June/July/Aug 2014

Cash and Carry

Two new books size up the money-driven configuration of American politics

Jim Newell


How do we define the corruption that money brings to our politics? It’s easy to be vaguely concerned about “money in politics” in the dollar-saturated public sphere that’s risen up following 2010’s Citizens United and subsequent federal-court decisions. Many people are. But the “corruption” that’s taking place now isn’t as simple as some would make it seem, and its complexity contributes directly to its power and endurance.

Indeed, if a presidential candidate were caught on film accepting from a railroad tycoon a silver briefcase overstuffed with greenbacks, that could supply enough impetus to push through some sort of modern legislation cracking down on our restored anything-goes campaign-finance system. But overt, easily digestible “bribery” is too low-tech a method of purchasing influence for the barons of the twenty-first century.

And besides, who would be so naive as to believe that outright bribery is the only worrisome manifestation of money corrupting politics? Oh, wait, that’s right: the fellow who currently runs the Supreme Court of the United States.

In his latest decision overturning longtime political-spending regulations—the majority opinion in 2014’s McCutcheon v. FEC, which struck down aggregate donation limits to candidates, political parties, and PACs—Chief Justice John Roberts lays out his litmus test for the constitutionality of a campaign-finance regulation targeted at eliminating corruption: “Any regulation must instead target what we have called ‘quid pro quo’ corruption or its appearance. That Latin phrase captures the notion of a direct exchange of an official act for money.” According to Roberts, the only form of political-spending “corruption” that Congress may restrain with regulations are those neatly discoverable cases of publicly documented bribery, preferably replete with the silver briefcases and power-mad corporate henchmen giddily burning C-notes as they light an obliging lawmaker’s cigar.

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Protesters rally against a Koch brothers' political strategy session, Rancho Mirage, CA, 2011.

But we ourselves would be naive to think Roberts is being naive in delivering his baby-simple rationalization for deregulating campaign donations. He’s not a dimwit; his court, in McCutcheon, was continuing its ideological mission to tilt the balance of power in America toward Gilded Age levels of control by and for the wealthy. His all-too-plain message to modern-day tycoons in this case was: As you were, gentlemen.

And gentlemen—because it usually is just men—of wealth have been quite busy ever since Citizens United, and a subsequent lower-court decision in Speechnow.org v. FEC.Even before the generous provisions of McCutcheon, the nation’s plutocrats were well on the way to turning elections into games of badminton among themselves.

The “network of donors” convened by Wichita billionaires Charles and David Koch alone spent $400 million during the 2012 election cycle, trying (mostly unsuccessfully) to elect Republican candidates through a complicated legal architecture of donor-masking nonprofit pass-throughs. Similarly well-heeled casino billionaire Sheldon Adelson first spent about $20 million trying to get his pal Newt Gingrich elected president, and then happily trained the spigot on eventual GOP nominee Mitt Romney and others—all in all, about a $100 million commitment for the dismal 2012 campaign season. Retired investor Foster Friess spent millions on fellow social conservative Rick Santorum’s bid, single-handedly keeping his campaign afloat for months. Liberal billionaires were slow to get into the expansive outside-spending game, but that trend, too, is changing: Retired hedge-fund manager Tom Steyer, armed with his own pliable network of donors, plans to spend $100 million in the 2014 election cycle supporting candidates who speak out on the dangers of climate change.

With super PACs and “dark money” nonprofits allowing our wealthiest fellow citizens to funnel millions—which, when you have $40 billion or so, still only amounts to peanuts—into the elections, the contingent of people to whom our politicians answer dwindles, perhaps eventually to a handful. And this, in a nutshell, is the modern-day iteration of corruption that our honorable chief justice overlooks. Or would that be “oversees”?

One guy who does get this is President Barack Obama. At a cozy February 2012 fund-raiser of elite donors outside Seattle, Obama shared with the assembled Democratic plutocrats his forecast for the future of presidential campaigns:

Unless things changed dramatically, Obama predicted, “I may be the last presidential candidate who could win the way I won, which was coming out without a lot of special-interest support, without a handful of big corporate supporters, who was able to mobilize and had the time and the space to mobilize a grassroots effort, and then eventually got a lot of big donors, but started off small and was able to build. I think the capacity for somebody to do that is going to be much harder.”. . . Obama turned to face [Bill] Gates, who stood awkwardly, his hands stuffed in his suit pants pockets. “And at that point, you genuinely have a situation where ten people—hey, you know, Bill could write a check.” And, Obama pointed out, it wasn’t just Gates, whose fortune, then estimated at billion, Democrats had been hoping to tap in a big way. “Actually, there are probably five or six people in this room,” Obama said, gesturing to [Steve] Ballmer and others, as nervous laughter spread through the crowd. Obama plowed ahead insistently, eyebrows raised, his voice rising with agitation as he stepped toward the donors. “I mean, there are five or six people in this room tonight that could simply make a decision this will be the next president and probably at least get a nomination, if ultimately the person didn’t win. And that’s not the way things are supposed to work.”

This account was delivered by a “source familiar with the event” to Politico reporter Kenneth P. Vogel, who includes it in the preface to Big Money, which serves more or less as a compilation of his adventures as a campaign-finance reporter pre– and post–Citizens United.

Vogel admits up front that “having tracked the flow of money into politics as a reporter for more than a dozen years, I’d heard plenty of hyperbolic predictions from self-styled reformers like Obama. From their perspective, the latest developments in campaign-finance law always seemed to be threatening the very fabric of American democracy by empowering rich donors or special interests.” He explains that more often than not, however, “the system self-corrected” as “Congress, regulators, or judges” would shut down a “particular loophole” that “resulted in scandal . . . only to see the cycle begin anew with a fresh avenue for spending.”

But even to an experienced, critical eye like Vogel’s, “the cresting wave of big money sparked by the Citizens United decision was truly altering the very character of American politics.”

It’s not just that the total sums pouring into our politics are greater than they’ve been at any other time in our nation’s history—though that is undeniably true. Rather, it’s that the spending is fundamentally changing how campaigns are run, which issues are debated, and which candidates represent their parties. . . . In a perverse kind of way, the new system is more democratic, but only for those with the cash to buy in. Anyone with enough net worth can become a player in the new big-money politics, and the country’s ultra-rich have lined up to get in the game. They are—in a very real and entirely legal way—hijacking American democracy.

What further complicates the new open-market traffic in campaign corruption is that the megaspenders’ motives for throwing around such sums aren’t limited to increasing the bottom lines of their businesses, as they would be in the classic, Robertsian “quid pro quo” scenario. (That work is delegated to their lobbyists, who pull down still bigger sums, in the aggregate, and work day in, day out on campaign off years.) This doesn’t ennoble their spending, however. Typically, they’re so wealthy that they treat the whole electoral process as a game, like picking horses at the track. Or, to use Vogel’s apt metaphor, they’re less like “conniving robber baron archetypes trying to buy government favor” and more reminiscent of “the wealthy class of sports junkies who plunk down hundreds of millions of dollars to buy a professional team.” I can attest, too, that toiling as a spectator to the game between candidates’ “sugar daddies” can serve as a time-consuming guilty pleasure. It’s fun. But then you remember that the sport you’re watching is plutocracy.

Vogel’s decision to adopt a gonzo-style approach allows us to check out the progress on our new oligarchic digs as the contractors near completion. Throughout the book, Vogel shares versions of the same first-person story that never seems to lose its alternatingly comedic and terrifying edges: Here’s a closed-door donor conference I snuck into, and here’s what happened when they found me out.

The most chilling of these involves Vogel’s experience in Indian Wells, California, in early 2013. Charles and David Koch were holding one of their biannual “secretive political gatherings of the conservative elite,” wherein major right-wing donors gather to plot election strategy. The resort confab was heavily guarded by security. But Vogel, miraculously, entered the premises by mimicking the “knowing nod” to the security-checkpoint guard that the driver in front of him had given. After Vogel interrupted a poolside conversation between a senator and a billionaire, a Koch PR guy “who had done a stint flacking for the mercenary military firm Blackwater” escorted the reporter off the premises. That’s when things really got frightening: When he returned to his hotel room, the phone started ringing. “I picked it up, and the line went dead. I called the front desk asking if the hotel was trying to get in touch. Nope, the clerk said, it was a man who had asked for me but didn’t identify himself.” When Vogel left the hotel and was driving to the airport, he got a call from the rental-car company telling him that his vehicle had been “reported as ‘suspicious or abandoned’ to the Riverside County sheriff.” It turned out that this report came from someone at the Koch conference—well after Vogel had left the scene. The Koch PR team denied any involvement in these episodes. “But,” Vogel writes, “the Koch operation’s aggressive approach and penchant for plausible deniability always keep you wondering.”

If, as Barack Obama predicts, the campaign-finance landscape now allows for a handful of people to decide who’s going to be the next major-party nominee or president, there’s a 100 percent chance that Charles and David Koch will occupy two of those slots.

That’s a strange distinction for the brothers whose “family company,” Koch Industries, is the second-largest privately owned corporation in the country (behind agribusiness giant Cargill). Even just five or ten years ago, they were considered annoying, fringy libertarian types by the Republican Party. There was little chance, before the Obama presidency and the concurrent birth of the Tea Party, that you would see the top-shelf GOP donors and presidential hopefuls spending a weekend with the Kochs in Southern California and going all Stasi on intruders like Ken Vogel. But here we are. And today, the Koch brothers pretty much own the Republican Party.

Daniel Schulman’s Sons of Wichita traces the tale of how these scions of great wealth became the controllers of the greatest wealth. While the focus, especially toward the end of the book, is on David and Charles, Schulman’s subjects also include “the other Koch brothers,” Bill and Frederick, who were bought out of their shares of the company in the early 1980s (leading to decades of thrilling suits and countersuits among the siblings).

Schulman’s book drops as the Koch donor network is all-in for another election cycle, this time spending tens of millions of dollars to unseat vulnerable incumbent Democratic senators. The Democrats, led by Senator Harry Reid, are fighting back (and raising plenty of money of their own) with attacks on the “shadowy billionaires” who are trying to “buy America.” Such rhetoric—which, amazingly enough, isn’t really false—still leaves room for others to come and fill in the blanks. Although I half-expected Sons of Wichita would be a book-length screed, Schulman—an editor from Mother Jones—has produced what may be the most thoroughly researched look inside the Koch empire to date.

One of the many areas in which the book succeeds is in breaking down the monolithic public construct of “the Koch brothers” into its component parts. Charles and David are very different people. Charles has been Koch Industries’ CEO since the 1960s, and is largely responsible for making the decisions that have turned the company into a behemoth. He still lives in Wichita and enjoys his privacy. His younger brother David, on the other hand, is an executive vice president for Koch Industries, but he lives in New York City, where he’s famous alternately for his arts and medical philanthropy and for his earlier days as a wild bachelor throwing epic parties.

But since this is a collective portrait of a family fortune, it turns out that the two most important people in the long story of “the Kochs” aren’t Charles and David. They’re Fred and Charles Koch. Fred—the father to the Sons of Wichita—built a sizable company devoted to oil-refining and ranching interests; Charles took over and turned it into a multinational conglomerate earning more than $100 billion in annual revenue. Fred was politically active and lectured his children about the evils of big government; Charles bought all the politics he could, and now lectures the American people about the evils of big government.

Fred Koch’s multidecade public crusade against creeping communism and “collectivism” in America kicked off in the 1920s and ’30s, after his experience working with a major client: the USSR, to which his company was selling industrial equipment and helping to install it. A Soviet official once warned him that communism was coming to the United States, and that the Russians were establishing beachheads in every institution of American society. “We will make you rotten to the core” were the official’s words—and, boy, did they ever linger with Fred Koch. As he would write years later in the Washington Post—well after he’d finished profiting from a contract to industrialize the enemy—“What I saw in Russia convinced me of the utterly evil nature of communism. . . . What I saw there convinced me that communism was the most evil force the world has ever seen and I must do everything in my power to fight it, which I have done since that time.”

What he did in those years was become a classic American paranoiac crank—chiefly as a founding member of the John Birch Society and loyal friend to its leader, Robert Welch. He also self-published a hilarious document titled A Business Man Looks at Communism, in which, among other things, he warned that “the colored man looms large in the Communist plan to take over America,” that tax-free nonprofits were “using the astronomical sums of money in their control to bring on socialism,” and that a “Communist-infiltrated union” had commandeered sensitive Pentagon communiqués so as to ensure that they went into the hands of the Communist enemy. It was unhinged lunacy. Demand was so high that “at least 2.6 million copies . . . would ultimately go into circulation,” Schulman notes.

While Charles “seemed to steer clear of the more hysterical claims being made by his father,” he still, “of the four brothers, most heartily imbibed their father’s hard-line political views.” In one 1965 speech to a college audience, the elder Koch explained that “the US government is trying to win votes—not to satisfy consumers. In this form of collectivism, the society controls everything that should be controlled by individuals.” (This language is not far off from what Charles Koch would write nearly fifty years later in a 2014 Wall Street Journal editorial decrying his stalwart enemy, the state, as a sinister promoter of runaway socialism.) Over the years, Charles would devour works by free-market theorists like Friedrich Hayek, Ludwig von Mises, F. A. Harper, Milton Friedman, Joseph Schumpeter, and Ayn Rand. “His scholarship reinforced his belief, instilled during his boyhood,” Schulman writes, “that ‘societal well being was only possible in a system of economic freedom.’”

What’s fascinating about the contemporary American political landscape is that so much of it is what it is because Charles Koch is a control freak. He has run, expanded, and micromanaged Koch Industries on his own terms as CEO for half a century, leaving disgruntled colleagues—such as his bitter, bought-out brother Bill—in his wake. When he got into libertarianism, he essentially bought the movement, leaving other pushed-aside luminaries in its orbit to warn against the corrupting influence of the “Kochtopus.” And more recently, when he decided that the Tea Party–infused GOP was the best vehicle on offer for effecting laissez-faire change, he cornered that market, too, over the loud lamentations of mainstream, establishment Republicans. Charles thinks he knows best and wants everyone else to get out of the way.

And in the post–Citizens United era, he and his brother can proceed along this path with impunity—or, as Kenneth Vogel would say, “in a very real and entirely legal way.”

How does this at once obvious and subtle form of modern corruption, wherein candidates need only appeal to a few wealthy backers and whatever obscure whims they have rolling around in their heads on any given day, end? Will it?

Unless the composition of the Supreme Court changes and its recent campaign-finance rulings are overturned, there’s little that either statutory law or new constitutional amendments can achieve. Plenty of liberals like to talk about eliminating private campaign funding and replacing it with publicly financed elections. But as we’ve seen with the failure of the McCain-Feingold law, clampdowns on campaign fund-raising just cause the big donors to spend their money outside of the system, through less regulated entities such as super PACs. And the “most popular proposed” constitutional amendment, as Vogel writes, “would make clear that corporations are not guaranteed First Amendment rights and therefore could not spend unlimited sums on politics. But that might not curb the majority of big-money political spending, which was done by rich individuals through super PACs.”

Basically, there’s no easy way to stop rich cranks from spending their money to do whatever they want. Perhaps the only way out, then, is through. The politics game will lose its novelty, it will move too slowly, they’ll be too bored to play, and they’ll pick a new sport. As always, we are at the mercy of their passing whims.

Jim Newell is a politics writer for Salon. He has previously served as an editor at Wonkette, a staff writer at Gawker, and a contributor to The Guardian and The Baffler. He lives in Washington, DC.

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