Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (28 page)

The message was made by Larry McCarthy, a veteran Washington media consultant best known for creating the racially charged Willie Horton ad, which featured the crimes of a convicted African-American murderer on a weekend furlough from prison in Massachusetts. It helped sink the presidential campaign of Michael Dukakis in 1988 by making him look soft on crime. McCarthy was infamous for using manipulative emotional messages, especially fear. As Peter Hart, the Democratic pollster, said of McCarthy, whom he had worked against, and occasionally with, over the years, “
If you want an assassination, you hire one of the best marksmen in history.” That spring, flush with cash, Noble signed McCarthy up.

The Center to Protect Patient Rights wasn’t flying blind. At Noble’s instigation, that spring the organization had also quietly paid Frank Luntz, the Republican pollster and pitchman, to conduct market testing on the best ways to attack Obama’s health-care proposal. Luntz’s political science professor at Penn had been James Piereson, who later ran the Olin Foundation. Luntz had studied the building of the conservative movement and become something like a translator, interpreting elite opinion for the masses. “
The think tanks became the creators of the ideas, and I became the explainer of the thoughts,” he said. “Mostly what I do is listen and I process.” He admitted that as communicators “these guys were impossible.”
In playing this role, Luntz was one of a long succession of “policy entrepreneurs” who served to popularize the agenda of wealthy backers by “framing” their issues in more broadly appealing language.

Luntz used polls, focus groups, and “instant response dial sessions” to perfect the language of health-care attacks and then tested the lines on average Americans in St. Louis, Missouri. Out of these sessions, Luntz compiled a seminal twenty-eight-page confidential memo in April warning that there was no groundswell of public opposition to Obama’s health-care plan at that point; in fact, there was a groundswell of public support. By far the most effective approach to turning the public against the program, Luntz advised, was to label it a “government takeover.” He wrote, “Takeovers are like coups. They both lead to dictators and a loss of freedom.”

“I did create the phrase ‘government takeover’ of health care. And I believe it,” Luntz maintained, noting too that “it gave the Republicans the weapon they needed to defeat Obama in 2010.” But most experts found the pitch patently misleading because the Obama administration was proposing that Americans buy private health insurance from for-profit companies, not the government. In fact, progressives were incensed that rather than backing a “public option” for those who preferred a government insurance program, the Obama plan included a government mandate that individuals purchase health-care coverage,
a conservative idea hatched by the Heritage Foundation to stave off nationalized health care. Luntz’s phrase was so false that it was chosen as “the Lie of the Year” by the nonpartisan fact-checking group PolitiFact. Yet while a rear guard of administration officials tried lamely to correct the record, Luntz’s deceptive message stuck, agitating increasingly fearful and angry voters, many of whom flocked to Tea Party protests.

Noble’s strategy was carefully targeted. He aimed the attack ads especially at the states of members of the Senate Finance Committee, which was writing the health-care bill and whose support would be needed to vote it out of the committee. The Obama White House had delegated a tremendous amount of authority to the committee’s chairman, the Montana Democrat Max Baucus, whom it was entrusting to win bipartisan support. Baucus, in turn, was trying fitfully to win the support of the committee’s leading Republican, the Iowa senator Chuck Grassley. Noble studied the committee and singled out members who might be especially susceptible to pressure, along with a few other key swing votes, narrowing his list down to those from Louisiana, Nebraska, Maine, Iowa, and Montana. With enough pressure, he believed he could even unnerve both Grassley and Baucus.

At the time, few thought that Obama’s health-care plan could be derailed. Conservative opposition was focused more on other issues. Noble needed to generate “grassroots” pressure on the potentially persuadable senators, but constituents weren’t yet engaged. The stakes grew as the Senate approached its summer recess. “
We knew we had to make that summer absolute hell,” he told
National Review
. For help, he turned to an old friend in Arizona, Doug Goodyear, whose controversial public relations firm, DCI Group, had truly professionalized the modern use of phony “Astroturf” campaigns on behalf of big-money interests, starting with the industry that really set the standard for deceptive advertising, tobacco.

Goodyear, the firm’s managing partner and chief executive, had founded DCI Group in 1996 with two Republican campaign operatives while he was handling outside public relations for the huge tobacco company R. J. Reynolds. The work had shown the trio that ordinary campaign tools could succeed at marketing even the most toxic products. The key, according to an internal 1990 memo the tobacco industry was forced to disclose in a later legal settlement, was to disguise the company’s financial interest as a matter of great principle. Instead of pitching cigarette sales, it would create fake “smokers’ rights” groups who would agitate against smoking restrictions as a fundamental matter of liberty. Or, as the memo written by Tim Hyde—one of the three founding partners of DCI Group and at the time R. J. Reynolds’s director of national field operations—put it, the company needed to “
create a movement” that would “build broad coalitions around the issue-cluster of freedom, choice, and privacy.” The company, Hyde wrote, “should proceed along two tracks.” One was the “intellectual track within the DC–New York corridor,” which could influence elite opinion with op-ed pieces, lawsuits, and expert think tank studies. The other was “a grassroots organizational and largely local track,” which would use front groups to simulate the appearance of popular political support.

Noble knew that by 2009 DCI Group was unsurpassed at these dark arts. The firm had deep ties to the Republican Party and had worked for powerful interests ranging from ExxonMobil and the Teamsters to the military junta in Myanmar. Goodyear was especially versed in corporate lobbying disguised as hidden-hand “Astroturf” campaigns. But the firm had numerous other talents. While working for ExxonMobil,
it had mocked Al Gore’s environmental jeremiad,
An Inconvenient Truth
, by secretly launching a cartoon spoof that went viral called “Al Gore’s Penguin Army.” Only later were DCI’s fingerprints discovered on the fake indie film. Unlike lobbying firms, which have to disclose some information, public relations firms exerting political pressure can hide the money trail.

Soon Noble’s Center to Protect Patient Rights was dispersing millions of dollars to other nonprofit groups, some of which appeared to be shell organizations fronting for DCI Group. In June, the Center to Protect Patient Rights sent $1.8 million to a confusingly similar-sounding organization called the Coalition to Protect Patient Rights, which was set up that month in Virginia by an accountant who worked for DCI Group. The Virginia organization soon passed most of the funds on to DCI Group.
Pretty soon, a former head of the American Medical Association named Donald Palmisano appeared on the national media circuit to take swipes at Obama’s health-care proposal on behalf of the newly created coalition. He admitted that donors, whom he declined to name and who were not in the medical field, had recruited him to speak for the group, which called itself a “doctor-led coalition.”

The same DCI Group accountant’s name appeared on paperwork filed by another Washington-area nonprofit, a tiny organization calling itself the Institute for Liberty. It soon received a $1.5 million grant from Noble’s Center to Protect Patient Rights. Four hundred thousand dollars of these funds were channeled back to DCI Group for “consulting.” The previous year, the Institute for Liberty’s entire budget had been $52,000. Suddenly it was so awash in cash that the group’s president, Andrew Langer, told
The Washington Post
, “
This year has been really serendipitous for us.” He said a donor, whom he declined to name, had earmarked the funds for a five-state advertising blitz targeting Obama’s health-care plan. Although
The Washington Post
wrote about the surprisingly large ad campaign, it failed to trace the money back to its true source. On air, the ads’ only sponsorship information was completely misleading. There was a line that said, “Paid for by Keeping Small Business Healthy.”

Americans for Prosperity, meanwhile, threw itself headlong into the fight, spinning off a group called Patients United Now, which, according to Tim Phillips, organized more than three hundred rallies against the health-care legislation. At one rally, an effigy of a Democratic congressman was hanged; at another, protesters unfurled a banner depicting corpses from Dachau, implying that Obama’s health-care plan was akin to the Nazis’ state-ordered murders.

The Bradley Foundation also pitched in. While the tax-exempt foundation did not directly support Tea Party groups, its president, Michael Grebe, said the foundation supported “
public education programs run by Americans for Prosperity and FreedomWorks, both of which are very active in the Tea Party.”

Although Grebe openly described the Kochs’ group, Americans for Prosperity, as “very active” in the Tea Party, Fink was still claiming otherwise. “We never funded the tea party,” he still maintained. “
We met for 20 or 30 years advancing free-market ideas in universities, think tanks and citizen groups. I am hopeful those ideas filtered down and were a part of the cause of the Tea Party taking off.”

By the time of the Kochs’ second donor summit of 2009, titled “Understanding and Addressing Threats to American Free Enterprise and Prosperity,” which took place in Aspen, Colorado, at the end of June, Noble had earned his place as an insider.
Not only had he been invited; he had been officially put on contract as a Koch political consultant. The Kochs felt they needed extra help, a former insider said, because Obama’s election had sparked such vitriol on the right that they were almost overwhelmed by the number of wealthy donors eager to join them. “Suddenly they were raising big money! They were in a hot spot. They were almost hyperventilating,” he said.

This time, instead of having to interrupt the proceedings, Randy Kendrick was a scheduled speaker on a health-care panel. And this time, the pitch she made to the others, according to one eyewitness, “set the place on fire.” Before the donors dispersed, many more millions were pledged to stop Obama’s top legislative priority.

That summer, traditional town hall meetings held by Democratic congressmen and senators returning to their districts and states exploded in acrimony. The anger appeared entirely spontaneous. But the investigative reporter Lee Fang discovered that a volunteer with FreedomWorks was circulating a memo instructing Tea Partiers on how to disrupt the meetings. Bob MacGuffie, who ran a Web site called RightPrinciples.com, advised opponents of Obama’s policies to “
pack the hall…spread out” to make their numbers seem more significant, and to “rock-the-boat early in the Rep’s presentation…to yell out and challenge the Rep’s statements early…to rattle him, get him off his prepared script and agenda…stand up and shout and sit right back down.” While MacGuffie was quickly dismissed as a lone amateur, some of the outside agitation was professional, paid for by the Koch network. Noble later admitted, “
We packed these town halls with people who were just screaming about this thing.”

After a military veteran assailed the Washington Democratic congressman Brian Baird for ostensibly defiling the Constitution by supporting Obama’s universal health-care plan, Baird decided to retire from politics, citing the intolerably toxic atmosphere. In Philadelphia, Senator Arlen Specter, a moderate Republican, and the secretary of health and human services, Kathleen Sebelius, were drowned out by hundreds of booing detractors at an event as they tried to explain the health-care legislation. Members of Congress all over the country, in districts as far apart as Tampa, Florida, and Long Island, New York, found themselves ambushed by screaming citizens, some mistakenly believing specious rumors about Obama’s plans to create government “death panels” to euthanize senior citizens.

The raucous rallies proved pivotal in eroding Obama’s agenda. Grover Norquist, the antitax activist who held a weekly meeting for conservative leaders in Washington, including representatives from Americans for Prosperity, described the summer’s pandemonium as a turning point. The Republican leadership in Congress, he said, “
couldn’t have done it without August, when people went out on the streets. It discouraged deal makers, like Grassley”—Republicans who might otherwise have worked constructively with Obama. Moreover, the appearance of growing public opposition to Obama affected corporate donors on K Street, the center of Washington’s lobbying industry. “K Street is a $3 billion weather vane,” Norquist said. “When Obama was strong, the Chamber of Commerce said, ‘We can work with the Obama administration.’ But that changed when thousands of people went into the street and ‘terrorized’ congressmen. August is what changed it.”

As Obama and his family vacationed in Martha’s Vineyard during the congressional recess that month, Grassley, who was under bombardment from anti-health-care ads paid for by the Koch network, made clear he would not provide bipartisan support. Baucus, whose state Noble’s campaign was also heavily targeting, dithered and delayed. The death of Senator Edward Kennedy, the liberal Democratic senator who had been the greatest champion of universal health care, cast health-care reform under a further cloud. A special election was set for January to fill what was assumed to be his reliably Democratic Senate seat.

Jim Margolis, the Democratic political consultant and advertising expert who had created many of Obama’s 2008 campaign spots, watched with growing dismay. He had been advising both the White House and Democrats in Congress on the health-care issue and had begun with high hopes. “
I thought on health care you’d get a modest amount of support from thoughtful Republicans,” he said. “In March and April, Max Baucus was reaching out to Olympia Snowe and Chuck Grassley. The moderate Republicans were making some of the right sounds. But the progress was slow. Then, over the August recess, it really explodes. It would be interesting to know what the funding streams were like,” he mused. “My suspicion is that the outside forces were kicking into high gear as we moved into the summer.” Axelrod later acknowledged that he “
wasn’t really tracking” the right-wing money during this period and only belatedly came to realize that there was a set of “right-wing oligarchs” that “found Obama threatening,” because he “believes in using government to solve problems. It was the Gilded Age all over again.”