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

by Jane Mayer

The Kochs had long been at war with the EPA, which had ranked Koch Industries one of only three companies in America that was simultaneously a top ten polluter of air, water, and climate.

David Koch complained to the Financial Times that “you’d think we could have more influence” after spending hundreds of millions of dollars on American politics.

Yet virtually every Republican presidential candidate other than Trump pledged fealty to the donors’ wish lists as they jockeyed for their support. The candidates promised to cut taxes for those in the highest brackets, preserve Wall Street loopholes, tolerate the off-shoring of manufacturing jobs and profits, and downgrade or privatize middle-class entitlement programs, including Social Security. Free trade was barely debated. These positions faithfully reflected the agenda of the wealthy donors, but studies showed that they were increasingly out of step with the broad base of not just Democratic but also Republican voters, many of whom had been left behind economically and socially for decades, particularly acutely since the 2008 financial crash.

This faction hoped to use their wealth to advance a strain of conservative libertarian politics that was so far out on the political fringe as recently as 1980, when David Koch ran for vice president of the United States on the Libertarian Party ticket, it received only 1 percent of the American vote. At the time, the conservative icon William F. Buckley Jr. dismissed their views as “Anarcho-Totalitarianism.”

In addition to the Kochs, this group included Richard Mellon Scaife, an heir to the Mellon banking and Gulf Oil fortunes; Harry and Lynde Bradley, midwesterners enriched by defense contracts; John M. Olin, a chemical and munitions company titan; the Coors brewing family of Colorado; and the DeVos family of Michigan, founders of the Amway marketing empire.

They said they were driven by principle, but their positions dovetailed seamlessly with their personal financial interests.

The Kochs vehemently opposed the government taking any action on climate change that would hurt their fossil fuel profits.

for the 2016 election, the political war chest accumulated by the Kochs and their small circle of friends was projected to be $889 million,

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.

The oligarchs in America didn’t rule directly, he argued, but instead used their fortunes to produce political results that favored their interests.

Kochs’ donor list provides another portrait of a fortunate social subset. They were mostly businessmen; very few were women. Fewer still were nonwhite. And while some had made their own fortunes, many others were intent on preserving vast legacies they had inherited.

“The awful truth is that America has two income tax systems, separate and unequal. One system is for the superrich, like Anschutz and his wife, Nancy, who are allowed to delay and avoid taxes on investment gains, among other tax tricks. The other system is for the less than fabulously wealthy.”

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, including the buildup of Germany’s capacity to manufacture fuel for its growing military ambitions.

“Although nobody agrees with me, I am of the opinion that the only sound countries in the world are Germany, Italy, and Japan, simply because they are all working and working hard,” he wrote in a letter to a friend. Koch added, “The laboring people in those countries are proportionately much better off than they are any place else in the world. When you contrast the state of mind of Germany today with what it was in 1925 you begin to think that perhaps this course of idleness, feeding at the public trough, dependence on government, etc., with which we are afflicted is not permanent and can be overcome.”

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

When his own son, Chase, then thirteen, played a halfhearted tennis match, Charles had an employee pick him up and deliver him to a baking, reeking feedlot on one of the family ranches where he was forced to work seven days a week, twelve hours a day. Charles proudly recounted the story with a grin,

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.

Another tactic was to wrap the group’s radical vision in mundane and unthreatening slogans that sound familiar today, such as “less government, more responsibility.”

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.

“It was a stew pot of ideas,” recalled diZerega, who later became a liberal academic, “but if you grew up with more money than God, and felt weird about it, this version of history, where the robber barons were heroes, would certainly make you feel a lot better about it.”

In his deposition, Bill described an emotionally wrenching confrontation in the mid-1960s in which he, Charles, and David tried to force their older brother Frederick, who they believed was gay, to relinquish his claim to a share of the family company, or else they threatened to expose his private life to their father.

“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.

As the company grew, Charles remained in Wichita, working ten-hour days, six days a week. When he proposed to his future wife, Liz, he did so reportedly over the phone, and she could hear him flipping through his busy date book in search of an open day for the wedding. In preparation, he required her to study free-market economics.

A former doorman described Koch as “the cheapest person” in the building. “We would load up his trucks—two vans usually—every weekend for the Hamptons. In and out, in and out, heavy bags. We would never get a tip from Mr. Koch. We would never get a smile from Mr. Koch.” For Christmas, which the doorman had anticipated would make up for the year’s travails, Koch merely gave him a $50 check.

From his earliest years, he writes, Charles’s goal was to achieve total control. “He did not escape his father’s authority until his father died,” he notes. After that, Charles went to great lengths to ensure that neither his brothers nor anyone else could challenge his personal control of the family company. Later clashes with unionized workers at the Pine Bend Refinery and with the expanding regulatory state strengthened his resolve. “Only the governments and the courts remained as sources of authority,” Coppin writes, and if enacted, Charles’s “libertarian policies would eliminate these.”

Around the same time, an obscure conference subsidized by Charles Koch laid out much of the road map for the Kochs’ future attempted takeover of American politics. In 1976, with a contribution of some $65,000 from Charles Koch, the Center for Libertarian Studies in New York City was launched and soon held a conference featuring several leading lights of the libertarian movement. Among those delivering papers on how the fringe movement could obtain genuine power was Charles Koch. The papers are striking in their radicalism, their disdain for the public, and their belief in the necessity of political subterfuge. Speakers proposed that libertarians hide their true antigovernment extremism by banishing the word “anarchism,” because it reminded too many people of “terrorists.” To attract a bigger following, some suggested, they needed to organize synthetic “grassroots” groups and issue meaningless titles to volunteers, without yielding any real control.

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.

They contrived to make David the vice presidential running mate, and thus according to campaign-finance law he could lavish as much of his personal fortune as he wished on the campaign rather than being limited by the $1,000 donation cap.

Over the next century, wealthy conservatives developed many sophisticated and appealing ways to wrap their antitax views in public-spirited rationales. As they waged this battle, they rarely mentioned self-interest, but they consistently opposed high taxes that fell most heavily on themselves.

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.

In 2013, there were over a hundred thousand private foundations in the United States with assets of over $800 billion.

Income in America during the mid-1970s was as equally distributed as at any time in the country’s history.

He argued that conservatives should control the political debate at its source by demanding “balance” in textbooks, television shows, and news coverage.

The best way to do this, Hayek told Fisher, who took notes, was to start “a scholarly institute” that would wage a “battle of ideas.”

To succeed, however, required some deception about the think tank’s true aims. Fisher’s partner in the venture, Oliver Smedley, wrote to Fisher saying that they needed to be “cagey” and disguise their organization as neutral and nonpartisan. Choosing a suitably anodyne name, they founded the grandfather of libertarian think tanks in London, calling it the Institute of Economic Affairs. Smedley wrote that it was “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.”

Powell and others in the newly aggressive corporate vanguard inverted from a negative into a positive the accusation that conservative organizations were slanted by successfully redefining existing establishment organizations like Brookings and The New York Times as equally biased but on the liberal side.

The benefit was a far more pluralistic intellectual climate, beyond liberal orthodoxy. The hazard, however, was that partisan shills would create “balance” based on fraudulent research and deceive the public about pressing issues in which their sponsors had financial interests.

Scaife’s extraordinary self-financed and largely tax-deductible vendetta against Clinton demonstrated the impact that a single wealthy extremist could have on national affairs, and served as something of a dress rehearsal for the Kochs’ later war against Obama. Presidents might surround themselves with Secret Service agents and phalanxes of lawyers and operatives, but Scaife proved how hard it was to defend against unlimited, untraceable spending by an opponent hiding behind nonprofit front groups.

The rapprochement testified both to Hillary Clinton’s political skills and to Scaife’s almost childlike impressionability. Repeatedly in his memoir, he changes his political views after meeting antagonists in person, whether the liberal Kennedy family member Sargent Shriver or the Democratic congressman Jack Murtha. “Like many billionaires, he lived in a bubble,” concluded his friend Ruddy (whose relations with the Clintons also thawed). Contrary information rarely penetrated it. Instead, Scaife’s family fortune enabled him to build a political bulwark reinforcing his ideology and imposing it on the rest of the country.

It’s impossible to know exactly how much money private foundations and trusts, funded by a handful of extraordinarily wealthy families, poured into the right-wing think tanks beginning in the 1970s or how effective it was.

When one ALEC administrator complained that Scaife’s foundation had too much influence over the organization’s agenda, a Scaife employee retorted that they operated on “the Golden Rule—whoever has the gold rules.”

Between 1981 and 1986, the top income tax rate was cut from 70 percent to 28 percent. Meanwhile, taxes on the bottom four-fifths of earners rose. Economic inequality, which had flatlined, began to climb.

Although Olin regarded himself as self-made and disapproved of the New Deal–era government social programs, beliefs that fueled his later financing of free-market ideology, the federal government was one of the greatest contributors to his company’s growth and his personal wealth. As Miller’s biography details, the firm’s huge government arms contracts in World Wars I and II dramatically improved its bottom line.

Simon’s foreboding, like that of Olin, is somewhat hard to fathom given that both men had reached pinnacles of American power and wealth. They were both millionaires many times over, with more properties, possessions, titles, honors, and accomplishments than they could easily count. Both men were born into privilege. Like Scaife, Simon was chauffeured to grade school, and his family was so wealthy he likened his parents to the carefree and careless characters in F. Scott Fitzgerald’s fiction. Nonetheless, he regarded himself proudly as self-made.

The key, Piereson explained, was to fund the conservative intelligentsia in such a way that it would not “raise questions about academic integrity.” Instead of trying to earmark a chair or dictate a faculty appointment, both of which he noted were bound to “generate fierce controversy,” he suggested that conservative donors look for like-minded faculty members whose influence could be enlarged by outside funding.

“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 it isn’t in fact.”

Olin fellows in Law and Economics, meanwhile, began to beat a path to the top of the legal profession, winning Supreme Court clerkships at a rate of approximately one each year, starting in 1985.

revealed that 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.

Simultaneously, the Olin Foundation 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 from a pipe dream shared by three ragtag law students into a powerful professional network of forty-two thousand right-leaning lawyers, with 150 law school campus chapters and about seventy-five lawyers’ groups nationally.