Dark Money

I read and review environmental books, and rarely read books about solely about politics. However, the biggest challenges and resistance to ameliorating environmental issues, especially climate change, come from one of the two major political parties in the United States, and an overwhelming amount of their campaign money be traced to fossil fuel industries and ultra-wealthy individuals like brothers Charles Koch and David Koch. “Dark Money,” then, is very much about the natural environment, but the whole political environment as well. When I started reading, I was highlighting almost every sentence, there was so much I wanted to talk about – but I was still in the introduction! After the first chapter, I scaled back, and hope I haven’t used too many direct quotes, and succeeded to rephrase other things. Jane Mayer wrote an article for The New Yorker in August 2010, a precursor to “Dark Money” in a way, but with equal attention given to the “Covert Operations” on the left as well. She was threatened with a smear – not personal, as no “dirt” could be found, but made-up claims of plagiarism that were easily disproven. The Kochs, apparently unavailable for comment, wouldn’t answer whether they were behind this. Credit goes to Mayer for this excellent work, and I encourage you to read her book for the full story.

Fred Koch was the father to four Koch brothers. Frederick Jr. was first, then Charles, who is the ruler with an iron fist. David is second in command, but his twin, Bill, is out of the picture. So when people refer to the Koch brothers now, it means Charles and David. Fred Koch’s company, once Winkler-Koch, made its first big bucks setting up oil refineries for Russia under Stalin and then Nazi Germany. While he had mixed feelings about Russia, which has left a lasting mark on his sons’ ideas, he “wrote admiringly about fascism in Germany, and elsewhere.” The brothers’ nanny was a Nazi sympathizer who returned to Germany to further the cause. The patriarch beat his sons and kept his wife in a state of fear. Continuing the tradition of suppressing the family’s women, Charles’s daughter Elizabeth felt (probably unhealthily) she always had to prove herself to her father when in his presence.

Not surprisingly, Koch’s company was sued for not paying taxes. For his sons to inherit his estate, they could avoid taxes if they gave to charity for the first two decades. Believing Frederick was gay, the other three threatened to blackmail him to hand over his share in the family company, which after father Fred died in 1967, they renamed Koch Industries. Charles and David eventually fired Bill, buying their brothers’ shares in the company, which may have cheated them by undervaluing; Charles and David then owned over 80% of the company’s stock. When their mother died, Charles didn’t give his older brother enough notice for him to make it to the funeral, which Bill almost missed too. Charles and David took advantage of their mother’s  dementia to re-write her will to exclude Frederick and Bill from her $10 million inheritance. In another dick move, Charles proposed to his wife over the phone, then made her read up on free-market economics. David, with charity driven into him, has donated a lot, but is still so tight he never tipped or even smiled at his household help.

Family matters aside, Fred Koch was a founding member of the John Birch Society; among their conspiracy theories was the belief that the President was “a Communist unknown to the rest of us” – not unlike how President Obama is mistakenly accused of being a “secret Muslim.” Another Bircher was Robert Welch, a candy manufacturer from Indiana (sound like “Parks and Recreation”?), who for being so against Communism, used their same organizational methods – a theme that surfaces a few times in this book. They also used simple, ambiguous slogans to make their message more appealing (sound like “Make America great again”?). The John Birch Society had plenty of other controversies, but was the foundation for Charles Koch’s libertarian ideology.

After the Birchers, the “school” Charles moved on to, founded by a Robert LeFevre, actually taught that “human beings should be allowed to sell themselves into slavery if they wished.” What?? Anyway, the FBI recognized this school as “anarchy” – a word the Kochs don’t like, but is really what they strive for – the absence of regulations. The other “teacher” at this “school” was a James J. Martin, a Holocaust denier. When Charles started the Cato Institute, Leonard Liggio, a libertarian historian trying to attract youth to this think tank cited the Nazi’s youth movement as a model. In 1980, David Koch was the Libertarian Party’s vice presidential candidate, where they wouldn’t be restrained by campaign-finance law (he himself spent over $2 million).

The second chapter focuses on Richard Mellon Scaife and the rise of private foundations. His Carthage Foundation and the Koch-affiliated Heritage Foundation were models of dark money. David Koch was never elected, but President Reagan gave a copy of the Heritage Foundation’s handbook to every member of Congress, and his administration adopted over 700 of the policies from there. In Chapter Three, the focus is on John M. Olin, whose father’s name you have probably seen at any engineering school. Somehow, Olin posed a conservationist, including directorship of the World Wildlife Fund, yet his family company was a large producer of DDT, and falsified records that would have shown their dumping of mercury, which was worst in Saltville, Virginia. The Olin Foundation laundered money for the CIA from 1958 to 1966, and under Michael Joyce broke ground in establishing “beachheads” at influential schools. They put out biased publications without peer-review – another recurring theme.

Koch Industries has a bad history of environmental pollution and, it turns out, disregard for its employees’ well-being. One employee died of leukemia, brought on by repeated exposure to benzene and other carcinogens, which the company knew about from its required screening, yet didn’t notify him until four years after showing signs. An environmental technician working for Koch Industries in another location reported – as her job required – the benzene emissions, which happened to be way above legal limits, but despite her diligence, the official report gave a much lower, false number to the state. In another incident, a Koch employee posing as an FBI agent threatened another employee with arrest for reporting mecury in gas meters and soil samples “so highly contaminated with mercury that the lab refused to send them back through the U.S. mail and demanded payment for specialized disposal of hazmat substances.” Since they couldn’t get him to retract his evidence, they fired him. In Lively, Texas, Koch Pipeline Company knew they had a corroded pipeline, but did not notify anyone near there. An employee who raised this concern was told the cost of a lawsuit would be less than repairs that could prevent a fatal explosion. Two people were killed because of one such explosion. What finally brought some damage to the Kochs’ reputation was when they stole huge amounts of crude oil from Native American lands. Charles Koch admitted taking this by accident – which just can’t be possible. Overseeing the grand jury was “a former Republican state senator with no experience in criminal law whose family had financial interests in oil wells receiving Koch royalties,” but the jury found the Kochs guilty of making almost 25,000 false claims. After the pipeline explosion, the Kochs diversified their portfolio, including the purchase of Georgia-Pacific. In 2010, Koch Industries was one of the top ten air polluters and by 2012 the top producer of toxic waste in the U.S., in addition to being “among the largest emitters of greenhouse gases in America.” If you wonder why the Republican party is alone in the world in denying climate science, consider what the Koch brothers have done to this country, and how their actions extend to the rest of world.

That is part of their environmental track record, but their biggest influence, by design, has always been politics. Charles Koch and political adviser Richard Fink conceived a “three-phase takeover of American politics” convincing intellectuals, think tanks, and people (voters) that libertarianism is a good thing. In the first phase are the beachheads the Mercatus Center and Charles Koch-chaired Institute for Humane Studies (an example of their misleading names) at George Mason University. Over a dozen regulations President George W. Bush hoped to cut came from Mercatus suggestions, including eight environmental protections. One economist there actually argued that smog (which includes surface ozone, emitted from oil refineries) blocks sunlight and thus prevents skin cancer. The judges in the circuit court that accepted this had attended Koch-funded seminars. Thankfully, the Supreme Court overturned this, “noting that the Clean Air Act’s standards are absolute and not subject to cost-benefit analysis.”

Jumping now to early 2009, Rick Santelli of CNBC’s business news is credited as sparking the Tea Party movement just after President Obama was sworn in the first time. Mayer shows the wide historical scope: Tea Partiers had always been around, but never to this degree (David Koch denied any involvement). When I was in college, I remember seeing a strange group of protestors, who seemed to erupt out of nowhere, holding the most confusing signs saying things about “pork” and a general air of unorganization. This was a local Tea Party, which was probably orchestrated in the bigger movement. The Kochs were now seeing this opportunity as the third phase of their plan – to manipulate voters to get what they want. Mayer points out that now Obama fell under a “permanent campaign” – where outside money was always at work to undermine his election. The hypocrisy of the House Republicans is evident in their first leadership retreat of 2009, when they chose to emulate the Taliban’s “asymmetric warfare.” The notion the Tea Party set in motion of Obama being a radical or a socialist has no basis in fact, and can only be explained by racism.

In Chapter Eight, Mayer writes “If there was a single ultra-wealthy interest group that hoped to see Obama fail as he took office, it was the fossil fuel industry.” That says a lot. Between 2005 and 2008, the Koch brothers spent more than anyone against climate reform, in a tax-exempt lobbying campaign to make people doubt climate science, using DonorsTrust to hide their names. It is hard to believe now, but thirteen years ago, the majority of Republicans supported carbon and environmental regulations – which Frank Luntz saw as a vulnerability. Even George W. Bush campaigned on climate action, but Halliburton’s Dick Cheney prevented him once in office.  James “Snowball” Inhofe, not surprisingly, got a lot of campaign contributions from the Koch’s political action committee. Any time the author uses the phrase “rich minority” or something like a tiny handful of ultra-rich conservatives, I assume the Koch brothers are in this group.

The Kochs and their network really abused 501(c)(4)s, “social welfare” groups exempt of taxes, but another powerful tool to their benefit was gerrymandering to achieve maximum Republican governorships and legislatures in all states. The Citizens United decision benefitted them most of all, and with the 2010 midterm election results, the presence of increased spending – especially on attack ads – had an absence, noted by President Obama’s advisor David Axelrod: “where is all this money coming from?” David Koch was in John Boehner’s office before the new Speaker of the House was sworn in. For the new wave of Republicans in Congress, the Kochs expected them to sign on to their “No Climate Tax” pledge, modeled after Grover Norquist’s hardline oath. From Saltville, Virginia (still polluted), came Morgan Griffith, who helped get the House to reduce the Environmental Protection Agency budget by 27 percent, which the Senate reduced to 16 percent. Fred Upton, who became chair of the congressional Energy and Commerce Committee, changed his public stance on climate change, as a sort of campaign debt. He is not alone: Chris Christie and Mitt Romney also fall in this category of (flip-) floppers.

The attack on the environment was one issue, but to undermine Obama as much as possible, Paul Ryan led the attack on Medicare, which led to the debt ceiling debacle. After David Koch was in his office, John Boehner went to the less elder of the Koch brothers in his Manhattan office to ask for help. Boehner ended up backing out, so that Congress could try to blame Obama. No compromises came from either side then, to avoid default and lowered credit rating. Cuts were made across the entire budget, which, after all, is what the libertarians wanted.

Mitt Romney’s choice of Paul Ryan as running mate reflects the Kochs’ influence. His infamous “47 percent” comment was “no slip of the tongue” as Mayer writes. The Koch school of thought had sunk in. Obama’s 2012 reelection campaign had to raise money to keep up with the Kochs’ – that is, Romney’s spending. The incumbent President didn’t want to form a super PAC, but had no choice if he wanted to get reelected and be in a position to reverse campaign spending for the future. Somehow, in California, full disclosure of campaign contributions found that what the Kochs were doing was money laundering. What wasn’t clear to me was how that could happen only in California, since the network is everywhere. Voter ID rules resurged, racist and obstructionist, and with no evidence of voter fraud from either side. Voter turnout was what Romney hadn’t counted on. I remember him having to pack up his would-be-celebratory fireworks. Despite all the money spent, he couldn’t believe he lost.

In Wisconsin, anti-union governor Scott Walker had been backed by billionaire John Menard Jr., whose corporation had the worst environmental record in the state. Art Pope, the Koch brother of North Carolina, was made the state’s budget director by Pat McCrory, one of the new Republican governors. Like Menard in Wisconsin, he made a fortune from his private chain store empire, and now in an official position is, officially, an oligarch. The cuts he made leave me speechless for their atrocity. By refusing qualified health care assistance, the damage is so bad against the poor that I was startled to see one metric measured not in dollars but lives. His influence over the education agenda looks as fascist as the Koch approach. A Goodmon said of them “Their only answer is cut taxes. It’s never about making things better. It’s all about tearing the other side down.” (Jim Goodmon, a Republican in North Carolina).

At a donor summit, it was pointed out that the public overwhelmingly distrusts Republicans’ claims of caring about the poor. The term they used to improve their image was promotion of “well-being.”  For the 2014 midterms, the Koch network had access to a state-of-the-art voter data tracking system that helped them gain nine Senate seats, which meant they had a majority now. Mitch McConnell, indebted to Charles and David, hired a Koch Industries lobbyist as his policy chief, calling for the refusal of any new carbon regulations. John Boehner, however, could no longer deal with the radical right and was forced to resign. Charles and David made out best of all, tripling their fortunes to over $41 billion each.

A strength of Mayer’s reporting is to use the words of people who know the subject people, to illustrate their personalities and ideologies. She makes sense of very complex systems, which in this book were shrouded in secrecy to begin with. “Dark Money” is a powerful book that explains how politics in the U.S. evolved in the last several decades, and comes in an election season when understanding these processes is essential.