David H. Koch in 1996. He and his brother Charles are lifelong libertarians and have quietly given more than a hundred million dollars to right-wing causes. Credit Photograph by Richard Schulman / Corbis
On May 17th, a black-tie audience at the Metropolitan Opera House applauded as a tall, jovial-looking billionaire took the stage. It was the seventieth annual spring gala of American Ballet Theatre, and David H. Koch was being celebrated for his generosity as a member of the board of trustees; he had recently donated $2.5 million toward the companys upcoming season, and had given many millions before that. Koch received an award while flanked by two of the galas co-chairs, Blaine Trump, in a peach-colored gown, and Caroline Kennedy Schlossberg, in emerald green. Kennedys mother, Jacqueline Kennedy Onassis, had been a patron of the ballet and, coincidentally, the previous owner of a Fifth Avenue apartment that Koch had bought, in 1995, and then sold, eleven years later, for thirty-two million dollars, having found it too small.
The gala marked the social ascent of Koch, who, at the age of seventy, has become one of the citys most prominent philanthropists. In 2008, he donated a hundred million dollars to modernize Lincoln Centers New York State Theatre building, which now bears his name. He has given twenty million to the American Museum of Natural History, whose dinosaur wing is named for him. This spring, after noticing the decrepit state of the fountains outside the Metropolitan Museum of Art, Koch pledged at least ten million dollars for their renovation. He is a trustee of the museum, perhaps the most coveted social prize in the city, and serves on the board of Memorial Sloan-Kettering Cancer Center, where, after he donated more than forty million dollars, an endowed chair and a research center were named for him.
One dignitary was conspicuously absent from the gala: the events third honorary co-chair, Michelle Obama. Her office said that a scheduling conflict had prevented her from attending. Yet had the First Lady shared the stage with Koch it might have created an awkward tableau. In Washington, Koch is best known as part of a family that has repeatedly funded stealth attacks on the federal government, and on the Obama Administration in particular.
With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge. The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline. Koch Industries owns Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpet, and Lycra, among other products. Forbes ranks it as the second-largest private company in the country, after Cargill, and its consistent profitability has made David and Charles Kochwho, years ago, bought out two other brothersamong the richest men in America. Their combined fortune of thirty-five billion dollars is exceeded only by those of Bill Gates and Warren Buffett.
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 industryespecially environmental regulation. These views dovetail with the brothers corporate interests. In a study released this spring, the University of Massachusetts at Amhersts 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 policiesfrom health-care reform to the economic-stimulus programthat, in political circles, their ideological network is known as the Kochtopus.
In a statement, Koch Industries said that the Greenpeace report distorts the environmental record of our companies. And David Koch, in a recent, admiring article about him in New York, protested that the radical press had turned his family into whipping boys, and had exaggerated its influence on American politics. But Charles Lewis, the founder of the Center for Public Integrity, a nonpartisan watchdog group, said, The Kochs are on a whole different level. Theres 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. Ive been in Washington since Watergate, and Ive never seen anything like it. They are the Standard Oil of our times.
A few weeks after the Lincoln Center gala, the advocacy wing of the Americans for Prosperity Foundationan organization that David Koch started, in 2004held a different kind of gathering. 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, Obamas senior adviser, said, What they dont 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, Ive never been to a tea-party event. No one representing the tea party has ever even approached me.
At the lectern in Austin, however, Venablea longtime political operative who draws a salary from Americans for Prosperity, and who has worked for Koch-funded political groups since 1994spoke less warily. We love what the Tea Parties are doing, because thats how were 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, Theyre certainly our people. Davids the chairman of our board. Ive certainly met with them, and Im 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 dont want our children to know about their rights. They dont 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 agendathe 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 movements 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. Bruce Bartlett, a conservative economist and a historian, who once worked at the National Center for Policy Analysis, a Dallas-based think tank that the Kochs fund, said, The problem with the whole libertarian movement is that its been all chiefs and no Indians. There havent been any actual people, like voters, who give a crap about it. So the problem for the Kochs has been trying to create a movement. With the emergence of the Tea Party, he said, everyone suddenly sees that for the first time there are Indians out therepeople who can provide real ideological power. The Kochs, he said, are trying to shape and control and channel the populist uprising into their own policies.
A Republican campaign consultant who has done research on behalf of Charles and David Koch said of the Tea Party, The Koch brothers gave the money that founded it. Its like they put the seeds in the ground. Then the rainstorm comes, and the frogs come out of the mudand theyre our candidates!
The Kochs and their political operatives declined requests for interviews. Instead, a prominent New York public-relations executive who is close with the Kochs put forward two friends: George Pataki, the former governor of New York, and Mortimer Zuckerman, the publisher and real-estate magnate. Pataki, a Republican who received campaign donations from David Koch, called him a patriot who cares deeply about his country. Zuckerman praised Davids gentle decency and the range of his public interests.
The Republican campaign consultant said of the familys political activities, To call them under the radar is an understatement. They are underground! Another former Koch adviser said, Theyre 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 movements finances, said that the Kochs are at the epicenter of the anti-Obama movement. But its 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. Fred Koch was the son of a Dutch printer who settled in Texas and ran a weekly newspaper. Fred attended M.I.T., where he earned a degree in chemical engineering. In 1927, he invented a more efficient process for converting oil into gasoline, but, according to family lore, Americas 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 Stalins regime set up fifteen modern oil refineries. Over time, however, Stalin brutally purged several of Kochs 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 Mussolinis 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 Partys 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.
Koch married Mary Robinson, the daughter of a Missouri physician, and they had four sons: Freddie, Charles, and twins, David and William. John Damgard, the president of the Futures Industry Association, was Davids schoolmate and friend. He recalled that Fred Koch was a real John Wayne type. Koch emphasized rugged pursuits, taking his sons big-game hunting in Africa, and requiring them to do farm labor at the family ranch. The Kochs lived in a stone mansion on a large compound across from Wichitas country club; in the summer, the boys could hear their friends splashing in the pool, but they were not allowed to join them. By instilling a work ethic in me at an early age, my father did me a big favor, although it didnt seem like a favor back then, Charles has written. By the time I was eight, he made sure work occupied most of my spare time. David Koch recalled that his father also indoctrinated the boys politically. He was constantly speaking to us children about what was wrong with government, he told Brian Doherty, an editor of the libertarian magazine Reason, and the author of Radicals for Capitalism, a 2007 history of the libertarian movement. Its something I grew up witha fundamental point of view that big government was bad, and imposition of government controls on our lives and economic fortunes was not good.
David attended Deerfield Academy, in Massachusetts, and Charles was sent to military school. Charles, David, and William all earned engineering degrees at their fathers alma mater, M.I.T., and later joined the family company. Charles eventually assumed control, with David as his deputy; Williams career at the company was less successful. Freddie went to Harvard and studied playwriting at the Yale School of Drama. His father reportedly disapproved of him, and punished him financially. (Freddie, through a spokesperson, denied this.)
In 1967, after Fred Koch died, of a heart attack, Charles renamed the business Koch Industries, in honor of his father. Fred Kochs will made his sons extraordinarily wealthy. David Koch joked about his good fortune in a 2003 speech to alumni at Deerfield, where, after pledging twenty-five million dollars, he was made the schools sole lifetime trustee. He said, 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!
David and Charles had absorbed their fathers conservative politics, but they did not share all his views, according to diZerega, who befriended Charles in the mid-sixties, after meeting him while browsing in a John Birch Society bookstore in Wichita. Charles eventually invited him to the Kochs mansion, to participate in an informal political-discussion group. It was pretty clear that Charles thought some of the Birch Society was bullshit, diZerega recalled.
DiZerega, who has lost touch with Charles, eventually abandoned right-wing views, and became a political-science professor. He credits Charles with opening his mind to political philosophy, which set him on the path to academia; Charles is one of three people to whom he dedicated his first book. But diZerega believes that the Koch brothers have followed a wayward intellectual trajectory, transferring their fathers paranoia about Soviet Communism to a distrust of the U.S. government, and seeing its expansion, beginning with the New Deal, as a tyrannical threat to freedom. In an essay, posted on Beliefnet, diZerega writes, As state socialism failed . . . the target for many within these organizations shifted to any kind of regulation at all. Socialism kept being defined downwards.
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. Hayeks 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.)
Charles and David also became devotees of a more radical thinker, Robert LeFevre, who favored the abolition of the state but didnt like the label anarchist; he called himself an autarchist. LeFevre liked to say that government is a disease masquerading as its own cure. In 1956, he opened an institution called the Freedom School, in Colorado Springs. Brian Doherty, of Reason, told me that LeFevre was an anarchist figure who won Charless heart, and that the school was a tiny world of people who thought the New Deal was a horrible mistake. According to diZerega, Charles supported the school financially, and even gave him money to take classes there.
Throughout the seventies, Charles and David continued to build Koch Industries. In 1980, William, with assistance from Freddie, attempted to take over the company from Charles, who, they felt, had assumed autocratic control. In retaliation, the companys board, which answered to Charles, fired William. (Charles runs it all with an iron hand, Bruce Bartlett, the economist, told me.) Lawsuits were filed, with William and Freddie on one side and Charles and David on the other. In 1983, Charles and David bought out their brothers share in the company for nearly a billion dollars. But the antagonism remained, and litigation continued for seventeen more years, with the brothers hiring rival private investigators; in 1990, they walked past one another with stony expressions at their mothers funeral. Eventually, Freddie moved to Monaco, which has no income tax. He bought historic estates in France, Austria, and elsewhere, filling them with art, antiques, opera scores, and literary manuscripts. William founded his own energy company, Oxbow, and turned to yachting; he spent an estimated sixty-five million dollars to win the Americas Cup, in 1992.
With Charles as the undisputed chairman and C.E.O., Koch Industries expanded rapidly. Roger Altman, who heads the investment-banking firm Evercore, told me that the companys performance has been beyond phenomenal. Charles remained in Wichita, with his wife and two children, guarding his privacy while supporting community charities. David moved to New York City, where he is an executive vice-president of the company and the C.E.O. of its Chemical Technology Group. A financial expert who knows Koch Industries well told me, Charles is the company. Charles runs it. David, described by associates as affable and a bit of a lunk, enjoyed for years the life of a wealthy bachelor. He rented a yacht in the South of France and bought a waterfront home in Southampton, where he threw parties that the Web site New York Social Diary likened to an East Coast version of Hugh Hefners soires. In 1996, he married Julia Flesher, a fashion assistant. They live in a nine-thousand-square-foot duplex at 740 Park Avenue, with their three children. Though Davids manner is more cosmopolitan, and more genial, than that of Charles, Brian Doherty, who has interviewed both brothers, couldnt think of a single issue on which the brothers disagreed.
As their fortunes grew, Charles and David Koch became the primary underwriters of hard-line libertarian politics in America. Charless 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 tickets 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.
Many of the ideas propounded in the 1980 campaign presaged the Tea Party movement. Ed 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 Libertarian Party platform called for the abolition of the F.B.I. and the C.I.A., as well as of federal regulatory agencies, such as the Securities and Exchange Commission and the Department of Energy. The Party wanted to end Social Security, minimum-wage laws, gun control, and all personal and corporate income taxes; it proposed the legalization of prostitution, recreational drugs, and suicide. Government should be reduced to only one function: the protection of individual rights. William F. Buckley, Jr., a more traditional conservative, called the movement Anarcho-Totalitarianism.
That November, the Libertarian ticket received only one per cent of the vote. The brothers realized that their brand of politics didnt sell at the ballot box. Charles Koch became openly scornful of conventional politics. It tends to be a nasty, corrupting business, he told a reporter at the time. Im interested in advancing libertarian ideas. According to Dohertys book, the Kochs came to regard elected politicians as merely actors playing out a script. A longtime confidant of the Kochs told Doherty that the brothers wanted to supply the themes and words for the scripts. In order to alter the direction of America, they had to influence the areas where policy ideas percolate from: academia and think tanks.
After the 1980 election, Charles and David Koch receded from the public arena. But they poured more than a hundred million dollars into dozens of seemingly independent organizations. Tax records indicate that in 2008 the three main Koch family foundations gave money to thirty-four political and policy organizations, three of which they founded, and several of which they direct. The Kochs and their company have given additional millions to political campaigns, advocacy groups, and lobbyists. The familys subterranean financial role has fuelled suspicion on the left; Lee Fang, of the liberal blog ThinkProgress, has called the Kochs the billionaires behind the hate.
Only the Kochs know precisely how much they have spent on politics. Public tax records show that between 1998 and 2008 the Charles G. Koch Charitable Foundation spent more than forty-eight million dollars. The Claude R. Lambe Charitable Foundation, which is controlled by Charles Koch and his wife, along with two company employees and an accountant, spent more than twenty-eight million. The David H. Koch Charitable Foundation spent more than a hundred and twenty million. Meanwhile, since 1998 Koch Industries has spent more than fifty million dollars on lobbying. Separately, the companys political-action committee, KochPAC, has donated some eight million dollars to political campaigns, more than eighty per cent of it to Republicans. So far in 2010, Koch Industries leads all other energy companies in political contributions, as it has since 2006. In addition, during the past dozen years the Kochs and other family members have personally spent more than two million dollars on political contributions. In the second quarter of 2010, David Koch was the biggest individual contributor to the Republican Governors Association, with a million-dollar donation. Other gifts by the Kochs may be untraceable; federal tax law permits anonymous personal donations to politically active nonprofit groups.
In recent decades, members of several industrial dynasties have spent parts of their fortunes on a conservative agenda. In the nineteen-eighties, the Olin family, which owns a chemicals-and-manufacturing conglomerate, became known for funding right-leaning thinking in academia, particularly in law schools. And during the nineties Richard Mellon Scaife, a descendant of Andrew Mellon, spent millions attempting to discredit President Bill Clinton. Ari Rabin-Havt, a vice-president at the Democratic-leaning Web site Media Matters, said that the Kochs effort is unusual, in its marshalling of corporate and personal funds: Their role, in terms of financial commitments, is staggering.
Of course, Democrats give money, too. Their most prominent donor, the financier George Soros, runs a foundation, the Open Society Institute, that has spent as much as a hundred million dollars a year in America. Soros has also made generous private contributions to various Democratic campaigns, including Obamas. But Michael Vachon, his spokesman, argued that Soross giving is transparent, and that none of his contributions are in the service of his own economic interests. The Kochs have given millions of dollars to nonprofit groups that criticize environmental regulation and support lower taxes for industry. Gus diZerega, the former friend, suggested that the Kochs youthful idealism about libertarianism had largely devolved into a rationale for corporate self-interest. He said of Charles, Perhaps he has confused making money with freedom.
Some critics have suggested that the Kochs approach has subverted the purpose of tax-exempt giving. By law, charitable foundations must conduct exclusively nonpartisan activities that promote the public welfare. A 2004 report by the National Committee for Responsive Philanthropy, a watchdog group, described the Kochs foundations as being self-serving, concluding, These foundations give money to nonprofit organizations that do research and advocacy on issues that impact the profit margin of Koch Industries.
The Kochs have gone well beyond their immediate self-interest, however, funding organizations that aim to push the country in a libertarian direction. Among the institutions that they have subsidized are the Institute for Justice, which files lawsuits opposing state and federal regulations; the Institute for Humane Studies, which underwrites libertarian academics; and the Bill of Rights Institute, which promotes a conservative slant on the Constitution. Many of the organizations funded by the Kochs employ specialists who write position papers that are subsequently quoted by politicians and pundits. David Koch has acknowledged that the family exerts tight ideological control. If were going to give a lot of money, well make darn sure they spend it in a way that goes along with our intent, he told Doherty. And if they make a wrong turn and start doing things we dont agree with, we withdraw funding.
The Kochs subsidization of a pro-corporate movement fulfills, in many ways, the vision laid out in a secret 1971 memo that Lewis Powell, then a Virginia attorney, wrote two months before he was nominated to the Supreme Court. The antiwar movement had turned its anger on defense contractors, such as Dow Chemical, and Ralph Nader was leading a public-interest crusade against corporations. Powell, writing a report for the U.S. Chamber of Commerce, urged American companies to fight back. The greatest threat to free enterprise, he warned, was not Communism or the New Left but, rather, respectable elements of societyintellectuals, journalists, and scientists. To defeat them, he wrote, business leaders needed to wage a long-term, unified campaign to change public opinion.
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 nations 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. Catos resident scholars have relentlessly criticized political attempts to stop global warming as expensive, ineffective, and unnecessary. Ed Crane, the Cato Institutes founder and president, told me that global-warming theories give the government more control of the economy.
Cato scholars have been particularly energetic in promoting the Climategate scandal. Last year, private e-mails of climate scientists at the University of East Anglia, in England, were mysteriously leaked, and their exchanges appeared to suggest a willingness to falsify data in order to buttress the idea that global warming is real. In the two weeks after the e-mails went public, one Cato scholar gave more than twenty media interviews trumpeting the alleged scandal. But five independent inquiries have since exonerated the researchers, and nothing was found in their e-mails or data to discredit the scientific consensus on global warming.
Nevertheless, the controversy succeeded in spreading skepticism about climate change. Even though the National Oceanic and Atmospheric Administration recently issued a report concluding that the evidence for global warming is unequivocal, more Americans are convinced than at any time since 1997 that scientists have exaggerated the seriousness of global warming. The Kochs promote this statistic on their companys Web site but do not mention the role that their funding has played in fostering such doubt.
In a 2002 memo, the Republican political consultant Frank Luntz wrote that so long as voters believe there is no consensus about global warming within the scientific community the status quo would prevail. The key for opponents of environmental reform, he said, was to question the sciencea public-relations strategy that the tobacco industry used effectively for years to forestall regulation. The Kochs have funded many sources of environmental skepticism, such as the Heritage Foundation, which has argued that scientific facts gathered in the past 10 years do not support the notion of catastrophic human-made warming. The brothers have given money to more obscure groups, too, such as the Independent Womens Forum, which opposes the presentation of global warming as a scientific fact in American public schools. Until 2008, the group was run by Nancy Pfotenhauer, a former lobbyist for Koch Industries. Mary Beth Jarvis, a vice-president of a Koch subsidiary, is on the groups board.
Naomi Oreskes, a professor of history and science studies at the University of California, San Diego, is the co-author of Merchants of Doubt, a new book that chronicles various attempts by American industry to manipulate public opinion on science. She noted that the Kochs, as the heads of a company with refineries and pipelines, have a lot at stake. She added, If the answer is to phase out fossil fuels, a different group of people are going to be making money, so we shouldnt be surprised that theyre fighting tooth and nail.
David Koch told New York that he was unconvinced that global warming has been caused by human activity. Even if it has been, he said, the heating of the planet will be beneficial, resulting in longer growing seasons in the Northern Hemisphere. The Earth will be able to support enormously more people because far greater land area will be available to produce food, he said.
In the mid-eighties, the Kochs provided millions of dollars to George Mason University, in Arlington, Virginia, to set up another think tank. Now known as the Mercatus Center, it promotes itself as the worlds premier university source for market-oriented ideasbridging the gap between academic ideas and real-world problems. Financial records show that the Koch family foundations have contributed more than thirty million dollars to George Mason, much of which has gone to the Mercatus Center, a nonprofit organization. Its ground zero for deregulation policy in Washington, Rob Stein, the Democratic strategist, said. It is an unusual arrangement. George Mason is a public university, and receives public funds, Stein noted. Virginia is hosting an institution that the Kochs practically control.
The founder of the Mercatus Center is Richard Fink, formerly an economist. Fink heads Koch Industries lobbying operation in Washington. In addition, he is the president of the Charles G. Koch Charitable Foundation, the president of the Claude R. Lambe Charitable Foundation, a director of the Fred C. and Mary R. Koch Foundation, and a director and co-founder, with David Koch, of the Americans for Prosperity Foundation.
Fink, with his many titles, has become the central nervous system of the Kochtopus. He appears to have supplanted Ed Crane, the head of the Cato Institute, as the brothers main political lieutenant. Though David remains on the board at Cato, Charles Koch has fallen out with Crane. Associates suggested to me that Crane had been insufficiently respectful of Charless management philosophy, which he distilled into a book called The Science of Success, and trademarked under the name Market-Based Management, or M.B.M. In the book, Charles recommends instilling a companys corporate culture with the competitiveness of the marketplace. Koch describes M.B.M. as a holistic system containing five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives. A top Cato Institute official told me that Charles thinks hes a genius. Hes the emperor, and hes convinced hes wearing clothes. Fink, by contrast, has been far more embracing of Charless ideas. (Fink, like the Kochs, declined to be interviewed.)
At a 1995 conference for philanthropists, Fink adopted the language of economics when speaking about the Mercatus Centers purpose. He said that grant-makers should use think tanks and political-action groups to convert intellectual raw materials into policy products.
The Wall Street Journal has called the Mercatus Center the most important think tank youve never heard of, and noted that fourteen of the twenty-three regulations that President George W. Bush placed on a hit list had been suggested first by Mercatus scholars. Fink told the paper that the Kochs have other means of fighting [their] battles, and that the Mercatus Center does not actively promote the companys private interests. But Thomas McGarity, a law professor at the University of Texas, who specializes in environmental issues, told me that Koch has been constantly in trouble with the E.P.A., and Mercatus has constantly hammered on the agency. An environmental lawyer who has clashed with the Mercatus Center called it a means of laundering economic aims. The lawyer explained the strategy: You take corporate money and give it to a neutral-sounding think tank, which hires people with pedigrees and academic degrees who put out credible-seeming studies. But they all coincide perfectly with the economic interests of their funders.
In 1997, for instance, the E.P.A. moved to reduce surface ozone, a form of pollution caused, in part, by emissions from oil refineries. Susan Dudley, an economist who became a top official at the Mercatus Center, criticized the proposed rule. The E.P.A., she argued, had not taken into account that smog-free skies would result in more cases of skin cancer. She projected that if pollution were controlled it would cause up to eleven thousand additional cases of skin cancer each year.
In 1999, the District of Columbia Circuit Court took up Dudleys smog argument. Evaluating the E.P.A. rule, the court found that the E.P.A. had explicitly disregarded the possible health benefits of ozone. In another part of the opinion, the court ruled, 2-1, that the E.P.A. had overstepped its authority in calibrating standards for ozone emissions. As the Constitutional Accountability Center, a think tank, revealed, the judges in the majority had previously attended legal junkets, on a Montana ranch, that were arranged by the Foundation for Research on Economics and the Environmenta group funded by Koch family foundations. The judges have claimed that the ruling was unaffected by their attendance.
Ideas dont 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 publics 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 revolutionsSaul 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 cant 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 admitted that they had improperly taken thirty-one million dollars worth of crude oil, but said that it had been accidental. Charles Koch told committee investigators that oil measurement is a very uncertain art.
To defend its reputation, Koch Industries hired Robert Strauss, then a premier Washington lobbyist; the company soon opened an office in the city. A grand jury was convened to investigate the allegations, but it eventually disbanded, without issuing criminal charges. According to the Senate report, after the committee hearings Koch operatives delved into the personal lives of committee staffers, even questioning an ex-wife. Senate investigators were upset by the Kochs tactics. Kenneth Ballen, the counsel to the Senate committee, said, These people have amassed such unaccountable power!
By 1993, when Bill Clinton became President, Citizens for a Sound Economy had become a prototype for the kind of corporate-backed opposition campaigns that have proliferated during the Obama era. The group waged a successful assault on Clintons proposed B.T.U. tax on energy, for instance, running advertisements, staging media events, and targeting opponents. And it mobilized anti-tax rallies outside the Capitolrallies that NPR described as designed to strike fear into the hearts of wavering Democrats. Dan Glickman, a former Democratic congressman from Wichita, who supported the B.T.U. tax, recalled, Id been in Congress eighteen years. The Kochs actually engaged against me and funded my opponent. They used a lot of resources and efforttheir employees, too. Glickman suffered a surprise defeat. I cant prove it, but I think I was probably their victim, he said.
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 committees 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 cutouta front operationin 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 Bushs relection. The groups 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. (A complaint was filed with the Federal Election Commission; it was dismissed.)
That year, internal rivalries at Citizens for a Sound Economy caused the organization to split apart. David Koch and Fink started a new group, Americans for Prosperity, and they hired Tim Phillips to run it. Phillips was a political veteran who had worked with Ralph Reed, the evangelical leader and Republican activist, co-founding Century Strategies, a campaign-consulting company that became notorious for its ties to the disgraced lobbyist Jack Abramoff. Phillipss online biography describes him as an expert in grasstops and grassroots political organizing. The Kochs choice of Phillips signalled an even greater toughness. The conservative operative Grover Norquist, who is known for praising throat slitters in politics, called Phillips a grownup who can make things happen.
Last year, Phillips told the Financial Times that Americans for Prosperity had only eight thousand registered members. Currently, its Web site claims that the group has 1.2 million activists. Whatever its size, the Kochs political involvement has been intense; a former employee of the Cato Institute told me that Americans for Prosperity was micromanaged by the Kochs. And the brothers investment may well have paid off: Americans for Prosperity, in concert with the familys other organizations, has been instrumental in disrupting the Obama Presidency.
In January, 2008, Charles Koch wrote in his company newsletter that America could be on the verge of the greatest loss of liberty and prosperity since the 1930s. That October, Americans for Prosperity held a conference of conservative operatives at a Marriott hotel outside Washington. Erick Erickson, the editor-in-chief of the conservative blog RedState.com, took the lectern, thanked David Koch, and vowed to unite and fight . . . the armies of the left! Soon after Obama assumed office, Americans for Prosperity launched Porkulus rallies against Obamas stimulus-spending measures. Then the Mercatus Center released a report claiming that stimulus funds had been directed disproportionately toward Democratic districts; eventually, the author was forced to correct the report, but not before Rush Limbaugh, citing the paper, had labelled Obamas program a slush fund, and Fox News and other conservative outlets had echoed the sentiment. (Phil Kerpen, the vice-president for policy at Americans for Prosperity, is a contributor to the Fox News Web site. Another officer at Americans for Prosperity, Walter Williams, often guest-hosts for Limbaugh.)
Americans for Prosperity also created an offshoot, Patients United Now, which organized what Phillips has estimated to be more than three hundred rallies against health-care reform. At one rally, an effigy of a Democratic congressman was hung; at another, protesters unfurled a banner depicting corpses from Dachau. The group also helped organize the Kill the Bill protests outside the Capitol, in March, where Democratic supporters of health-care reform alleged that they were spat on and cursed at. Phillips was a featured speaker.
Americans for Prosperity has held at least eighty events targeting cap-and-trade legislation, which is aimed at making industries pay for the air pollution that they create. Speakers for the group claimed, with exaggeration, that even back-yard barbecues and kitchen stoves would be taxed. The group was also involved in the attacks on Obamas green jobs czar, Van Jones, and waged a crusade against international climate talks. Casting his group as a champion of ordinary workers who would be hurt by environmentalists, Phillips went to Copenhagen last year and staged a protest outside the United Nations conference on climate change, declaring, Were a grassroots organization. . . . I think its unfortunate when wealthy children of wealthy families . . . want to send unemployment rates in the United States up to twenty per cent.
Grover Norquist, who holds a weekly meeting for conservative leaders in Washington, including representatives from Americans for Prosperity, told me that last summers raucous rallies were pivotal in undermining Obamas agenda. The Republican leadership in Congress, he said, couldnt have done it without August, when people went out on the streets. It discouraged deal-makersRepublicans who might otherwise have worked constructively with Obama. Moreover, the appearance of growing public opposition to Obama affected corporate donors on K Street. K Street is a three-billion-dollar weathervane, Norquist said. When Obama was strong, the Chamber of Commerce said, We can work with the Obama Administration. But that changed when thousands of people went into the street and terrorized congressmen. August is what changed it. Now that Obama is weak, people are getting tough.
As the first anniversary of Obamas election approached, David Koch came to the Washington area to attend a triumphant Americans for Prosperity gathering. Obamas poll numbers were falling fast. Not a single Republican senator was working with the Administration on health care, or much else. Pundits were writing about Obamas political ineptitude, and Tea Party groups were accusing the President of initiating a government takeover. In a speech, Koch said, Days like today bring to reality the vision of our board of directors when we started this organization, five years ago. He went on, We envisioned a mass movement, a state-based one, but national in scope, of hundreds of thousands of American citizens from all walks of life standing up and fighting for the economic freedoms that made our nation the most prosperous society in history. . . . Thankfully, the stirrings from California to Virginia, and from Texas to Michigan, show that more and more of our fellow-citizens are beginning to see the same truths as we do.
While Koch didnt explicitly embrace the Tea Party movement that day, more recently he has come close to doing so, praising it for demonstrating the powerful visceral hostility in the body politic against the massive increase in government power, the massive efforts to socialize this country. Charles Koch, in a newsletter sent to his seventy thousand employees, compared the Obama Administration to the regime of the Venezuelan strongman Hugo Chvez. The Kochs sense of imperilment is somewhat puzzling. Income inequality in America is greater than it has been since the nineteen-twenties, and since the seventies the tax rates of the wealthiest have fallen more than those of the middle class. Yet the brothers message has evidently resonated with voters: a recent poll found that fifty-five per cent of Americans agreed that Obama is a socialist.
Americans for Prosperity, meanwhile, has announced that it will spend an additional forty-five million dollars before the midterm elections, in November. Although the group is legally prohibited from directly endorsing candidates, it nonetheless plans to target some fifty House races and half a dozen Senate races, staging rallies, organizing door-to-door canvassing, and running ads aimed at educating voters about where candidates stand.
Though the Kochs have slowed Obamas momentum, their larger political battle is far from won. Richard Fink, interviewed by FrumForum.com this spring, said, If you look at where weve gone from the year 2000 to now, with the expansion of government spending and a debt burden that threatens to bankrupt the country, it doesnt look very good at all. He went on, It looks like the infrastructure that was built and nurtured has not carried the day. He suggested that the Kochs needed to get more into the practical, day-to-day issues of governing.
In 1991, David Koch was badly injured in a plane crash in Los Angeles. He was the sole passenger in first class to survive. As he was recovering, a routine physical exam led to the discovery of prostate cancer. Koch received treatment, settled down, started a family, and reconsidered his life. As he told Portfolio, When youre the only one who survived in the front of the plane and everyone else diedyeah, you think, My God, the good Lord spared me for some greater purpose. My joke is that Ive been busy ever since, doing all the good work I can think of, so He can have confidence in me.
Koch began giving spectacularly large donations to the arts and sciences. And he became a patron of cancer research, focussing on prostate cancer. In addition to his gifts to Sloan-Kettering, he gave fifteen million dollars to New York-Presbyterian Hospital, a hundred and twenty-five million to M.I.T. for cancer research, twenty million to Johns Hopkins University, and twenty-five million to the M. D. Anderson Cancer Center, in Houston. In response to his generosity, Sloan-Kettering gave Koch its Excellence in Corporate Leadership Award. In 2004, President Bush named him to the National Cancer Advisory Board, which guides the National Cancer Institute.
Kochs corporate and political roles, however, may pose conflicts of interest. For example, at the same time that David Koch has been casting himself as a champion in the fight against cancer, Koch Industries has been lobbying to prevent the E.P.A. from classifying formaldehyde, which the company produces in great quantities, as a known carcinogen in humans.
Scientists have long known that formaldehyde causes cancer in rats, and several major scientific studies have concluded that formaldehyde causes cancer in human beingsincluding one published last year by the National Cancer Institute, on whose advisory board Koch sits. The study tracked twenty-five thousand patients for an average of forty years; subjects exposed to higher amounts of formaldehyde had significantly higher rates of leukemia. These results helped lead an expert panel within the National Institutes of Health to conclude that formaldehyde should be categorized as a known carcinogen, and be strictly controlled by the government. Corporations have resisted regulations on formaldehyde for decades, however, and Koch Industries has been a large funder of members of Congress who have stymied the E.P.A., requiring it to defer new regulations until more studies are completed.
Koch Industries became a major producer of the chemical in 2005, after it bought Georgia-Pacific, the paper and wood-products company, for twenty-one billion dollars. Georgia-Pacific manufactures formaldehyde in its chemical division, and uses it to produce various wood products, such as plywood and laminates. Its annual production capacity for formaldehyde is 2.2 billion pounds. Last December, Traylor Champion, Georgia-Pacifics vice-president of environmental affairs, sent a formal letter of protest to federal health authorities. He wrote that the company strongly disagrees with the N.I.H. panels conclusion that formaldehyde should be treated as a known human carcinogen. David Koch did not recuse himself from the National Cancer Advisory Board, or divest himself of company stock, while his company was directly lobbying the government to keep formaldehyde on the market. (A board spokesperson said that the issue of formaldehyde had not come up.)
James Huff, an associate director at the National Institute for Environmental Health Sciences, a division of the N.I.H., told me that it was disgusting for Koch to be serving on the National Cancer Advisory Board: Its just not good for public health. Vested interests should not be on the board. He went on, Those boards are very important. Theyre very influential as to whether N.C.I. goes into formaldehyde or not. Billions of dollars are involved in formaldehyde.
Harold Varmus, the director of the National Cancer Institute, knows David Koch from Memorial Sloan-Kettering, which he used to run. He said that, at Sloan-Kettering, a lot of people who gave to us had large business interests. The one thing we wouldnt tolerate in our board members is tobacco. When told of Koch Industries stance on formaldehyde, Varmus said that he was surprised.
The David H. Koch Hall of Human Origins, at the Smithsonians National Museum of Natural History, is a multimedia exploration of the theory that mankind evolved in response to climate change. At the main entrance, viewers are confronted with a giant graph charting the Earths temperature over the past ten million years, which notes that it is far cooler now than it was ten thousand years ago. Overhead, the text reads, HUMANS EVOLVED IN RESPONSE TO A CHANGING WORLD. The message, as amplified by the exhibits Web site, is that key human adaptations evolved in response to environmental instability. Only at the end of the exhibit, under the headline OUR SURVIVAL CHALLENGE, is it noted that levels of carbon dioxide are higher now than they have ever been, and that they are projected to increase dramatically in the next century. No cause is given for this development; no mention is made of any possible role played by fossil fuels. The exhibit makes it seem part of a natural continuum. The accompanying text says, During the period in which humans evolved, Earths temperature and the amount of carbon dioxide in the atmosphere fluctuated together. An interactive game in the exhibit suggests that humans will continue to adapt to climate change in the future. People may build underground cities, developing short, compact bodies or curved spines, so that moving around in tight spaces will be no problem.
Such ideas uncannily echo the Koch message. The companys January newsletter to employees, for instance, argues that fluctuations in the earths climate predate humanity, and concludes, Since we cant control Mother Nature, lets figure out how to get along with her changes. Joseph Romm, a physicist who runs the Web site ClimateProgress.org, is infuriated by the Smithsonians presentation. The whole exhibit whitewashes the modern climate issue, he said. I think the Kochs wanted to be seen as some sort of high-minded company, associated with the greatest natural-history and science museum in the country. But the truth is, the exhibit is underwritten by big-time polluters, who are underground funders of action to stop efforts to deal with this threat to humanity. I think the Smithsonian should have drawn the line.
Cristin Samper, the museums director, said that the exhibit is not about climate change, and described Koch as one of the best donors weve had, in my tenure here, because hes very interested in the content, but completely hands off. He noted, I dont know all the details of his involvement in other issues.
The Kochs have long depended on the publics not knowing all the details about them. They have been content to operate what David Koch has called the largest company that youve 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 Courts recent ruling in the Citizens United casewhich struck down laws prohibiting direct corporate spending on campaignshad made it even easier for big companies to hide behind groups with harmless-sounding names like Americans for Prosperity. Obama said, They dont have to say who, exactly, Americans for Prosperity are. You dont know if its a foreign-controlled corporationor even, he added, a big oil company.
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