Jane Mayer

Jane Mayer is a staff writer for The New Yorker and the author of three bestselling and critically acclaimed narrative nonfiction books. She coauthored Landslide: The Unmaking of the President, 1984–1988, with Doyle McManus, and Strange Justice: The Selling of Clarence Thomas, with Jill Abramson, which was a finalist for the National Book Award. Her book The Dark Side: The Inside Story of How the War on Terror Turned into a War on American Ideals, for which she was awarded a Guggenheim Fellowship, was named one of The New York Times’s Top 10 Books of the Year and won the J. Anthony Lukas Book Prize, the Goldsmith Book Prize, the Edward Weintal Prize, the Ridenhour Prize, the New York Public Library’s Helen Bernstein Book Award for Excellence in Journalism, and the Robert F. Kennedy Book Award. It was also a finalist for the National Book Award and the National Book Critics Circle Award. For her reporting at The New Yorker, Mayer has been awarded the John Chancellor Award, the George Polk Award, the Toner Prize for Excellence in Political Reporting, and the I. F. Stone Medal for Journalistic Independence presented by the Nieman Foundation at Harvard. Mayer lives in Washington, D.C.

www.jane-mayer.com

ALSO BY JANE MAYER

The Dark Side: The Inside Story of How the War on Terror Turned into a War on American Ideals

Strange Justice: The Selling of Clarence Thomas (with Jill Abramson)

Landslide: The Unmaking of the President, 1984–1988 (with Doyle McManus)

Election Night 2016

from Dark Money

by Jane Mayer

A Vintage Short

Vintage Books

A Division of Penguin Random House LLC

New York

Copyright © 2017 by Jane Mayer

All rights reserved. Published in the United States by Vintage Books, a division of Penguin Random House LLC, New York, and in Canada by Random House of Canada, a division of Penguin Random House Canada Limited, Toronto. Originally published in the United States as part of Dark Money by Anchor Books, a division of Penguin Random House LLC, New York, in 2017.

Vintage and colophon are registered trademarks of Penguin Random House LLC.

The Cataloging-in-Publication Data for Dark Money is available from the Library of Congress.

Ebook ISBN 9780525566601

Cover design by Linda Huang

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Contents

Cover

About the Author

Also by Jane Mayer

Title Page

Copyright

Election Night 2016

Election night 2016 was a stunning political upset auguring a new political order in almost every respect. Donald Trump, a billionaire businessman with no experience in elected office, running on a promise to upend the status quo, defeated Hillary Clinton, the designated heir to Barack Obama’s Democratic presidency. Trump’s triumph defied the predictions of almost every pundit and pollster. It rocked the political establishments in both parties and sent shock waves around the globe. Markets trembled before recovering their equilibrium. The political world seemed to shift on its axis, spinning toward an unknown and unpredictable future. Although Trump ran as a self-proclaimed outsider against what he portrayed as entrenched and corrupt political elites, there was an unexpectedly familiar representative of this moneyed class at his victory party in Manhattan. Standing with a jubilant smile amid the throng of revelers at the Hilton hotel in midtown Manhattan was David Koch.

During the presidential primaries, Trump had mocked his Republican rivals as “puppets” for flocking to the secretive fund-raising sessions sponsored by David Koch and his brother Charles, co-owners of the second-largest private company in the United States, the Kansas-based energy and manufacturing conglomerate Koch Industries. Affronted, the Koch brothers, whose political spending had made their name almost shorthand for special-interest clout, withheld their financial support from Trump. As a result, the story line adopted by many in the media was that the Koch brothers in particular, and big political donors in general, were no longer a major factor in American politics. Trump had after all defeated far bigger-spending rivals, including Clinton.

It might be nice to think the era of big money in American politics is over, but a closer look reveals a far more complicated and far less reassuring reality.

Trump had indeed campaigned by attacking the big donors, corporate lobbyists, and political action committees that have come to dominate American politics as “very corrupt.” In doing so, he fed into a national, bipartisan outpouring of disgust at the growing extent to which campaigns have become little more than relentless pursuits of obscene amounts of cash. To the surprise of many, Trump and Bernie Sanders, the left-wing insurgent who challenged Clinton in the Democratic primaries, seemed to transform big political money from an advantage into a liability. Trump nicknamed Clinton “Crooked Hillary,” claiming that she was “100% owned by her donors.” By Election Day, the public’s trust in her was in tatters.

Improbably, Trump, a New York businessman who had global financial interests and who spent some $66 million of his own fortune to get elected, ran against Wall Street. He successfully positioned himself as pristine because he was a billionaire in his own right, rather than one beholden to other billionaires. In a tweet less than a month before the election, Trump promised, “I will Make Our Government Honest Again—believe me. But first I’m going to have to #DrainTheSwamp.” His DrainTheSwamp hashtag became a rallying cry for supporters riled by the growing economic inequality in the country and intent on ending corruption in Washington, which they blamed for putting the interests of the rich and powerful over their own.

Yet as Ann Ravel, a Democratic member of the Federal Election Commission who had championed reform of political money for years, observed just days after Trump’s election, instead “the alligators are multiplying.”

Despite having been elected as a populist outsider, Trump put together a transition team that was crawling with the kinds of corporate insiders he vowed to disempower. Especially prominent among them were lobbyists and political operatives who had financial ties to the Kochs. This was perhaps unexpected, because the Kochs had continued to express their distaste for Trump throughout the campaign. Charles Koch called himself a libertarian. He supported open immigration and free trade, both of which benefited his vast multinational corporation. He had denounced Trump’s plans to bar Muslim immigrants as “monstrous” and “frightening.”

Yet there were signs of a rapprochement. The chair of Trump’s transition team, Vice President elect Mike Pence, had been Charles Koch’s first choice for the presidency in 2012 and a major recipient of Koch campaign contributions. David Koch had personally donated $300,000 to Pence’s campaigns in the four years before Trump chose Pence as his running mate. Pence, who in the past had shared the Kochs’ enthusiasm for privatizing Social Security and denying the reality of climate change, had been a featured guest at a fund-raiser that David Koch hosted for about seventy of the Republican Party’s biggest political donors at his Palm Beach, Florida, mansion in the spring of 2016. He had also been slated to speak at the Kochs’ donor summit in August 2016 but canceled after joining the Republican ticket. Meanwhile, Pence’s senior adviser in the sensitive task of managing Trump’s transition to power was Marc Short, who just a few months earlier had actually run the Kochs’ secretive donor club, Freedom Partners. This was the same elite group whose meetings Trump had ridiculed during the campaign.

The Kochs’ influence was also evident in the transition team members that Trump picked in the areas of energy and the environment, which were crucial to Koch Industries’ bottom line. For policy and personnel advice regarding the Department of Energy, an early chart of the transition team showed that Trump chose Michael McKenna, the president of the lobbying firm MWR Strategies, whose clients included Koch Industries. McKenna also had ties to the American Energy Alliance, a tax-exempt nonprofit that advocated for corporate-friendly energy policies, to which the Kochs’ donor group, Freedom Partners, had given $1.5 million in 2012. The group, which didn’t disclose its revenue sources, was a textbook example of the way secret spending by billion-dollar private interests aimed to manipulate public opinion.

Another lobbyist for Koch Industries, Michael Catanzaro, a partner at the lobbying firm CGCN Group, headed “energy independence” for Trump’s transition team and was mentioned as a possible White House energy czar. Meanwhile, Harold Hamm, a charter member of the Kochs’ donor circle, who became a billionaire by founding Continental Resources, an Oklahoma-based shale-oil company known for its enormously lucrative “fracking” operation, was reportedly advising Trump on energy issues and under consideration for a cabinet post, possibly energy secretary.

To the alarm of the scientific community, Trump chose Myron Ebell, an outspoken climate change skeptic, to head his transition team for the Environmental Protection Agency (EPA). Ebell too had Koch money ties. He worked at a Washington think tank, the Competitive Enterprise Institute. It didn’t disclose its funding sources, but in the past, it had been bankrolled by fossil fuel interests, including the Kochs. His stridently antiregulatory views meshed perfectly with theirs. The Kochs had long been at war with the EPA, which had ranked Koch Industries one of only three companies in America that was simultaneously a top ten polluter of air, water, and climate. Joining Ebell on the transition team was David Schnare, a self-described “free-market environmentalist” who had accused the EPA of having “blood on its hands.” Schnare worked for a think tank affiliated with the State Policy Network, which was also funded in part by the Kochs. He was reviled in environmental circles for hounding the climate scientist Michael Mann with onerous public records requests until the Virginia Supreme Court ordered him to desist in 2014. The Union of Concerned Scientists had described these actions against climate scientists as “harassment.”

Thus, less than a week after having been elected on a wave of populist anger, Trump appeared set to fulfill many of the special interests’ fondest dreams, including the deregulatory schemes of the Kochs. He promised to “get rid of” the EPA in “almost every form” and to withdraw from the 2015 international climate accord in Paris, and against the overwhelming scientific evidence to the contrary, he called climate change “a hoax.” The Trump transition had a self-imposed ethics code barring lobbyists from shaping the rules and staffing the departments in which they had financial interests, but in the early stages, at least, these commonsense strictures appeared to have been sidestepped.

Experts in government ethics were aghast. “If you have people on the transition team with deep financial ties to the industries to be regulated, it raises questions about whether they are serving the public interest or their own interests,” warned Norman Eisen, who devised the Obama administration’s conflict-of-interest rules. “Let’s face it, in the Beltway nexus of corporations and dark money, lobbyists are the delivery mechanism for special-interest influence.” Peter Wehner, who served in the administrations of Ronald Reagan and both presidents Bush, told the New York Times, “This whole idea that he was an outsider and going to destroy the political establishment and drain the swamp were the lines of a con man, and guess what—he is being exposed as just that.”

The Kochs’ influence reached greater heights with Trump’s nomination of Mike Pompeo, a Republican congressman from Kansas, to direct the CIA. Pompeo was the single largest recipient of Koch campaign funds in Congress. The Kochs had also been investors, and partners, in Pompeo’s business ventures prior to his entry into politics. In fact, as Burdett Loomis, a University of Kansas professor of political science, noted, the future CIA director’s nickname was “the congressman from Koch.” Helping to guide the transition team in these fateful choices was Rebekah Mercer, the daughter of Robert Mercer, the wealthy New York hedge fund manager who “out-Koched the Kochs” in 2014, as Bloomberg News put it, giving more money to their political club than even they had.

Clearly the reports of the Kochs’ political death in 2016 were exaggerated. While they had refrained from backing a presidential candidate, the tentacles of the “Kochtopus,” as their sprawling political machine was known, were already encircling the Trump administration before it had even officially taken power.

Many had counted the Kochs out after their refusal to back a presidential candidate. Their initial 2015 plan called for their donor group to spend an astounding budget of $889 million in order to purchase the presidency. But they sat out the primaries, as they had in the past, and then found their plan rudely upended when Trump emerged as the nominee. He was the only major Republican presidential candidate whom they opposed. Sidelined, they continued to withhold their support.

But while the media fixated on the extraordinary presidential race, the Kochs and their network of right-wing political patrons quietly spent more money than ever on the three-pronged influence-buying approach they had mastered during the previous forty years. They combined corporate lobbying, politically tinged nonprofit spending, and “down ballot” campaign contributions in state and local races, where their money bought a bigger bang for the buck.

Far from shutting their wallets, they simply downgraded their budget to $750 million and directed several hundred million dollars of it to races beneath the presidential level. Few noticed, but in 2016 Koch Industries and Freedom Partners poured huge sums into at least nineteen Senate, forty-two House, and four gubernatorial races as well as countless lesser ones all over the country.

They also mobilized what a 2016 study by two Harvard University scholars, Theda Skocpol and Alexander Hertel-Fernandez, described as an unprecedented and unparalleled permanent, private political machine. In fact, amazingly, in 2016 the Kochs’ private network of political groups had a bigger payroll than the Republican National Committee. The Koch network had 1,600 paid staffers in thirty-five states and boasted that its operation covered 80 percent of the population. This marked a huge escalation from just a few years earlier. As recently as 2012, the Kochs’ primary political advocacy group, Americans for Prosperity, had a paid staff of only 450.

The Kochs ran their political operation centrally like a private business, with divisions devoted to various constituency groups, such as Hispanics, veterans, and young voters. One of their top people explained that their aim during the 2016 election had been to target five million voters in eight states with key Senate races. In the past, labor unions probably provided the closest parallel to this kind of private political organizing, but they of course represented the dues of millions of members. In comparison, the Koch network was sponsored by just four hundred or so of the richest people in the country. It was for this reason that the Harvard scholars who studied it said that the Koch network was “like nothing we’ve ever seen.”

Irrespective of Trump, the Kochs and their fellow mega-donors succeeded in their chief political objective in 2016, which was to keep both houses of Congress under conservative Republican control, ensuring that they could continue to advance their corporate agenda. They succeeded in their secondary goal too, which was to further crush the Democratic Party by continuing the nationwide sweep of state legislatures and local offices that they had begun in 2010. By controlling statehouses, they could dominate not just legislation but also the gerrymandering of congressional districts, in hopes of securing their grip on the House of Representatives for years to come.

Many of the races they backed were too minor to merit press attention. In Texas alone, they supported candidates in seventy-four different races, reaching all the way down to a county court commissioner. Thanks in no small part to huge quantities of targeted money spent by the Kochs and their allied donors, the Democratic Party lost both houses of Congress, fourteen governorships, and thirty state legislatures, comprising more than nine hundred seats, during Obama’s presidency. By the time the votes were tallied in the 2016 election, Republicans controlled thirty-two state legislatures, while Democrats controlled only thirteen. Five others were split. This imbalance posed a huge problem for Democrats not only in the present but for the future, because state legislatures serve as incubators for rising leaders.

The Kochs might have disavowed Trump, but in several important respects he was their natural heir and the unintended consequence of the extraordinary political movement they had underwritten since the 1970s. For forty years, they had vilified the very idea of government. They had propagated that message through the countless think tanks, academic programs, front groups, ad campaigns, legal organizations, lobbyists, and candidates they supported. It was hard not to believe that this had helped set the table for the takeover of the world’s most powerful country by a man who made his inexperience and antipathy toward governing among his top selling points.

Charles Koch’s mentor, the quasi-anarchist Robert LeFevre, had taught the Kochs that “government is a disease masquerading as its own cure.” Their extreme opposition to the expansions of the federal government that had taken place during the Progressive Era, the New Deal era, the Great Society, and Obama’s presidency had helped to convince voters that Washington was corrupt and broken and that, when it came to governing, knowing nothing was preferable to expertise. Charles Koch had referred to himself as a “radical,” and in Trump he got the radical solution he had helped to spawn.

The Kochs had also primed America for Trump by pouring gasoline on the fires lit by the antitax Tea Party movement starting in 2009. Charles Koch decried Trump’s toxic rhetoric in 2016, and David Koch complained to the Financial Times that “you’d think we could have more influence” after spending hundreds of millions of dollars on American politics. But in fact, the influence of the Kochs and their fellow big donors was manifest in Trump’s use of incendiary and irresponsibly divisive rhetoric. Only a few years ago, it was they who were sponsoring the hate.

In the 1960s, Charles Koch had funded the all-white private Freedom School in Colorado, whose head had told the New York Times that the admittance of black students might present housing problems because some students were segregationists. That was long ago, and his views, like those of many others, could well have changed. But in a 2011 interview with the Weekly Standard, David Koch echoed specious claims, made by the conservative gadfly Dinesh D’Souza, that Obama was somehow African rather than American in his outlook. He claimed that Obama, who was born in America and abandoned by his Kenyan father as a toddler, nonetheless derived his “radical” views from his African heritage.

The effort to attack Obama, not as a legitimate and democratically elected American political opponent, but as an alien threat to the country’s survival, was very much in evidence at a summit that the Kochs’ political organization Americans for Prosperity hosted in Austin, Texas, during the summer of 2010. Between Tea Party training sessions, operatives working for the Kochs gave an award to a blogger who had described Obama as the “cokehead-in-chief” and asserted that he suffered from “demonic possession (aka schizophrenia, etc.).” The Kochs and other members of the Republican donor class might have disowned the vile language of the 2016 campaign, but six years earlier they were honoring it with trophies.

The same incendiary style characterized the big donors’ fight against the Affordable Care Act. Rather than respectfully debating Obama’s health-care plan as a policy issue, the Kochs and their allied donors poured cash into a dark-money group called the Center to Protect Patient Rights, which mounted a guerrilla war of fearmongering and vitriol. Television ads sponsored by the group featured the false claim that Obama’s plan was “a government takeover” of health care, which Politi-Fact named “the Lie of the Year” in 2010. Meanwhile, a spinoff of Americans for Prosperity organized anti-Obamacare rallies at which protesters unfurled banners depicting corpses from Dachau, implying that Obama’s policies would result in mass murder. Koch operatives also purposefully sabotaged the democratic process by planting screaming protesters in town hall meetings at which congressmen met with constituents that year. In short, during the Obama years, the Kochs radicalized and organized an unruly movement of malcontents, over which by 2016 they had lost control. “We are partly responsible,” one former employee in the Kochs’ political operation admitted to Politico a month before Trump was elected. “We invested a lot in training and arming a grassroots army that was not controllable.”

In other ways too, the Kochs and their allied big donors became victims of their own success in 2016. They inadvertently laid the groundwork for Trump’s rise by too thoroughly capturing the Republican Party with their cash. Their narrowly self-serving policy priorities were at odds with those of the vast majority of voters. Yet virtually every Republican presidential candidate other than Trump pledged fealty to the donors’ wish lists as they jockeyed for their support. The candidates promised to cut taxes for those in the highest brackets, preserve Wall Street loopholes, tolerate the off-shoring of manufacturing jobs and profits, and downgrade or privatize middle-class entitlement programs, including Social Security. Free trade was barely debated. These positions faithfully reflected the agenda of the wealthy donors, but studies showed that they were increasingly out of step with the broad base of not just Democratic but also Republican voters, many of whom had been left behind economically and socially for decades, particularly acutely since the 2008 financial crash. Trump, who could afford to forgo the billionaires’ backing and ignore their policy priorities, saw the opening and seized it.

Whether Trump would fulfill his supporters’ hopes and break free from the self-serving elites whose money had captured the Republican Party prior to his unorthodox election remained to be seen. The early signs were not promising. Not only was Trump’s early transition team swarming with corporate lobbyists, including those who had worked for the Kochs, but Trump’s inaugural committee featured several members of the Kochs’ billion-dollar donor club, too. Neither Diane Hendricks, a building supply company owner whose $3.6 billion fortune made her the wealthiest woman in Wisconsin, nor billionaire Sheldon Adelson, founding chairman and chief executive of the Las Vegas Sands Corporation casino empire, signaled a break from politics as usual.

Inaugurals had long been underwritten by rich donors, so perhaps reading too much into this was unfair. But Trump’s tax proposals, to the extent that they could be gleaned, were if anything even more of a bait and switch. While he had garnered blue-collar support by promising to stick it to the elites who “are getting away with murder,” his proposals, according to economic experts, threatened instead to enshrine a permanent aristocracy in America. He appeared poised to repeal the estate tax, presenting a windfall to heirs of estates worth $10.9 million or more. There had been fewer than five thousand estates of this size in 2015. He also had plans to abolish the gift tax, which put the brakes on inherited wealth. Capital gains taxes and income taxes for top earners were headed toward the chopping block, too. Charles and David Koch, who together were worth some $84.5 billion, stood to benefit to an extent that dwarfed earlier administrations, as did many other billionaires. As the headline on Yahoo Finance proclaimed on the day after the election, “Trump’s Win Is a ‘Grand Slam’ for Wall Street Banks.”

The fact of the matter was that while Trump might have been elected by those he described as “the forgotten” men, he would have to deal with a Republican Party that had been shaped substantially by the billionaires of the radical Right. He would have to work with a vice president once funded by the Kochs and a Congress dominated by members who owed their political careers to the Kochs. Further, he would have to face a private political machine organized in practically every state, ready to attack any deviation from their agenda. No one could predict what Trump would do. Nor could they predict how much longer the Kochs, by then in their eighties, would stay active. But one thing was certain. The Kochs’ dark money, which they had directed their successors to keep spending long after they had passed away, would continue to exert disproportionate influence over American politics for years to come.

November 2016

Washington, D.C.

ALSO BY

JANE MEYER

DARK MONEY

The Hidden History of the Billionaires Behind the Rise of the Radical Right

Why is America living in an age of profound and widening economic inequality? Why have even modest attempts to address climate change been defeated again and again? Why do hedge-fund billionaires pay a far lower tax rate than middle-class workers? In a riveting and indelible feat of reporting, Jane Mayer illuminates the history of an elite cadre of plutocrats—headed by the Kochs, the Scaifes, the Olins, and the Bradleys—who have bankrolled a systematic plan to fundamentally alter the American political system. Mayer traces a byzantine trail of billions of dollars spent by the network, revealing a staggering conglomeration of think tanks, academic institutions, media groups, courthouses, and government allies that have fallen under their sphere of influence. Drawing from hundreds of exclusive interviews, as well as extensive scrutiny of public records, private papers, and court proceedings, Mayer provides vivid portraits of the secretive figures behind the new American oligarchy and a searing look at the carefully concealed agendas steering the nation. Dark Money is an essential book for anyone who cares about the future of American democracy.

Political Science

THE DARK SIDE

The Inside Story of How the War on Terror Turned into a War on American Ideals

The Dark Side is a dramatic, riveting, and definitive narrative account of how the United States made self-destructive decisions in the pursuit of terrorists around the world—decisions that not only violated the Constitution but also hampered the pursuit of Al Qaeda. In spellbinding detail, Jane Mayer relates the impact of these decisions by which key players, namely Vice President Dick Cheney and his powerful, secretive adviser David Addington, exploited September 11 to further a long-held agenda to enhance presidential powers to a degree never known in U.S. history and obliterate Constitutional protections that define the very essence of the American experiment. With a new afterword.

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