Kochland Page 68

  “He treated it as if he’d been shot at. He wouldn’t let it go . . . he was furious at the conference organizers for not protecting him,” recalled one person in the room. Pruitt often fixated on what he saw as threats to his safety, this person said. “He becomes obsessed. I think he truly believes that he is sort of on God’s mission, and people are out to get him.”

  Pruitt’s new leadership team consisted largely of loyalists from Oklahoma. They barricaded themselves off from the rest of the agency and held hours-long meetings each morning without any EPA staff present. David Schnare attended those meetings, and he became frustrated with Pruitt’s refusal to meet with EPA staff. It was hindering Pruitt’s ability to understand the agency and to mobilize the people who worked there.

  “Let’s put it this way. He didn’t want anyone to tell him that he couldn’t do something. He only wanted to be able to tell people to go do things and sometimes someone has to stand up and say you can’t do that. And those people didn’t last,” Schnare said.

  There were other problems with Pruitt. Schnare began to doubt that Pruitt, for all his close ties to energy companies, might be a reliable conduit for the effort to thoroughly dismantle the legal basis for climate change regulation. Schnare discussed the transition plan with Pruitt, and explained the importance of attacking climate rules. But Pruitt seemed uninterested. Instead, Pruitt asked his staff to come up with quick initiatives that could garner headlines and give him a chance to visit states for public events.

  “If he had an agenda, the agenda was: promote Scott Pruitt for the next job,” Schnare said. “He looked for opportunities that gave him the chance to go out into the states—especially Iowa and New Hampshire.”

  Schnare quit the EPA that spring. Pruitt’s inner circle became tighter. The morning meetings went long—three hours sometimes—and Pruitt’s team began issuing policy proposals that were fully formed, without any input from the EPA’s staff. In the course of a year, Pruitt’s team issued orders to repeal or roll back forty-six rules and regulations. Many of these were major rules. Pruitt’s team issued a proposal to repeal the Clean Power Plan and to strip away the CAFE standards for fuel efficiency.

  In June, Pruitt attended a ceremony at the White House Rose Garden, where he introduced President Trump. The event was to announce America’s withdrawal from the Paris Climate Accord agreement to reduce global greenhouse gas emissions. It was the third global treaty to combat climate change abandoned by the United States. Pruitt was a vocal proponent of the withdrawal, and his argument won out over officials who believed that international obligations should be honored from administration to administration.

  The withdrawal was characteristic of the Trump administration’s approach to governing and conformed with Charles Koch’s views. Trump and his advisors considered the Washington bureaucracy to be a parasitic population, feeding off the American economy. To combat these parasites, the administration left jobs unfilled, transferred career employees considered disloyal into dead-end jobs, and failed to appoint staff members to the one review board that considered employee complaints. This slow corrosion of the civil service melded smoothly with Charles Koch’s goals. There would be no harm in letting the administrative state recede.

  Still, it wasn’t clear how effective Pruitt was in his effort to dismantle, or permanently hobble, the EPA. His efforts to repeal the Clean Power Plan and other measures would face legal challenges. Pruitt also seemed to be stalling on the tedious and time-consuming work of chopping up the EPA’s functions and delegating them to other agencies, as Schnare had suggested. Finally, Pruitt became fatally distracted—by mid-2018, he was the focus of eleven federal investigations for his spending on security and relationships with lobbyists. He asked one of his staffers, for example, to reach out to Chick-fil-A to win Pruitt’s wife a franchise location.

  In July of 2018, Pruitt resigned. He was temporarily replaced by his deputy, Andrew Wheeler, a former coal industry lobbyist. In certain circles, there was hope that Wheeler would be more focused and more disciplined in carrying forward some of the goals outlined in Schnare’s transition plan.

  Even within the chaos of Pruitt’s tenure, he achieved important victories for Koch Industries. The effort to regulate greenhouse gas emissions had been purged from the EPA, at least temporarily, pushing back the date when carbon emission limits might harm Koch’s oil refining and trading operations.

  The Trump administration also did something that seemed impossible—it politicized the issue of climate change even further than it had been in 2010. It seemed inconceivable, in the Trump era, that any Republican or conservative Democrat could even broach the topic of combating climate change. The real-world effects were measurable. When George W. Bush was elected president, atmospheric concentrations of carbon were 375 parts per million, far exceeding the record level of human history. When Barack Obama pushed for the cap-and-trade bill in 2010, carbon dioxide levels were 393 parts per million. In 2018, the concentrations reached 410 parts per million, a new record.

  * * *

  In late 2017, Charles Koch’s political network released a memo to its donors. The memo touted two big achievements that year. The first was the “comprehensive tax reform bill,” which the memo said was the network’s top priority. The second was the regulatory rollback administered by cabinet members like Scott Pruitt, including the proposed repeal of the Clean Power Plan and the withdrawal from the Paris Climate Accord.

  The Koch network couldn’t claim credit for these accomplishments. The group had shaped the Trump agenda but had not written it. The balance of power between the Trump administration and the Koch network was still uncertain. Koch claimed some victories, but it was clear that Donald Trump was determined to go his own way. Trump abandoned a major trade deal in Asia and imposed tariffs on goods from Europe and China, policies that Charles Koch vehemently opposed.

  Inside the Trump administration, there was disdain for Charles Koch because he was considered too ideological, inflexible, and out of touch with American voters. Trump’s influential policy advisor, Steve Bannon, made this disdain public during an interview with the New York Times Magazine, published in March of 2017. Bannon, indirectly praising Donald Trump’s brilliance, disparaged the Democratic Party. Then he took a shot directly at Charles Koch: “And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government—which just doesn’t have any depth to it. They’re not living in the real world.”

  It seemed that the Trump administration and the Koch network were like opposing chess players who couldn’t clear the board. There was no clear winner. But Charles Koch pressed his advantage. His donor network announced that they would spend between $300 million and $400 million during the 2018 midterm elections, helping shape the most important political contest of Trump’s presidency.

  The Koch network maximized its influence with this money by forging a connection with the one senior member of the Trump administration with whom Charles Koch had a long relationship—Vice President Mike Pence. As an Indiana congressman, Pence was a close ally of Americans for Prosperity, a relationship that lasted after Pence entered the White House. In June of 2017, while Charles Koch attended a meeting with his donor network in Colorado Springs, Koch took a detour to hold a private meeting with Pence and a handful of Pence’s staff members at the Broadmoor Hotel. The meeting lasted roughly an hour, and was not on Pence’s official schedule for that day. Koch and Pence discussed Trump’s legislative agenda, including the tax cuts and health care reform. Pence was later given responsibilities for helping manage Trump’s strategy for the 2018 midterms. Trump said that if the Democrats won control of the House or Senate, their first order of business would be impeachment proceedings, which would disrupt the presidency. The contest was vital, and Charles Koch ensured he would be a major player in it.

  With this money hanging in the balance, Charles Koch traveled to Palm Springs in January of 2018 to host the meeting of his donors. As th
e event got underway, Charles Koch took the stage, standing behind the podium as an evening breeze blew through the luxury resort. He wore a suit jacket and blue shirt, with no tie. He looked profoundly confident, and told his colleagues that they were making great progress in the Trump era.

  “I’m more excited about what we’re doing and about the opportunities than I’ve ever been,” he said. “We’ve made more progress in the last five years than I had in the previous fifty.”

  In typical fashion, Koch then made a joke at his own expense, pointing out that some people might have wondered what he was doing all those fifty years, if he hadn’t achieved great results. The comment drew light laughter. But it was clear enough what he had been doing. He had been building a political network with a reach and influence that was arguably stronger than any other in corporate America. Only the CEO of Koch Industries could call upon a massive lobbying operation, an army of grassroots activists, a donor network with contributions in the billions of dollars, and a universe of political front groups and donor vehicles nearly impossible for outsiders to map. If the CEO of General Electric or any other publicly traded company tried to build a similar machine to influence public policy, and dedicated as much time and money to it as Charles Koch, then that CEO would almost certainly be curtailed by a board of directors. Thanks to his efforts to retain such tight control over Koch Industries, Charles Koch did not face this dilemma. His political network was enduring, and massive. And it would almost certainly outlive the Trump administration.

  Charles Koch possessed an attribute that seemed to elude Donald Trump—he possessed almost limitless patience, and a time horizon that was measured in decades.

  After the laughter passed during his speech, Charles Koch explained that his fifty years of work in politics had a clear directive, even if the results were slow in coming.

  “You’ve got to build the foundation before you build the house,” he said. “That’s what I claim I was working on.”

  * * *

  I. The change that appeared to win over Meadows and the Freedom Caucus was curiously minute. An amendment introduced by Republican congressman Tom MacArthur allowed states to request a waiver from certain obligations imposed by Obamacare, essentially punting hard decisions about cutting health care coverage to state governors. A Brookings Institution analyst speculated that the MacArthur Amendment made the bill palatable in part because it allowed the House to pass the bill on to the Senate, making it the upper chamber’s problem.

  II. This similar tax was called a Value Added Tax on sales inside a country. While not exactly the same as the border adjustment proposed by Paul Ryan, the widely used VATs frequently included border adjustments, allowing economists to study their impact.

  III. The BAT wasn’t expected to be all good for exporters. Most experts expected that a BAT would eventually strengthen the dollar, making US products more expensive overseas. But the tax structure would still most likely benefit exporters over firms that shipped production overseas.

  IV. West Texas Intermediate

  V. In 2018, Americans for Prosperity attacked Collins with a campaign of Internet ads, direct mail, and radio spots as she sought reelection.

  CHAPTER 25

  * * *

  Control

  (2018)

  It was about six in the morning, in the middle of winter, when dawn started to break over Charles Koch’s family compound in Wichita. Behind the compound’s tall walls, treetops became visible in the faint light, their branches bare and sharp. The sky turned faintly purple, then pink. Outside the compound, a man sat alone in a large black Chevy Tahoe with tinted windows, apparently watching the walls. The man sat patiently. He looked down at his phone and waited, the light of its screen making his face glow. His headlights were extinguished and he was all but invisible to the morning traffic that passed by. Then, a little bit before six thirty, the man in the Tahoe flipped on his headlights and drove forward. At the same time, another black SUV emerged from Charles Koch’s compound, pulling out from an entrance that was partly obscured by shrubbery. The man in the Tahoe pulled out into traffic, his timing impeccable, and fell into line behind the other black SUV. Both cars headed north, toward Koch Industries headquarters.

  Part of the myth about Charles Koch was that he drove himself to work every day, parking in front of Koch Industries headquarters and walking up the stairs to his office. His reality was different now. It was an open secret in Wichita that Charles Koch rode to work in a convoy of armored vehicles, chaperoned by armed security guards. This was seen as pragmatic. Since he had become politically active, Charles Koch was a magnet for death threats. He was a private man, little understood and widely hated. He was now also one of the richest men on earth, so security was necessary. Charles Koch’s great skill was analyzing and mitigating risk.

  Traffic was light this early in the morning. The black SUVs drove past strip malls as they headed north. The sky continued to lighten, but only slightly. At this time of day, the commute to Koch headquarters lasted only a matter of minutes. The Koch Industries campus was visible from miles away. The Tower sat at the center of the campus, still the tallest building within several miles. The first rays of the morning sun glinted off the dark brown granite walls and the opaque windows. The parking lots around the Tower were still illuminated, this early in the morning, by bright lights that hung from the top of tall black poles. The lights made the campus look like a self-contained universe, a splendidly isolated pool of shining stars, surrounded by a wall. It was a beautiful sight in the morning. Kochland.

  When he arrived at work, Charles Koch’s car pulled into a special parking garage with high security. The lot was near the bombproof chamber where mail was sorted before entering the building. Here was a universe that he, primarily, had authored. The people he encountered spoke a language he invented, worked in business units he oversaw, and granted him the kind of deference enjoyed by national leaders. When he entered the hallways of his office building, Charles Koch could take the elevator up to the third floor, or walk there through the spacious and well-lit stairwell.

  The hallways were hushed in the morning. The décor of the third floor, which housed Koch’s executive suites, had barely changed in twenty years. The doorway to the executive suite was near the elevator bank. Walking inside that door, Charles Koch passed into a spacious lobby. There was a couch, a table, and a small bookcase across from the desk where his assistant sat. Beyond the desk was the doorway to his office. And to the left, on the other side of the lobby, was the entrance to the corporate boardroom, the site of countless strategy sessions and battles over the decades.

  As he walked to his office, Charles Koch passed a sculpture. It was a bust of his father’s head, mounted on a tall pedestal, surrounded by decorative plants. It looked like a monument to a nation’s founder. It had been fifty years since Fred Koch died and Charles took over the family company. Fred Koch, that difficult and driving man, was now safely enshrined in the form of a memorial, a silent bust. The man who had encouraged his sons to wear boxing gloves and fight one another, the man who forced Charles Koch to dig weeds in the family yard with a spoon, the man who sent Charles to military school, who used guilt to drag Charles back home to Wichita to run the business, that man was gone. There was only the memory of him—a memory that was shaped and cultivated by his son Charles. Every year in September, Charles Koch hosted the “Founder’s Day” memorial event, where he talked about his father’s legacy. He wrote about his father and produced videos about his father. He controlled the narrative. And one part of the narrative that Charles Koch didn’t emphasize, maybe because he didn’t have to, was that Charles’s achievements had surpassed his father’s. Fred Koch left behind a company that was a motley assortment of assets—a cattle ranch, a share in an oil refinery, a gas-gathering business. Charles Koch fused them together. Charles was the one who invented Koch Industries. Fred Koch published a political tract and sold it through mail order. Fred Koch cofounded the John Bi
rch Society, a paranoid, marginal political group that dissolved into obscurity. Charles Koch wrote his own political tracts and two books on Market-Based Management, one of which was a national bestseller. Charles Koch built a political network that was arguably more influential than any other in corporate America. Reporters and authors traveled from around the country, seeking an audience with Charles Koch. His political pronouncements made the evening news.

  Everything Fred Koch accomplished, Charles Koch surpassed.

  And while he might not admit to this fact, Charles Koch must have been aware of it, on some level, as he passed that bust of his father. He walked past the receptionist’s desk and into his familiar office. He walked past the small leather couch and coffee table, past the walls with their built-in bookshelves that held his personal library. His desk was still in the same spot, over by the window. It was not uncommon for Charles Koch to arrive at his desk just after dawn.

  When he sat down, Charles Koch could turn his head to take in a sweeping view of the Kansas horizon. This view had changed over the last decade or so. It wasn’t all empty space now. There was a public-school building just north of Koch headquarters and some suburban neighborhoods to the northeast. But the landscape changed only because Charles Koch had allowed it to change. He owned virtually all the land he could see, out to the horizon. He had purchased the acreage over time, at reasonable prices. He donated the land on which the public school sat to clear the way for its construction. When Charles Koch gazed out his window, he saw a landscape that he controlled.