Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

by Jane Mayer

Much of this activism was cloaked in secrecy and presented as philanthropy, leaving almost no money trail that the public could trace. But cumulatively it formed, as one of their operatives boasted in 2015, a “fully integrated network.”

But the Kochs in particular set a new standard. As Charles Lewis, the founder of the Center for Public Integrity, a nonpartisan watchdog group, put it, “The Kochs are on a whole different level. There’s no one else who has spent

this much money. The sheer dimension of it is what sets them apart. They have a pattern of lawbreaking, political manipulation, and obfuscation. I’ve been in Washington since Watergate, and I’ve never seen anything like it. They are the Standard Oil of our times.

the Kochs portrayed their political philanthropy inside their circle as a matter of noblesse oblige. “If not us, who? If not now, when?” Charles Koch asked in the invitation to one such donor summit,

One former insider in the Kochs’ realm, who declined to be named because he feared retribution, described the early donor summits as a clever means devised by Charles Koch to enlist others to pay for political fights that helped his company’s bottom line.

The participants at the Koch seminars reflected the broader growth in economic inequality in the country, which had reached the level of the Gilded Age in the 1890s. The gap between the top 1 percent of earners in America and everyone else had grown so wide by 2007 that the top 1 percent of the population owned 35 percent of the nation’s private assets and was pocketing almost a quarter of all earnings, up from just 9 percent twenty-five years earlier. Liberal critics, like the New York Times columnist

We are on the road not just to a highly unequal society, but to a society of an oligarchy.

“When you have a few people who are so wealthy that they can effectively buy the political system, the political system is going to tend to serve their interests.

But Jeffrey Winters, a professor at Northwestern University specializing in the comparative study of oligarchies, was one of a growing number of voices who were beginning to argue that America was a “civil oligarchy” in which a tiny and extremely wealthy slice of the population was able to use its vastly superior economic position to promote a brand of politics that served first and foremost itself.

Stiglitz, a Nobel Prize–winning economist, put it, “Wealth begets power, which begets more wealth.

Mike Lofgren, a Republican who spent thirty years observing how wealthy interests gamed the policy-making apparatus in Washington, where he was a staff member on the Senate Budget Committee, decried what he called the “secession” of the rich in which they “disconnect themselves from the civic life of the nation and from any concern about its well-being except as a place to extract loot.

Singer described himself as a Goldwater free-enterprise conservative, and he contributed generously to promoting free-market ideology, but at the same time his firm reportedly sought unusual government help in squeezing several desperately impoverished governments, a contradiction that applied to many participants in the Koch donor network.

Fink reportedly told the billionaire brothers, whose wealth, when combined, put at their disposal the single largest fortune in the world, that if they wanted to beat back the progressive tide that Obama’s election represented, it would take “the fight of their lives.

Koch fought back in the courts for more than fifteen years, finally winning a $1.5 million settlement. He correctly suspected that his opponents bribed at least one presiding judge, an incompetent lush who left the case in the hands of a crooked clerk. “The fact that the judge was bribed completely altered their view of justice,” one longtime family employee suggests. “They believe justice can be bought, and the rules are for chumps.

What happened next has been excised from the official corporate history of Koch Industries.

After mentioning the company’s work in the Soviet Union, the bulk of which ended in 1932, the corporate history skips ahead to 1940, when it says Fred Koch decided to found a new company, Wood River Oil & Refining.

A controversial chapter is missing. After leaving the U.S.S.R., Fred Koch turned to Adolf Hitler’s Third Reich. Hitler became chancellor in 1933, and soon after, his government oversaw and funded massive industrial expansion,

Fred Koch’s willingness to work with the Soviets and the Nazis was a major factor in creating the Koch family’s early fortune.

What if any effect this early experience with authority had on Charles is impossible to know, but it’s interesting that his lifetime preoccupation would become crusading against authoritarianism while running a business over which he exerted absolute control.

In 1958, Fred Koch became one of eleven original members of the John

Birch Society, the archconservative group best known for spreading far-fetched conspiracy theories about secret Communist plots to subvert America.

Ironically, the organization modeled itself on the Communist Party. Stealth and subterfuge were endemic.

To minimize future taxes, Fred Koch took advantage of elaborate estate planning. Among other strategies, he set up a “charitable lead trust” that enabled him to pass on his estate to his sons without inheritance taxes, so long as the sons donated the accruing interest on the principal to charity for twenty years. To maximize their self-interest, in other words, the Koch boys were compelled to be charitable. Tax avoidance was thus the original impetus for the Koch brothers’ extraordinary philanthropy.

This single Koch refinery is now responsible for an estimated 25 percent of the 1.2 million barrels of oil the U.S. imports each day from Canada’s tar sands territories.

The Kochs’ good fortune, however, was the globe’s misfortune, because crude oil derived from Canada’s dirty tar sands requires far greater amounts of energy to produce and so is especially harmful to the environment.

The papers are striking in their radicalism, their disdain for the public, and their belief in the necessity of political subterfuge.

(Interestingly, Charles would go on to issue stock in his own nonprofit think tank, the Cato Institute, in much the same way.)

He also wrote that to fund their future political enterprise, they should, like the John Birch Society, make use of “all modern sales and motivational techniques to raise money and attract donors…including meeting in a home or other place the prospect enjoys being.

Charles cautioned his fellow radicals that to win, they would need to cultivate credible leaders and a positive image, unlike the John Birch Society, requiring them to “work with, rather than combat, the people in the media and arts.” The brothers followed this plan too. David became a lavish supporter of the arts in New York and appeared regularly in the society pages. Charles, meanwhile, kept a lower profile but assiduously invited sympathetic members of the media to his donor summits, such as the talk radio host Glenn Beck, the Washington Post columnist Charles Krauthammer, and the National Review columnist Ramesh Ponnuru. Two of the top donors in the Koch network owned their own news

As for gaining adherents, Charles suggested, their best bet was to focus on “attracting youth” because “this is the only group that is open to a radically different social philosophy.” He would act on this belief in years to come by funneling millions of dollars into educational indoctrination, with free-market curricula and even video games promoting his ideology pitched to prospects as young as grade school.

In hindsight, it seems that David Koch’s 1980 campaign served as a bridge between LeFevre’s radical pedagogy and the Tea Party movement. Indeed the Libertarian Party

standard-bearer that year, Clark, told The Nation that libertarians were getting ready to stage “a very big tea party,” because people were “sick to death” of taxes. The party’s platform, meanwhile, was almost an exact replica of the Freedom School’s radical curriculum. It called for the repeal of all campaign-finance laws and the abolition of the Federal Election Commission (FEC). It also favored the abolition of all government health-care programs, including Medicaid and Medicare. It attacked Social Security as “virtually bankrupt” and called for its abolition, too. The Libertarians also opposed all income and corporate taxes, including capital gains taxes, and called for an end to the prosecution of tax

evaders. Their platform called for the abolition too of the Securities and Exchange Commission, the Environmental Protection Agency, the FBI, and the CIA, among other government agencies. It demanded the abolition of “any laws” impeding employment—by which it meant minimum wage and child labor laws. And it targeted public schools for abolition too, along with what it termed the “compulsory” education of children. The Libertarians also wanted to get rid 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 political reform passed during the twentieth century. In the view o...

According to Doherty’s history, the Kochs came to regard elected politicians as merely “actors playing out a script.” Instead of wasting more time, a confidant of the Kochs’ told Doherty, the brothers now wanted to “supply the themes and words for the scripts.

They defined liberty as its absence, and the unfettered accumulation of enormous private wealth as America’s purpose.

Kochtopus.

Philanthropy, with its guarantees of anonymity, became their chosen instrument. But their goal was patently political: to undo not just Lyndon Johnson’s Great Society and Franklin Roosevelt’s New Deal but Teddy Roosevelt’s Progressive Era, too.

In his history, Rich People’s Movements: Grassroots Campaigns to Untax the One Percent, Martin notes that the passage of the income tax in 1913 was regarded as calamitous by many wealthy citizens, setting off a century-long tug-of-war in which they fought repeatedly to repeal or roll back progressive forms of taxation. Over the next century, wealthy conservatives developed many sophisticated and appealing ways to wrap their antitax views in public-spirited rationales.

He says that in his youth he feared people would dislike him because of it. But he writes that unlike most liberals, as he grew older, he came to feel entitled to his good fortune.

Despite having barely squeaked through prep school, Scaife was

accepted at his father’s college, Yale, from which he was soon expelled following several drunken benders.

As Scaife wrote of the setup, “Isn’t it grand how tax law gets written?

Scaife, in his memoir, describes the method by which his mother was able to pass on her fortune to him tax-free as “a socially useful tax shelter.” He writes,

A consequence, however, was that the tax code turned many extraordinarily wealthy families, intent upon preserving their fortunes, into major forces in America’s civic sector. In order to shelter themselves from taxes, they were required to invent a public philanthropic role. In the instance of both the Kochs and the Scaifes, the tax law ended up spurring the funding of the modern conservative movement.

Private foundations have very few legal restrictions. They are required to donate at least 5 percent 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. In addition, the process often confers an aura of generosity and public-spiritedness on the donors, acting as a salve against class resentment.

Critics, including the former president Theodore Roosevelt, assailed the idea, declaring, “No amount of charity in spending such fortunes can

compensate in any way for the misconduct in acquiring them.

“troubling because they were considered deeply and fundamentally anti-democratic…an entity that would undermine political equality, affect public policies, and could exist in perpetuity.” Unable to gain

In 2013, there were over a hundred thousand private foundations in the United States 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 tax breaks, have grown into 800-billion-pound Goliaths in the public policy realm.