the country was governed. Most of this spending was never disclosed. But as the Kochs’ political lieutenant, Fink, boasted to
The Wichita Eagle
in 2012, “
I think that’s actually one of the things that happened at the Obama administration, is that every rock they overturned, they saw people who were against it, and it turned out to be us.”

A trial run of this non-electoral outside spending actually began in the summer of 2008. Karl Rove, the operative whom George W. Bush called “the architect” of his 2004 reelection, had long dreamed of creating a conservative political machine outside the traditional political parties’ control that could be funded by virtually unlimited private fortunes. His hope was to draft conservative donors of all stripes into creating a self-financed militia that could be called into action without the transparency, legal restrictions, or accountability that circumscribed conventional campaigns. And that summer, the Kochs had participated briefly in a version of this project, according to the
Politico
reporter Kenneth Vogel. Their representatives met clandestinely with political operatives working for other hugely wealthy donors, such as the Las Vegas casino magnate Sheldon Adelson. The ideal, one participant said, was “
a never-ending campaign.” After the disappointment of Obama’s victory, though, the group disbanded. The Kochs, among others, regrouped.

The lesson learned, as one donor, the late Texas billionaire Harold Simmons, put it, was that next time they needed to spend even more. Simmons, who made a fortune in leveraged buyouts, had put almost $3 million into a group running television ads trying to tie Obama to the 1960s radical Bill Ayers during the 2008 campaign. “
If we had run more ads, we could have killed Obama,” he lamented.

When Obama took office, the stock market was down nearly six thousand points, and unemployment was shooting up toward 7 percent. As the former senator Tom Daschle later recalled, “
There was a growing sense of calamity.” Obama expected bipartisan support at a moment that seemed like an economic version of the September 11, 2001, crisis. He had proclaimed in his 2004 keynote address to the Democratic National Convention, “There is not a liberal America and a conservative America. There is the United States of America!” Or so he thought.

Obama’s billionaire opponents wasted no time indulging him in a honeymoon. Forty-eight hours after Obama was sworn in, Americans for Prosperity started attacking his first major piece of legislation, a massive $800 billion Keynesian-inspired boost in public spending and tax cuts meant to stimulate the economy, the American Recovery and Reinvestment Act. The Kochs’ advocacy group began organizing “Porkulus” rallies around the country, deriding public spending as corrupt “pork.” The term was coined by Rush Limbaugh. It’s reasonable to assume that the Kochs were too busy to follow such minutiae, but a former member of their inner circle asserts that Americans for Prosperity did “
nothing more, and nothing less than they wanted it to do.” Poorly attended at first, the “Porkulus” rallies became dress rehearsals for the Tea Party.

Americans for Prosperity soon launched a “No Stimulus” effort that sponsored anti-Obama media events featuring the star of the Koch seminar that January, South Carolina’s senator Jim DeMint. The group also hosted a Web site, aired television advertisements, and pushed a petition that it claimed collected 500,000 signatures aimed at stopping Congress from passing Obama’s stimulus bill. “We cannot spend our way to prosperity,” it proclaimed. As the bill took shape, the group sent a sharply worded letter to Republicans in Congress, demanding that they vote no on the spending bill, regardless of any compromises or modifications that the new administration might offer.

The attacks reflected Charles Koch’s revisionist belief that government interference in the economy was what had caused the last Great Depression. “
Bankers, brokers and businessmen,” he argued, had been falsely blamed. The true culprits were Herbert Hoover and Franklin Roosevelt, both of whom he regarded as dangerous liberals. In his view, the economic policies of Warren Harding and Calvin Coolidge—the latter had famously declared, “The chief business of the American people is business”—had been unfairly maligned. Charles argued that the New Deal only “
prolonged and deepened the decline.” Shortly after Obama was elected, Charles sent out a newsletter with this “History Lesson” to his seventy thousand or so employees, essentially reprising the robber barons’ revisionism that he had been taught at the Freedom School. He also mobilized the Kochtopus, the sprawling network of some thirty-four public policy and political organizations his fortune supported by 2008. During the Bush years, it had been relatively quiescent.