Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (62 page)

“I’m an incumbent president”
: Vogel,
Big Money
, viii.

The same pattern was repeated
: This mathematically odd outcome had only occurred twice before in the past century.

“A few years ago”
: Tarini Parti, “GOP, Koch Brothers Find There’s Nothing Finer Than Carolina,”
Politico
, May 11, 2013.

Phillips declined to say
: Nationally, the Koch network’s main bank, Freedom Partners, poured $32.3 million into Americans for Prosperity in 2012. But how much of this went into North Carolina remained undisclosed.

For his services
: The State of North Carolina paid Hofeller an additional $77,000 as well.

“We worked together”
: Raupe is quoted in an excellent ProPublica investigative piece by Pierce, Elliott, and Meyer, “How Dark Money Helped Republicans Hold the House and Hurt Voters.”

“The Kochs were instrumental”
: David Axelrod, interview with author.

According to a report
: Pierce, Elliott, and Meyer, “How Dark Money Helped Republicans Hold the House and Hurt Voters.”

“Make sure your security”
: See Robert Draper, “The League of Dangerous Mapmakers,”
Atlantic
, Oct. 2012.

In reality, however
: Hofeller’s failure to read the public hearing transcripts was attributed by ProPublica to court documents, and ProPublica noted that Hofeller declined to comment further.

But before that could happen
: The Democratic challenger was Sam Ervin IV, a rising star who shared the name of his famous grandfather, a former North Carolina senator who won national acclaim during the Watergate hearings.

The money trail
: ProPublica traced over $1 million back to Gillespie’s Republican State Leadership Committee. Pope’s company, Variety Wholesalers, contributed some of this cash. The RSLC’s role was hidden behind a new group that sprang up, calling itself Justice for All NC. This group in turn donated $1.5 million to a super PAC called the North Carolina Judicial Coalition.

Successive midterm losses
: Nicholas Confessore, Jonathan Martin, and Maggie Haberman, “Democrats See No Choice but Hillary Clinton in 2016,”
New York Times
, March 11, 2015.

Almost as soon
: Pat McCrory attended events for Americans for Prosperity before declaring his candidacy for governor in 2012, and once he did declare, AFP spent $130,000 in mailers benefiting his campaign.

“my way, or everyone else”
: Richard Morgan, interview with author, which first appeared in Mayer, “State for Sale.”

“When he was done”
: Ibid.

It is unusual
: Winters,
Oligarchy
, xi.

“conservative government in exile”
: Matea Gold, “In NC Conservative Donor Sits at the Heart of the Government He Helped Transform,”
Washington Post
, July 19, 2014.

Yet the lines
: Jack Hawke, a Republican political operative, for instance, moved back and forth between the presidency of the Civitas Institute and the campaigns of the Republican governor Pat McCrory.

“the Koch brothers lite”
: Scott Place, interview with author.

“I’ve never seen”
: Lynn Bonner, David Perlmutt, and Anne Blythe, “Elections Bill Headed to McCrory,”
Charlotte Observer
, July 27, 2013.

“No, it’s worse”
: Dan T. Carter, “State of Shock,”
Southern Spaces
, Sept. 24, 2013.

So for savings
: See ibid.

The assault was systematic
: Spending on public schools in North Carolina was reduced to $7.5 billion in 2012–2013 from $7.9 billion in 2007–2008, despite the state’s rapidly growing population, according to Rob Christiansen, “NC GOP Rolls Back Era of Democratic Laws,”
News Observer
, June 16, 2013.

“What are you doing”
: Bill Friday, interview with author, which first appeared in Mayer, “State for Sale.”

“I’m pretty sure”
: Stephen Margolis (the former chair of NC State’s economics department), interview with author. See ibid.

“It’s sad and blatant”
: Mayer, “State for Sale.”

“constitutional limitations”
: David Edwards, “NC GOP Bills Would Require Teaching Koch Principles While Banning Teachers’ Political Views in Class,”
Raw Story
, April 29, 2011.

“I was a Republican”
: Jim Goodmon, interview with author, which first appeared in Mayer, “State for Sale.”

opposition to minimum wage laws
: In an interview with the author, Roy Cordato, a vice president at the John Locke Foundation, argued that “the minimum wage hurts low-skilled workers, by pricing them out of the market,” and that concern about worker exploitation was “the kind of thinking that comes from Karl Marx.” In Cordato’s view, “any freely made contracts among consenting adults should be legal,” including those involving prostitution and the sale of dangerous drugs. He said he supported child-labor laws but opposed what he called “compulsory education” for minors.

“a plantation mentality”
: Dean Debnam, interview with author, which first appeared in Mayer, “State for Sale.”

“wealth creation and wealth destruction”
: Ibid.

“He had his checkbook”
: Scott Place, interview with author.

David Parker
: interview with author, which first appeared in Mayer, “State for Sale.”

“You capture the Soviet Union”
: Ed Pilkington and Suzanne Goldenberg, “State Conservative Groups Plan US-Wide Assault on Education, Health, and Tax,”
Guardian
, Dec. 5, 2013.

“Pick what you need”
: See Jane Mayer, “Is Ikea the New Model for the Conservative Movement?,”
New Yorker
, Nov. 15, 2013.

In 2011, the State Policy Network’s budget
: See “Exposed: The State Policy Network,” Center for Media and Democracy, Nov. 2013. The report is thorough and well documented and makes the point on page 3 that the organization helped to spread the Kochtopus’s “financial tentacles across the states.”

On average, ALEC produced
: For ALEC’s track record on introducing bills, see Cray and Montague, “Kingpins of Carbon and Their War on Democracy,” 37.

“Nowhere else can you get”
: The quotations from the ALEC members’ newsletter and from Thompson appear in Alexander Hertel-Fernandez, “Who Passes Businesses’ ‘Model Bills’? Policy Capacity and Corporate Influence in U.S. State Politics,”
Perspectives in Politics
12, no. 3 (Sept. 2014).

Two years later
: For more on ALEC, see
ALECExposed.org
, produced by the Center for Media and Democracy.

“a wolf in disguise”
: Dave Zweifel, “Plain Talk: ‘News Service’ Just a Wolf in Disguise,”
Madison.com
.

“legacy media”
: Jason Stverak spoke about the “vacuum” at a Heritage Foundation conference, “From Tea Parties to Taking Charge,” April 22–23, 2010.

Much of the money went through
: For one of the best analyses of the finances of DonorsTrust, see Abowd, “Donors Use Charity to Push Free-Market Policies in States.”

The big backers
: See “Exposed: The State Policy Network,” 18.

“a better opportunity”
: Abowd, “Donors Use Charity to Push Free-Market Policies in States.” According to “Exposed: The State Policy Network,” 19–20, inadvertent disclosures by just two State Policy Network think tanks, in Massachusetts and Texas, revealed major deposits from Koch Industries and the Koch family foundations. David Koch’s personal contribution of $125,000 in 2007 to the Massachusetts-based member of the State Policy Network, the Pioneer Institute, showed that he was the single largest donor to the group that year. A similar mistaken disclosure by the Texas Public Policy Foundation revealed that Koch Industries contributed over $159,000 to the think tank in 2010, while one of the Koch family foundations contributed over $69,000.

“historical oddity”
: See Ryan Lizza, “Where the G.O.P.’s Suicide Caucus Lives,”
New Yorker
, Sept. 26, 2013.

Big outside money
: Kenneth Vogel, in
Big Money
, 211, makes much the same point, writing, “Nearly eleven months after the biggest of the big-money mostly failed to get its way at the ballot box, the shutdown battle was proof that the 2010 and 2012 spending sprees were having more impact than ever on the way American government functioned.”

A galaxy of conservative
: Todd Purdum, “The Obamacare Sabotage Campaign,”
Politico
, Nov. 1, 2013.

“This bastard has to be killed”
: Linda Greenhouse, “By Any Means Necessary,”
New York Times
, Aug. 20, 2014.

“loose-knit coalition”
: Sheryl Gay Stolberg and Mike McIntire, “A Federal Budget Crisis Months in the Planning,”
New York Times
, Oct. 5, 2013.

The meetings produced
: In his article “Meet the Evangelical Cabal Orchestrating the Shutdown,”
Nation
, Oct. 8, 2013, Lee Fang notes that the Conservative Action Project was closely affiliated with the secretive Council on National Policy and had been meeting in Washington since at least 2009.

Freedom Partners
: Stolberg and McIntire, “Federal Budget Crisis Months in the Planning,” suggested that Freedom Partners spent $200 million in the fight against health care, but this figure represents other spending by the group as well.

News reports reflected
: Jenna Portnoy, “In Southwest Va., Health Needs, Poverty Collide with Antipathy to the Affordable Care Act,”
Washington Post
, June 19, 2004.

As part of that effort
: The figure of four million uninsured adults blocked by the states refusing to expand Medicaid comes from the Kaiser Family Foundation. Rachel Garfield et al., “The Coverage Gap: Uninsured Poor Adults in States That Do Not Expand Medicaid—an Update,” Kaiser Family Foundation, April 17, 2015.

Meanwhile, the Cato Institute
: See Alec MacGillis’s profile of the Cato Institute’s Michael Cannon for a revealing look at the think tank’s behind-the-scenes role. MacGillis, “Obamacare’s Single Most Relentless Antagonist,”
New Republic
, Nov. 12, 2013.

This nonetheless formed
: See Robert Pear, “Four Words That Imperil Health Care Law Were All a Mistake, Writers Now Say,”
New York Times
, May 25, 2015.

But the NFIB was talked
: The NFIB called itself “America’s leading small business association,” and in previous years most of its funding had come from its small-business members. But starting in 2010, the year it agreed to act as the plaintiff in the court challenge, outside money from some very big fortunes started filling its coffers. In 2012, the year the case reached the Supreme Court, as CNN first reported, the NFIB received more money from Freedom Partners than from any other single source. In addition, from 2010 until 2012, DonorsTrust supplied over half of the budget for the NFIB’s legal center. The Bradley Foundation donated funds, too.

The combined millions of dollars in contributions paid for some of the most brilliant litigators in the country to advance arguments that Josh Blackman, a conservative law professor who wrote
Unprecedented
, a book on the case, admitted seemed “crazy” in the beginning. Yet because of the efforts of a few activists bankrolled by wealthy ideological entrepreneurs, the challenge went from the fringe to one vote short of victory in the Supreme Court. For more, see Blackman,
Unprecedented: The Constitutional Challenge to Obamacare
(PublicAffairs, 2013).

“It’s David versus Goliath”
: Stolberg and McIntire, “Federal Budget Crisis Months in the Planning.”

$235 million was spent
: For Kantar Media statistics on ad spending, see Purdum, “Obamacare Sabotage Campaign.”

“When else in our history”
: Stolberg and McIntire, “Federal Budget Crisis Months in the Planning.”

“The president was reelected”
: Boehner, interview with Diane Sawyer, ABC News, Nov. 8, 2012.

“John, what happened”
: See John Bresnahan et al., “Anatomy of a Shutdown,”
Politico
, Oct. 18, 2013.

“I am not going to”
: Art Pope, interview with author.

“maybe it’s also the content”
: Matthew Continetti, “The Double Bind: What Stands in the Way of a Republican Revival? Republicans,”
Weekly Standard
, March 18, 2013.

“Conservative think tanks”
: Jeffrey Winters, interview with author.

“We’re going to fight”
: Daniel Fisher, “Inside the Koch Empire,”
Forbes
, Dec. 24, 2012.

Around the time that Reid
: See John Mashey, “Koch Industries Hires Tobacco Operative Steve Lombardo to Lead Communications, Marketing,”
DeSmogBlog.com
, Jan. 10, 2014.

“The current campaign finance”
: Republican National Committee, Growth and Opportunity Project, March 13, 2013, 51.

“We consistently see”
: See Kenneth Vogel, “Koch Brothers’ Americans for Prosperity Plans $125 Million Spending Spree,”
Politico
, May 9, 2014.

These political problems
: See Annie Lowrey, “Income Inequality May Take Toll on Growth,”
New York Times
, Oct. 16, 2012.

“The poor, okay”
: See Bill Roy and Daniel McCoy, “Charles Koch: Business Giant, Bogeyman, Benefactor, and Elusive (Until Now),”
Wichita Business Journal
, Feb. 28, 2014.

Michael Sullivan
: Asked whether Steven Cohen and Michael Sullivan contributed money to the Kochs’ political efforts, Mark Herr, a spokesman for Point72, Cohen’s new hedge fund, said, “We don’t comment or offer guidance on political donations.”

Obama’s senior adviser
: Holden met in the White House with Jarrett, the domestic policy director, Cecilia Muñoz, and the White House counsel, W. Neil Eggleston, on April 16, 2015. Subsequently, Obama defended the Kochs’ involvement on criminal justice reform issues, though he disparaged them not long afterward for opposing government support for renewable energy. Charles Koch described himself as “flabbergasted” by the president’s criticism.

“It was hell”
: Goodwin, “Mark Holden Wants You to Love the Koch Brothers.”

“hemorrhaging benzene”
: Loder and Evans, “Koch Brothers Flout Law Getting Richer with Secret Iran Sales.”

Nonetheless, the $25 million
: Some liberal groups, like AFSCME, criticized the United Negro College Fund for taking money from the Kochs, whom it accused of breaking public employees’ unions that had provided employment to many minorities.

As a 2015 report
: Jay Schalin,
Renewal in the University: How Academic Centers Restore the Spirit of Inquiry
, John William Pope Center for Higher Education, Jan. 2015.

By 2014, the various Koch foundations
: The number 283 comes from ibid., 17.

“We learned that Keynes”
: Jerry Funt, interview with author.

Russell Sobel
: Sobel became a teacher at the Citadel after abruptly leaving West Virginia University in 2012. Sobel was also a visiting fellow at the South Carolina Policy Council, part of the State Policy Network, and was affiliated with the Mercatus Center, the Cato Institute, the Fraser Institute, the Tax Foundation, and programs partly funded by grants from the Kochs at Troy University in Alabama and Hampden-Sydney College in Virginia.

But when critics raised
: See Hardin, “Campaign to Stop Fresh College Thinking.”

Young Entrepreneurs Academy
:
The Huffington Post
published a news-making story on the Kochs’ incursions into high schools. See Christina Wilkie and Joy Resmovits, “Koch High: How the Koch Brothers Are Buying Their Way into the Minds of High School Students,” July 21, 2014.

Displayed prominently
: Beneath his byline, Charles appended a quotation from Martin Luther King Jr.: “We are caught in an inescapable network of mutuality.”

No mention was made
: In his essay on the Well-Being Initiative, Charles Koch offered some of his own theories on the topic. As he saw it, the world had been divided for 240 years between those who believed government could make one happy and those who sought fulfillment through self-reliance. The split began with the French Revolution, continuing through the Russian Revolution, and on through tyrannical states like North Korea, he said. He contrasted these “collectivists” with the United States, whose founders, he said, “chose a very different path.”

But two American historians who read his essay found it full of factual flaws. Rather than opposing the French Revolution, Founding Fathers like Thomas Jefferson greatly admired it. Moreover, as the Princeton professor Sean Wilentz noted in an interview with the author, the U.S. Constitution was inspired by the European Enlightenment and calls for the government to “promote the general welfare.” Further, the Georgetown University professor Michael Kazin noted that far from being laissez-faire, the federal government had been intervening in support of public welfare since before the Civil War, often in aid of businesses. “The Koch version of history is a complete fairy tale,” he said in an interview with the author.

By then, Brooks had moved
: See Chris Young, “Kochs Put a Happy Face on Free Enterprise,” Center for Public Integrity, June 25, 2014, which was the first report describing their embrace of “well-being” as a public relations gambit.

“Well, somebody has got to win”
: Roy and McCoy, “Charles Koch.”

But after tallying up
: Louis Jacobson, “Charles Koch, in Op-Ed, Says His Political Engagement Began Only in the Last Decade,”
PolitiFact.com
, April 3, 2014.

The Kochs’ development
: The Democratic National Committee had undergone a somewhat similar transformation a decade earlier when about a hundred investors, including George Soros, combined forces to fund the creation of a nonparty political data and analytical firm called Catalist. In contrast to i360, Catalist was a co-op, formed by constituent groups in the progressive political sphere, such as labor unions and environmental groups. It was owned by a trust, and if it were sold, its charter required its investors to donate any profits to charity.

“I think it’s very dangerous”
: See Jon Ward, “The Koch Brothers and the Republican Party Go to War—with Each Other,”
Yahoo News
, June 11, 2015.

“They’re building a party”
: Lisa Graves, interview with author.

Americans for Prosperity had expanded
: See Mike Allen and Kenneth P. Vogel, “Inside the Koch Data Mine,”
Politico
, Dec. 8, 2014.

“They aggressively corrected”
: David Axelrod, interview with author.

“retooled and revamped”
: See Nicholas Confessore, “Outside Groups with Deep Pockets Lift G.O.P.,”
New York Times
, Nov. 5, 2014.

“We have reached”
: Mark McKinnon, “The 100 Rich People Who Run America,”
Daily Beast
, Jan. 5, 2015.

A few of the biggest
: Tom Steyer’s organization was called Next Generation.

The 100 biggest known donors
: According to
Politico
, 501(c) groups disclosed $219 million in campaign spending to the Federal Election Commission, 69 percent of which was by conservative groups. But this
disclosed
spending was a fraction of all of the 501(c) political spending during the 2014 midterm elections. One single Koch-backed 501(c) group, Americans for Prosperity, alone spent $125 million. See Kenneth Vogel, “Big Money Breaks Out,”
Politico
, Dec. 29, 2014.

As America grew more
: See Eduardo Porter, “Companies Open Up on Giving in Politics,”
New York Times
, June 10, 2015, who writes that “unbridled spending” could create the “nightmare situation” where “those at the pinnacle of American society purchase the power needed to preserve the yawning inequities of the status quo.”

Among the new power brokers
: Koch Industries spent over $13 million lobbying Congress in 2014, as well as making over $3 million in political action committee contributions, according to
OpenSecrets.org
.
https://www.opensecrets.org/lobby/clientsum.php?id=D000000186&year=20
,
https://www.opensecrets.org/pacs/lookup2.php?strID=C00236489&cycle=2014
.

Soon after he was sworn in
: See Lee Fang, “Mitch McConnell’s Policy Chief Previously Lobbied for Koch Industries,”
Intercept
, May 18, 2015.

Three of the newly elected
: The other two freshman Republican senators expressing thanks at the Kochs’ 2014 June summit were Colorado’s Cory Gardner and Arkansas’s Tom Cotton.

John Kasich, the iconoclastic governor
: Neil King Jr., “An Ohio Prescription for GOP: Lower Taxes, More Aid for Poor,”
Wall Street Journal
, Aug. 14, 2013; and Alex Isenstadt, “Operation Replace Jeb,”
Politico
, June 19, 2015.

“What I give isn’t ‘dark’ ”
: Charles Koch interview with Anthony Mason,
CBS Sunday Morning
, Oct. 12, 2015. Yet as Paul Abowd revealed in his investigative report on DonorsTrust, “Donors Use Charity to Push Free-Market Policies in States,” Center for Public Integrity, Feb. 14, 2013, “The Knowledge and Progress Fund, a Wichita, Kansas–based foundation run by Charles Koch…gave almost $8 million dollars to DonorsTrust between 2005 and 2011. Where the funds ended up is a mystery.” In addition, he reported, the Charles G. Koch Foundation also filtered small grants through DonorsTrust.

“over $760 million”
: This figure is according to Robert Maguire, an investigator at the Center for Responsive Politics. This included $64 million to groups in the Koch network, such as the American Future Fund, 60 Plus, and Americans for Prosperity in 2010, $407 million to the network in 2012, and pledges of $290 million to the network in 2014, according to Peter Stone’s report, “The Koch Brothers Big Donor Retreat,”
Daily Beast
, June 13, 2014.

“It’s extraordinary”
: Rob Stein, interview with author.

“There are few policy victories”
: Brian Doherty, interview with author.

“actors playing out”
: Ibid.

Even though Americans
: Just 6 percent of Americans wanted Social Security cut, according to Lee Drutman, and a slight majority wanted the program’s benefits increased; see Drutman, “What Donald Trump Gets About the Electorate,”
Vox
, Aug. 18, 2015.

“false prophets”
: John Boehner’s interview with John Dickerson on
Face the Nation
, CBS News, Sept. 27, 2015.

“Giving back”
: Peter Buffett, “The Charitable-Industrial Complex,”
New York Times
, July 26, 2013.

Anyone paying attention
: Confessore, “Outside Groups with Deep Pockets Lift G.O.P.”
New York Times
, Nov. 5, 2014.

“What they want”
: Phil Dubose, interview with author.

To get there
: The information on the Kochs’ pledges of $75 million is based on an interview with one source who is politically allied with them on several projects.

This time, the Koch network
: James Davis, a spokesman for Freedom Partners, emphasized that the $889 million budget covered not just electoral spending but the whole universe of ideological spending by the Koch network, including think tanks, advocacy groups, voter data, and opposition research.

“Eight hundred and eighty-nine million dollars”
: Fred Wertheimer’s interview with the author. Wertheimer’s nonprofit organization Democracy 21 had been supported by grants from George Soros’s Open Society Foundations. Wertheimer had nonetheless criticized Soros’s use of big money on elections.

As was clear
: According to
OpenSecrets.org’s
tally of lobbying records, Koch Industries spent $13.7 million on lobbying in 2014,
https://www.opensecrets.org/lobby/clientsum.php?id=D000000186&year=2014
.

“We are doing all of this”
: Fredreka Schouten, “Charles Koch: We’re Not in Politics to Boost Our Bottom Line,”
USA Today
, April 24, 2015.