December 21, 2011

Koch Industries

Blue Army: Finance

Well, Doctor, what have we got: a Republic or a Monarchy?

A Republic, if you can keep it.

— Mrs Powel of Philada & Benjamin Franklin (1706 – 90), Constitutional Convention, 1787.

The most disquieting voices joining the chorus of criticism [of the free enterprise system] come from perfectly respectable elements of society:
  • from the college campus,
  • [from] the pulpit,
  • [from] the media,
  • [from] the intellectual and literary journals,
  • [from] the arts and sciences, and
  • from politicians. …
[It] must be recognized that businessmen have not been trained or equipped to conduct guerrilla warfare with those who propagandize against the system, seeking insidiously and constantly to sabotage it. …
[The] time has come … for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it. …

[As] every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. …
Business must learn the [lessons,] long ago learned by labor and other self-interest groups: …
  • that political power is necessary;
  • that such power must be [assiduously] cultivated; and
  • that when necessary, it must be used aggressively and with determination …

The threat to the enterprise system is not merely a matter of economics.
It also is a threat to individual freedom. …
As the experience of the socialist and totalitarian states demonstrates, the contraction and denial of economic freedom is followed inevitably by governmental restrictions on other cherished rights. …

Under our constitutional system, especially with an activist-minded Supreme Court, the judiciary may be the most important instrument for social, economic and political change.

Lewis Powell (1907 – 98) [Associate Justice, US Supreme Court], Attack of American Free Enterprise System, Memo to the US Chamber of Commerce, 23 August 1971.

We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.

Louis Brandeis (1856 – 1941) [Associate Justice, US Supreme Court]

The Golden Rule: He who has the gold rules

(Alex Gibney, Park Avenue: Money, Power and the American Dream, 2012)

(Edward Wolff, A Century of Wealth in America, Harvard University Press, 2017)

(Executive Excess 2006, 13th Annual CEO Compensation Survey, Institute for Policy Studies & United for a Fair Economy)

Dan Ariely (1967) [James B Duke Professor of Psychology and Behavioral Economics, Duke University]:
[In] 1976 the average CEO was paid 36 times as much as the average worker.
By 1993, the average CEO was paid 131 times as much. …

[In] 1993, securities regulators [started forcing companies] to reveal details about the pay and perks of their top executives.
The idea was that once pay was in the open, boards would be reluctant to give executives outrageous salaries and benefits. …

[However, as] salaries became public information, the media regularly ran special stories ranking CEOs by pay.
[This] publicity had CEOs in America comparing their pay with that of [their peers.]
In response, executives' salaries skyrocketed.
[Compensation] consulting firms … "helped" [by advising] their CEO clients to demand outrageous raises.
The result?
Now the average CEO makes about 369 times as much as the average worker — about 3 times the salary before executive compensation went public. …

Instead of causing shame, every new outrage in compensation encourages other CEOs to demand even more.
(Predictably Irrational, Harper, 2009, p 148-50, emphasis added)

Jane Mayer (1955):
[Steve Schwarzman, chairman and CEO of Blackstone,] made $398.3 million in 2006, which was 9 times more than the CEO of Goldman Sachs.
On top of this, his shares in Blackstone were valued at more than $7 billion.
(p 254)

The [carried interest] loophole was in essence an accounting trick that enabled hedge fund and private equity managers to categorize huge portions of their income as “interest,” which was taxed at the 15% rate then applied to long-term capital gains.
This was less than half the income tax rate paid by other top-bracket wage earners.
[It is] estimated that the hedge fund loophole [costs] the government over $6 billion a year — the cost of providing health care to three million children.
Of that total … almost $2 billion a year … went to just 25 individuals [— an average tax concession of $80 million each.]
(p 255)

[In] December 2010 … Republican negotiators insisted on cuts in estate taxes that would cost the Treasury $23 billion and save some 6,600 of the wealthiest taxpayers an average of $1.5 million each.
The demand didn’t materialize out of thin air. …
[Beginning in 1998, the] Kochs and the DeVoses … joined with [15] of the other richest families in the country, including the Waltons of Walmart and the Mars candy clan, in financing and coordinating a massive, multiyear campaign to reduce and eventually repeal inheritance taxes.
[These] 17 families stood to save $71 billion from the tax change, explaining why they willingly spent almost half a billion collectively, lobbying for it …
(p 290)

From 2006 until 2009, Chelsea Clinton, the daughter of the former president, worked as an associate at Avenue Capital Group, a $14 billion private equity and hedge fund firm.
Marc Lasry, co-founder of Avenue Capital, was a major Clinton supporter as well as a $1 million investor in a fund managed by the Clintons’ son-in-law, Marc Mezvinsky.
The Clinton administration had been rife with Wall Street tycoons.
(Dark Money, Doubleday, 2016, p 323)

Jane Mayer (1955):
A 2008 study of the wealthiest 400 taxpayers … showed that they earned an average of $202 million and paid an effective income tax rate of less than 20%. …
In other words, the effective tax rate on earning $202 million was lower than the rate paid by Americans earning $34,501 a year.
(Dark Money, Doubleday, 2016, p 288)

Robert Lenzner:
The top 0.1% — about 315,000 individuals out of 315 million — [capture] about half of all capital gains on the sale of shares or property after 1 year …
[These] capital gains make up 60% of the income made by the Forbes 400 [and are at taxed at 15%.]
(The Top 0.1% Of The Nation Earn Half Of All Capital Gains, Forbes, 20 November 2011)

George Domhoff (1936) [Distinguished Professor Emeritus, Sociology Department, University of California, Santa Cruz]:
[The] average income of the top 400:
  • tripled during the Clinton Administration; and
  • doubled during the first 7 years of the Bush Administration.
[A 6 fold increase in 15 years.]
(Wealth, Income, and Power, September 2005)

Charles Koch (1935)Koch Industries$44.7B
David Koch (1940)Koch Industries$44.7B
Steve Schwarzman (1947)Blackstone$11.3B
Philip Anschutz (1939)Qwest$11.0B
Ken Griffin (1968)Citidal$7.0B
Richard DeVos (1926)Amway$5.8B
Diane Hendricks (1947)ABC Supply$3.6B
Ken Langone (1935)Home Depot$2.9B
Steve Bechtel (1925)Bechtel$2.7B
Stan Hubbard (1933)Hubbard Broadcasting$2.0B
Joe Craft (1950)Alliance Resource Partners$1.4B

Jane Mayer (1955):
Of the 200 or so participants meeting secretly [at the Koch's donor summit in Aspen in June 2010,] at least 11 [of the "investors"] were on Forbes’s list of the 400 wealthiest Americans.
(pp 256 & 411)

Fewer than 200 extraordinarily rich individuals and private foundations [account] for the $750 million pooled by DonorsTrust and its sister arm, Donors Capital Fund, since 1999.
(p 347)

You wish to keep your charitable giving private, especially gifts funding sensitive or controversial issues.
Set up a DonorsTrust account and ask that your gifts remain anonymous.
Know that any contributions to your DonorsTrust account that have to be reported to the IRS will not become public information.
Unlike with private foundations, gifts from your account will remain as anonymous as you request.
(p 206)

On November 4, 2014, the investors of the Koch network finally got their money’s worth.
Election Day proved a Republican triumph.
The GOP picked up 9 seats in the Senate, winning full control of both congressional chambers. …
From this point on [Obama] would be largely relegated to playing defense against conservatives’ efforts to roll back everything his administration had done before.
(p 370)

Whether their motives were virtuous or venal, in the course of a few decades a handful of [fabulously wealthy] right-wing philanthropists had changed the course of American politics.
They created a formidable wealth defense movement, which had become a sizable part of what [Peter Buffett] dubbed “the charitable-industrial complex.”
(p 377)

Art Pope (1956) [Former Director, Americans for Prosperity]:
America does not have an aristocracy or a plutocracy.
(p 343)

In a generation, we’ve shifted the public-policy debate in North Carolina from the center-left to the center-right.
(Dark Money, Doubleday, 2016, p 338)

Jane Mayer (1955):
For several years, [Paul Ryan] had been advocating radically deep cuts in government spending, including to Medicare and Medicaid, the two main government health programs for the elderly and the poor. …
His ideas were wildly popular with most of the wealthy donors.
As the country’s highest taxpayers, they would be the biggest beneficiaries of the tax savings produced by spending cuts.
[Needless to say,] none of them needed to rely on government social services for their health or welfare.
(Dark Money, Doubleday, 2016, p 266, emphasis added)

John Galbraith (1908 – 2006):
No legislation in American history [has been] more bitterly [opposed by business] than the … Social Security Act.
(A History of Economics, Penguin, 1987, p 217)

Jeffrey Winters (1960) [Professor of Political Science, Northwestern University]:
Conservative think tanks, which are almost exclusively funded by very wealthy people, are the front line of the income-defense industry.
(p 356)

Jane Mayer (1955):
[Donations to 501(c)(3) educational organizations can] be written off as tax-deductible charitable gifts.
But while [these can] “educate” the public [in libertarian theology they cannot] participate in electoral politics.
501(c)(4) “social welfare” [groups, on the other hand, can] participate in electoral politics so long as this was not [their] “primary” activity.
[These donations can] be made in secret but [are] not tax deductible.
(p 187)

[Thus, if a 501(c)(4)] group spent 49% of its funds on politics, it complied with the law because it … wasn’t “primarily” engaged in politics.
[Such groups could also] claim no political spending if it gave to another such group, even if the latter spent the funds on politics. …
For example, at the end of 2010, the Center to Protect Patient Rights reported on its tax return that it spent no money on politics.
Yet it granted $103 million to other conservative groups, most of which were actively engaged in the midterm elections. …

In 2006 [before the Citizens United decision,] only 2% of “outside” political spending came from “social welfare” groups that hid their donors.
In 2010, this number rose to 40%, [laundering] hundreds of millions of dollars.
(p 248)

[In] 2009 and 2010 the health insurance industry secretly funneled over $86 million into the US Chamber of Commerce for attack ads [on Obamacare.]
(p 410)

[In] 2012 the Kochs’ network of a few hundred individuals spent at least $407 million, almost all of it anonymously. …
[This] was more than the combined contributions to the two presidential campaigns made by 5,667,658 Americans, whose donations were legally capped at $5,000.
[That is to say,] the top 0.04% of donors contributed about the same amount as the bottom 68%.
(p 314, emphasis added)

Phil Dubose [27 year Koch Industries veteran]:
[The Koch's] mismeasuring crude oil from the Indian reservations [just] as they did all over the US.
If you bought crude, you’d shorten the gauge. …
They’d recalibrate them, so if it showed a barrel, they’d say it was just three-quarters of a barrel when they were buying it. …
You cheated.
If we sold a barge with fifteen hundred barrels, you’d say it was two thousand. …
That was the Koch Method. …

The Kochs never did play by the rules. …
They just didn’t abide by anything.
Not the EPA or anything else.
They constantly polluted.
If they got fined, it didn’t matter, because they made so much money doing it.
We never reported things like busted pipeline out in the field. …
When we spilled oil, we never reported the real amount.
We were told to do that, to keep our costs down.
(pp 136-7)

What they want is to get their own way.
They call themselves libertarians.
[What that] means is that if you’re big enough to get away with it, you can get away with it.
No government.
If it’s good for their business, they think it’s good for America.
What it means for the country, is it would release the dogs.
The little people?
They’d get gobbled up.
(p 377)

Charles Koch (1935):
I just want my fair share — which is all of it.
(p 378)

John Olin (1892 – 1982):
My greatest ambition now is to see free enterprise reestablished in this country.
Business and the public must be awakened to the creeping stranglehold that socialism has gained here since World War II. …

Jane Mayer (1955):
[In his essay "The Intellectuals and Capitalism" Friedrich Hayek emphasized that] to conquer politics, one must first conquer the intellectuals.
(p 100, emphasis added)

William Simon (1927 – 2000) [President, Olin Foundation]:
What we need is a counter-intelligentsia …
[It] can be organized to challenge our ruling ‘new class’ — opinion makers …
Ideas are weapons — indeed the only weapons with which other ideas can be fought.
Capitalism has no duty to subsidize its enemies.
[Conservatives must cease] the mindless subsidizing of colleges and universities whose departments of politics, economics and history are hostile to capitalism.
[Instead, they] must take pains to funnel desperately needed funds to scholars, social scientists and writers who understand the relationship between political and economic liberty …
They must be given grants, grants, and more grants in exchange for books, books, and more books.
(p 102)

Jane Mayer (1955):
Without the rigorous peer-reviewed standards required by [the academic press,] the Olin Foundation was able to inject into the mainstream a number of works whose scholarship was debatable at best.
(p 106)

Oliver Smedley (1911 – 1989) [Cofounder, Institute of Economic Affairs}:
[It is] imperative that we should give no indication in our literature that we are working to educate the public along certain lines which might be interpreted as having a political bias.
In other words, if we said openly that we were re-teaching the economics of the free market, it might enable our enemies to question the charitableness of our motives.
(p 80)

James Piereson [Conservative Scholar, Manhattan Institute]:
[It is] essential for the integrity and reputation of [conservative academic] programs that they be defined not by ideological points of view [but] in terms of fields of study, [like the] John M Olin Fellowships in Military History. …
Often a program can be given a philosophical or principled identity by giving it the name of an important historical figure, such as the James Madison Program [in] American Ideals and Institutions at Princeton University. …
(p 104)

Economic analysis tends to have conservatizing effects. …
If you said to a dean that you wanted to fund conservative constitutional law, he would reject the idea out of hand.
But if you said you wanted to support Law and Economics, he would be much more open to the idea …
Law and Economics is neutral, but it has a philosophical thrust in the direction of free markets and limited government.
That is, like many disciplines, it seems neutral, but … in fact, [it isn’t.]
(Jane Mayer, Dark Money, Doubleday, 2016, p 108)

Tim Phillips (1964) [President, American for Prosperity]:
[Republican] candidates have figured out that [climate] science has become political …
[That] if you … buy into green energy … you do so at your political peril.
The vast majority of people who are involved in the [Republican] conventions and the primaries [are now suspicious] of the science.
[That’s] our influence.
Groups like Americans for Prosperity have done [that.]
(Coral Davenport, Heads in the Sand, National Journal, 3 December 2011)

Jeremy Rifkin (1945):
From 2002 to 2008, [US] federal energy subsidies to the fossil fuel industry totaled more than $72 billion.
Renewable energy subsidies that same period were less than $29 billion. …
[Between] 2009 and 2010, the oil, coal, and utility industries spent $500 million to lobby the government against the passage of climate-change legislation.
(The Third Industrial Revolution, Palgrave Macmillan, 2011, p 58)

Bertrand Russell (1872 – 1970)

[Private economic] power within a State … can influence
  • [the] law by corruption and
  • public opinion by propaganda.
It can put politicians under obligations which interfere with their freedom.
It can threaten to cause a financial crisis.
But there are very definite limits to what it can achieve. …

[Where] the issue is simple and public opinion is definite, the plutocracy is powerless …
[Where] public opinion is undecided, or baffled by the complexity of the issue, the plutocracy can secure a desired political result. …

[The plutocracy has hitherto] been unable to
  • introduce Asiatic labour in California or Australia, except in [the] early days in small numbers. …
  • destroy trade unionism …
  • avoid heavy taxation of the rich [or]
  • prevent socialist propaganda. …

[The trade unions, for their part,] have failed … to keep in power governments which they liked but which a majority of the nation distrusted.

[The] power of economic organisations to influence political decisions in a democracy is limited by public opinion, which, on many important issues, refuses to be swayed even by very intensive propaganda.
Democracy, where it exists, has more reality than many opponents of capitalism are willing to admit.

(Power: A New Social Analysis, 1938, pp 85-6, emphasis added)

Gerrymandering — An American Tradition

The REDistributing MAjority Project: Buying democracy on the cheap

With Obama dominating Washington, [Republican strategist Ed Gillespie, looked to the states.
He knew that 2011 was a year in which many state legislatures would redraw the boundaries of their congressional districts based on a new census, a process that only took place once a decade.
So he put together an ambitious strategy aimed at a Republican takeover of governorships and legislatures all across the country.
Capturing them would enable Republicans to redraw their states’ congressional districts in order to favor their candidates.
(p 242)

To implement [REDMAP, Gillespie] took over the Republican State Leadership Committee (RSLC) …
By the end of 2010, with the help of million-dollar donations from the tobacco companies Altria and Reynolds, as well as huge donations from Walmart, the pharmaceutical industry, and rich private donors like those at the Koch summit, the RSLC would have $30 million, three times its Democratic counterpart.
(p 243)

[In successive] midterm losses in 2010 and 2014 … the Democrats [lost] more than 900 [state] legislative seats and 11 governorships …
(p 337)

[In 2010 alone, Republicans] won control of both the legislature and the governor’s office in 21 states; the Democrats had similar one-party rule in only 11.
The map looked red, with small islands of blue.

As a consequence of their gains, Republicans now had four times as many districts to gerrymander as the Democrats.
By creating reliably safe seats, they could build a firewall protecting the Republican control of Congress for the next decade.

Clearly, REDMAP’s payoff for a relatively modest investment was impressive. …
Newly Republican states like Michigan, Wisconsin, Ohio, and North Carolina soon became breeding grounds for attacks on Obama’s core agenda.
They undermined his policies on health care, abortion, gay rights, voting rights, immigration, the environment, guns, and labor.
(p 266)

Welcome to Paradise: Art Pope's Libertarian Utopia

[By packing] minority voters into three districts that already had a high concentration of African-American voters, [Republican operatives in North Carolina] left more of the surrounding territory white and Republican, and the Democrats in those areas stranded.
In effect, the new [electoral] map had resegregated the state into congressional districts in which minority voters could dominate their own neighborhoods but were unlikely to see their party gain majority power in the state.
(p 335)

[As a consequence,] despite getting fewer votes than the Democrats [in 2012, the Republicans] won more congressional seats.
The same pattern was repeated in enough other states that the Republicans were able to hold on to the House of Representatives, despite a bigger 2012 turnout nationwide for [the] Democrats.
(p 333)

[2012 saw the Republicans win] the governorship and veto-proof majorities in both houses of the general assembly.
It was the first time since Reconstruction that the Republican Party had complete control of the state’s government.
(p 337)

[Within months] they enacted conservative policies that [libertarian] think tanks had been incubating for years …
  • [slashing] taxes on corporations and the wealthy while cutting benefits and services for the middle class and the poor …
  • [gutting] environmental programs,
  • sharply limited women’s access to abortion,
  • [backing] a constitutional ban on gay marriage, …
  • [legalizing] concealed guns in bars and on playgrounds and school campuses …
  • [erecting] cumbersome new bureaucratic barriers to voting … designed to discourage poor and minority voters …
  • [eliminating] the earned-income tax credit for low-income workers …
  • [repealing] North Carolina’s estate tax …
  • [drastically cutting] unemployment benefits, …
  • [denying] free health care to 500,000 uninsured low-income residents [at an estimated cost of] between 455 and 1,145 lives a year
  • [authorizing] vouchers for private schools while [squeezing] the public school [budgets,]
  • [eliminating] teachers’ assistants …
  • [reducing] teacher pay …
  • [abolishing] incentives for teachers to earn higher degrees …
  • [reducing] funding for a successful program for at-risk preschoolers, [and]
  • [imposing a $414 million (16%) cut in university funding that was] projected to cause tuition hikes, faculty layoffs, and fewer scholarships …

At the same time [as Art Pope’s] network fought to cut university budgets, he offered to privately fund academic programs in subjects he favored, like Western civilization and free-market economics.
(pp 339-41)

Republicans in the state senate passed a bill requiring North Carolina’s high school students to study conservative principles as part of American history in order to graduate in 2015.
(p 342)
[Art Pope] played an active role in the 2010 redistricting of North Carolina's electoral map as a pro bono legal adviser during the process.
The redistricting effort assisted in shifting the state's US House delegation from 7-6 Democratic to 9-4 in favor of Republicans.
Pope has been a long time supporter of legislation to establish an independent nonpartisan redistricting commission. …
After his selection as [Republican] Governor Pat McCrory's budget director, Pope resigned his positions as a member of the board of directors of Americans for Prosperity …
(19 July 2017)

Pippa Norris & Max Grömping:
The issue of gerrymandered has been consistently regarded by experts as the worst aspect of US voting procedures …
In the [Perceptions of Electoral Integrity Index] sub-dimension of ‘district boundaries’ – consisting of items such as 'Boundaries favored incumbents', or 'Boundaries were impartial' – North Carolina and Wisconsin rank lowest, with scores of 7 and 8, respectively.
On the other hand, even the top-ranked states (New Mexico, Maine, and Hawai’i) received scores not exceeding the low 60s.
The only outlier is Iowa, which was rated by the surveyed experts with a 73 out of 100 in the dimension of district boundaries. …
[The] reform of state electoral laws was also widely discussed [during the 2016] campaign, following the passage of several restrictive voting and registration procedures which were subsequently struck down by the courts, such as in North Carolina.
( Populist Threats to Electoral Integrity: The Year in Elections, 2016-2017, The Electoral Integrity Project, 2017, p 8)

Adriano Udani & David Kimball [Department of Political Science, University of Missouri, St Louis]:
Republican elites are tapping into the growing US anger toward immigrants — and are deploying that as a reason to restrict voting.
Tightened voting laws depresses turnout among voters of color, who tend to vote for Democrats. …
Proponents of voter identification requirements and other limitations on voting rights will likely exploit growing US ethnocentrism to get those new rules through.
(Who believes in voter fraud? Americans who are hostile to immigrants, The Washington Post, 1 February 2017)

Jane Mayer (1955):
The Pope fortune has always depended on [minimum wage workers and] low-income patrons. …
[Variety Wholesalers] favors a specific demographic:
  • neighborhoods with median incomes of less than $40,000 and
  • a population that is at least 25% African-American.
(State for Sale, The New Yorker, 10 October 2011)

Charles & David Koch

[The Koch governance strategy envisioned a] three-phase takeover of American politics.

  1. The first phase required an “investment” in intellectuals whose ideas would serve as the “raw products.”
  2. The second required an investment in think tanks that would turn the ideas into marketable policies.
  3. And the third phase required the subsidization of “citizens” groups that would, along with “special interests,” pressure elected officials to implement the policies.

It was in essence a libertarian [policy] production line, waiting only to be bought, assembled, and switched on.
(p 142)

The aim of the [Institute of Humane Studies at George Mason University] was to cultivate and subsidize … the next [generation of] libertarian scholars.
Anxious at one point that the war of ideas was proceeding too slowly, Charles reportedly demanded better metrics with which to monitor students’ political views.
[Applicants’] essays had to be run through computers in order to count the number of times they mentioned the free-market icons Ayn Rand and Milton Friedman.
Students were tested at the beginning and the end of each week for ideological improvement.
The institute also housed the Charles G Koch summer internship program, a paid fellowship placing students who shared the Kochs’ views in like-minded nonprofit groups, where they could join the libertarian network.
(p 150)

By 2015, the Charles Koch Foundation was subsidizing pro-business, antiregulatory, and antitax programs in 307 different institutions of higher education in America and had plans to expand into 18 more. …
  • [At Brown University they funded] faculty research and postdoctoral candidates in such topics as why bank deregulation is good for the poor.
  • At [the cash strapped] West Virginia University, [the] foundation required the school to give it a say over the professors it funded …
    [One of the Koch approved professors,] Russell Sobel, edited a 2007 book called Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It, arguing that mine safety and clean water regulations only hurt workers.
    “Are workers really better off being safer but making less income?” it asked.
(p 155)

[In 1980] David Koch ran for vice president of the United States on the Libertarian Party ticket …
(p 3)

[Running as a candidate allowed him to] lavish as much of his personal fortune as he wished on the campaign rather than being limited by the $1,000 donation cap. …
[As] its primary source of funds [he] spent more than $2 million on the effort, just short of 60% of the campaign’s entire budget. …

The party’s platform … called for
  • the repeal of all campaign-finance laws and the abolition of the Federal Election Commission …
  • the abolition of all government health-care programs, including Medicaid and Medicare …
  • [the lifting of] all income and corporate taxes, including capital gains taxes, and … for an end to the prosecution of tax evaders …
  • the abolition … of the Securities and Exchange Commission, the Environmental Protection Agency, the FBI, and the CIA …
  • the abolition of “any laws” impeding employment — [including] minimum wage and child labor laws [— along with] public schools [and] the “compulsory” education of children …
  • [the abolition of] the Food and Drug Administration, the Occupational Safety and Health Administration, seat belt laws, and all forms of welfare for the poor.
The platform was, in short, an effort to repeal virtually every major [progressive] reform passed during the twentieth century.
In the view of the Kochs and other members of the Libertarian Party, government should be reduced to a skeletal function: the protection of individual and property rights.

That November, the Libertarian ticket received only 1% of the vote.
(p 57-8)

[In] 1930, there were approximately two hundred private foundations [in the United States.]
[By] 2013, there were over a hundred thousand … with assets of over $800 billion.
These peculiarly American organizations, run with little transparency or accountability to either voters or consumers yet publicly subsidized by [inheritance] tax breaks …
(p 71)

[These] foundations have very few legal restrictions.
They are required to donate at least 5% of their assets every year to public charities — referred to as “nonprofit” organizations.
In exchange, the donors are granted deductions, enabling them to reduce their income taxes dramatically.
This arrangement enables the wealthy to simultaneously receive generous tax subsidies and use their foundations to impact society as they please.
(p 69-70)

One measure of the [conservative] movement’s impact was that starting in 1973, and for successive decades afterward, the public’s trust in government continually sank.
If there was a single unified message pushed by those financing the conservative movement, it was that government rather than business was America’s problem.
By the early 1980s, the reversal in public opinion was so significant that Americans’ distrust of government for the first time surpassed their distrust of business.
(p 89)

[When Ronald] Reagan, a movement conservative, overwhelmingly defeated Carter [in 1980, he] embraced the Heritage Foundation’s phone-book-sized policy playbook, Mandate for Leadership, and distributed a copy of it to every member of Congress.
His administration soon delivered [on 61% of the Heritage Foundation's] 1,270 specific policy proposals. …

[Reagan] slashed corporate and individual tax rates, particularly helping the wealthy.
Between 1981 and 1986, the top income tax rate was cut from 70% to 28%.
Meanwhile, taxes on the bottom four-fifths of earners rose.
Economic inequality, which had flatlined, began to climb.
[He also] abolished the economic controls on oil and gas [including] taxes on oil profits.
Koch Industries’ profits … skyrocketed.
(p 91)


[Citizens for a Sound Economy was established by the Kochs in 1984 as a fake grassroots non-profit organization.]
[Microsoft] reportedly made a contribution to the foundation set up by Citizens for a Sound Economy that was aimed at reducing the Justice Department’s antitrust work.
(p 160)

In 1990, the organization created a spin-off, Citizens for the Environment, which called acid rain and other environmental problems “myths.” …
In 1993, it waged a successful assault on Clinton’s proposed tax on energy, which would have taxed fossil fuel use but exempted renewable energy sources. …
Next, it went after his proposed tax increase on high earners.
According to The Wall Street Journal [the] CSE’s ads were deeply misleading, focusing on owners of car washes and other mom-and-pop small businesses, implying that the tax was aimed at the middle class when in fact it would affect only the wealthiest 4%.
(p 161)

In 1997 … the EPA moved to reduce surface ozone, a form of air pollution caused, in part, by emissions from oil refineries.
Susan Dudley, … a top official at the Mercatus Center [and later Administrator of the Office of Information and Regulatory Affairs in the Office of Management and Budget under George W Bush,] came up with a novel criticism of the proposed rule.
The EPA, she argued, had not taken into account that by blocking the sun, smog cut down on cases of skin cancer.
She claimed that if pollution were controlled, it would cause up to eleven thousand additional cases of skin cancer each year. …
[However, on appeal the Supreme Court ruled unanimously] that the Clean Air Act’s standards are absolute and not subject to cost-benefit analysis.
(p 153-4)

[In 2003 Citizen's for a Sound Economy split into American's for Prosperity and FreedomWorks due to internal conflicts.]
[In 2009 it was FreedomWorks, along with its billionaire backers, that] gave the nascent Tea Party movement organization and political direction, without which it might have frittered away like the Occupy movement.
(p 182)

FreedomWorks, [a] tax-exempt organization quietly cemented a deal with Glenn Beck, the incendiary right-wing Fox News television host who at the time was a Tea Party superstar.
For an annual payment that eventually topped $1 million, Beck read “embedded content” written by the FreedomWorks staff.
They told him what to say on the air, and he blended the promotional material seamlessly into his monologue, making it sound as if it were his own opinion.
The arrangement was described on FreedomWorks’ tax disclosures as “advertising services.”
(p 183, emphasis added)

The presidential candidacy of the environmental activist Al Gore in 2000 posed an obvious threat to the fossil fuel industry.
That election cycle, Koch Industries and its employees disbursed over $800,000 in support of his opponent George W Bush and other Republicans.
Koch Industries’ political action committee was spending more on federal campaigns than any other oil and gas company, including ExxonMobil.
The company’s expenditures on Washington lobbying expanded more than twenty-fold from 2004 to 2008, reaching $20 million.
(p 210)

In 2004, Democratic-aligned outside groups spent $185 million — more than twice what the Republican outside groups spent — in a failed effort to defeat George W Bush’s reelection. …
With the help of Democratic operatives, [George Soros] funneled more than $27 million into the outside spending vehicle of choice that year, known as 527 groups.
It was the same year that Republicans used the same mechanism to fund the “Swift Boat” attacks on John Kerry. …
The Federal Election Commission ruled that the gargantuan outside spending schemes violated campaign-finance laws and imposed hefty fines on both the Democratic and the Republican perpetrators.
Afterward, Soros remained active in ideological philanthropy, spending hundreds of millions to support a network of human rights and civil liberties groups, but he largely withdrew from spectacular campaign contributions.
(p 236)

The George W Bush years … proved a bonanza for the fossil fuel industry …
Bush had vowed during the campaign to act on climate change by limiting greenhouse gas emissions, but once in office Cheney countermanded him. …
[He] shifted the administration’s position to arguing that the science on global warming was “inconclusive,” requiring “more scientific inquiry.”

[Cheney's] 2005 energy bill … offered enormous subsidies and tax breaks for fossil-fuel-intensive companies.
[He] used his influence to exempt [fracking] from regulation under the Safe Drinking Water Act, over objections from the Environmental Protection Agency.
The fracking industry boomed. …
Cheney’s former company Halliburton also became a major player in the fracking industry, illustrating that free-market advocates greatly benefited from government favors.

In all, the Bush energy act contained some $6 billion in oil and gas subsidies and $9 billion in coal subsidies.
[Meanwhile, the] Kochs … took full advantage of the special tax credits and subsidies available to the oil, ethanol, and pipeline business, among other areas of commerce in which they were engaged.
In addition, their companies benefited from nearly $100 million in government contracts in the decade after 2000 …
(pp 212-3)

In 2010, Americans for Prosperity, [FreedomWorks and American Majority] encouraged members to provoke Democratic candidates into on-camera outbursts.
Some gave instructions on how to do it.
In time, the practice spread to liberal groups too.
(p 260)

[Following the 2010 midterms, the victorious Republicans] stocked the [House Energy and Commerce Committee] with oil industry advocates, many of whom owed huge campaign debts to the Kochs.
Koch Industries PAC was the single largest oil and gas industry donor to members of the panel, outspending even ExxonMobil.
It had donated to 22 of the committee’s 31 Republican members and 5 of its Democratic members …
In addition, 5 out of the 6 Republican freshmen on the committee had received “outside” support from Americans for Prosperity. …

The “No Climate Tax” pledge was invented by Americans for Prosperity in 2008 when the Supreme Court cleared the way for the EPA to regulate greenhouse gases …
By the start of the legislative session in 2011, fully 156 members of Congress had signed the … pledge.
Many returning members of the House Energy and Commerce Committee had already taken the pledge, and of the 12 new Republicans on the panel 9 were signatories, including 5 of the 6 freshmen.
(pp 272-3)

Citizen's United: Corporate Free Speech — The civil rights of a legal fiction

On January 21, 2010, the [Supreme] Court announced its 5–4 decision in the Citizens United case, overturning a century of restrictions banning corporations and unions from spending all they wanted to elect candidates.
(p 227)

In striking down the existing campaign-finance laws, the courts eviscerated a century of reform.
After a series of campaign scandals involving secret donations from the newly rich industrial barons in the late nineteenth and early twentieth centuries, Progressives had passed laws limiting spending in order to protect the democratic process from corruption.
The laws were meant to safeguard political equality at a time of growing economic inequality.
Reformers had seen the concentration of wealth in the hands of oil, steel, finance, and railroad magnates as threatening the democratic equilibrium. …
In a growing backlash to the corruption, at President Theodore Roosevelt’s behest, Congress passed the Tillman Act in 1907, which banned corporate contributions to federal candidates and political committees.
Later scandals resulted in further restrictions limiting spending by unions and the size of individual contributions, and requiring public disclosure.
By overturning many of these restrictions, the Citizens United decision was in many respects a return to the Gilded Age.
(p 229)

While polls consistently showed that large majorities of the American public — both Republicans and Democrats — favored strict spending limits, the key challenges that led to dismantling the laws were initiated by an extraordinarily rich minority: the Kochs and their clique of ultra-wealthy conservative activists.
(p 237)

Money Talks: One Dollar, One Vote

(Federal form 990 filings, 2009-13)

Charles & David Koch

(501c3s: Think Tanks, Academia, Policy)
Charles G Koch FoundationRichard Fink (President)$77.6M
Claude R Lambe FoundationRichard Fink (President)$8.3M
Knowledge & Progress FundRichard Fink (President)$2.0M

Top 20 Recipients
George Mason University (Mercatus Center)$28.9M
Institute for Humane Studies (George Mason University)$15.3M
Charles Koch Institute$2.8M
Donors TrustWhitney Ball (Founder)$2.1M
The Heritage FoundationEdwin Feulner (President)$2.0M
Florida State University$1.6M
American Enterprise InstituteArthur Brooks (President)$1.6M
Bill of Rights Institute$1.6M
Federalist Society$1.2M
Manhattan Institute for Policy ResearchPaul Singer (Chairman, Board of Trustees)$1.0M
Clemson University$1.0M
University of Arizona$961K
West Virginia University$873K
Utah State University$815K
Troy University$804K
Liberty Source$770K
Jack Miller Center$752K
American Legislative Exchange CouncilPaul Weyrich (Founder)$671K
Americans For ProsperityTim Phillips (President)$627K
Foundation for Individual Rights in Education$580K

Anonymous Donors

(501c4s & 501c6s: Political and Issue Spending)
Freedom PartnersMarc Short, Alan Cobb, Wayne Gable &
Richard Ribbentrop
American Encore (Center to Protect Patient's Rights)Sean Nobel (Executive Director)$247.9M
TC4 TrustMichael Hartz$38.8.7M

Top 20 Recipients
American Future Fund$76.8M
Americans For ProsperityTim Phillips (President)$51.1M
60 Plus Association$37.7M
Americans for Responsible Leadership$27.9M
Public Notice$22.2M
Generation Opportunity (Targets young people)$15.1M
American Commitment$12.9M
Center for Shared Services$11.9M
Concerned Women for America$11.4M
Family Policy Alliance (CitizenLink) / Evangchr4 Trust$10.3M
Libre Initiative (Targets latinos)$7.2M
Concerned Veterans for America$7.2M
Americans for Limited GovernmentHoward Rich (Founder)$7.1M
Americans for Tax ReformGrover Norquist (Founder & President)$5.3M
National Rifle Association$6.6M
Americans for Job Security$4.9M
Coalition to Protect Patients' Rights$4.1M
Public Engagement Group Trust$3.4M
National Federation of Independent Businesses and related groups
(Funding conduit for the Supreme Court challenges to Obamacare)

[The] State Policy Network, a national coalition of conservative state-based think tanks, [was established in 1992 by Thomas Roe.]
By 2012, the network had 64 separate think tanks turning out cookie-cutter-like policy papers, including at least one hub in every state.
(p 345)

Adding clout to the Right’s reach at the state level was the American Legislative Exchange Council. …
Critics called it a conservative corporate “bill mill.”
Thousands of businesses and trade groups paid expensive dues to attend closed-door conferences with local officials during which they drafted model legislation that state legislators subsequently introduced as their own.
On average, ALEC produced about a thousand new bills a year, some 200 of which became state law.
The State Policy Network’s think tanks, some 29 of which were members of ALEC, provided legislative research. …
In 2013 alone, it produced some 70 bills aimed at impeding government support for alternative, renewable energy programs.
(p 346)

John Olin (1892 – 1982)

Between 1958 and 1966, [the Olin Foundation] secretly served as a bank for the Central Intelligence Agency.
During these eight years, the CIA laundered $1.95 million through the foundation. …
Many of the government funds went to anti-Communist intellectuals and publications.
But in 1967, the press exposed the covert propaganda operation, triggering a political furor and causing the CIA to fold the program.
(p 104)

The Olin Foundation’s most significant beachheads [in academia] were established in America’s law schools, where it … underwrote 83% of the costs for all Law and Economics programs in American law schools between the years of 1985 and 1989. …
Law and Economics stresses the need to analyze laws, including government regulations, not just for their fairness but also for their economic impact.
Its proponents describe it in apolitical terms as bringing “efficiency” and “clarity” to the law, rather than relying on fuzzy, hard-to-quantify concepts like social justice.
(p 107)

[In 1993] the Olin Foundation was paying students thousands of dollars to take classes in Law and Economics at Georgetown Law School and to attend workshops on the subject at Columbia Law School. …

Henry Manne (1928 – 2015), who had become dean of the George Mason University School of Law in Virginia, [organized seminars that] treated judges to two-week-long, all-expenses-paid immersion training in Law and Economics usually in luxurious settings like the Ocean Reef Club in Key Largo, Florida.
(p 109)

Within a few years, 660 judges had gone on these junkets, some, like the US Court of Appeals judge and unconfirmed Supreme Court nominee Douglas Ginsburg, many times.
By one count, 40% of the federal judiciary participated, including the future Supreme Court justices Ruth Bader Ginsburg and Clarence Thomas. …

[The] Olin Foundation [also] provided crucial start-up funds for the Federalist Society, a powerful organization for conservative law students founded in 1982.
With $5.5 million from the Olin Foundation, as well as large donations from foundations tied to Scaife, the Kochs, and other conservative legacies, the Federalist Society grew … into a powerful professional network of 42,000 right-leaning lawyers, with 150 law school campus chapters and about 75 lawyers’ groups nationally.
All of the conservative justices on the Supreme Court are members, as are the former vice president Dick Cheney, the former attorneys general Edwin Meese and John Ashcroft, and numerous members of the federal bench.
(p 110)

John M Olin died in 1982 at the age of eighty-nine, but after his death his foundation became even more robust. …
The funds were well invested, growing to some $370 million in all before the foundation spent it down and closed its doors in 2005.
Olin had directed his foundation to shut down during the lifetime of the trustees for fear that it would fall into the hands of liberals, as he believed the Ford Foundation had tragically done. …

[In the late 80's] the Olin Foundation made a key $25,000 investment of its own in an unknown writer named Charles Murray (1943), funding a grant at the Manhattan Institute that would support a book he was writing that attacked liberal welfare policies. …
[The Heritage Foundation] placed an antiwelfare piece by Murray on the op-ed page of The Wall Street Journal.
This sparked a grant from the Olin Foundation that enabled him to work full-time on what became his pathbreaking 1984 book, Losing Ground [which] blamed government programs for creating a culture of dependence among the poor.
Critics said it overlooked macroeconomic issues over which the poor had no control, and academics and journalists were split, with several challenging Murray’s scholarship.
Nonetheless, with ample funding from Olin and other conservative foundations, Murray succeeded in shifting the debate over America’s poor from society’s shortcomings to their own.
(p 111)

[Even Bill Clinton] later embraced his ideas, calling Murray’s analysis “essentially right” and incorporating many of his prescriptions, including work requirements and the end to aid as an entitlement, in his 1996 welfare reform bill.
(p 112)

[Murray went on, in 1994, to co-author] The Bell Curve, which correlated race and low IQ scores to argue that blacks were less likely than whites to join the “cognitive elite,” and was loudly and convincingly discredited.
The Manhattan Institute fired Murray over the controversial project.
(p 113)

Lynde & Harry Bradley

[Between 1985 and 2000 the Lynde and Harry Bradley Foundation gave] away $280 million to [conservative causes. …]
At least two-thirds of its grants … financed conservative intellectual activity.
It paid for:
  • some 600 graduate and postgraduate fellowships,
  • right-wing think tanks,
  • conservative journals,
  • activists fighting Communism abroad, and
  • its own publishing house, Encounter Books.
[The] foundation gave both Harvard and Yale $5.5 million …
It was an activist force on the secondary-school level, too.
The Bradley Foundation virtually drove the early national “school choice” movement, waging an all-out assault on teachers’ unions and traditional public schools.
In an effort to “wean” Americans from government, the foundation militated for parents to be able to use public funds to send their children to private and parochial schools.
(p 113)

(Jane Mayer, Dark Money, Doubleday, 2016)


The Golden Rule: He who has the gold rules

Gerrymandering — An American Tradition
Charles & David Koch
John Olin

Lynde & Harry Bradley

Covert Operations
Execs Blocking Progress on Global Warming


Would you like to know more?

The Koch Network

  • In the Withdrawal from the Paris Climate Agreement, the Koch Brothers’ Campaign Becomes Overt, The New Yorker, 5 June 2017.
    Jane Mayer (1955).
  • State for Sale, The New Yorker, 10 October 2011.
    Jane Mayer (1955).

    [In] the past decade Pope, his family, his [$150 million] family foundation, and his business have spent more than 40 million dollars [on changing] the direction of American politics. …
    Art Pope (1956) [Owner, Chairman & CEO, Variety Wholesalers]:
    Most of the efforts that I or my company have supported have been to get the message out on the issues, so that voters can make an informed choice.
    To donate money, or make an independent expenditure to educate voters on the issues, or on voting records of the incumbents — I mean, it helps citizens make informed decisions!
    It’s the core of the First Amendment!
    Asked whether candidates with the biggest budgets might drown out less wealthy candidates, he said,
    I really have more faith in the North Carolina voters than that. …

    Chris Kromm [Executive director, Institute for Southern Studies]:
    Pope began … his quest to be kingmaker in the North Carolina GOP, spending big money to push out moderates and get farther-right Republicans elected. …
    [He] created a climate of fear …
    He has a whole network that can reward or punish Republicans. …
    That’s the strength of the Pope network.
    It enforces ideological conformity, and gets people in line. …
    He just keeps pushing this far-down-the-spectrum view relentlessly, until it’s viewed as common consensus.

  • Who's to Blame — 12 Politicians and Execs Blocking Progress on Global Warming: Charles and David Koch, 19 January 2011.
    Rolling Stone Politics.

    With a combined worth of $43 billion [Charles and David Koch] are America's leading funders of the climate-disinformation machine.
    The Kochs have contributed $5 million to Americans for Prosperity, the driving force behind the Tea Party.
    They also gave nearly $25 million to conservative think tanks like the Heritage Foundation and the Cato Institute, two of the leading players in the climate-denial racket.
    And to help kill climate legislation in Congress, Koch spent $38 million on lobbying — more than any energy company except ExxonMobil and Chevron.
    Last year, besides underwriting a host of conservative candidates in the midterm elections, the Koch brothers backed Proposition 23, the unsuccessful effort to end California's crackdown on climate pollution, and funded attacks against the EPA's right to regulate carbon emissions.

  • Toxic 100 Air Polluters, Political Economy Research Institute (PERI), University of Massachusetts, Amherst, 18 October 2010.

    [Koch Industries ranked 10th highest toxic air polluter in the United States in 2010.]

  • Koctopus: the billionaires behind the Tea Party, 13 September 2010.
    Lee Fang.

    … David Koch works with a group of other billionaires and American businessmen to convene a meeting twice a year to coordinate their funding, so, its not just David Koch, it also Bruce Kovner, the hedge fund manager, its also … Phil Anderson and these other right-wing billionaires who work together to coordinate their funds, so if you take the cumulative effect, they have much much more money [than Soros,] its in the realm of billions dollars that they are spending every year.

    Would you like to know more?

  • Covert Operations: The billionaire brothers who are waging a war against Obama, The New Yorker, 30 August 2010.
    Jane Mayer (1955).

    Public tax records show that between 1998 and 2008 the Charles G Koch Charitable Foundation spent more than forty-eight million dollars.
    The Claude R Lambe Charitable Foundation, which is controlled by Charles Koch and his wife, along with two company employees and an accountant, spent more than twenty-eight million.
    The David H Koch Charitable Foundation spent more than a hundred and twenty million. …

    Other gifts by the Kochs may be untraceable; federal tax law permits anonymous personal donations to politically active nonprofit groups.
    The Kochs have given millions of dollars to nonprofit groups that criticize environmental regulation and support lower taxes for industry. …
    Gus diZerega:
    Perhaps [Charles] has confused making money with freedom.
    By law, charitable foundations must conduct exclusively nonpartisan activities that promote the public welfare.
    A 2004 report by the National Committee for Responsive Philanthropy, a watchdog group, described the Kochs’ foundations as being self-serving …
    These foundations give money to nonprofit organizations that do research and advocacy on issues that impact the profit margin of Koch Industries.
    The Kochs have gone well beyond their immediate self-interest, however, funding organizations that aim to push the country in a libertarian direction.
    Among the institutions that they have subsidized are
    • the Institute for Justice, which files lawsuits opposing state and federal regulations;
    • the Institute for Humane Studies, which underwrites libertarian academics; and
    • the Bill of Rights Institute, which promotes a conservative slant on the Constitution.
    David Koch has acknowledged that the family exerts tight ideological control.
    If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent …
    [If] they make a wrong turn and start doing things we don’t agree with, we withdraw funding.
    The greatest threat to free enterprise [Lewis Powell] warned, was not Communism or the New Left but, rather, "respectable elements of society" — intellectuals, journalists, and scientists.
    To defeat them … business leaders needed to wage a long-term, unified campaign to change public opinion.

    Charles Koch seems to have approached both business and politics with the deliberation of an engineer.
    To bring about social change [a strategy is required that is both] vertically and horizontally integrated …
    [From] idea creation to policy development to education to grassroots organizations to lobbying to litigation to political action.
    We have a radical philosophy …

    Morlocks at the Smithsonian

    The David H Koch Hall of Human Origins, at the Smithsonian’s National Museum of Natural History, is a multimedia exploration of the theory that mankind evolved in response to climate change.
    At the main entrance, viewers are confronted with a giant graph charting the Earth’s temperature over the past ten million years, which notes that it is far cooler now than it was ten thousand years ago.
    Overhead, the text reads,
    The message, as amplified by the exhibit’s Web site, is that
    [Key] human adaptations evolved in response to environmental instability.
    Only at the end of the exhibit, under the headline "OUR SURVIVAL CHALLENGE," is it noted that levels of carbon dioxide are higher now than they have ever been, and that they are projected to increase dramatically in the next century. …
    [No] mention is made of any possible role played by fossil fuels.
    The exhibit makes it seem part of a natural continuum.
    The accompanying text says,
    During the period in which humans evolved, Earth’s temperature and the amount of carbon dioxide in the atmosphere fluctuated together.
    An interactive game in the exhibit suggests that humans will continue to adapt to climate change in the future.
    People may build "underground cities," developing "short, compact bodies"” or "curved spines," so that "moving around in tight spaces will be no problem."

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