Interesting Times

By Jane Mayer, The New Yorker, 8-30-10

During the 2000 election campaign, Koch Industries spent some nine hundred thousand dollars to support the candidacies of George W. Bush and other Republicans. During the Bush years, Koch Industries and other fossil-fuel companies enjoyed remarkable prosperity. The 2005 energy bill, which Hillary Clinton dubbed the Dick Cheney Lobbyist Energy Bill, offered enormous subsidies and tax breaks for energy companies. The Kochs have cast themselves as deficit hawks, but, according to a study by Media Matters, their companies have benefitted from nearly a hundred million dollars in government contracts since 2000.

In 2004, Citizens for a Sound Economy was accused of illegitimately throwing its weight behind Bush’s reëlection. The group’s Oregon branch had attempted to get Ralph Nader on the Presidential ballot, in order to dilute Democratic support for John Kerry. Critics argued that it was illegal for a tax-exempt nonprofit organization to donate its services for partisan political purposes. (A complaint was filed with the Federal Election Commission; it was dismissed.)

That year, internal rivalries at Citizens for a Sound Economy caused the organization to split apart. David Koch and Fink started a new group, Americans for Prosperity, and they hired Tim Phillips to run it. Phillips was a political veteran who had worked with Ralph Reed, the evangelical leader and Republican activist, co-founding Century Strategies, a campaign-consulting company that became notorious for its ties to the disgraced lobbyist Jack Abramoff. Phillips’s online biography describes him as an expert in “grasstops” and “grassroots” political organizing. The Kochs’ choice of Phillips signalled an even greater toughness. The conservative operative Grover Norquist, who is known for praising “throat slitters” in politics, called Phillips “a grownup who can make things happen.”

Last year, Phillips told the Financial Times that Americans for Prosperity had only eight thousand registered members. Currently, its Web site claims that the group has “1.2 million activists.” Whatever its size, the Kochs’ political involvement has been intense; a former employee of the Cato Institute told me that Americans for Prosperity “was micromanaged by the Kochs.” And the brothers’ investment may well have paid off: Americans for Prosperity, in concert with the family’s other organizations, has been instrumental in disrupting the Obama Presidency.

In January, 2008, Charles Koch wrote in his company newsletter that America could be on the verge of “the greatest loss of liberty and prosperity since the 1930s.” That October, Americans for Prosperity held a conference of conservative operatives at a Marriott hotel outside Washington. Erick Erickson, the editor-in-chief of the conservative blog RedState.com, took the lectern, thanked David Koch, and vowed to “unite and fight . . . the armies of the left!” Soon after Obama assumed office, Americans for Prosperity launched “Porkulus” rallies against Obama’s stimulus-spending measures. Then the Mercatus Center released a report claiming that stimulus funds had been directed disproportionately toward Democratic districts; eventually, the author was forced to correct the report, but not before Rush Limbaugh, citing the paper, had labelled Obama’s program “a slush fund,” and Fox News and other conservative outlets had echoed the sentiment. (Phil Kerpen, the vice-president for policy at Americans for Prosperity, is a contributor to the Fox News Web site. Another officer at Americans for Prosperity, Walter Williams, often guest-hosts for Limbaugh.)

Americans for Prosperity also created an offshoot, Patients United Now, which organized what Phillips has estimated to be more than three hundred rallies against health-care reform. At one rally, an effigy of a Democratic congressman was hung; at another, protesters unfurled a banner depicting corpses from Dachau. The group also helped organize the “Kill the Bill” protests outside the Capitol, in March, where Democratic supporters of health-care reform alleged that they were spat on and cursed at. Phillips was a featured speaker.

Americans for Prosperity has held at least eighty events targeting cap-and-trade legislation, which is aimed at making industries pay for the air pollution that they create. Speakers for the group claimed, with exaggeration, that even back-yard barbecues and kitchen stoves would be taxed. The group was also involved in the attacks on Obama’s “green jobs” czar, Van Jones, and waged a crusade against international climate talks. Casting his group as a champion of ordinary workers who would be hurt by environmentalists, Phillips went to Copenhagen last year and staged a protest outside the United Nations conference on climate change, declaring, “We’re a grassroots organization. . . . I think it’s unfortunate when wealthy children of wealthy families . . . want to send unemployment rates in the United States up to twenty per cent.”

Grover Norquist, who holds a weekly meeting for conservative leaders in Washington, including representatives from Americans for Prosperity, told me that last summer’s raucous rallies were pivotal in undermining Obama’s agenda. The Republican leadership in Congress, he said, “couldn’t have done it without August, when people went out on the streets. It discouraged deal-makers”—Republicans who might otherwise have worked constructively with Obama. Moreover, the appearance of growing public opposition to Obama affected corporate donors on K Street. “K Street is a three-billion-dollar weathervane,” Norquist said. “When Obama was strong, the Chamber of Commerce said, ‘We can work with the Obama Administration.’ But that changed when thousands of people went into the street and ‘terrorized’ congressmen. August is what changed it. Now that Obama is weak, people are getting tough.”

As the first anniversary of Obama’s election approached, David Koch came to the Washington area to attend a triumphant Americans for Prosperity gathering. Obama’s poll numbers were falling fast. Not a single Republican senator was working with the Administration on health care, or much else. Pundits were writing about Obama’s political ineptitude, and Tea Party groups were accusing the President of initiating “a government takeover.” In a speech, Koch said, “Days like today bring to reality the vision of our board of directors when we started this organization, five years ago.” He went on, “We envisioned a mass movement, a state-based one, but national in scope, of hundreds of thousands of American citizens from all walks of life standing up and fighting for the economic freedoms that made our nation the most prosperous society in history. . . . Thankfully, the stirrings from California to Virginia, and from Texas to Michigan, show that more and more of our fellow-citizens are beginning to see the same truths as we do.”

While Koch didn’t explicitly embrace the Tea Party movement that day, more recently he has come close to doing so, praising it for demonstrating the “powerful visceral hostility in the body politic against the massive increase in government power, the massive efforts to socialize this country.” Charles Koch, in a newsletter sent to his seventy thousand employees, compared the Obama Administration to the regime of the Venezuelan strongman Hugo Chávez. The Kochs’ sense of imperilment is somewhat puzzling. Income inequality in America is greater than it has been since the nineteen-twenties, and since the seventies the tax rates of the wealthiest have fallen more than those of the middle class. Yet the brothers’ message has evidently resonated with voters: a recent poll found that fifty-five per cent of Americans agreed that Obama is a socialist.

Americans for Prosperity, meanwhile, has announced that it will spend an additional forty-five million dollars before the midterm elections, in November. Although the group is legally prohibited from directly endorsing candidates, it nonetheless plans to target some fifty House races and half a dozen Senate races, staging rallies, organizing door-to-door canvassing, and running ads aimed at “educating voters about where candidates stand.”

Though the Kochs have slowed Obama’s momentum, their larger political battle is far from won. Richard Fink, interviewed by FrumForum.com this spring, said, “If you look at where we’ve gone from the year 2000 to now, with the expansion of government spending and a debt burden that threatens to bankrupt the country, it doesn’t look very good at all.” He went on, “It looks like the infrastructure that was built and nurtured has not carried the day.” He suggested that the Kochs needed “to get more into the practical, day-to-day issues of governing.”

In 1991, David Koch was badly injured in a plane crash in Los Angeles. He was the sole passenger in first class to survive. As he was recovering, a routine physical exam led to the discovery of prostate cancer. Koch received treatment, settled down, started a family, and reconsidered his life. As he told Portfolio, “When you’re the only one who survived in the front of the plane and everyone else died—yeah, you think, ‘My God, the good Lord spared me for some greater purpose.’ My joke is that I’ve been busy ever since, doing all the good work I can think of, so He can have confidence in me.”

Koch began giving spectacularly large donations to the arts and sciences. And he became a patron of cancer research, focussing on prostate cancer. In addition to his gifts to Sloan-Kettering, he gave fifteen million dollars to New York-Presbyterian Hospital, a hundred and twenty-five million to M.I.T. for cancer research, twenty million to Johns Hopkins University, and twenty-five million to the M. D. Anderson Cancer Center, in Houston. In response to his generosity, Sloan-Kettering gave Koch its Excellence in Corporate Leadership Award. In 2004, President Bush named him to the National Cancer Advisory Board, which guides the National Cancer Institute.

Koch’s corporate and political roles, however, may pose conflicts of interest. For example, at the same time that David Koch has been casting himself as a champion in the fight against cancer, Koch Industries has been lobbying to prevent the E.P.A. from classifying formaldehyde, which the company produces in great quantities, as a “known carcinogen” in humans.

Scientists have long known that formaldehyde causes cancer in rats, and several major scientific studies have concluded that formaldehyde causes cancer in human beings—including one published last year by the National Cancer Institute, on whose advisory board Koch sits. The study tracked twenty-five thousand patients for an average of forty years; subjects exposed to higher amounts of formaldehyde had significantly higher rates of leukemia. These results helped lead an expert panel within the National Institutes of Health to conclude that formaldehyde should be categorized as a known carcinogen, and be strictly controlled by the government. Corporations have resisted regulations on formaldehyde for decades, however, and Koch Industries has been a large funder of members of Congress who have stymied the E.P.A., requiring it to defer new regulations until more studies are completed.

Koch Industries became a major producer of the chemical in 2005, after it bought Georgia-Pacific, the paper and wood-products company, for twenty-one billion dollars. Georgia-Pacific manufactures formaldehyde in its chemical division, and uses it to produce various wood products, such as plywood and laminates. Its annual production capacity for formaldehyde is 2.2 billion pounds. Last December, Traylor Champion, Georgia-Pacific’s vice-president of environmental affairs, sent a formal letter of protest to federal health authorities. He wrote that the company “strongly disagrees” with the N.I.H. panel’s conclusion that formaldehyde should be treated as a known human carcinogen. David Koch did not recuse himself from the National Cancer Advisory Board, or divest himself of company stock, while his company was directly lobbying the government to keep formaldehyde on the market. (A board spokesperson said that the issue of formaldehyde had not come up.)

James Huff, an associate director at the National Institute for Environmental Health Sciences, a division of the N.I.H., told me that it was “disgusting” for Koch to be serving on the National Cancer Advisory Board: “It’s just not good for public health. Vested interests should not be on the board.” He went on, “Those boards are very important. They’re very influential as to whether N.C.I. goes into formaldehyde or not. Billions of dollars are involved in formaldehyde.”

Harold Varmus, the director of the National Cancer Institute, knows David Koch from Memorial Sloan-Kettering, which he used to run. He said that, at Sloan-Kettering, “a lot of people who gave to us had large business interests. The one thing we wouldn’t tolerate in our board members is tobacco.” When told of Koch Industries’ stance on formaldehyde, Varmus said that he was “surprised.”

The David H. Koch Hall of Human Origins, at the Smithsonian’s National Museum of Natural History, is a multimedia exploration of the theory that mankind evolved in response to climate change. At the main entrance, viewers are confronted with a giant graph charting the Earth’s temperature over the past ten million years, which notes that it is far cooler now than it was ten thousand years ago. Overhead, the text reads, “HUMANS EVOLVED IN RESPONSE TO A CHANGING WORLD.” The message, as amplified by the exhibit’s Web site, is that “key human adaptations evolved in response to environmental instability.” Only at the end of the exhibit, under the headline “OUR SURVIVAL CHALLENGE,” is it noted that levels of carbon dioxide are higher now than they have ever been, and that they are projected to increase dramatically in the next century. No cause is given for this development; no mention is made of any possible role played by fossil fuels. The exhibit makes it seem part of a natural continuum. The accompanying text says, “During the period in which humans evolved, Earth’s temperature and the amount of carbon dioxide in the atmosphere fluctuated together.” An interactive game in the exhibit suggests that humans will continue to adapt to climate change in the future. People may build “underground cities,” developing “short, compact bodies” or “curved spines,” so that “moving around in tight spaces will be no problem.”

Such ideas uncannily echo the Koch message. The company’s January newsletter to employees, for instance, argues that “fluctuations in the earth’s climate predate humanity,” and concludes, “Since we can’t control Mother Nature, let’s figure out how to get along with her changes.” Joseph Romm, a physicist who runs the Web site ClimateProgress.org, is infuriated by the Smithsonian’s presentation. “The whole exhibit whitewashes the modern climate issue,” he said. “I think the Kochs wanted to be seen as some sort of high-minded company, associated with the greatest natural-history and science museum in the country. But the truth is, the exhibit is underwritten by big-time polluters, who are underground funders of action to stop efforts to deal with this threat to humanity. I think the Smithsonian should have drawn the line.”

Cristián Samper, the museum’s director, said that the exhibit is not about climate change, and described Koch as “one of the best donors we’ve had, in my tenure here, because he’s very interested in the content, but completely hands off.” He noted, “I don’t know all the details of his involvement in other issues.”

The Kochs have long depended on the public’s not knowing all the details about them. They have been content to operate what David Koch has called “the largest company that you’ve never heard of.” But with the growing prominence of the Tea Party, and with increased awareness of the Kochs’ ties to the movement, the brothers may find it harder to deflect scrutiny. Recently, President Obama took aim at the Kochs’ political network. Speaking at a Democratic National Committee fund-raiser, in Austin, he warned supporters that the Supreme Court’s recent ruling in the Citizens United case—which struck down laws prohibiting direct corporate spending on campaigns—had made it even easier for big companies to hide behind “groups with harmless-sounding names like Americans for Prosperity.” Obama said, “They don’t have to say who, exactly, Americans for Prosperity are. You don’t know if it’s a foreign-controlled corporation”—or even, he added, “a big oil company.” ?