Kochland Read online

  Bob Inglis knew he was losing the campaign. What he didn’t know was that he wasn’t alone. Koch Industries and Americans for Prosperity were replicating the strategy in congressional districts across the country. In Washington, sitting Republican lawmakers started talking nervously about being “primaried” by Koch-funded candidates. One wrong step could expose them to fierce competition. As Winn might have predicted, everyone started behaving much better.

  * * *

  As it pressured Republican lawmakers from the outside, the Koch network built a hard wall of “no” votes around the Waxman-Markey bill in the Senate to contain its support.

  Since at least 2008, Americans for Prosperity asked politicians to sign a pledge that they would “oppose any legislation relating to climate change that includes a net increase in government revenue.” It was phrased in a way to look like an antitax measure rather than a promise to kill any effort to control greenhouse gas emissions. But it achieved the same goal. Putting a price on carbon—through a cap-and-trade system or a carbon tax—was seen as the most realistic way to control carbon emissions. Only the federal government had the authority to impose that price, so Koch’s pledge killed the effort in its tracks.

  The “carbon pledge,” as it was called, was signed by 223 state and federal politicians in 2009. One of them was the Indiana Congressman Mike Pence. Pence, who had called climate change a “myth,” was the only member of the Indiana delegation to sign the pledge. In this sense, Pence was a trailblazer. By September of 2010, four members of Indiana’s delegation had signed the pledge and a total of 627 state and federal lawmakers and candidates had done so.

  As Koch Industries encircled the Waxman-Markey bill with its carbon pledge, the Democrats put their energy into passing Obamacare, which was approved in the Senate on Christmas Eve 2009 and signed into law in the spring of 2010. Then the Democrats put their energy into the Dodd-Frank financial reform bill, which imposed new regulations on Wall Street banks. It passed the Senate in May of 2010 and was signed into law in July.

  The cap-and-trade bill languished during these months in the Senate, as the group of senators led by John Kerry tried fruitlessly to find some sort of bargain that could make the bill palatable to sixty senators. All through the spring and summer of 2010, the political atmosphere grew hotter, stoked by AFP and other conservative groups, and the issue of carbon regulation became more toxic.

  This was the period when Bob Inglis was fighting in a primary election against Trey Gowdy, set for June of 2010. Inglis refused to abandon his campaign slogan “America’s sun is still rising.” Looking back, Bob Inglis said that there was one moment when he should have realized he was going to lose. It happened to be the one moment in his political career when he was most worried about being assassinated. It happened during a town hall meeting in a public school near Inglis’s home in Travelers Rest. Because the event was so close to his house, he brought his wife and children. When they arrived, the crowd was so large that the local fire marshal was turning people away. Even before Inglis started speaking, a crowd outside was getting furious.

  The atmosphere inside was even worse. The auditorium was stuffy and crowded and full of raw anger. Inglis knew that many of his neighbors around Travelers Rest carried guns on their person. He was certain there were many guns in the room that night. When he took the stage, he began to give his stump speech. Under normal circumstances, he would have pointed out his wife and children in the audience, which was a standard gesture for a congressional candidate. That night, he didn’t do it.

  “I didn’t introduce my wife and kids because I was concerned about their safety. You could just tell, in the pulsating anger in the place, that it wouldn’t be good to introduce your wife and kids,” Inglis said. “If I was going to get shot, it probably was going to happen there. At that town hall meeting.”

  At the end of the night, a woman close to the stage yelled at Inglis: “We don’t trust you anymore!”

  If a congressman lost the trust of his voters, there was no recovering from it. When the primary vote was held on June 22, Inglis attended a watch party with his campaign staff in downtown Greenville. The event turned out to be a chance for Bob Inglis’s close friends and family to witness the most public and humiliating defeat of his political life. He lost the race with 29 percent of the vote to Gowdy’s 70 percent.

  Inglis worried about what this might mean for future politicians. “I was really quite sad about the rise of this populist fire that can only burn things down. It can’t build anything up. I continued to be saddened that this fire, which I thought would burn out, has only gotten hotter.”

  * * *

  It is difficult to identify the exact moment when the cap-and-trade bill died. There was no vote to declare its final defeat. The measure simply lost momentum and then died quietly. In late April of 2010, Lindsey Graham dropped out of the gang of senators who were pushing the bill. No Republicans were willing to step in and replace him. Harry Reid announced that the Senate would work first to pass comprehensive immigration reform before addressing climate change.

  Jonathan Phillips and the other staffers who’d written the bill knew that Reid’s decision was a death sentence. The moment of opportunity to pass meaningful greenhouse gas regulations had passed.

  Americans for Prosperity emerged from the summer of 2010 in its strongest position ever. Steve Lonegan, in New Jersey, had a hard time keeping up with the organization’s growth. There were more people and more resources pouring in than ever before. When Lonegan joined AFP, it was a political upstart, a group of outsiders like a pirate crew, fighting to change government policy from outside the system. This culture was rapidly disappearing, replaced by a streamlined, corporate model.

  “In the early days, we were rambunctious. There were less controls,” Lonegan recalled. “But as things got bigger and bigger, they had to put in more, like, lawyers and bureaucracy. Though it was still effective, it did become somewhat more bureaucratic. But I think that was out of necessity.”

  As AFP solidified its position, it also began to entangle itself tightly with the Republican Party and change it from within. AFP went on a hiring spree and poached young and aspiring talent from the Republican Party. Two-thirds of all AFP directors were drawn from it. Perhaps more importantly, roughly one-third of all the AFP state directors who left AFP went directly from that job to positions in Republican Party politics, taking with them their contacts and education from Koch’s political operation.

  The deep ties between AFP and the Republican Party were only discovered years later, when two Harvard political scientists, Theda Skocpol and Alexander Hertel-Fernandez, conducted one of the only rigorous independent studies of the newly expanded Americans for Prosperity network. “These data show that the AFP federation has been able to penetrate GOP career ladders,” Skocpol and Hertel-Fernandez wrote. The employees who went back and forth tended to be “young men in their thirties or forties” who would presumably have long careers in politics ahead of them.

  AFP was reshaping the Republican Party and strengthening it at the same time. In 2010, the Koch network shifted its focus from fighting the Waxman-Markey bill to electing as many Republicans as possible in the midterm congressional election.

  In November, a wave of votes from Republicans and Tea Party activists destroyed the Democratic majority in the House of Representatives. Republicans also made strong gains in the Senate, although it didn’t win control. The era of the Democratic supermajority of sixty votes was firmly buried. The filibuster would once again become a remarkably powerful tool of opposition. Now, if Harry Reid wanted to pass a bill, he would need Republicans to join a vote to end a filibuster debate. This was a possibility of vanishing likelihood.

  The magnitude of this victory was immense for Koch Industries. Of the eighty-five newly elected Republicans who arrived in Washington, seventy-six had signed Americans for Prosperity’s carbon pledge, vowing they would never support a federal climate bill that added to the
government’s tax revenue. Of those seventy-six members of Congress, fifty-seven of the signees had received campaign contributions from Koch Industries’ PAC, according to an analysis by the Investigative Reporting Workshop at American University. Koch Industries had terminally stalled the Waxman-Markey bill in the Senate, and now it had salted the earth behind it, ensuring that a new climate change bill would never grow.

  * * *

  One of the earliest acts of the new Republican majority was to halt funding for the Select Committee on Energy Independence and Global Warming. The team began to box up their files and personal belongings and emptied out the basement office of the Longworth Building.

  Jonathan Phillips, the young staffer who’d written sections of the bill to promote renewable energy, left Congress and took a job with the US Agency for International Development. He traveled to Africa and helped companies there build new clean energy infrastructure. Two of the legal experts on the team, Michael Goo and Joel Beauvais, moved to the EPA, where they started working on a plan to regulate carbon emissions from coal-powered utility plants. The EPA rule, called the Clean Power Plan, was the closest thing to a carbon control law that officials in the Obama administration felt they could achieve. Americans for Prosperity quickly caught wind of this and immediately began recruiting opposition to it through its website.

  In the absence of regulation, greenhouse gas emissions continued to soar. In 2011, humans emitted 32.27 billion tons of carbon into the atmosphere, a rate that was more than 150 times what it had been before the industrial revolution. Concentrations of carbon in the atmosphere rose every year after the death of the Waxman-Markey bill. Scientists had warned that humans should strive to keep carbon dioxide levels at 350 parts per million to avoid catastrophic environmental impacts. As the Waxman-Markey bill was debated, carbon levels hovered around 370 parts per million. Within five years of its failure, levels hovered at 400 parts per million, the highest ever recorded during human existence.

  After he left politics, Bob Inglis formed a group that promoted free-market solutions to the problem of climate change. His view remained unpopular in Republican circles. And everywhere he went, Inglis had that nagging feeling from 2010, when he had looked at the back of a town hall meeting and seen someone with a video camera, mounted on a tripod, filming him, someone “that maybe had a little bit of help, you know what I mean?”

  Someone still seemed to be helping.

  Inglis attended a debate over climate change policy in Washington, DC, hosted in part by the Libertarian Reason Foundation. When he arrived, Inglis found something curious. On each empty seat had been placed a campaign-style button. The buttons read simply: “70–29.” This was the vote margin by which Inglis had lost to Trey Gowdy, 70 percent to 29 percent.

  The buttons stuck in Inglis’s mind. Someone had to print them, pay for them, and disperse them over the empty seats. Things like that took money and coordination. A couple of years after he was kicked out of office, Inglis finally had a strong suspicion as to who could do that. When he held the button, one thought crossed his mind:

  “It seems to me that it has Koch written all over it.”

  * * *

  Charles Koch had reason to be exultant as 2010 came to a close. Koch Industries had faced an unprecedented economic threat in the form of the Waxman-Markey bill and had played a vital role in derailing it. His own political ideals had faced an unprecedented threat in the seemingly permanent Democratic majority in Washington and the popularity of the Obama agenda. He played a vital role in destroying it. Koch’s political operations were larger, more influential, and more powerful than ever.

  But Charles Koch still felt threatened. He felt that the fight was still in its early stages. There was no time to waste with victory parties. On September 24, he sent a letter to wealthy political donors whom he was hoping to enlist in his cause. “Everyone benefits from the prosperity that emerges from free societies. But that prosperity is under attack by the current administration and many of our elected officials,” Charles Koch wrote. “We must stop—and reverse—this internal assault on our founding principles.”

  The letter was an invitation to Charles Koch’s eighth private gathering for wealthy conservative donors and the politicians who sought their help. The conference was in January of 2011 at a resort near Palm Springs, California.

  Security around the donor conference was intense. Attendees registered for the event by contacting the Koch Industries lobbying office in Washington, DC, rather than the host hotel. When attendees arrived, they were required to wear an identification badge at all times. They were also warned not to leave materials behind, or to post on social media while they were at the event. No one from the media was allowed inside.

  Charles Koch had a pithy piece of wisdom that he liked to share with his political operatives. It was a saying about whales and harpoons. “The whale that comes above sea level gets harpooned,” is how one person remembered it.

  The allegory was clear. It was safer to remain below the surface. It was better for Koch’s political operations to remain anonymous. This helped explain the complexity of Charles Koch’s emerging political organization, the endlessly complicated interlocking network of shell organizations and secret donations. It also explained the security and secrecy around the donor meetings that Charles Koch hosted twice a year.

  The events had grown larger and more lavish since 2006, when Steve Lonegan attended one of the earliest conferences in Aspen. Since that time, the events had been attended by Supreme Court justices Antonin Scalia and Clarence Thomas; GOP congressmen Mike Pence, Tom Price, and Paul Ryan; Republican governors Bobby Jindal and Haley Barbour; and celebrity speakers like Rush Limbaugh, Charles Krauthammer, and John Stossel. At the summer conference of 2010, one of the keynote speakers was the Tea Party leader Glenn Beck, whose speech was entitled “Is America on the Road to Serfdom?”

  But secrecy was becoming difficult to maintain. Americans for Prosperity was one of the most influential political organizations of 2010. A number of investigative reporting outlets began to dig into Charles and David Koch’s long history of political involvement, including the Center for Public Integrity and the Investigative Reporting Workshop at American University. Both groups published deep reports that outlined the Koch brothers’ extensive political donations. Activist groups took note as well. In March of 2010, Greenpeace released its forty-three-page report entitled Koch Industries: Secretly Funding the Climate Denial Machine, which detailed Koch’s extensive giving to groups like the Mercatus Center, the Cato Institute, and the Competitive Enterprise Institute.

  The publicity culminated in August of 2010 when the New Yorker magazine published a detailed report of Koch’s political history, with contemporary accounts of Americans for Prosperity’s coordination with Tea Party activists. The article, “Covert Operations: The Billionaire Brothers Who Are Waging a War Against Obama,” was written by Jane Mayer, one of the most prominent investigative reporters in America. It cemented the Koch brothers’ role as public figures who were deeply influencing political affairs. A widespread narrative raced through American politics, a narrative that the Koch brothers hadn’t just assisted the Tea Party but had created it. The story line was inflamed by the 2010 Supreme Court decision Citizens United v. Federal Election Commission, which lifted restrictions on campaign donations to independent political groups. This opened the gates for unlimited cash to be poured into the third-party groups that Koch became masterful at employing. It appeared that there were no constraints on the political power that billionaires could wield. The Koch brothers were seen as the primary beneficiaries of the new landscape.

  The whale had breached. The harpoons began to fly. When Charles Koch arrived in Rancho Mirage for the eighth donor conference, he found that the veil of secrecy had been lifted for good. Roughly a thousand protestors were gathered outside the Omni Rancho Las Palmas Resort & Spa. The resort was a collection of low-slung buildings built in the style of adobe haciendas, en
circling a pool and a golf course. The protestors filled the street just outside, standing between the row of palm trees that swayed in the placid breeze. Security officers stood on the hacienda roof, looking down at the crowd, while cordons of local police officers in riot gear squeezed the big crowd inward from the sides. The police justified their militarized presence based on the fact that there were several federal judges inside the resort at Koch’s gathering.

  The protestors were raucous and wore brightly colored costumes. They carried big banners that read: “Quarantine Koch,” alongside neon biohazard symbols. They carried placards that read: “Uncloak the KOCHS!” and “TEA PARTIERS ARE KOCH SUCKERS!” They chanted and sang songs into loudspeakers.

  The din could be heard throughout the resort. But inside the conference rooms, the seminar proceeded. Charles Koch made it clear to the attendees that the event was not a junket; not “fun in the sun,” as he put it. The gathering was a work trip, a chance to press their strategy. He spoke about the political struggle in nearly apocalyptic terms. At a donor conference in 2011, he told the crowd that America’s future could literally be endangered if Barack Obama won reelection. “This is the mother of all wars we’ve got, over the next eighteen months, for the life or death of this country,” Koch said.

  Charles was the star of the seminars, but he was a reticent one. He didn’t like the business of shaking hands with politicians and getting his photo taken with them. When given the chance, he passed up opportunities to meet even very senior political leaders who asked for one-on-one time with him. If anything, he seemed to look down on them.

  “I remember talking to him. I think he viewed the folks in Congress as victims of the system. I know he did,” said one person familiar with Koch’s political operations. Charles Koch, who prized long-term thinking and who preached about the importance of creating incentive systems and bonus payments to reinforce it, looked at Congress and saw a dysfunctional system that was riven by toxic incentives. Politicians were just caught up in that system. They almost couldn’t help but do the wrong thing.