Book Reviews

The Kochs’ Dangerous Game

What the Koch brothers have built isn’t a political network. It’s a trust. And it must be busted.

By Rob Stein

Tagged Charles KochDavid Kochpolitical donors

Dark Money: The Hidden History of The Billionaires Behind the Rise of the Radical Right by Jane Mayer • Doubleday • 2016 • 449 pages • $29.95

Ida Tarbell’s extraordinary 1904 book, The History of the Standard Oil Company, documented the secret, interrelated networks and domineering control mechanisms that John D. Rockefeller and his close associates constructed to assure their control of America’s oil business. She warned of the clear and present dangers that such dominance of an economically powerful industry creates for competitors, markets, and nations.

Tarbell dissected Rockefeller’s obsession with concentrated power and described the architecture of his control in such chilling and compelling detail that public outrage emboldened a trust-busting President, the Congress, and the Supreme Court to break up the great “industrial trusts”—oil, steel, banking, railroads, and others. These trusts were ultimately judged to have “restrained trade” by reducing competition and controlling prices, and while the owners remained wealthy and powerful, their era of naked, unchecked dominance was over.

History will have to determine whether Jane Mayer’s meticulously researched Dark Money, about the voracious and domineering political ambitions and appetites of Charles and David Koch and their donor colleagues, achieves the same iconic status as Tarbell’s work. Mayer artfully paints a picture—in minute detail—of how America’s two wealthiest brothers and their most intimate operatives have created a powerful, unaccountable, and unprecedented form of privately financed “political trust” designed and operated to lessen competition in the marketplace of ideas, restrain the functioning of representative government, threaten the integrity of democratic institutions and processes, and further enrich themselves and their allies.

The purpose of the Koch-led political trust is absolute domination of American politics—vanquish Republican moderates and centrists, replace the Republican Party’s political apparatus with their own private, potent political machinery, defeat Democrats electorally and progressive legislation at the state and federal levels, and subjugate the policymaking of all three branches of government. And, as Mayer carefully chronicles, the direct consequence of the political outcomes produced by the Koch trust are quantifiable economic benefits worth billions of dollars in lower taxes, fewer regulations, and less regulatory oversight.

Of course, the Koch trust has not yet succeeded in achieving total political dominance, as the great economic trusts of the nineteenth and twentieth centuries had not quite accomplished absolute economic control before they were stopped and stripped of their powers of abuse. But Mayer provides hard evidence of their activities and aims, and she connects relevant dots. The Kochs and their closest allies have erected the structures, secured the human and financial capital, and empowered a small command and control management team. Their trust is growing in wealth and power. Their handpicked managers and directors are gaining valuable political sophistication. The system they have built is exercising almost monopolistic powers within the Republican Party, in state and national elections, in state legislatures, in the Congress, in our courts, and in our regulatory agencies. Their political trust is bending American politics to their personal wills and whims and is bestowing invaluable economic benefits on them and their allies.

Dark Money shines a spotlight on two powerful men, their allies, and the intricate, troubling financial entanglements of their pervasive political participation. The central question Mayer’s analysis raises is this: When constitutional freedoms to speak and assemble are warped into the power to manipulate and control state and federal elections and policy outcomes, what can and must be done about it?

The Koch trust has been decades in the making.  Mayer has thoroughly researched the business history and political evolution of the Koch family. They have long-held anti-government views, and in time their libertarian philosophy (personal freedom, small government, lower taxes, less regulation) has gained broader acceptance and greater currency in Republican circles. The Kochs’ theory of political change and their long-term political strategies owe their genesis to Richard Fink, who over the past 40 years has become the Kochs’ most important political strategist. According to Mayer, it was back in 1976 that Fink—a high-ranking employee of Koch Industries, then and now—created the original roadmap for the Kochs’ political ambitions:

Called “Structure of Social Change,” it approached the manufacture of political change like any other product. . . . a three-phase takeover of American politics. . . . first an investment in “intellectuals” whose ideas would serve as the “raw products” . . . second . . . think tanks that would turn the ideas into marketable policies. . . . and third the subsidization of “citizens” groups that would, along with “special interests,” pressure elected officials to implement the policies.

Mayer quotes Charles Koch describing the Fink vision:

To bring about social change requires a strategy that is vertically and horizontally integrated. . . . idea creation to policy development to education to grass roots organizations to lobbying to political action.

Over the next three decades, the Kochs and their wealthy allies invested billions of dollars in building an impressive state and national network of think tanks, advocacy organizations, networking hubs, and citizens groups, including the original libertarian infrastructure: the Cato Institute, the Reason Foundation, the Competitive Enterprise Institute, and about a dozen more groups, as well as anchors of American conservatism, including the Heritage Foundation, the American Legislative Exchange Council, the State Policy Network, the Mercatus Center, the Federalist Society, and dozens of others.

These institutions have promoted the beliefs that form the soul of late twentieth and early twenty-first-century American conservative philosophy and policies—individual freedom (as they define it), unfettered capitalism, lower taxes, less regulation, smaller government, school vouchers, health savings accounts, taxpayers’ bills of rights, an originalist judicial interpretation of the Constitution, and the rest.

By the end of 2008, the Kochs’ 30-year investment in this (non-party) privately financed conservative infrastructure had produced a dizzying array of institutions that were providing support to conservative candidates and officeholders and fighting progressive legislation.  Based on Mayer’s reporting, and my own separate analysis, it can be estimated that by 2008 this political infrastructure had an annual operating cost exceeding $500 million per year.

This conservative institutional infrastructure was vast and influential.  But by 2009, it was becoming increasingly clear to the Kochs and their strategists that more money, more centralized management, and more strategic investment were needed to optimize impact and assure total political victory.

As Mayer notes, some pivotal events between January 2009 and January 2010 produced new political opportunities and unprecedented urgency. Barack Obama moved into the White House in January 2009, and 30 days later the Tea Party movement was born. Within months, Tea Party rallies and “chapters” were being organized throughout the country. Then, in January 2010, the U.S. Supreme Court handed down its Citizens United v. FEC decision, which launched a new era of undisclosed, unlimited political contributions.

These events galvanized Republican operatives and the Koch donor network to focus hard on the 2010 mid-term elections. As Mayer reports, the potential to spend vast amounts of new money required new strategies:

Managing all of this new, dark money was a challenge. In April, as campaign professionals were trying to figure out how to take maximum advantage of the Citizens United decision, [Ed] Gillespie invited Republican operatives to what he described in an e-mail as “an informal discussion of the 2010 landscape.” The unusual meeting was to take place in Karl Rove’s living room. . . . What transpired was a war council in which the twenty assembled chieftains coordinated their plans of action and divided up their territory. Kenneth Vogel, in Big Money, describes it as “the birthplace of the new Republican Party—one steered by just a handful of unelected operatives who answered only to the richest activists who funded them.”

Jane Mayer, a staff writer for The New Yorker, is one of America’s preeminent investigative journalists and has written extensively about American political controversies.  Her first three books chronicled the presidency (Landslide: The Unmaking of the President, 1984-1988, co-authored with Doyle McManus), the Supreme Court nominating process (Strange Justice: The Selling of Clarence Thomas, co-authored with Jill Abramson), and torture (The Dark Side: The Inside Story of How the War on Terror Turned into a War on American Ideals).

While others have studied and written about money in politics, generally, and about the Kochs specifically—Ken Vogel of Politico, Daniel Schulman of Mother Jones, Theda Skocpol at Harvard, and others—Dark Money is the most revealing account yet of the genesis, growth, and maturation of the Koch brothers’ empire and its highly focused political ambitions.   

I, too, have studied the topic of money in politics. I have been an observer and original researcher in this field since 2003, and in 2005, I founded the Democracy Alliance, the largest network of wealthy progressives to invest in progressive independent expenditure organizations. I have spoken publicly on these issues and have communicated, from time to time, with Mayer and other researchers and journalists. (I am quoted several times in Dark Money.)

Moreover, I am keenly aware that conservatives argue that the political conglomerate the Kochs and their allies have created is simply the mirror image of the interlocking nature of progressive activism in America. Their mantra is that we all do what they are doing and that the “vast left-wing conspiracy” is as large, powerful, and controlling as anything they have built.

Their political trust is bending American politics to their personal whims.

This claim is false. There is no progressive equivalent to what Mayer has described. Yes, wealthy progressive strategists, operatives, and donors are committed to advancing their political agendas and influencing the outcomes of elections and policy debates. Progressive donors do convene and consider recommendations for funding independent expenditure organizations. And progressive organizations and networks do target and attempt to align their political efforts.

However, no small cadre of progressive donors is aggregating increasingly large pools of unreported political money like the Kochs and their donor allies. No single progressive group of donors has empowered a few intimate operatives to allocate hundreds of millions of dollars each election cycle to coordinate political activism throughout the country. No progressive cabal is targeting and distributing millions of dollars to impact specific elections and legislation in each of 30 or more states and in the halls of Congress.  And no network of progressive donors to a powerful political trust are realizing personal and corporate economic benefits bestowed by the politicians they support.

It is of course conceivable that someday a handful of progressives could build such powerful capacities. The passions and ingenuity of strategists and donors is not limited to one party, faction, or worldview.  But there is not now a progressive equivalent to the Koch trust.

The Kochs and their allies are correct when they assert that it is their right and civic duty to participate actively in the political process, and that the laws and regulations of campaign finance and lobbying permit them to do so to their heart’s content. And they are correct to note that advancing their political philosophy is also what motivates wealthy progressive donors, including the partners of the Democracy Alliance, to invest together in political activism.

But there is and must be a bright-line distinction between, on the one hand, constitutional freedoms to advance personal or corporate interests, and, on the other hand, the abuse of power and wealth to surreptitiously aggregate and disseminate great pools of political capital in order to dominate democratic institutions and processes and to subvert the freedoms of other citizens. Mayer describes throughout the book how the Koch trust is controlling elections in more than 30 states and is unduly influencing state and federal legislative and regulatory processes.  She concludes her narrative with a dire warning about how the Kochs and their allies are exceeding their rights of constitutionally permitted free speech and assembly by controlling a powerful private political apparatus that is threatening representative democracy:  Mayer quotes Fred Wertheimer, a respected Washington-based public interest lawyer who has been battling against the undue influence of money in politics for more than 40 years:

We have two unelected multibillionaires who want to control the U.S. government and exercise the power to decide what is best for 300 million American people, without the voices of these people being heard. . . . There is nothing in our constitutional democracy that accepts that two of the richest people in the world can control our destiny.

The 2010 mid-term elections, when the Kochs employed data-driven, targeted, and coordinated spending on House races, became their model for how to wield power to advance their broader political goals and to serve their corporate interests.

Mayer describes how David Koch and his lieutenants stormed the Capitol on the opening day of the 112th Congress ready to cash in their chips for supporting the Republican revolution:

While Koch was a very public presence in the Capitol, his political adjutant, Tim Phillips, the President of Americans for Prosperity, was deep in the inner sanctum of the congressional committee that mattered the most to the bottom line of Koch Industries. Phillips’ most important destination that day was the House Energy and Commerce Committee, under which the new Republican majority had now increased power to block President Obama’s environmental agenda in Congress.  The Committee could bury progress on climate change and harass the Environmental Protection Agency for the foreseeable future.

There was no doubt that having financed the Republican takeover of the House of Representatives, the Kochs and their allies had changed the congressional calculus on climate change. Mayer describes the new attitudes about global warming:

Tim Phillips gladly took credit for the dramatic spike in expressed skepticism. “If you look at where the situation was three years ago and where it is today, there’s been a dramatic turnaround,” he told National Journal . . . “what it means for candidates on the Republican side is, if you. . . . buy into green energy or you play footsie on this issue, you do so at your own political peril.”

Mayer also focuses on the power that the Kochs now wield at the state level in states such as North Carolina, Michigan, Wisconsin, and elsewhere. Take, for example, how the Kochs bought into Wisconsin politics. Koch Industries’ PAC, Mayer writes, was the second largest contributor to Governor Scott Walker’s campaign. The Kochs also contributed to 16 state legislative candidates, all of whom won.

The ability to wield political power in Congress and to influence governors and state legislators has also created a powerful magnet to attract more wealthy donors—titans of oil and gas, financial services, and other regulated industries—to the Kochs’ political meetings.

Mayer parses the critical components of the Kochs’ political control: first, to raise enormous amounts of money—hundreds of millions of dollars per cycle, without disclosing the names of its donors; second, to finance and utilize sophisticated data management and analytics to target political friends and foes; and third, to use that analysis to determine where to distribute large sums of highest impact money to influence specific state legislative and governors’ races, congressional and Senate elections, and policy processes (legislation, executive actions, and regulatory enforcement) in more than 30 states.

The Kochs have created or enlarged a number of interrelated organizations to perform these three functions. While it is not possible to discern exactly how many organizations are being coordinated, precisely how much the network is spending per cycle, the actual political strategies they are employing, or the intricate relationships among their boards, staff, grantees, and donors, we do know that there are two organizations that form the heart of the Kochs’ political trust.

Americans for Prosperity (AFP) is the Koch trust’s most important engine for state-based political targeting, coordination, and activism. As described by Mayer, and thoughtfully analyzed recently by Theda Skocpol and Alexander Hertel-Fernandez in a recent paper, between 2010 and 2015, AFP’s resources and capacities exploded from an annual budget of $9 million in 2007 to something in excess of $200 million in 2016, with a staff of 500 people, most of whom are in field offices in over 30 states.

AFP, today, is the most potent non-party, non-candidate political apparatus in the country. As the lead political coordinator since 2010 of the network of conservative state-based political activism—i.e., the State Policy Network, the American Legislative Exchange Council, and state affiliates of national conservative organizations—AFP has been at the center of electoral victories that have resulted in congressional majorities in both houses of Congress and “…more than nine hundred legislative seats and eleven governorships.”

The second group, now called Freedom Partners, is apparently the dominant Koch-controlled “pooled fund” for this current election cycle. The purpose of Freedom Partners is to educate and recruit donors, solicit large contributions from the wealthiest Republicans, and assure that control of the distribution of the funds is in the hands of an intimate Koch-dominated directorate comprised primarily of former and current, high ranking employees of Koch Industries. As Mayer reports, Freedom Partners is organized as a “business association,” a 501(c)6, which shields its donors from public disclosure of their contributions. And while the group must name the recipients of the funds it distributes, this disclosure does not occur on publicly available forms until the year after the distributions have been made. Freedom Partners and other associated pooled funds are expected to raise and allocate hundreds of millions of dollars in 2015 and 2016 to affect state and congressional elections and influence policy in more than 30 states. 

It is the combination of AFP and Freedom Partners, and their interconnected relationships with dozens of other groups they coordinate and fund, that constitutes the Koch-led political trust. As Mayer painstakingly shows, this trust has had a profound impact on American politics, particularly in the states where AFP has state offices. It is more dominant and influential than Republican Party operations in these states. It is systematically defeating both Republican and Democratic office holders with whom it disagrees. It has entrenched Republican control of more than 30 state legislatures and governorships. It has assured Republican control of both houses of the U.S. Congress. It has been responsible for countless state and federal policy victories that have advanced their policy beliefs, and in many instances has produced demonstrable economic benefits for the Kochs and their donor allies.

The power and influence of America’s first unaccountable political trust is beyond question.  What can be done?

There are many current recommendations about how to confront and control the role of great wealth in our political system including: reforming campaign finance; enacting legislation, filing law suits, or passing a constitutional amendment to overturn Citizens United; and compelling the Federal Election Commission or the Internal Revenue Service to require all entities engaging in political activity to disclose the names of all donors and to enforce rules that prohibit coordination among campaigns and independent expenditure groups.

If achieved, these measures could mitigate the power and influence of the Koch political trust. But each will likely take years to accomplish. What is needed now is an engaged, concerted, and well-financed nonpartisan call to action by concerned Republicans, independents, and Democrats to challenge the legitimacy and legality of such unfettered concentration of political power. If existing state and federal laws governing elections, lobbying and non-profit political activity do not provide ample basis for prohibiting political trusts, then in due course, energetic citizen actions, Congress, and the President must demand new laws and regulations.

In 1904, Ida Tarbell’s book ignited outrage against the industrial trusts. It took another seven years of action by President Theodore Roosevelt, Congress, and finally the Supreme Court for Standard Oil to be dismantled. Someday, when historians describe what sparked public outrage and caused the dismantling of the first privately financed American political trust, I suspect that Dark Money will be heavily cited.

Read more about Charles KochDavid Kochpolitical donors

Rob Stein is a lawyer, strategist, and social entrepreneur who served as a senior advisor to the Chairman of the Democratic National Committee from 1989-1992. In 2005, he founded the Democracy Alliance, a network of high net worth donors to progressive causes.

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