The Koch Brothers and the Weaponization of Philanthropy

There have always been wealthy people who have tried to use their money to impose their will upon the nation.  That is the point made by Isaac William Martin in his book Rich People’s Movements: Grassroots Campaigns to Untax the One Percent.  Martin suggests that the wealthy have a primal fear of democracy.  Since they are wildly outnumbered, the non-wealthy could move against them and confiscate their wealth if they chose to.  The passage of the sixteenth amendment allowing the federal government to levy an income tax came to be viewed as a “revolutionary” development, and the imposition of a progressive income tax was certainly considered a form of confiscation.

The development of the Tea party Movement and the political and social activism of the wealthy Koch brothers and their allies are often viewed as recent developments.  Martin warns us that we are mistaken.  What we are seeing is merely another chapter, albeit a more threatening chapter, of activism by the wealthy attempting to redefine our social contract as a means of protecting their accumulation of wealth.  To make that point, he informs us of an earlier movement that had utilized the label “T Party.”

“In September 4, 1962, hundreds of conservative activists crowded into the Wilshire Ebell Theater in Los Angeles for a protest meeting that they called the California T Party.  These protestors were unusually well-heeled and unusually radical.  They were there to support a constitutional amendment that would outlaw all federal taxation of income and inherited wealth, and would further require the federal government to sell off virtually all of its assets in order to pay for a massive, one-time transfer of wealth to the richest Americans.”

“There were two more California T Parties that week, followed by a national gathering in Chicago two weeks later, at which activists from around the country met, sang protest songs, and attended workshops on grass roots organizing for income tax repeal.”

The radical wealthy at that time were taking their guidance on how to create a movement from the Civil Rights Movement.  It would be the era of the Koch brothers before a more successful strategy would emerge.  Jane Mayer provides the up-to-date details in her book Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right.

Charles and David Koch inherited both wealth and radical philosophies from their father, who was one of the founding members of the John Birch Society.  Mayer tells us that they were not much concerned about the Communist plots so important to the other Birchers.  They were more interested in social and economic philosophies. 

They managed to arrive at a view of government as having only the function of protecting personal property and personal rights.

“As far back as 1976, Charles Koch, who was trained as an engineer, began planning a movement that would sweep the country.  As a former member of the John Birch Society, he had a radical goal.  In 1978, he declared ‘Our movement must destroy the prevalent statist paradigm’.”

The Koch brothers were exceptionally wealthy, and that produced influence among the fraternity of the extraordinarily wealthy.

“Charles and David Koch automatically had extraordinary influence.  But for many years, they had magnified their reach by joining forces with a small and intensely ideological group of like minded political allies, many of whose personal fortunes were also unfathomably large.  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’.”

And what was in the platform on which David Koch ran?

“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 ‘compulsory’ education of children.”

There is no evidence that the Koch brothers’ goals have changed, but Mayer provides plenty of evidence that they learned a better way to get what they wanted without having to participate directly in political battles.

The Kochs and others would be greatly influenced by a memo distributed by Lewis Powell, soon to be nominated to the Supreme Court by Richard Nixon.  Powell argued that businesses were under assault and needed to fight back.  What was unique about his proposal was that businesses could not win any battle with society unless they first gained control of the terms of the dispute.

“What distinguished his jeremiad from many other conservative screeds was his argument that the greatest threat was posed not by a few ‘extremists of the left,’ but rather by ‘perfectly respectable elements of society.’  The real enemies, he suggested, were ‘the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences,’ and ‘politicians’.”

“Powell called on corporate America to fight back.  He urged America’s capitalists to wage ‘guerilla warfare’ against those seeking to ‘insidiously’ undermine them.  Conservatives must capture public opinion, he argued, by exerting influence over the institutions that shape it, which he identified as academia, the media, the churches, and the courts.  He argued that conservatives should control the political debate at its source by demanding ‘balance’ in textbooks, television shows, and news coverage.  Donors, he argued, should demand a say in university hiring and curriculum and ‘press vigorously in all political arenas.’  The key to victory, he predicted, was ‘careful long-range planning and implementation,’ backed by a ‘scale of financing available only through joint effort’.”

The mechanism for waging this ‘guerilla warfare’ would be the private foundation—supposedly devoted to charity and other ‘public goods.’

“By 1930, there were approximately two hundred private foundations….By 1950, the number had grown to two thousand, and by 1985 there were thirty thousand.  In 2013, there were over a hundred thousand private foundations in the United States with assets of over $800 billion.  These particularly 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.”

“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.”

It was this designation of “nonprofit organizations” as the legal equivalent to charitable organizations that would allow what Mayer refers to as the “weaponization of philanthropy.” When Congress created this interpretation of nonprofits as “social welfare” entities early in the twentieth century it was not expected that the wealthy would use them as a means of propagating personal political agendas while hiding the source of funds.

“….to qualify as tax exempt, such groups had to certify that they would be ‘operated exclusively for the promotion of social welfare.’  The IRS later loosened the guidelines, though, allowing them to engage marginally in politics, so long as it wasn’t their ‘primary’ purpose.  Lawyers soon stretched the loophole to absurd lengths.  They argued, for instance, that if a group spent 49 percent of its funds on politics, it complied with the law because it still wasn’t ‘primarily’ engaged in politics.  They also argued that one such group could claim no political spending if it gave to another such group, even if the latter spent the funds on politics.  Experts likened the setup to Russian nesting dolls.  For example, at the end of 2010, the Center to Protect Patient Rights reported on its tax return that it spent no money on politics.  Yet it granted $103 million to other conservative groups, most of which were actively engaged in the midterm elections.”

Mayer explains how the wealthy used their money to fund campaigns against public policy notions of which they disapproved.  Consider the findings of a study of the funding behind the campaign against actions to counter global warming.

“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, Brulle found.  During the seven-year period he studied, these foundations distributed $558 million in the form of 5,299 grants to ninety-one different nonprofit organizations.  The money went to think tanks, advocacy groups, trade associations, other foundations, and academic and legal programs.  Cumulatively, this private network waged a permanent campaign to undermine Americans’ faith in climate science and to defeat any effort to regulate carbon emissions.”

Not surprisingly the Kochs and Koch Industries were big players in this effort, along with many others whose wealth depended on fossil fuels.  The fact that over half a billion dollars was spent on combating proposed legislation in this one area may seem like a lot of money.  Mayer tracks the Koch brothers’ wealth over time: $28 billion in 2009, $62 billion in 2012, and up to $83.2 billion in 2015.  They have done rather well under a president who they viewed as an enemy of business.  A half billion dollars is really just “loose change” for these guys.  And they aren’t the only ones who could spend stupendous amounts of money if they wished.

The Kochs have been holding “summits” since 2003 in which like-minded people were invited to discuss issues and strategies.  These summits really took off with the election of Obama in 2009, when a number of people who grew wealthier under George W. Bush realized that the new president might ruin the good thing they had going.  Something had to be done to undermine the Obama administration

“By 2009, the Kochs had indeed succeeded in expanding their political conference from a wonky free-market swap fest to the point where it was beginning to attract an impressive array of influential figures.  Wealthy businessmen thronged to rub shoulders with famous and powerful speakers, like the Supreme Court justices Antonin Scalia and Clarence Thomas.  Congressmen, senators, governors, and media celebrities came too.”

The Kochs viewed attendees at these summits as donors who would pledge money to fund projects.  As these gatherings grew in popularity, so did the amounts pledged as contributions to the joint effort.  These were intended to be secret meetings with no record of what transpired and no attendance lists made public, but Mayer was able to gather some information that had leaked out.

“No fewer than eighteen billionaires would be among the ‘doers’ joining the Kochs’ clandestine opposition movement during the first term of Obama’s presidency.  Ignoring the mere millionaires in attendance, many of whose fortunes were estimated to be worth hundreds of millions of dollars, the combined fortunes of the eighteen known billionaire participants alone as of 2015 topped $214 billion.”

Dare we refer to this network of the wealthy as a cabal?  The Kochs and their “friends” have advertized a budget of $889 million for the 2016 election cycle.  Who knows how much money will actually be spent—and for what purpose?

Consider that it takes tens of millions to elect a senator, millions to elect congresspersons, state legislators, and  judges, and perhaps thousands to elect school board members.  There is plenty of money available to take over the nation.  If a legislator cannot be bought with campaign funds and other goodies, he or she can be threatened with campaign funding for a primary opponent.  If he or she still doesn’t behave they can simply be replaced by someone who will.  The Kochs and their accomplices essentially own the Republican Party.  There is no limit to the damage of which they are capable.

Recall that incredible platform on which David Koch ran for vice president in 1980.  Is it still so incredible?  Taxes have not been eliminated, but funding for the IRS is being ratcheted down which makes it easier for the wealthy to avoid taxes.  Public education has not been abolished, but note the number of billionaires who are championing “nonprofit” private charter schools as an alternative.  Public higher education is being starved of funds, making it easier for the Kochs and others to dangle needed money in front of universities in order to establish teachers and curricula that adhere to their philosophies.  Koch Industries is most famous for the pollution it generates.  The Environmental Protection Agency is under continual assault.  Concerns about debt are overplayed in order to continually limit the ability of the government to govern.

The bottom line is that people and policies that once were considered insane are now dominant in one of our political parties.

Be afraid!  Be very afraid!