Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (29 page)

The press, ever alert to a colorful political drama, exaggerated the size of the grassroots groundswell.
When fewer than sixty-five thousand Tea Party supporters flocked to the National Mall in Washington on September 12 for Glenn Beck and FreedomWorks’ “9/12” rally, carrying signs like one reading, “Bury Obamacare with Kennedy,” it was treated as if the entire center of gravity in American politics had shifted.

To be sure, the numbers on the far right had grown.
Membership in the Liberty League, the anti–New Deal corollary to the Tea Party during the 1930s, has been estimated at 75,000, while membership in the John Birch Society in the 1960s has been estimated at 100,000 core members. Overall, at its height, 5 percent of Americans approved of the John Birch Society. The Tea Party movement, in contrast, was estimated by
The New York Times
to have won the support of 18 percent of the population at its zenith, but at its core, according to the researcher Devin Burghart, were some
330,000 activists who had signed up with six national organizational networks. If the estimates were correct, the actual number of hard-core Tea Party activists was not, by historical standards, all that large. But the professionalization of the underground infrastructure, the growth of sympathetic and in some cases subsidized media outlets, and the concentrated money pushing the message from the fringe to center stage were truly consequential.

On October 3, as the first anniversary of Obama’s election approached, David Koch came to the Washington area to attend a triumphant Defending the American Dream Summit, sponsored by Americans for Prosperity. Obama’s poll numbers were falling fast. Only one Republican senator, Olympia Snowe of Maine, was working with the administration on health care, and she would eventually peel off. Aides said Obama was deeply disappointed. By obstructing every initiative, including his most ambitious domestic program, the Republicans had undermined his greatest appeal, his promise to be a bridge builder beyond old partisan divisions.

Mitch McConnell, the Republican minority leader in the Senate, held the Republican caucus in line partly by noting that Tea Party forces were ready and waiting to launch primary challenges against any who strayed. The outside groups funded by outside money thus provided crucial leverage. The plan worked so well that by the fall pundits who had fallen over themselves to praise Obama a year before were writing about his political ineptitude.

In a speech to a filled ballroom at the Crystal Gateway Marriott in Arlington, Virginia, on that October day, Koch said, “Five years ago, my brother Charles and I provided the funds to start the Americans for Prosperity, and it’s beyond my wildest dreams how AFP has grown into this enormous organization.” He went on, “Days like today bring to reality the vision of our board of directors when we founded this organization, five years ago.” Rubbing his hands together somewhat awkwardly, he added, “We envisioned a mass movement, a state-based one, but national in scope, of hundreds of thousands of American citizens from all walks of life standing up and fighting for the economic freedoms that made our nation the most prosperous society in history…Thankfully, the stirrings from California to Virginia, and from Texas to Michigan, show that more and more of our fellow-citizens are beginning to see the same truths as we do.”

As he stood at the lectern beaming, delegates from the various chapters of Americans for Prosperity reported in, one by one, describing how they had organized “dozens of tea parties” in their regions as they stood beside oversized vertical signs marking their states. Strobe lights crisscrossed the auditorium as excitement surged.
It was hard not to notice that twenty-nine years after David Koch left the national political stage in utter defeat, he had succeeded in financing something that looked a lot like a presidential nominating convention, with himself as the winner.

In the final months before the 2008 presidential election, Michael Mann, a tenured meteorology and geosciences professor at Penn State University who had become a leading figure in climate change research, told his wife that he would be happy whichever candidate won. Both the Republican and the Democratic presidential nominees had spoken about the importance of addressing global warming, which Mann regarded as the paramount issue of the day. But what he didn’t fully foresee was that the same forces stirring the Tea Party would expertly channel the public outrage at government against scientific experts like himself.

Mann had started out unconvinced by the science of climate change, but in 1999 he and two co-authors had published a study tracking the previous thousand years of temperatures in the Northern Hemisphere. It included a simple, easy-to-grasp graph showing that the earth’s temperature had hovered in a more or less straight line for nine hundred years but then shot sharply upward, like the blade of a hockey stick, in the twentieth century. What came to be known as the hockey stick graph was so powerfully persuasive it gained iconic status within the climate debate. By 2008, Mann, like most experts, had long since concluded that the scientific evidence was overwhelming that human beings were endangering the earth’s climate by burning too much oil, gas, and coal. The carbon dioxide and other gases these fuels released were trapping the earth’s heat, with devastating effects.

As even the Pentagon, a cautious bastion of technological nonpartisanship, concluded, “the danger from climate change is real, urgent, and severe.” An official U.S. National Security Strategy report declared the situation a growing national security threat, arguing, “
The change wrought by a warming planet will lead to new conflicts over refugees and resources; new suffering from drought and famine; catastrophic natural disasters; and the degradation of land across the globe.” The report unambiguously predicted that if nothing were done, “climate change and pandemic disease” would directly threaten “the health and safety of the American people.”

The American Association for the Advancement of Science, the world’s largest and most prestigious scientific society, was equally if not more adamant. It warned that “
we face risks of abrupt, unpredictable and potentially irreversible changes” with potentially “massively disruptive consequences.”

Mann wasn’t particularly political. Middle-aged, friendly, and balding, with a dark goatee shadowing his round face, he was a quintessential science nerd who had majored in applied math and physics at the University of California, Berkeley, got advanced degrees in geology and geophysics at Yale, and for many years didn’t think scientists had much of a role to play in public policy. When Obama won, he recalls, “I shared the widespread view that we would see some action on the climate front.”

Certainly this assumption seemed reasonable. On the night that Obama clinched the Democratic nomination, he spoke passionately about climate change, vowing that Americans would look back knowing that “this was the moment when the rise of the oceans began to slow and our planet began to heal.” Once in office, he pledged to pass a “cap and trade” bill forcing the fossil fuel industry to pay for its pollution, as other industries did, rather than treating it as someone else’s problem. Cap and trade was a market-based solution, originally backed by Republicans, requiring permits for carbon emissions. The theory was that it would give the industry a financial incentive to stop polluting. It had worked surprisingly well in previous years to reduce industrial emissions that caused acid rain. By choosing a tested, moderate, bipartisan approach, the Obama administration and many environmentalists assumed a deal would be winnable.

“
What we didn’t take into account,” Mann later noted, “was the ferociousness of the moneyed interests and the politicians doing their bidding. We are talking about a direct challenge to the most powerful industry that has ever existed on the face of the earth. There’s no depth to which they’re unwilling to sink to challenge anything threatening their interests even if it’s science and the scientists involved in it.”

Mann contended that “the fossil fuel industry is an oligarchy.” Some might dispute that American oil, gas, and coal magnates met the dictionary definition of a small, privileged group that effectively rules over the majority. But it was indisputable that they funded and helped orchestrate a series of vitriolic personal attacks that would threaten Mann’s livelihood, derail climate legislation, and alter the course of the Obama presidency.

If there was a single ultra-wealthy interest group that hoped to see Obama fail as he took office, it was the fossil fuel industry. And if there was one test of its members’ concentrated financial power over the machinery of American democracy, it was this minority’s ability to stave off government action on climate change as science and the rest of the world were moving in the opposite direction. While Obama’s health-care bill was useful in riling up Tea Party protesters, his environmental and energy policies were the real target of many of the multimillionaires and billionaires in the Koch circle. For most of the world’s population the costs of inaction on climate change were far greater than those of action. But for the fossil fuel industry, as Mann put it, “
it’s like the switch from whale oil in the nineteenth century. They’re fighting to maintain the status quo, no matter how dumb.”

C
oal, oil, and gas magnates formed the nucleus of the Koch donor network. Guest lists for the summits read like a Who’s Who of America’s most successful and most conservative fossil fuel barons, the majority of whom were private, independent operators of privately owned companies. They were men who had either made or inherited enormous fortunes in “extractive” energy without having to answer to public shareholders or much of anyone else. Among the group, for instance, was Corbin “Corby” Robertson Jr., the grandson of one of Texas’s most legendary oil barons, Hugh Roy Cullen. Robertson, a former captain of the football team at the University of Texas, from which he graduated in 1969, had taken a bold, unorthodox risk with his inherited oil fortune. He had bet almost all of it on coal, reportedly accumulating by 2003 the single largest private cache of coal reserves in America.
He owned, by one count, twenty-one billion tons of coal reserves—enough to fuel the entire country for twenty years.
Only the U.S. government reportedly owned more coal than his private, Houston-based company, Quintana Resources Capital.

Other donors in the network included Harold Hamm and Larry Nichols, two of the most successful pioneers in “fracking,” the environmentally controversial process by which water and chemicals are injected underground into rock formations to extract oil and natural gas. Hamm, the founder of Continental Resources, was a self-made billionaire wildcatter whom the
National Journal
likened to John D. Rockefeller. While his nearly billion-dollar divorce settlement and amazing rise from being born the youngest of thirteen children in a family of sharecroppers made tabloid history, business journals were more focused on his company, which almost overnight had become the face of fracking in North Dakota’s Bakken Shale.

Joining him in the network, on the opposite end of the social scale, was Larry Nichols, head of Devon Energy and later chairman of the American Petroleum Institute, the foremost trade association for the oil industry. A graduate of Princeton and a former Supreme Court clerk, Nichols had urged his family’s Oklahoma energy company to buy Mitchell Energy after he noticed that its natural gas output was climbing because of fracking. Nichols combined the process with his own company’s expertise in horizontal drilling to “
unleash what became known as the unconventional gas revolution,” as the energy industry historian Daniel Yergin wrote in
The Quest
.
The Kochs, too, had investments in the chemicals, pipelines, and other aspects of fracking.

The donor network also boasted spectacularly successful oilmen like Philip Anschutz, heir to a western oil-drilling fortune, who himself discovered a fabled oil field on the Wyoming-Utah border in the 1980s, after which he diversified into ranches, railroads, and communications. The network included many smaller operators too. There were oilmen from Wyoming, Oklahoma, Texas, and Colorado and coal magnates from Virginia, West Virginia, Kentucky, and Ohio. The largest distributor of propane canisters in the country was also involved. Participating, too, were many of those whose businesses provided ancillary support to America’s energy sector. In addition to the Kochs there were numerous other owners of pipelines, drilling equipment, and oil service companies, including the legendary Bechtel family, which made billions building refineries and pipelines in Saudi Arabia, Venezuela, and elsewhere.

Most of the actual donors in this group preferred to keep low profiles, letting the politicians speak for them. They were expert in casting the group’s reservations about government regulation in lofty philosophical terms. The politicians called them “job creators” and patriots, responsible for American energy independence. Clearly, though, there were few Americans for whom government caps on carbon posed a more direct financial threat.

The problem for this group was that by 2008 the arithmetic of climate change presented an almost unimaginable challenge.
If the world were to stay within the range of carbon emissions that scientists deemed reasonable in order for atmospheric temperatures to remain tolerable through the mid-century, 80 percent of the fossil fuel industry’s reserves would have to stay unused in the ground. In other words, scientists estimated that the fossil fuel industry owned roughly five times more oil, gas, and coal than the planet could safely burn. If the government interfered with the “free market” in order to protect the planet, the potential losses for these companies were catastrophic. If, however, the carbon from these reserves were burned wantonly without the government applying any brakes, scientists predicted an intolerable rise in atmospheric temperatures, triggering potentially irreversible global damage to life on earth.

As early as 1997, one member of the Koch group sounded the alarm about the coming regulatory threat. That year Lew Ward, the retiring chairman of the Independent Petroleum Association of America, the trade group of independent oil and gas producers, delivered a jeremiad as his swan song. Ward, who was himself an Oklahoma oilman, began by proudly ticking off the various tax loopholes he helped pass during his tenure. “We’ve been fortunate the past couple of years to have a Republican Congress,” he noted. But he warned that the various policy “skirmishes” the industry had survived recently were nothing but “a dress rehearsal for the real show…the possible ‘Carbon Tax’ that could help pay the costs of reducing greenhouse gas emissions.” Ward perceived accurately that the climate change issue was coming and argued that if the “radical environmentalist ‘off-oil’ agenda” succeeded, “we can look down the road a little way and see an industry under siege.” He vowed, “We are not going to let that happen. You can take that to the bank!”

Ward’s swagger was well-grounded. The oil industry had held parochial but powerful sway over American politics for years.
As early as 1913, the oil industry used its clout to win a special tax loophole, the “oil depletion allowance.” On the theory that oil exploration was risky and costly, it enabled the industry to deduct so much income when it hit gushers that many oil companies evaded income taxes altogether. After the loophole was scandalously enlarged in 1926, liberals, stymied by the oil patch’s defenders in Congress, tried unsuccessfully for five decades before they were finally able to close it.

No American politician’s rise to power in the last century was more fueled by oil than that of Lyndon Johnson.
As Robert Caro recounts in
The Path to Power
, starting in 1940 Johnson rose from a neophyte congressman to the Democratic Party’s consummate power broker by handing out campaign contributions from his enormously wealthy backers in the Texas oil fields and defending their interests.

Although the oil industry benefited enormously from the federal government in the form of favorable tax treatment, huge government contracts, and aid in building pipelines, as well as other handouts, it became a bastion of antigovernment conservatism. In fact, as its wealth grew, the Texas oil patch was the source not only of an astounding amount of campaign lucre but also of a particularly extreme strain of right-wing politics. In his book about the state’s oil fortunes,
The Big Rich
, Bryan Burrough speculates that what animated many of the magnates was “
the deep-tissue insecurity of the nouveau riche” who were hell-bent on keeping all they had just gained.

If there was a progenitor of Texas’s modern-day ultraconservative oil faction, it was Corby Robertson’s grandfather Hugh Roy Cullen, who helped make Quintana a billion-dollar enterprise. With roots in the fallen gentry of the Confederacy, he belonged to a band of oilmen that loathed northern liberals, denigrated FDR’s administration as the “Jew Deal,” and formed a third party whose plank called for “
the restoration of the supremacy of the white race.”
Cullen’s political ambitions expanded with his fortune, and in 1952—half a century before the Kochs became giant political spenders—he was the single biggest donor in American politics and a key supporter of Senator Joseph McCarthy’s anti-Communist crusade. But at the time, his brand of radically right-wing, oil-fueled politics was doomed to be marginalized. Burrough explains that “
to succeed in politics Cullen needed a support organization of some kind, but building one was something he was unwilling or incapable of doing.” Half a century later, however, with the “Kochtopus” in place, Cullen’s grandson and fellow oilmen would fare far better.

Opposition to curbs on carbon had long been building in the industry. The concept that the earth was warming, and mankind was causing it, first broke into the mainstream media in 1988 when the climate modeler James Hansen, director of NASA’s Goddard Institute for Space Studies, testified before a Senate committee about it, amid a nationwide heat wave.
The New York Times
played his dramatic findings on its front page. During his presidency, George H. W. Bush, like most political leaders of both parties at the time, accepted the science without dispute. He vowed to protect the environment, promising to fight “the Greenhouse Effect with the White House Effect” and sending his secretary of state, James Baker, to the first international summit of climate scientists, the Intergovernmental Panel on Climate Change. Although Bush was a Republican, he was not an outlier in his party. For decades, the environmental movement had enjoyed bipartisan support.