Reblog: The oil billionaires behind the Tea Party

Beautiful Horizons blog:

From the

The oil billionaires behind the Tea Party… and the Cato Institute… and… (ad nauseum)

Ace reporter Jane Mayer has a piece in the current issue of The New Yorker exposing the billionaire Koch brothers – Charles and David – who are responsible for funneling hundreds of millions of dollars into anti-government groups to promote their anti-regulatory, anti-tax, near-zero-government agenda.  With the rise of the Tea Parties, these heirs to a huge oil and chemical fortune have found a “populist” stealth vehicle to conduct a campaign that provides cover for a massive criminal and fraudulent enterprise which is – stripped of the ideological trappings – about corporate power being allowed to “run amok.”

I’m posting extensive excerpts from the piece below – it’s essential journalism at this juncture of relentless and dishonest attacks on the very idea of government and vicious smears against the Obama administration:

The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests. In a study released this spring, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a “kingpin of climate science denial.” The report showed that, from 2005 to 2008, the Kochs vastly outdid ExxonMobil in giving money to organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups. Indeed, the brothers have funded opposition campaigns against so many Obama Administration policies—from health-care reform to the economic-stimulus program—that, in political circles, their ideological network is known as the Kochtopus…

Over the July 4th weekend, a summit called Texas Defending the American Dream took place in a chilly hotel ballroom in Austin. Though Koch freely promotes his philanthropic ventures, he did not attend the summit, and his name was not in evidence. And on this occasion the audience was roused not by a dance performance but by a series of speakers denouncing President Barack Obama. Peggy Venable, the organizer of the summit, warned that Administration officials “have a socialist vision for this country.”

Five hundred people attended the summit, which served, in part, as a training session for Tea Party activists in Texas. An advertisement cast the event as a populist uprising against vested corporate power. “Today, the voices of average Americans are being drowned out by lobbyists and special interests,” it said. “But you can do something about it.” The pitch made no mention of its corporate funders. The White House has expressed frustration that such sponsors have largely eluded public notice. David Axelrod, Obama’s senior adviser, said, “What they don’t say is that, in part, this is a grassroots citizens’ movement brought to you by a bunch of oil billionaires.”

In April, 2009, Melissa Cohlmia, a company spokesperson, denied that the Kochs had direct links to the Tea Party, saying that Americans for Prosperity is “an independent organization and Koch companies do not in any way direct their activities.” Later, she issued a statement: “No funding has been provided by Koch companies, the Koch foundations, or Charles Koch or David Koch specifically to support the tea parties.” David Koch told New York, “I’ve never been to a tea-party event. No one representing the tea party has ever even approached me.”

At the lectern in Austin, however, Venable—a longtime political operative who draws a salary from Americans for Prosperity, and who has worked for Koch-funded political groups since 1994—spoke less warily. “We love what the Tea Parties are doing, because that’s how we’re going to take back America!” she declared, as the crowd cheered. In a subsequent interview, she described herself as an early member of the movement, joking, “I was part of the Tea Party before it was cool!” She explained that the role of Americans for Prosperity was to help “educate” Tea Party activists on policy details, and to give them “next-step training” after their rallies, so that their political energy could be channelled “more effectively.” And she noted that Americans for Prosperity had provided Tea Party activists with lists of elected officials to target. She said of the Kochs, “They’re certainly our people. David’s the chairman of our board. I’ve certainly met with them, and I’m very appreciative of what they do.”

Venable honored several Tea Party “citizen leaders” at the summit. The Texas branch of Americans for Prosperity gave its Blogger of the Year Award to a young woman named Sibyl West. On June 14th, West, writing on her site, described Obama as the “cokehead in chief.” In an online thread, West speculated that the President was exhibiting symptoms of “demonic possession (aka schizophrenia, etc.).” The summit featured several paid speakers, including Janine Turner, the actress best known for her role on the television series “Northern Exposure.” She declared, “They don’t want our children to know about their rights. They don’t want our children to know about a God!”

During a catered lunch, Venable introduced Ted Cruz, a former solicitor general of Texas, who told the crowd that Obama was “the most radical President ever to occupy the Oval Office,” and had hidden from voters a secret agenda—“the government taking over our economy and our lives.” Countering Obama, Cruz proclaimed, was “the epic fight of our generation!” As the crowd rose to its feet and cheered, he quoted the defiant words of a Texan at the Alamo: “Victory, or death!”

Americans for Prosperity has worked closely with the Tea Party since the movement’s inception. In the weeks before the first Tax Day protests, in April, 2009, Americans for Prosperity hosted a Web site offering supporters “Tea Party Talking Points.” The Arizona branch urged people to send tea bags to Obama; the Missouri branch urged members to sign up for “Taxpayer Tea Party Registration” and provided directions to nine protests. The group continues to stoke the rebellion. The North Carolina branch recently launched a “Tea Party Finder” Web site, advertised as “a hub for all the Tea Parties in North Carolina.”

The anti-government fervor infusing the 2010 elections represents a political triumph for the Kochs. By giving money to “educate,” fund, and organize Tea Party protesters, they have helped turn their private agenda into a mass movement…

The Republican campaign consultant said of the family’s political activities, “To call them under the radar is an understatement. They are underground!” Another former Koch adviser said, “They’re smart. This right-wing, redneck stuff works for them. They see this as a way to get things done without getting dirty themselves.” Rob Stein, a Democratic political strategist who has studied the conservative movement’s finances, said that the Kochs are “at the epicenter of the anti-Obama movement. But it’s not just about Obama. They would have done the same to Hillary Clinton. They did the same with Bill Clinton. They are out to destroy progressivism.”

Oddly enough, the fiercely capitalist Koch family owes part of its fortune to Joseph Stalin… In 1927, (the Koch brother’s father, Fred) invented a more efficient process for converting oil into gasoline, but, according to family lore, America’s major oil companies regarded him as a threat and shut him out of the industry. Unable to succeed at home, Koch found work in the Soviet Union. In the nineteen-thirties, his company trained Bolshevik engineers and helped Stalin’s regime set up fifteen modern oil refineries. Over time, however, Stalin brutally purged several of Koch’s Soviet colleagues. Koch was deeply affected by the experience, and regretted his collaboration. He returned to the U.S. In the headquarters of his company, Rock Island Oil & Refining, in Wichita, he kept photographs aimed at proving that some of those Soviet refineries had been destroyed in the Second World War. Gus diZerega, a former friend of Charles Koch, recalled, “As the Soviets became a stronger military power, Fred felt a certain amount of guilt at having helped build them up. I think it bothered him a lot.”

In 1958, Fred Koch became one of the original members of the John Birch Society, the arch-conservative group known, in part, for a highly skeptical view of governance and for spreading fears of a Communist takeover. Members considered President Dwight D. Eisenhower to be a Communist agent. In a self-published broadside, Koch claimed that “the Communists have infiltrated both the Democrat and Republican Parties.” He wrote admiringly of Benito Mussolini’s suppression of Communists in Italy, and disparagingly of the American civil-rights movement. “The colored man looms large in the Communist plan to take over America,” he warned. Welfare was a secret plot to attract rural blacks to cities, where they would foment “a vicious race war.” In a 1963 speech that prefigures the Tea Party’s talk of a secret socialist plot, Koch predicted that Communists would “infiltrate the highest offices of government in the U.S. until the President is a Communist, unknown to the rest of us.”

Members of the John Birch Society developed an interest in a school of Austrian economists who promoted free-market ideals. Charles and David Koch were particularly influenced by the work of Friedrich von Hayek, the author of “The Road to Serfdom” (1944), which argued that centralized government planning led, inexorably, to totalitarianism. Hayek’s belief in unfettered capitalism has proved inspirational to many conservatives, and to anti-Soviet dissidents; lately, Tea Party supporters have championed his work. In June, the talk-radio host Glenn Beck, who has supported the Tea Party rebellion, promoted “The Road to Serfdom” on his show; the paperback soon became a No. 1 best-seller on Amazon. (Beck appears to be a fan of the Kochs; in the midst of a recent on-air parody of Al Gore, Beck said, without explanation, “I want to thank Charles Koch for this information.” Beck declined to elaborate on the relationship.)

Fred Koch’s will made his sons extraordinarily wealthy. David Koch joked about his good fortune in a 2003 speech… “You might ask: How does David Koch happen to have the wealth to be so generous? Well, let me tell you a story. It all started when I was a little boy. One day, my father gave me an apple. I soon sold it for five dollars and bought two apples and sold them for ten. Then I bought four apples and sold them for twenty. Well, this went on day after day, week after week, month after month, year after year, until my father died and left me three hundred million dollars!”

As their fortunes grew, Charles and David Koch became the primary underwriters of hard-line libertarian politics in America. Charles’s goal, as Doherty described it, was to tear the government “out at the root.” The brothers’ first major public step came in 1979, when Charles persuaded David, then thirty-nine, to run for public office. They had become supporters of the Libertarian Party, and were backing its Presidential candidate, Ed Clark, who was running against Ronald Reagan from the right. Frustrated by the legal limits on campaign donations, they contrived to place David on the ticket, in the Vice-Presidential slot; upon becoming a candidate, he could lavish as much of his personal fortune as he wished on the campaign. The ticket’s slogan was “The Libertarian Party has only one source of funds: You.” In fact, its primary source of funds was David Koch, who spent more than two million dollars on the effort…

Charles Koch seems to have approached both business and politics with the deliberation of an engineer. “To bring about social change,” he told Doherty, requires “a strategy” that is “vertically and horizontally integrated,” spanning “from idea creation to policy development to education to grassroots organizations to lobbying to litigation to political action.” The project, he admitted, was extremely ambitious. “We have a radical philosophy,” he said.

In 1977, the Kochs provided the funds to launch the nation’s first libertarian think tank, the Cato Institute. According to the Center for Public Integrity, between 1986 and 1993 the Koch family gave eleven million dollars to the institute. Today, Cato has more than a hundred full-time employees, and its experts and policy papers are widely quoted and respected by the mainstream media. It describes itself as nonpartisan, and its scholars have at times been critical of both parties. But it has consistently pushed for corporate tax cuts, reductions in social services, and laissez-faire environmental policies.

When President Obama, in a 2008 speech, described the science on global warming as “beyond dispute,” the Cato Institute took out a full-page ad in the Times to contradict him. Cato’s resident scholars have relentlessly criticized political attempts to stop global warming as expensive, ineffective, and unnecessary. Ed Crane, the Cato Institute’s founder and president, told me that “global-warming theories give the government more control of the economy.”

“Ideas don’t happen on their own,” Matt Kibbe, the president of FreedomWorks, a Tea Party advocacy group, told me. “Throughout history, ideas need patrons.” The Koch brothers, after helping to create Cato and Mercatus, concluded that think tanks alone were not enough to effect change. They needed a mechanism to deliver those ideas to the street, and to attract the public’s support. In 1984, David Koch and Richard Fink created yet another organization, and Kibbe joined them. The group, Citizens for a Sound Economy, seemed like a grassroots movement, but according to the Center for Public Integrity it was sponsored principally by the Kochs, who provided $7.9 million between 1986 and 1993. Its mission, Kibbe said, “was to take these heavy ideas and translate them for mass America. . . . We read the same literature Obama did about nonviolent revolutions—Saul Alinsky, Gandhi, Martin Luther King. We studied the idea of the Boston Tea Party as an example of nonviolent social change. We learned we needed boots on the ground to sell ideas, not candidates.” Within a few years, the group had mobilized fifty paid field workers, in twenty-six states, to rally voters behind the Kochs’ agenda. David and Charles, according to one participant, were “very controlling, very top down. You can’t build an organization with them. They run it.”

Around this time, the brothers faced a political crisis. In 1989, the Senate Select Committee on Indian Affairs investigated their business and released a scathing report accusing Koch Oil of “a widespread and sophisticated scheme to steal crude oil from Indians and others through fraudulent mismeasuring.”    …

The Kochs continued to disperse their money, creating slippery organizations with generic-sounding names, and this made it difficult to ascertain the extent of their influence in Washington. In 1990, Citizens for a Sound Economy created a spinoff group, Citizens for the Environment, which called acid rain and other environmental problems “myths.” When the Pittsburgh Post-Gazette investigated the matter, it discovered that the spinoff group had “no citizen membership of its own.”

In 1997, another Senate investigation began looking into what a minority report called “an audacious plan to pour millions of dollars in contributions into Republican campaigns nationwide without disclosing the amount or source,” in order to evade campaign-finance laws. A shell corporation, Triad Management, had paid more than three million dollars for attack ads in twenty-six House races and three Senate races. More than half of the advertising money came from an obscure nonprofit group, the Economic Education Trust. The Senate committee’s minority report suggested that “the trust was financed in whole or in part by Charles and David Koch of Wichita, Kansas.” The brothers were suspected of having secretly paid for the attack ads, most of which aired in states where Koch Industries did business. In Kansas, where Triad Management was especially active, the funds may have played a decisive role in four of six federal races. The Kochs, when asked by reporters if they had given the money, refused to comment. In 1998, however, the Wall Street Journal confirmed that a consultant on the Kochs’ payroll had been involved in the scheme. Charles Lewis, of the Center for Public Integrity, described the scandal as “historic. Triad was the first time a major corporation used a cutout”—a front operation—“in a threatening way. Koch Industries was the poster child of a company run amok.”

During the Clinton Administration, the energy industry faced increased scrutiny and regulation. In the mid-nineties, the Justice Department filed two lawsuits against Koch Industries, claiming that it was responsible for more than three hundred oil spills, which had released an estimated three million gallons of oil into lakes and rivers. The penalty was potentially as high as two hundred and fourteen million dollars. In a settlement, Koch Industries paid a record thirty-million-dollar civil fine, and agreed to spend five million dollars on environmental projects.

In 1999, a jury found Koch Industries guilty of negligence and malice in the deaths of two Texas teen-agers in an explosion that resulted from a leaky underground butane pipeline. (In 2001, the company paid an undisclosed settlement.) And in the final months of the Clinton Presidency the Justice Department levelled a ninety-seven-count indictment against the company, for covering up the discharge of ninety-one tons of benzene, a carcinogen, from its refinery in Corpus Christi, Texas. The company was liable for three hundred and fifty million dollars in fines, and four Koch employees faced up to thirty-five years in prison. The Koch Petroleum Group eventually pleaded guilty to one criminal charge of covering up environmental violations, including the falsification of documents, and paid a twenty-million-dollar fine. David Uhlmann, a career prosecutor who, at the time, headed the environmental-crimes section at the Justice Department, described the suit as “one of the most significant cases ever brought under the Clean Air Act.” He added, “Environmental crimes are almost always motivated by economics and arrogance, and in the Koch case there was a healthy dose of both.”

During the 2000 election campaign, Koch Industries spent some nine hundred thousand dollars to support the candidacies of George W. Bush and other Republicans. During the Bush years, Koch Industries and other fossil-fuel companies enjoyed remarkable prosperity. The 2005 energy bill, which Hillary Clinton dubbed the Dick Cheney Lobbyist Energy Bill, offered enormous subsidies and tax breaks for energy companies. The Kochs have cast themselves as deficit hawks, but, according to a study by Media Matters, their companies have benefitted from nearly a hundred million dollars in government contracts since 2000.

In 2004, Citizens for a Sound Economy was accused of illegitimately throwing its weight behind Bush’s reëlection. The group’s Oregon branch had attempted to get Ralph Nader on the Presidential ballot, in order to dilute Democratic support for John Kerry. Critics argued that it was illegal for a tax-exempt nonprofit organization to donate its services for partisan political purposes…

The Kochs have long depended on the public’s not knowing all the details about them. They have been content to operate what David Koch has called “the largest company that you’ve never heard of.” But with the growing prominence of the Tea Party, and with increased awareness of the Kochs’ ties to the movement, the brothers may find it harder to deflect scrutiny. Recently, President Obama took aim at the Kochs’ political network. Speaking at a Democratic National Committee fund-raiser, in Austin, he warned supporters that the Supreme Court’s recent ruling in the Citizens United case—which struck down laws prohibiting direct corporate spending on campaigns—had made it even easier for big companies to hide behind “groups with harmless-sounding names like Americans for Prosperity.” Obama said, “They don’t have to say who, exactly, Americans for Prosperity are. You don’t know if it’s a foreign-controlled corporation”—or even, he added, “a big oil company.” ♦

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