Balance of Power

Mobilizing the Rich to ‘Change the Balance of Power’

by Daniel Schulman

Charles and David had learned some important lessons from their decades of political and public policy involvement. One was that it takes a village — preferably one populated by outrageously wealthy people — to build a free-​market army.

Starting during the Bush administration, Charles began holding bi-annual seminars that brought together deep-​pocketed donors — from hedge fund billionaires to media moguls — who shared their political objectives. The purpose, at least at first, was to showcase conservative groups deemed worthy of their support. But over the years this network transformed into a central coordinating body for the purpose of strategically channeling resources into conservative, free-​market causes — cash that flowed to groups including Americans for Prosperity to bankroll efforts to trounce Democrats in the upcoming midterms.

The brothers held their final conclave before the midterm elections on June 27 and 28, 2010, at the St. Regis Hotel in Aspen. The impressive roster of attendees hardly needed name tags, though they wore them anyway, in accordance with the security protocol they were reminded of before the start of every meeting. Mingling with Charles and David and their wives in the hotel’s chandeliered Grand Ballroom was billionaire entrepreneur Phil Anschutz, owner of the Examiner newspapers and The Weekly Standard; leveraged buyout pioneer John Childs; mega-millionaire investor Foster Friess; hedge fund manager Ken Griffin, founder and CEO of Citadel LLC; several members of the Marshall family, whose stake in Kock Industries was estimated at nearly $13 billion; and the Blackstone Group’s CEO Stephen Schwarzman, one of David’s neighbors at his New York residence at 740 Park Avenue. Charles’s son, Chase, an executive at the family company, and his new wife, Annie, also attended, as did the CEO’s daughter, Elizabeth, a Brooklyn-​based writer.        

The two-day conference featured back‑to‑back presentations and panel discussions on topics ranging from “Framing the Debate on Spending” to electing free-market allies in upcoming judicial elections, and from “Winning the Fight between Big Government and Free Enterprise” to “Mobilizing Citizens” for the November midterms (Americans for Prosperity’s Tim Phillips was a presenter).

Kentucky Sen. Rand Paul speaks at the Americans for Prosperity gathering Friday, Aug. 29, 2014, in Dallas. Paul and Texas Gov. Rick Perry are bashing what they call the president’s lack of leadership in response to the violent militant group attacking cities in Iraq. Both are among four top Republicans considering 2016 White House bids addressing the conservative summit in Dallas. (AP Photo/LM Otero)

The Wall Street Journal’s Stephen Moore moderated a discussion on “Understanding the Persistent Threats We Face.” A description of the session in the conference program noted: “The current administration swept into office with a promise to ‘fundamentally transform America.’ From the nationalization of healthcare to the rising power of unions, as well as a push for major new climate and energy regulations, financial regulation, and even more government spending, there is no lack of significant threats for us to understand and address.”

The Aspen seminar’s headliner was Glenn Beck, who Fox News would ease out the following year after his controversial diatribes provoked an advertiser boycott. Beck’s Hayek-​themed keynote was titled “Is America on the Road to Serfdom?”

There had been much talk during the conference about the upcoming midterm elections and knocking Nancy Pelosi and the House Democrats back into the congressional minority, but no sooner had the fleet of private jets cleared Aspen airspace than Charles turned his mind to an even bigger political fight — the 2012 presidential race.

As the midterms neared, Charles sent a letter to new members of the donor network, inviting them to the next conference, scheduled for late January 2011. “‘If not us, who? If not now, when?’” his letter began. “That question was posed by a member of our network of business and philanthropic leaders, who are dedicated to defending our free society. We cannot rely on politicians to do so, so it is up to us to combat what is now the greatest assault on American freedom and prosperity in our lifetimes.”

He noted that the network’s bi-annual meetings “have been critical in improving and expanding our efforts” to combat “the multitude of public policies that threaten to destroy America as we know it.”

In Aspen, Charles wrote, “our group heard plans to activate citizens against the threat of government over-spending and to change the balance of power in Congress this November. In response, participants committed to an unprecedented level of support.”

But they would not stop at the midterms.

“Everyone benefits from the prosperity that emerges from free societies,” he wrote. “But that prosperity is under attack by the current Administration and many of our elected officials. Their policies threaten to erode our economic freedom and transfer vast sums of power to the state. We must stop — and reverse — this internal assault on our founding principles.

“Fighting back with incremental changes will only lead to a slower rate of decline. We must dedicate ourselves to making major advances in the direction of economic freedom.”

Wearing a tweed overcoat and a tan scarf, David stepped out of the chill and into the gleaming, marble corridors of the US Capitol. It was January 5, 2011, and the building teemed with lawmakers and their families, including the 85 Republican freshmen who had helped their party reclaim the House and were waiting to be sworn in that afternoon along with the rest of the new Congress.

Two months after the midterms, the pundit class was still guffawing over the Democrats’ “shellacking” and attempting to wrap their minds around the ascendant tea party. The 2010 midterm elections had followed a similar script to 1994’s “Republican Revolution.” During both elections, one of the catalyzing issues had been health care. Each had likewise brought to power a Republican House majority with an ambitious agenda of drastically downsizing government and returning to core conservative principles.

The Kock brothers certainly deserved a share of the credit for the Democratic drubbing. In the lead‑up to the midterms, their advocacy group carpet-​bombed dozens of congressional swing districts with ads aimed at Democratic lawmakers. Americans for Prosperity rolled out an initiative dubbed “November Is Coming,” featuring a petition drive commanding politicians to “oppose big government programs or any other freedom-​killing policies or we will remember in November.” The group mobilized thousands of activists to go door to door in their districts. It also provided them with a computerized phone-​banking program that connected Americans for Prosperity volunteers to targeted voters, generating a script to read from. “I’m calling to encourage you to call Congressman John Salazar and tell him to stop his wasteful spending that is bankrupting America,” read one script targeting the Colorado Democrat and the brother of the Interior secretary — who ultimately went down in defeat. Also booted from Congress were Democrats including Representatives Alan Mollohan, Christopher Carney, Kathy Dahlkemper, Steve Kagen, Earl Pomeroy and Michael Arcuri, the lawmakers Americans for Prosperity had targeted for early retirement with withering health-​care-​reform-​related attack ads.

Americans for Prosperity formed just one prong of Charles and David’s plan of attack for 2010. Their political operatives had parceled out their donor network’s war chest to dozens of like-​minded conservative groups, which hammered the Democrats from every conceivable angle. The brothers had together pledged at least $12 million toward the effort.

David had come to the Capitol that day for the gratifying experience of witnessing California’s Nancy Pelosi pass the Speaker’s gavel to Ohio’s John Boehner, whose star had risen, fallen and risen again during his two-​decade congressional career. Their plan was working. David was accompanied to the Capitol that day by Nancy Pfotenhauer, who after leaving Americans for Prosperity had become a policy advisor and spokeswoman for the 2008 presidential campaign of John McCain.

When the media scrutiny of Charles and David had heated up, Kock Industries had retained Pfotenhauer — and other crisis communication specialists — as an outside PR consultant. Also by David’s side was Pfotenhaeur’s Americans for Prosperity successor Tim Phillips, who had a meeting that day with Michigan’s Fred Upton, the incoming chairman of the House Energy and Commerce Committee. Before the New Year, Phillips and Upton, a long-​serving Republican lawmaker who had first come to Washington in the 1980s to work in Reagan’s Office of Management and Budget, had teamed up on a Wall Street Journal editorial calling the Environmental Protection Agency’s efforts to regulate carbon emissions “an unconstitutional power grab that will kill millions of jobs.”

After the swearing‑in, David was hosting a welcome party for the new class of Republican lawmakers at the Capitol Hill Club, a private haunt for GOP powerbrokers where some of the real business of Washington gets done over single malts. A reporter for the liberal blog ThinkProgress approached him as he left the Capitol with Phillips that afternoon. Deaf in his left ear, David leaned down with his right.

“Are you proud of what Americans for Prosperity has achieved this year?” the reporter asked. “You bet I am, man oh’ man,” David responded. “We’re going to do more too in the next couple of years, you know.”

Phillips, laughing nervously, tried to hurry David away. But the billionaire, who had flipped open a cell phone and put it to his ear, obliged the reporter with another question. The journalist inquired about the tea party — was David proud of its accomplishments?

“Yeah,” he responded. “There are some extremists there, but the rank and file are just normal people like us. And I admire them. It’s probably the best grassroots uprising since 1776 in my opinion.”

If this was the second coming of the American Revolution, then the midterms had been its Lexington and Concord. What came next was all-​out war.