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11 June 2016

The revolution will be tax-free: the libertarian dreams of the Koch brothers

The billionaire brothers who tried to buy the US presidency.

By Jane Mayer

This was the year that two of the world’s richest and most conservative men, Charles and David Koch, hoped, in effect, to purchase the US presidency. As the election campaign got under way, the Koch brothers were tied as the fifth-wealthiest individuals in the country, with a combined fortune of more than $80bn.

The plan had been a long time in the making. Over four decades, the Kochs had put together an association of 400 wealthy American conservatives; together, they pledged to spend $889m to ensure victory for their chosen candidates.

Let’s put that into context: that is more than either of the two main US political parties spent in the 2012 election overall. “We’ve had money in the past, but this is so far beyond what anyone has thought of, it’s mind-boggling,” Fred Wertheimer, an expert on political spending, said, on learning of the plan last winter. “This is unheard of in the history of the country.”

Yet it appears the billionaires’ plans have been thwarted by two upstart candidates whose campaigns have been fuelled in part by a backlash against the influence of wealthy political donors. In the Democratic Party, Bernie Sanders has made a virtue out of his exclusion by America’s moneyed political establishment. In the Republican Party, instead of a pliant nominee who is reliably subservient to their demands, the Kochs and their compatriots have been stuck with the billionaire developer Donald Trump, who has boasted that his “self-financed” campaign frees him from outside influence.

As he defeated his Republican rivals one by one, Trump gleefully skewered them as “puppets” controlled by contributors. Now, to the horror of many ambitious Republican Party officials, the Kochs have reciprocated by denouncing Trump and pledging to stay out of the presidential race.

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I have spent several years digging into the Byzantine family histories and money trails produced by the Kochs and a handful of other billionaires who have been quietly shaping US politics for almost half a century, by funding the rise of the libertarian right. It seems to me that the ultra-rich have become victims of their own success.

During Barack Obama’s presidency, the Kochs built up an unprecedented private political machine that today employs more than 1,000 full-time operatives in at least 35 states. They have built an intricate network of seemingly unconnected front groups, foundations and think tanks, as well as an army of door-knockers to get out the vote, armed with the most sophisticated political data that money can buy.

Much of what they have done has been cloaked in secrecy and funded by undisclosed “dark” money. Last year, a recording was leaked in which one of the Kochs’ operatives can be heard boasting to their backers that their “investment” had paid off. They had created an unparalleled, “fully integrated network” – referred to by commentators as “the Kochtopus”. This ideological machine hadn’t just shadowed the Republican Party: it had, in essence, subsumed it.

By capturing the Republican Party and bending it to serve their interests – particularly after 2010, when the US Supreme Court lifted almost all limits on what wealthy individuals and businesses could spend on elections (the notorious “Citizens United” ruling) – the Kochs and their allies ignored the concerns of the vast majority of ordinary Americans, at their own peril. They pushed for the party to take positions that they and other ultra-wealthy conservatives preferred, such as abolishing virtually all government social spending and slashing taxes disproportionately to favour top earners. They ignored polls suggesting that less wealthy Republicans did not share their agenda.

The Kochs, whose hugely profitable oil, chemical and manufacturing conglomerate, Koch Industries, has routinely been among America’s major polluters, also campaigned for the party to oppose all manner of environmental regulations, as well as any energy policy that threatened their fossil fuel profits. Their prodigious spending, as the Harvard professor Theda Skocpol has written, acted as a “magnetic force”, pulling one of America’s two main political parties so far to the right that it left most of the country behind.

It is these angry, left-out, middle-class Republicans whom Trump has seduced. By promising to save, not scrap, the likes of social security programmes and by criticising hedge-fund billionaires for shirking their taxes, while fanning hostility towards immigrants and free-trade deals, he has exploited the opening created by the Kochs’ free-market zealotry.

While the Kochs are now among the most powerful unelected figures in US politics, they were never in tune with the mainstream – far from it. Based in Wichita, Kansas, the family has long defined the furthest-right fringe of American political thinking. In 1958, after building oil refineries for Stalin and Hitler, Fred Koch, the father of the current Koch brothers, helped found the John Birch Society, a clandestine, anti-communist group so prone to paranoid conspiracies that its members claimed that the Republican president Dwight Eisenhower was a communist sympathiser.

Fred Koch was an overpowering, sometimes cruel father who brought up his sons Charles and David – and their less well-known brothers, Frederick and Bill – to oppose not just communism but centralised governments of all sorts, including America’s burgeoning welfare state.

Charles Koch, now 80, who with David owns almost all of Koch Industries, America’s second-largest private company, has always been the intellectual engine behind the brothers’ political ambitions. As a young man, he not only joined the John Birch Society but also became an acolyte of a radical libertarian thinker named Robert LeFevre, who called himself an “autarchist” because he didn’t like the word “anarchist”. LeFevre was so anti-government that he described it as “a disease masquerading as its own cure”. 

The FBI considered the group extreme enough to place under surveillance. These libertarians were so far beyond the norm, even for US conservatives at the time, that William F Buckley, the founder of America’s modern conservative movement, dismissed them as “anarcho-totalitarians”.

Had the Kochs and a handful of other like-minded families not spent well over a billion dollars promoting their views over the years, it is doubtful that they would have won over the public. The Kochs’ one stab at running for office was a dismal failure. In 1980, Charles convinced David to run for vice-president on the Libertarian Party ticket. Ronald Reagan, whom the brothers deemed too liberal, won the presidency for the Republicans. The Libertarians received barely 1 per cent of the vote and Charles expressed disgust with conventional politics. He dismissed politicians as merely “actors playing out a script” and developed a new ambition to “supply the themes and words for the scripts”. According to Brian Doherty, a fellow libertarian, his ultimate aim was radical: to pull the government “out at the root”.

Hoping to further that end, the Koch brothers became the primary underwriters of hardline libertarianism in America. As engineers and industrialists, they seemingly approached the project as a manufacturing challenge, building what became, in essence, an ideological assembly line. They described ideas as “raw product” and funded academics to tailor their ideology into marketable policies. They created and subsidised think tanks and advocacy groups. To pressure politicians into implementing their policies, they funded what looked like naturally sprouting grass-roots citizens’ groups, as well as legal groups, judicial seminars and litigation that cleared the way for unlimited political spending by those with almost unlimited wealth.

Much of this activity was hidden from the public view. But when the virulently anti-government Tea Party protests erupted in 2009, organised in some instances by operatives working for the Kochs, the press and public finally began to catch on.

The improbable success that the Kochs and a number of other ultra-wealthy fringe ideologues have had in influencing one of America’s two major political parties, despite the unpopularity of their views, is not over. It is tempting to think that, given Trump’s triumph, their outsized role has peaked. Yet an adviser to the Kochs recently told me: “They feel they’re on a roll.” He explained that, by skipping the costly presidential race, the brothers will have more money than ever for other projects. Their goal now is to keep both Houses of Congress under Republican control and to spend more on converting Americans to their anti-government cause.

The Kochs’ main political group, Freedom Partners, is already spending millions of dollars on eight races in the Senate and 32 in the House, as well as four gubernatorial races. Charles Koch’s foundation, meanwhile, is pushing free-market academic programmes at more than 300 colleges and universities with an eye to recruiting future generations to his “movement”. If there is any lesson to be learned from studying the billionaires behind the rise of America’s radical right, it is that they play a very long game and have the fortunes to fund it. 

Jane Mayer is the author of “Dark Money” (Scribe, £9.99) and is a staff writer at the New Yorker

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This article appears in the 07 Jun 2016 issue of the New Statesman, A special issue on Britain in Europe