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The Rich and Hidden Political Influence of the Koch Brothers

By Linda McQuaig and Neil Brooks

Charles and David Koch
Charles (photo credit: Kevin Moloney/Fortune Brainstorm TECH) and David (photo credit: Gage Skidmore) Koch

Toward the end of November, the Meredith Corporation, owner of Family Circle, Better Homes and Gardens, and AllRecipies, agreed to buy Time Inc. for $3 billion. To help make the all-cash transaction possible, Charles and David Koch contributed $650 million. The billionaire brothers have been known to use their wealth and political connections to promote conservative causes. Meredith, however, stated in its announcement of the deal that they will “have no influence on Meredith’s editorial or managerial operations.” But as Linda McQuaid and Neil Brooks show us in this excerpt from Billionaires’ Ball: Gluttony and Hubris in an Age of Inequality, the brothers have a history of masking their influence to push for their interests. The future of such magazine titles as Time, Sports Illustrated, Essence, and People, now part of Meredith’s portfolio, remains to be seen.

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Barely a month after Barack Obama had been sworn in as the forty-fourth US president, riding a wave of immense popular support with his “Yes, we can” rallying cry echoing around the country and the world, a voice seemed to appear from nowhere saying, “No, actually you can’t.” Ostensibly, it came first from Rick Santelli, a relatively obscure investment manager-turned-commentator on CNBC, who denounced Obama’s plans to help struggling American homeowners as “promoting bad behavior.” In a wide-ranging rant from the floor of the Chicago Mercantile Exchange on February 19, 2009, Santelli said, “We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.” Within hours, a protest movement had swung into action on the Internet, talk radio, and cable TV, and rallies were scheduled across the country for the following week.

To Mark Ames and Yasha Levine, journalists who had written for an expatriate newspaper based in Moscow, there was something fishy about the whole affair. “As veteran Russia reporters, both of us spent years watching the Kremlin use fake grassroots movements to influence and control the political landscape. To us, the uncanny speed and direction the movement took and the players involved in promoting it had a strangely forced quality to it.” Ames and Levine noted that, only hours after Santelli’s rant, a previously inactive website called ChicagoTeaParty.com, which had been registered six months earlier by a right-wing activist, sprung to life, declaring itself the official home of the Chicago Tea Party. Whether or not Santelli was part of deliberate plan to launch the Tea Party—he denies that he was—Ames and Levine quickly pointed out what other journalists have later confirmed: that the apparently spontaneous outburst of disaffected Americans was greatly helped along by an organized and sophisticated campaign ultimately funded by two of America’s richest men, Charles and David Koch.

Billionaires BallIn many ways, the emergence of the Tea Party as a potent force in American politics can be seen as the culmination of almost four decades of behind-the-scenes effort on the part of the billionaire brothers. The political views of the Koch brothers have always been on the extreme right, nurtured by their father, Fred Koch, a cofounder of the ultra-right-wing John Birch Society. Since inheriting his massive privately held oil fortune in the late 1960s, the brothers have been pouring untold millions of dollars into promoting libertarian causes. The probing of Ames and Levine, as well as a comprehensive, investigative piece by Jane Mayer in the New Yorker in August 2010, has shown that the brothers established a vast network of ultra-conservative political organizations, advocacy groups, publications, and think tanks. Included in this network is the high-profile Cato Institute, which has aggressively pushed for an end to Social Security, and the Mercatus Center, located at George Washington University, which has been a leading advocate of environmental deregulation and inaction on climate change. (Its scholars have reassured the public that “if a slight warming does occur, historical evidence suggests it is likely to be beneficial, occurring at night, in the winter and at the poles.”)

The brothers have mostly stayed out of politics directly (apart from David Koch’s stint as the vice presidential candidate for the Libertarian Party in 1980, positioned to the right of Ronald Reagan). Perhaps the Kochs sensed how politically toxic a couple of billionaires could be to a movement whose central aim has been slashing taxes on the rich and dismantling programs, like Social Security, that keep millions of Americans out of poverty.

Hence they’ve masked their involvement. But their fingerprints are all over groups that have played an essential role in fostering the Tea Party’s rise, particularly Americans for Prosperity, which David Koch started in 2004. In a rare speech to a celebratory AFP gathering in the Washington area in 2009, Koch confirmed his involvement: “Days like today bring to reality the vision of our board of directors when we started this organization five years ago.” Still, with Koch and his kingly lifestyle remaining mostly out of sight, AFP has been able to present Koch-funded political events as populist gatherings of ordinary citizens trying to fight vested interests. Advertisements for a 2010 summit called Texas Defending the American Dream, for instance, proclaimed, “Today, the voices of average Americans are being drowned out by lobbyists and special interests”—without mentioning that the event was being sponsored by two of America’s wealthiest men, whose lobbying and special interest pleading had become so extensive it was dubbed the Kochtopus decades earlier.

In fact, the Kochs were really just one—although a leading one—of the ultra-rich US families that in the 1970s turned their attention and directed their wealth to the task of pushing American politics sharply to the right and putting in place policies that more clearly favored their own interests.

 

About the Authors 

Linda McQuaigLinda McQuaig has developed a reputation for taking on the establishment. Author of seven Canadian best sellers and winner of a National Newspaper Award, she has been a national reporter for the Globe and Mail, a senior writer for Maclean's magazine, and a political columnist for the Toronto Star. Follow her on Twitter at @LindaMcQuaig and visit her website.

 

Neil BrooksAuthor of three books, Neil Brooks is director of the Graduate Program in Taxation at Osgoode Hall Law School in Toronto. He has participated in building projects relating to income tax in Lithuania (through the Harvard Institute for International Development), Vietnam (Swedish International Development Agency), Japan (Asian Development Bank), China (AUSAid), and Mongolia (AUSAid).

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