Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right
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Another veteran of Citizens for a Sound Economy concluded that while the Kochs loved liberty as an abstraction, “they were very controlling, very top-down. You can’t build an organization with them. They run it.”
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To run this more political side of the operation, the Kochs hired Tim Phillips, a political veteran who had worked with Ralph Reed, the former head of the Christian Coalition. Reed was regarded as the religious Right’s savviest political operative. He and Phillips had co-founded Century Strategies, a dynamo of a campaign-consulting firm that became notorious for its close and lucrative business ties to Jack Abramoff, a lobbyist who went to prison for defrauding millions of dollars from Native American casino owners, among other clients. Phillips was not charged in connection with the scandal ...more
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Pundits, opponents, and disillusioned supporters would blame Obama for squandering the promise of his administration. Certainly he and his administration made their share of mistakes. But it is hard to think of another president who had to face the kind of guerrilla warfare waged against him almost as soon as he took office. A small number of people with massive resources orchestrated, manipulated, and exploited the economic unrest for their own purposes. They used tax-deductible donations to fund a movement to slash taxes on the rich and cut regulations on their own businesses. While they ...more
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As his fellow traders whistled and cheered, he went on to say, “We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” From the start, the analogy was inapt. As Michael Grunwald, author of The New New Deal, a richly reported book about Obama’s stimulus plan, observed, “The Boston Tea Party was a protest against an unelected leader who raised taxes, while Obama was an elected leader who had just cut them.”
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To begin with, the Tea Party was not “a new strain” in American politics. The scale was unusual, but history had shown that similar reactionary forces had attacked virtually every Democratic president since Franklin Roosevelt. Earlier business-funded right-wing movements, from the Liberty League to the John Birch Society to Scaife’s Arkansas Project, all had cast Democratic presidents as traitors, usurpers, and threats to the Constitution. The undeniable element of racial resentment that tinged many Tea Party rallies was also an old and disgracefully enduring story in American politics. Nor ...more
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What Obama was up against was a new form of permanent campaign. It was waged not by politicians but by people whose wealth gave them the ability to fund their own private field operations with which they could undermine the outcome of the election. So-called outside money—that spent by individuals and groups outside of the campaigns themselves—exploded during the Obama years. Much attention was paid to the portion of this spending that was directed at elections. Less attention was paid to the equally unrivaled role that outside money played in influencing the way the country was governed. Most ...more
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The conventional wisdom at the beginning of the Obama presidency was that the 2008 election had been such a wipeout for Republicans that their only hope of staying relevant was to cut deals with Obama, who was seen as far too popular to oppose. But those who expected compromise—which included the president and his top aides—hadn’t noticed the growing extremism in the Grand Old Party. Even before the new congressional session began, Eric Cantor, a lawyer from Richmond, Virginia, who was about to become the new minority whip in the House, told a handful of trusted allies in a private planning ...more
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At their first official leadership retreat in January 2009, the model that the House Republicans chose to emulate was the Taliban. The Texas congressman Pete Sessions, the new leader of the Republican House campaign committee, held up Afghanistan’s infamous Islamic extremists as providing an example of how they could wage “asymmetric warfare.” The country might be in an economic crisis, but governing, he told his colleagues, was not the reason they had been elected. As he flashed through a slide presentation at the Annapolis Inn, he asked his colleagues, “If the Purpose of the Majority is to ...more
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Steve LaTourette, a longtime Republican moderate congressman from Ohio who was a close friend of Boehner’s, explained, “In the past, it was rare that someone would run against an incumbent in their own party. But the money that these outside groups have is what gives these people liquid courage to run against an incumbent.” He described the outside donors as “a bunch of rich people who you can count on maybe two hands who have an inordinate impact. One or two might have been the guy in high school with the pocket protector picking his nose, but now he’s inherited $40 million and has his chance ...more
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The Republican leadership, according to an anecdote related by Grunwald, told GOP members of the House that as one of them, Jerry Lewis, a member of the House Appropriations Committee, put it, “We can’t play.” David Obey, the Democratic chairman of the House Appropriations Committee, was incensed at the lack of cooperation. “What they said right from the get-go,” he said, was that “it doesn’t matter what the hell you do, we ain’t going to help you. We’re going to stand on the sidelines and bitch.” The Republicans of course saw it differently. They accused Obama of being too partisan and took ...more
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Bill Burton, the deputy press secretary for Obama in the White House, looks back at the level of obstruction in the administration’s first month as a complete shock. “They turned on Obama so early,” he later recalled ruefully. “Not only did we not have the answers yet, we barely knew where to sit down. The chairs in the White House were still spinning from the people who had left them.” Looking back, Burton shook his head at the administration’s naïveté. “No one at the time saw it coming.” Specifically, he said, “We didn’t really see the force, the outside money, until after he was elected. ...more
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Within two months of Obama taking office, he recalled, the political environment had been transformed. “In January, we were working with the Republicans on an economic recovery package grounded firmly in centrist thinking,” he recalls. “The mainstream economic view was that the size of the calamity required massive economic spending. We asked the Republicans for their ideas. We were getting cooperation. Letters from all sorts of members of Congress were coming in with their heartfelt ideas. One high-ranking member of the House Republicans even suggested high-speed rail! But by early February, ...more
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Among this group’s earlier political efforts was a stealth attempt in the early 1990s to get voters to approve ballot measures imposing congressional term limits. Experts suggested that term limits would hurt Democrats, who had more congressional incumbents at the time, and also strengthen the power of outsiders with money, like themselves. As was true of the later Tea Party movement, the supporters of term limits described their movement as a grassroots outpouring fueled by populist outrage at entrenched power. In California, the Kochs were rumored to be behind a 1992 referendum on whether to ...more
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As the operatives linked forces online, they set a date for the first national Tea Party protests, February 27. That day, more than a dozen protests were held in cities across the country. The organizers claimed 30,000 participants, but the crowds in many places were still sparse. But on April 15, when there was a second series of “Tax Day” Tea Party rallies across the country, the numbers had increased tenfold, to 300,000. The Heritage Foundation, the Cato Institute, and Americans for Prosperity provided speakers, talking points, press releases, transportation, and other logistical support. ...more
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No organization played a bigger early role than FreedomWorks, the estranged sibling of Americans for Prosperity, which was funded by donations from companies like Philip Morris and from billionaires like Richard Mellon Scaife. “I’d argue that when the Tea Party took off, FreedomWorks had as much to do with making it an effective movement as anyone,” said Armey.
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FreedomWorks, it was later revealed, also had some hired help. The 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.” “We ...more
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Beck, whose views were shaped by W. Cleon Skousen, the fringe theorist whose political paranoia had inspired the John Birch Society, reached a daily audience of some two million, disseminating the ideas of early conservative extremists like Fred Koch on a whole new scale. Frank Luntz describes the impact as historic. “That rant from Santelli woke up the upper middle class and the investor class, and then Glenn Beck woke up everyone else. Glenn Beck’s show is what created the Tea Party movement,” he said, adding, “It started on Tax Day 2009, and it exploded at town hall meetings in July.
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Another factor was Obama’s aversion to confrontation and hot rhetoric, which resulted in largely milquetoast messaging about Wall Street. Unlike Franklin Roosevelt, who blamed the “money changers” for the Great Depression in his first inaugural address, Obama’s public utterances were muted. In a matter of weeks, critics argued that he had ceded the mantle of populism to his Tea Party opponents. “In an atmosphere primed for a populist b...
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Fink, the Kochs’ political lieutenant, professed to be discomfited by the racism. But David Koch echoed the specious claims that Obama was somehow African in his outlook, even though he was born in America, abandoned by his Kenyan father as a toddler, raised mainly in Hawaii by his American mother, and had never set foot on the African continent until he was an adult. In a revealing later interview with the conservative pundit Matthew Continetti, David nonetheless disparaged Obama as “the most radical president we’ve ever had as a nation” and opined that the president’s radicalism derived from ...more
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At the Kochs’ secretive January summit in Palm Springs, one of the group’s largest donors, Randy Kendrick, posed a question. Her shoulder-length cascades of frosted hair and flashy jewelry made her an unlikely-looking rabble-rouser, but Kendrick was an outspoken lawyer who had abandoned the women’s movement decades earlier for the Goldwater Institute, a far-right libertarian think tank in Phoenix, where she was on the board of directors. She and her husband, Ken, the co-owner and managing general partner of the Arizona Diamondbacks baseball team, had the kind of fortune that made people take ...more
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She argued that the choice of private health care had saved her from spending the rest of her life confined to a wheelchair after a leg injury. She had initially been told that because she suffered from a rare disorder, she couldn’t risk surgery. But a specialist at the renowned Cleveland Clinic had found a successful treatment. She survived the surgery and was now an active mother of teenage twins. “Randy was convinced that if America had government health care like Canada or Great Britain, she would be dead,” a friend who asked not to be identified confided. It was a powerful testimonial, ...more
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The Kochs of course opposed the expansion of any government social program, including any potential universal health-care plan. But the sources said they hadn’t focused much on the issue. They had assumed the health-care industry would fight its own battles, in its own interest, so they hadn’t thought they’d need to step in. Instead, the Obama administration had cut deals with much of the health-care industry, winning much of its support. “They were unprepared on the issue,” said one of the sources. Despite their later reputation for orchestrating opposition to Obamacare, it was actually ...more
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The first tangible sign of this underground funding stream was a television ad called “Survivor.” It featured a Canadian woman named Shona Holmes who said, “I survived a brain tumor,” but claimed that if she had been forced to wait for treatment from Canada’s government health service, “I’d be dead.” Instead, she said, she had received lifesaving treatment in Arizona. Fact-checkers later revealed that her dramatic story was highly dubious and that in fact the reason the Canadian health authorities hadn’t expedited her treatment was that she actually had a benign cyst on her pituitary gland. ...more
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Luntz used polls, focus groups, and “instant response dial sessions” to perfect the language of health-care attacks and then tested the lines on average Americans in St. Louis, Missouri. Out of these sessions, Luntz compiled a seminal twenty-eight-page confidential memo in April warning that there was no groundswell of public opposition to Obama’s health-care plan at that point; in fact, there was a groundswell of public support. By far the most effective approach to turning the public against the program, Luntz advised, was to label it a “government takeover.” He wrote, “Takeovers are like ...more
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Goodyear, the firm’s managing partner and chief executive, had founded DCI Group in 1996 with two Republican campaign operatives while he was handling outside public relations for the huge tobacco company R. J. Reynolds. The work had shown the trio that ordinary campaign tools could succeed at marketing even the most toxic products. The key, according to an internal 1990 memo the tobacco industry was forced to disclose in a later legal settlement, was to disguise the company’s financial interest as a matter of great principle. Instead of pitching cigarette sales, it would create fake “smokers’ ...more
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That summer, traditional town hall meetings held by Democratic congressmen and senators returning to their districts and states exploded in acrimony. The anger appeared entirely spontaneous. But the investigative reporter Lee Fang discovered that a volunteer with FreedomWorks was circulating a memo instructing Tea Partiers on how to disrupt the meetings. Bob MacGuffie, who ran a Web site called RightPrinciples.com, advised opponents of Obama’s policies to “pack the hall…spread out” to make their numbers seem more significant, and to “rock-the-boat early in the Rep’s presentation…to yell out ...more
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To be sure, the numbers on the far right had grown. Membership in the Liberty League, the anti–New Deal corollary to the Tea Party during the 1930s, has been estimated at 75,000, while membership in the John Birch Society in the 1960s has been estimated at 100,000 core members. Overall, at its height, 5 percent of Americans approved of the John Birch Society. The Tea Party movement, in contrast, was estimated by The New York Times to have won the support of 18 percent of the population at its zenith, but at its core, according to the researcher Devin Burghart, were some 330,000 activists who ...more
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For most of the world’s population the costs of inaction on climate change were far greater than those of action. But for the fossil fuel industry, as Mann put it, “it’s like the switch from whale oil in the nineteenth century. They’re fighting to maintain the status quo, no matter how dumb.”
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Kert Davies, the director of research at Greenpeace, the liberal environmental group, spent months trying to trace the funds flowing into a web of nonprofit organizations and talking heads, all denying the reality of global warming as if working from the same script. What he discovered was that from 2005 to 2008, a single source, the Kochs, poured almost $25 million into dozens of different organizations fighting climate reform. The sum was staggering. His research showed that Charles and David had outspent what was then the world’s largest public oil company, ExxonMobil, by a factor of three.
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Robert Brulle, a Drexel University professor of sociology and environmental science, discovered that between 2003 and 2010 over half a billion dollars was spent on what he described as a massive “campaign to manipulate and mislead the public about the threat posed by climate change.” The study examined the tax records of more than a hundred nonprofit organizations engaged in challenging the prevailing science on global warming. What it found was, in essence, a corporate lobbying campaign disguised as a tax-exempt, philanthropic endeavor. Some 140 conservative foundations funded the campaign, ...more
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Brulle found that as the money was dispersed, three-quarters of the funds from these and other sources financing what he called the “climate change counter-movement” were untraceable.
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Rather than funding the campaign directly, a growing number of private conservative foundations and donors had begun directing their contributions through an organization called DonorsTrust that in essence became a screen for the right wing, behind which fingerprints disappeared from the cash. Housed in a humdrum brick building in Alexandria, Virginia, DonorsTrust and its affiliate, Donors Capital Fund, were memorably described by Mother Jones’s Andy Kroll as “the dark-money ATM of the conservative movement.”
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Between 1999 and 2015, DonorsTrust redistributed some $750 million from the pooled contributions to myriad conservative causes under its own name. Ordinarily, under the law, in exchange for their tax breaks, private foundations such as the Charles G. Koch Foundation were required to publicly disclose the charitable groups to whom they made their grants. It was one way to assure that these public service organizations were in fact serving the public. But donor-advised funds defeated this minimum transparency. Ball argued that the mechanism wasn’t suspicious, or even unusual, and that liberals ...more
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What Brulle noticed as he studied the money behind climate change denial was that as criticism of those blocking reform increased around 2007, tens of millions of dollars of contributions from fossil fuel interests like Koch and ExxonMobil seemed to have disappeared from the public fight. Meanwhile, a growing and commensurate amount of anonymous money from DonorsTrust started funding the climate change countermovement. In 2003, for instance, Brulle found that DonorsTrust money was the source of only 3 percent of the 140 groups whose financial records he studied. By 2010, it had grown to 24 ...more
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What much of the stealth funding bought was the dissemination of scientific doubt. The fossil fuel industry thus followed the same deceptive playbook that had been developed by the public relations firm Hill & Knowlton on behalf of the tobacco companies in the 1960s, in order to fabricate uncertainty about the science linking smoking to cancer. As the firm’s memo had notoriously put it, “Doubt is our product.” To add credibility to their side, the tobacco companies funded a network of official-sounding institutes and smokers’ rights groups. This strategy soon characterized the global warming ...more
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Inhofe’s spokesman, Marc Morano, had a reputation as a professional “pit bull,” as Mann later put it, derived from his earlier role promoting the claims of the Swift Boat Veterans for Truth, a group that had smeared John Kerry’s military record during his 2004 presidential campaign. At the time, Morano was working for a conservative news outlet that was funded in part by the Scaife, Bradley, and Olin Foundations. By 2006, Morano had moved on to “swiftboating” scientists. “You’ve got to name names and you’ve got to go after individuals,” he explained in an interview with the documentary ...more
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The George W. Bush years, meanwhile, proved a bonanza for the fossil fuel industry, which had thrown its weight behind his election. The coal industry in particular had played a major role in delivering West Virginia’s five electoral votes to Bush in 2000, sealing a victory that would have gone to Al Gore had he carried the formerly Democratic state instead. “State political veterans and top White House staffers concur that it was basically a coal-fired victory,” The Wall Street Journal wrote. The industry was lavishly rewarded. Vice President Dick Cheney, a former CEO of the oil-field ...more
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Climate contrarians also recruited conservative evangelical Christian leaders, who distrusted government in general and had impressive political and communications clout. One by-product of this pact was an organization in the Washington suburbs called the Cornwall Alliance, which released a hit film in evangelical circles called Resisting the Green Dragon that equated environmentalism with worship of a false god. It described global warming as “one of the greatest deceptions of our day.” Climate change became such a hot-button issue for Christian fundamentalists that Richard Cizik, a vice ...more
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The Kochs themselves said little about their views on climate change at the time. But in one interview, David Koch suggested that if real, it would prove a boon. “The Earth will be able to support enormously more people because a far greater land area will be available to produce food,” he argued. Charles’s thinking was reflected in the company’s in-house newsletter, which featured an article titled “Blowing Smoke.” “Why are such unproven or false claims promoted?” it asked. Rather than fighting global warming, the newsletter suggested, mankind would be better off adapting to it. “Since we ...more
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Within days, Inhofe and other Republicans in Congress who were recipients of Koch campaign donations demanded an investigation into Mann. They sent threatening letters to Penn State, where he was by then a tenured professor. Later, Virginia’s attorney general, Ken Cuccinelli, a graduate of the George Mason School of Law, would also subpoena Mann’s former employer, the University of Virginia, demanding all records relating to his decade-old academic research, regardless of libertarians’ professed concerns about government intrusion. Eventually, Virginia’s Supreme Court dismissed its own ...more
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It was particularly disturbing to Mann that there appeared to be overlap between hard-core climate change deniers and Second Amendment enthusiasts, whipped up, he came to believe, by “cynical special interests.” Mann says, “The disaffected, the people who have trouble putting dinner on the table, were being misled into believing that action on climate change meant that ‘They’ want to take away your freedom and probably your guns, too. There was a very skillful campaign to indoctrinate them,” he said. “We’ve seen Second Amendment enthusiasts take action against abortion doctors. There’s an ...more
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“Gridlock is the greatest friend a global warming skeptic has, because that’s all you really want,” Morano later acknowledged. “There’s no legislation we’re championing. We’re the negative force. We are just trying to stop stuff.”
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The DeVoses were devout members of the Dutch Reformed Church, a renegade branch of Calvinism brought to America by Dutch immigrants, many of whom settled around Lake Michigan. By the 1970s, the church had become a vibrant and, some would say, vitriolic center of the Christian Right. Members crusaded against abortion, homosexuality, feminism, and modern science that conflicted with their teachings. Extreme free-market economic theories rejecting government intervention and venerating hard work and success in the Calvinist tradition were also embraced by many followers. Within this community of ...more
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Amway in fact was structured to avoid federal taxes. DeVos and Van Andel achieved this by defining the door-to-door salesmen who sold their beauty, cleaning, and dietary products as “independent business owners” rather than employees. This enabled the company’s owners to skip Social Security contributions and other employee benefits, greatly enhancing their bottom line. It resulted, however, in numerous legal skirmishes with the Internal Revenue Service and the Federal Trade Commission (FTC). In a charge that was later dropped, the government alleged that the company was little more than a ...more
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The flood of money from Amway’s founders failed, though, to quash an investigation by the Canadian government into a tax-fraud scheme in which both DeVos and Van Andel were criminally charged in 1982. The scandal exploded when Kitty McKinsey and Paul Magnusson, then reporters for the Detroit Free Press, shocked readers accustomed to DeVos and Van Andel’s professions of patriotism and religiosity with an exposé tracing an elaborate, thirteen-year-long tax scam directly to the bosses’ offices. At its highest levels, they revealed, Amway had secretly authorized a scheme creating dummy invoices to ...more
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The DeVoses were also deeply involved in the secretive Council for National Policy, described by The New York Times as “a little-known club of a few hundred of the most powerful conservatives in the country,” which it said “met behind closed doors in undisclosed locations for a confidential conference” three times a year. Membership lists were secret, but among the names tied to the organization were Jerry Falwell, Phyllis Schlafly, Pat Robertson, and Wayne LaPierre of the National Rifle Association (NRA). There was overlap with a number of other participants in the Koch seminars, too, ...more
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Conservatives cast their opposition to campaign-finance restrictions as a principled defense of free speech, but McConnell, who was one of the cause’s biggest champions, had occasionally revealed a more partisan motive. As a Republican running for office in Kentucky in the 1970s, when it was almost solidly Democratic, he once admitted “a spending edge is the only thing that gives a Republican a chance to compete.” He had once opened a college class by writing on the blackboard the three ingredients that he felt were necessary to build a political party: “Money, money, money.” In a Senate ...more
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The James Madison Center aimed to make this dream a reality by taking the fight to the courts. In addition to the DeVos family, early donors included several of the most powerful groups on the right, such as the Christian Coalition and the NRA. But the driving force behind the organization was a single-minded lawyer from Terre Haute, Indiana, James Bopp Jr., who was general counsel to the antiabortion National Right to Life Committee. Bopp also became the Madison Center’s general counsel. In fact, Bopp’s law firm and the James Madison Center had the same office address and phone number, and ...more
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In 1997, the same year that she helped found the Madison Center, Betsy DeVos explained her opposition to campaign-finance restrictions. At the time, there was a national outcry against the way both the Democratic and the Republican Parties had evaded contribution limits in the 1996 presidential campaign by paying for what they claimed were “issue” ads rather than campaign ads, with unlimited funds that came to be known as soft money. There was a bipartisan Senate push for reform. But in a guest column in the Capitol Hill newspaper Roll Call, DeVos defended the unlimited contributions. “Soft ...more
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If the DeVoses expected a “return on our investment” in the Madison Center, as Betsy had put it, they got one in the Supreme Court’s Citizens United decision. It “was really Jim [Bopp]’s brainchild,” Richard L. Hasen, an expert on election law at Loyola Law School in Los Angeles told The New York Times. “He has manufactured these cases to present certain questions to the Supreme Court in a certain order and achieve a certain result,” said Hasen. “He is a litigation machine.” Bopp agreed. “We had a 10-year plan to take all this down,” he told the Times. “And if we do it right, I think we can ...more