Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (26 page)

For decades this small, wealthy, and intense circle had been trying to advance their fervently held libertarian ideas, almost always working in secret, cloaked behind layers of shell groups, so that their role couldn’t be detected.
Rich in particular rivaled Houdini for sleights of hand, having obscured his role behind a positively dizzying number of name-changing, shape-shifting, interlocking organizations.
He almost invariably declined to talk to the press or debate opponents. Until the Tea Party, however, the results had been disappointing. “
My 32 years of engagement has been a long and expensive lesson in frustration,” his frequent political partner, O’Keefe, admitted.

Among this group’s earlier political efforts was a stealth attempt in the early 1990s to get voters to approve ballot measures imposing congressional term limits. Experts suggested that term limits would hurt Democrats, who had more congressional incumbents at the time, and also strengthen the power of outsiders with money, like themselves. As was true of the later Tea Party movement, the supporters of term limits described their movement as a grassroots outpouring fueled by populist outrage at entrenched power. In California, the Kochs were rumored to be behind a 1992 referendum on whether to impose them, but a spokesman denied they had any direct role.
But after the referendum succeeded, the
Los Angeles Times
discovered that the true organizers and much of its funding traced back to a secretive group run by Howie Rich and Eric O’Keefe, U.S. Term Limits. There were ties to the Kochs, too. Fink admitted when confronted by the paper that they had in fact provided “seed money.”

Similarly, in Washington State a congressional term-limits ballot initiative nearly passed in 1991 until
The New York Times
exposed what Murray Rothbard, the irreverent libertarian theorist who had split with the Kochs, called “
the Kochian deep pockets behind the ‘grassroots’ movement.” The paper discovered that what supporters billed as “
a prairie fire of populism” was in fact the product of a Washington-based group calling itself Citizens for Congressional Reform, which was started with hundreds of thousands of dollars from David Koch. “
I ignited the spark, and the fire is raging on its own,” he claimed once his role was exposed. Fanning the flames, however, was his checkbook. His group contributed nearly three-quarters of the campaign’s budget, paying for professional signature gatherers to collect enough names to get the issue on the ballot.

Eventually, the Supreme Court ruled that federal term limits were unconstitutional. This finished off the movement at the congressional level for good, though not its backers’ penchant for ersatz populism.

T
he patrons of libertarianism kept on trying to buy at least the aura of public support. In 2004, one of the first ventures of the Kochs’ newly formed advocacy group, Americans for Prosperity, was a radical antitax measure called the Taxpayer Bill of Rights. The measure placed drastic restrictions on state legislators, requiring all tax increases to first be approved by public referenda. The group chose Kansas as its first battleground for the Taxpayers Bill of Rights just as the Kochs were fighting a proposed tax increase in their home state. Despite an outcry about shadowy spending, AFP spent a record amount of money on television ads, and the tax increase was defeated.

Two years later, in 2006, a group created and run by Rich called Americans for Limited Government spent some $8 million promoting a variety of other ballot drives, including one that demanded that owners get compensated for the impact of land-use laws on their property. Supporters again claimed to have widespread grassroots support.
But an investigation by the Center for Public Integrity revealed that in fact just three donors, none of them disclosed, accounted for 99 percent of the organization’s funding. Despite the heavy spending, the fringe antigovernment measures were voted down almost everywhere.

Soon afterward, the State of Illinois suspended Rich’s group of its charitable license after it failed to supply required financial statements, and in 2006 the group shut down its Chicago headquarters. At this point, Americans for Limited Government moved to Fairfax, Virginia, where several other nonprofit organizations run by Rich were based. Back in Chicago, meanwhile, a new tax-exempt group sprang up at its former address, calling itself the Sam Adams Alliance.

Eric O’Keefe, who had served on the board of Americans for Limited Government, was now the chairman and chief executive officer of the new organization. “
We’re not going to be shut up,” he had vowed when previously investigated in Wisconsin for campaign-finance violations. Tax records showed that some 88 percent of the Sam Adams Alliance’s funding that year came from a single gift of $3.7 million from a mysterious undisclosed donor.

In the summer of 2008, as Barack Obama grew closer to capturing the presidency, Eric Odom at the Sam Adams Alliance started experimenting with some of the online communications methods that would later help to organize the Tea Party movement. He tested out the use of Twitter to trigger a right-wing flash mob in the House of Representatives in Washington. He and a friend, Rob Bluey, a twenty-eight-year-old blogger who described himself as “
a card-carrying member of the vast right-wing conspiracy,” created something they called the DontGo movement.
They sent out Twitter messages demanding that the Democratic leadership in the House schedule a vote on legalizing offshore oil and gas drilling, or else Republicans would refuse to go home for the summer recess.

The Twitter experiment worked remarkably well. That August, conservative congressmen, oil lobbyists, and other supporters of offshore drilling poured into the House, creating a wild and seemingly spontaneous protest. They chanted, “Don’t go!” and “Drill here! Drill now!” They didn’t succeed in lifting the restriction on offshore drilling, but one leader of the revolt, the Arizona congressman John Shadegg, a conservative Republican, exalted that the protest was “the 2008 version of the Boston Tea Party.”

Six months later, immediately after Santelli’s rant, Eric Odom reactivated the “DontGo” list. He fired off a call to action to the same ten thousand hard-core conservative insiders whose contact information he and Bluey had compiled. Odom also formed what he called the Nationwide Tea Party Coalition with other activists, including operatives from Dick Armey’s group, FreedomWorks, and the Kochs’ group, Americans for Prosperity. AFP quickly registered a Web site called TaxPayerTeaParty.com and used its network of fifty-some staffers to plan rallies across the country.

As the operatives linked forces online, they set a date for the first national Tea Party protests, February 27. That day, more than a dozen protests were held in cities across the country. The organizers claimed 30,000 participants, but the crowds in many places were still sparse. But on April 15, when there was a second series of “Tax Day” Tea Party rallies across the country, the numbers had increased tenfold, to 300,000.

The Heritage Foundation, the Cato Institute, and Americans for Prosperity provided speakers, talking points, press releases, transportation, and other logistical support. Lee Fang, a blogger for the progressive Web site
ThinkProgress
, was among the first to question whether the movement was organic or synthetic “Astroturf.”
He noted that Americans for Prosperity was suddenly planning protests “coast to coast,” while FreedomWorks seemed to have taken over a local rally in Florida. Not everyone liked the top-down control of the protests. “Americans for Prosperity annoyed some of the Tea Partiers,” recalls the libertarian blogger Ralph Benko. “These people drove up, opened the door, put T-shirts on them, then took pictures and sent them to Charles [Koch] saying, ‘See? We’re doing great things with your money.’ ”

Thomas Frank, author of
What’s the Matter with Kansas?
, had stopped by to see an early Tea Party rally in Lafayette Square, across from the White House, in February 2009. “
It was very much a put-up job,” he concluded. “All the usual suspects were there, like FreedomWorks, ‘Joe the Plumber,’ and
The American Spectator
magazine. There were also some people who had Revolutionary War costumes and ‘Don’t Tread on Me’ flags, actual activists, and a few ordinary people,” he said. “But it was very well organized by the conservative groups. Back then, it was really obvious that it was put on, and they’d set it up. But then it caught on.” Frank argues that “the Tea Party wasn’t subverted,” as some have suggested. “It was
born
subverted.” Still, he said, “it’s a major accomplishment for sponsors like the Kochs that they’ve turned corporate self-interest into a movement among people on the streets.”

While the Kochs were continuing to profess no involvement, Peggy Venable, a spunky veteran of the Reagan administration who had been on their payroll as a political operative in Texas since 1994, becoming the head of the Texas chapter of Americans for Prosperity, gushed about her role in the movement. “
I was a member of the Tea Party before it was cool!” she said during a conversation at a Koch-sponsored political event called Defending the American Dream, in Austin. As the Tea Party movement took off, she described how Americans for Prosperity had helped to “educate” the activists on policy details. She said they had given the supporters what she called “next-step training” after their rallies so that their political energy could be channeled “more effectively.” The organization also supplied the angry protesters with lists of elected officials to target. Venable, who spoke without first checking with the Kochs’ public relations representatives, happily said of the brothers, “They’re certainly our people. David’s the chairman of our board. I’ve certainly met with them, and I’m very appreciative of what they do.” She added, “We love what the Tea Parties are doing, because that’s how we’re going to take back America!”

Venable honored several Tea Party “citizen leaders” at the summit. The Texas branch of Americans for Prosperity gave its Blogger of the Year Award to a young woman named Sibyl West. Writing on her Web site, West described Obama as the “cokehead in chief” and speculated that the president was exhibiting symptoms of “demonic possession (aka schizophrenia, etc.).”

During a catered lunch at the summit, Venable introduced Ted Cruz, a former solicitor general of Texas and future senator, who told the crowd that Obama was “the most radical president ever to occupy the Oval Office” and had hidden from voters a secret agenda—“the government taking over our economy and our lives.” Countering Obama, Cruz proclaimed, was “the epic fight of our generation!” As the crowd rose to its feet and cheered, he quoted the defiant words of a Texan at the Alamo: “Victory, or death!”

N
o organization played a bigger early role than FreedomWorks, the estranged sibling of Americans for Prosperity, which was funded by donations from companies like Philip Morris and from billionaires like Richard Mellon Scaife. “I’d argue that when the Tea Party took off, FreedomWorks had as much to do with making it an effective movement as anyone,” said Armey.

In looking back, Armey gave particular credit to a young aide named Brendan Steinhauser, the group’s director of state and federal campaigns, who created a Web site immediately after Santelli’s rant that provided all kinds of practical advice to supporters. It counseled them on how to plan rallies and what issues to protest, with Obama’s stimulus spending high on the target list. He also suggested slogans and signs and sponsored a daily conference call with over fifty Tea Party activists around the country to coordinate their efforts. Soon FreedomWorks was providing a professional support team of nine for the operation. Armey recalled that Steinhauser “
spent hours and hours on the phone with people who’d found the FreedomWorks Web site. The other guys at FreedomWorks were laughing at him” in the beginning, he said. But Armey described how Steinhauser organized the inchoate anger into a mass political movement. “He told them what to do. He gave them training. If it hadn’t been for FreedomWorks, the Tea Party movement would never have taken off,” Armey later said.

The fact that Armey was himself a Washington insider belied the notion that the Tea Party movement was anti-elitist. Armey had spent eighteen years in Congress and was reportedly paid $750,000 a year as a lobbyist at the law firm DLA Piper, which represented corporate clients such as the pharmaceutical giant Bristol-Myers Squibb. But billionaire backers were useful. They gave the nascent Tea Party movement organization and political direction, without which it might have frittered away like the Occupy movement. The protesters in turn gave the billionaire donors something they’d had trouble buying—the numbers needed to lend their agenda the air of legitimacy. As Armey put it, “We’d been doing this lonely work for years. From our point of view, it was like the cavalry coming.”

FreedomWorks, it was later revealed, also had some hired help. The tax-exempt organization quietly cemented a deal with Glenn Beck, the incendiary right-wing Fox News television host who at the time was a Tea Party superstar. For an annual payment that eventually topped $1 million, Beck read “embedded content” written by the FreedomWorks staff. They told him what to say on the air, and he blended the promotional material seamlessly into his monologue, making it sound as if it were his own opinion. The arrangement was described on FreedomWorks’ tax disclosures as “advertising services.”

“
We thought it would be a useful tool if it was done in moderation, but then they started doing it by leaps and bounds,” Armey recalled about the arrangement. “They were keeping it secret from their activists and supporters,” he alleged. “They were creating an illusion that they were so important this icon, this hero of the movement, was bragging about them. Instead of earning the media, they were paying for it.”

Beck, whose views were shaped by W. Cleon Skousen, the fringe theorist whose political paranoia had inspired the John Birch Society, reached a daily audience of some two million, disseminating the ideas of early conservative extremists like Fred Koch on a whole new scale. Frank Luntz describes the impact as historic. “
That rant from Santelli woke up the upper middle class and the investor class, and then Glenn Beck woke up everyone else. Glenn Beck’s show is what created the Tea Party movement,” he said, adding, “It started on Tax Day 2009, and it exploded at town hall meetings in July. You can create a mass movement within three months.”