People & Power

The Koch Brothers

People & Power asks why the billionaire siblings are spending a fortune in support of a conservative political agenda.

By People & Power reporter Bob Abeshouse

Charles and David Koch are each worth about $25bn, which makes them the fourth richest Americans. When you combine their fortunes, they are the third wealthiest people in the world. Radical libertarians who use their money to oppose government and virtually all regulation as interference with the free market, the Kochs are in a class of their own as players on the American political stage. Their web of influence in the US stretches from state capitals to the halls of congress in Washington DC.

The Koch brothers fueled the conservative Tea Party movement that vigorously opposes Barack Obama, the US president. They fund efforts to derail action on global warming, and support politicians who object to raising taxes on corporations or the wealthy to help fix America’s fiscal problems. According to New Yorker writer Jane Mayer, who wrote a groundbreaking exposé of the Kochs in 2010, they have built a top to bottom operation to shape public policy that has been “incredibly effective. They are so rich that their pockets are almost bottomless, and they can keep pouring money into this whole process”.

Koch industries, the second largest privately-held company in the US, is an oil refining, chemical, paper products and financial services company with revenues of a $100bn a year. Virtually every American household has some Koch product – from paper towels and lumber, to Stainmaster carpet and Lycra in sports clothes, to gasoline for cars. The Koch’s political philosophy of rolling back environmental and financial regulations is also beneficial to their business interests.

The Kochs rarely talk to the press, and conduct their affairs behind closed doors. But at a secret meeting of conservative activists and funders the Kochs held in Vail, Colorado this past summer, someone made undercover recordings. One caught Charles Koch urging participants to dig deep into their pockets to defeat Obama. “This is the mother of all wars we’ve got in the next 18 months,” he says, “for the life or death of this country.” He called out the names of 31 people at the Vail meeting who each contributed more than $1m over the past 12 months.

In the 2010 congressional elections, the Kochs and their partners spent at least $40m, helping to swing the balance of power in the US House of Representatives towards right-wing Tea Party Republicans. It has been reported that the Kochs are planning to raise and spend more than $200m to defeat Obama in 2012. But the brothers could easily kick in more without anyone knowing due to loopholes in US law.

The Kochs founded and provide millions to Americans for Prosperity, a political organisation that builds grassroots support for conservative causes and candidates. Americans for Prosperity, which has 35 state chapters and claims to have about two million members, has close ties to Tea Party groups and played a key role in opposing Obama’s health care initiative.

Last year, Americans for Prosperity spent at least half a million dollars supporting Wisconsin Governor Scott Walker’s efforts to cut social spending and roll back collective bargaining rights for public employee unions. The legislation passed by Walker makes it more difficult for unions, which are major backers of Democratic candidates, to secure funds for political purposes. Americans for Prosperity is also very active in a battle against unions in Ohio, another important 2012 presidential state. Its president, Tim Phillips, says that the organisation is winning in Wisconsin and around the country “because on the policies of economic freedom, we’re right”. He refused to tell People & Power reporter Bob Abeshouse how much the organisation is spending to combat the unions.

The Kochs have also poured millions into think tanks and academia to influence the battle over ideas. According to Kert Davies, the director of research for Greenpeace in the US, the Kochs have spent more than $50m since 1998 on “various front groups and think tanks who … oppose the consensus view that climate change is real, urgent and we have to do something about it”. As operators of oil pipelines and refineries, the Kochs have opposed all efforts to encourage alternative sources of energy by imposing a tax on fossil fuels.

Patrick Michaels, a senior fellow at the CATO Institute, often appears in the media to contest global warming science. CATO was founded by Charles Koch, and the Kochs and their foundations have contributed about $14m to CATO. Since 2009, there has been a sharp drop in the percentage of Americans who see global warming as a serious threat according to Gallup polls. Davies argues that the change can be attributed in large measure to the efforts of scientists like Michaels and others who are funded by the fossil fuel industry.

The Kochs have also promoted their free market ideology and business interests through aggressive lobbying in Washington DC, and financial support of political candidates. Greenpeace has tracked more than $50m that Koch Industries has spent on lobbyists since 2006, when Cap and Trade and other legislation to combat global warming was being considered. The Kochs have been the largest political spender since 2000 in the energy sector, exceeding Exxon, Chevron, and other major players. 

The Kochs contributed to 62 of the 87 new members of the US House of Representatives in 2010. Members of the House Energy and Commerce Committee that the Kochs supported have taken the lead in opposing US Environmental Protection Agency efforts to reduce global warming emissions. Other members backed by the Kochs belong to the right-wing Tea Party bloc that took the US to the brink of default in July by refusing to consider a budget deal that would include tax increases.

Since People & Power’s report on the Kochs aired last fall, supporters of the Tea Party movement have complicated the Republican presidential primaries. Tea Party supporters have shifted from candidate to candidate and failed to coalesce around Mitt Romney. Given the divisions, the Kochs have not come out publically for any candidate. They are setting their sights instead on defeating Barack Obama and expanding their influence in the US House and Senate.

According to Ken Vogel of Politico, who appears in the Koch Brothers update, one of their more ambitious new projects is setting up a national voter database called Themis to expand their fundraising and mobilising machinery. Vogel says that the effort is unprecedented, and reveals the Kochs determination to develop capabilities reserved for the major political parties in the past.

Americans for Prosperity has already spent $6m on campaign ads attacking Obama for his support of renewable energy projects. Davies of Greenpeace says the Kochs influence on the campaign debate is clear. Republicans like Mitt Romney and Newt Gingrich who favored climate change legislation in the past now oppose it. President Obama, he says, is “even bragging about drilling more oil than Bush at this point.”

Americans for Prosperity is also laying the groundwork for reigniting the Tea Party to defeat Obama. In March, Americans for Prosperity and Tea Party groups are staging protests at the US Supreme Court while it considers the constitutionality of the health care law the Obama administration pushed through in 2010. The health care debate fueled the rise of the Tea Party in the first year of the Obama presidency.

Meanwhile, the Kochs are rounding up hundreds of millions of dollars for the 2012 elections. In January, they held another of their secret meetings with wealthy conservatives at a lush resort in Palm Springs, California. New attendees included the casino magnate Sheldon Adelson, who with his family has given $16.5m to the Super PAC backing Newt Gingrich, and Foster Friess, a wealthy financier supporting Rick Santorum in the Republican primaries.

Obama is doing his best to raise a billion dollars for the presidential race, and break all fundraising records. But Lee Fang, an investigator with the Republic Report, told reporter Bob Abeshouse that the “Kochs will have a tremendous impact. On a larger scale this election will come down to a few billionaires: a couple on the left supporting the Democrats, and a lot on the right supporting the Republicans. I think in 2013 people will look back on this election as the greatest one bought and sold.”