Covert Operations (Part III)

The billionaire brothers who are waging a war against Obama.
By Jane Mayer


In a 2002 memo, the Republican political consultant Frank Luntz wrote that so long as “voters believe there is no consensus about global warming within the scientific community” the status quo would prevail. The key for opponents of environmental reform, he said, was to question the science—a public-relations strategy that the tobacco industry used effectively for years to forestall regulation. The Kochs have funded many sources of environmental skepticism, such as the Heritage Foundation, which has argued that “scientific facts gathered in the past 10 years do not support the notion of catastrophic human-made warming.” The brothers have given money to more obscure groups, too, such as the Independent Women’s Forum, which opposes the presentation of global warming as a scientific fact in American public schools. Until 2008, the group was run by Nancy Pfotenhauer, a former lobbyist for Koch Industries. Mary Beth Jarvis, a vice-president of a Koch subsidiary, is on the group’s board.

Naomi Oreskes, a professor of history and science studies at the University of California, San Diego, is the co-author of “Merchants of Doubt,” a new book that chronicles various attempts by American industry to manipulate public opinion on science. She noted that the Kochs, as the heads of “a company with refineries and pipelines,” have “a lot at stake.” She added, “If the answer is to phase out fossil fuels, a different group of people are going to be making money, so we shouldn’t be surprised that they’re fighting tooth and nail.”

David Koch told New York that he was unconvinced that global warming has been caused by human activity. Even if it has been, he said, the heating of the planet will be beneficial, resulting in longer growing seasons in the Northern Hemisphere. “The Earth will be able to support enormously more people because far greater land area will be available to produce food,” he said.

In the mid-eighties, the Kochs provided millions of dollars to George Mason University, in Arlington, Virginia, to set up another think tank. Now known as the Mercatus Center, it promotes itself as “the world’s premier university source for market-oriented ideas—bridging the gap between academic ideas and real-world problems.” Financial records show that the Koch family foundations have contributed more than thirty million dollars to George Mason, much of which has gone to the Mercatus Center, a nonprofit organization. “It’s ground zero for deregulation policy in Washington,” Rob Stein, the Democratic strategist, said. It is an unusual arrangement. “George Mason is a public university, and receives public funds,” Stein noted. “Virginia is hosting an institution that the Kochs practically control.”

The founder of the Mercatus Center is Richard Fink, formerly an economist. Fink heads Koch Industries’ lobbying operation in Washington. In addition, he is the president of the Charles G. Koch Charitable Foundation, the president of the Claude R. Lambe Charitable Foundation, a director of the Fred C. and Mary R. Koch Foundation, and a director and co-founder, with David Koch, of the Americans for Prosperity Foundation.
Fink, with his many titles, has become the central nervous system of the Kochtopus. He appears to have supplanted Ed Crane, the head of the Cato Institute, as the brothers’ main political lieutenant. Though David remains on the board at Cato, Charles Koch has fallen out with Crane. Associates suggested to me that Crane had been insufficiently respectful of Charles’s management philosophy, which he distilled into a book called “The Science of Success,” and trademarked under the name Market-Based Management, or M.B.M. In the book, Charles recommends instilling a company’s corporate culture with the competitiveness of the marketplace. Koch describes M.B.M. as a “holistic system” containing “five dimensions: vision, virtue and talents, knowledge processes, decision rights and incentives.” A top Cato Institute official told me that Charles “thinks he’s a genius. He’s the emperor, and he’s convinced he’s wearing clothes.” Fink, by contrast, has been far more embracing of Charles’s ideas. (Fink, like the Kochs, declined to be interviewed.)

At a 1995 conference for philanthropists, Fink adopted the language of economics when speaking about the Mercatus Center’s purpose. He said that grant-makers should use think tanks and political-action groups to convert intellectual raw materials into policy “products.” The Wall Street Journal has called the Mercatus Center “the most important think tank you’ve never heard of,” and noted that fourteen of the twenty-three regulations that President George W. Bush placed on a “hit list” had been suggested first by Mercatus scholars. Fink told the paper that the Kochs have “other means of fighting [their] battles,” and that the Mercatus Center does not actively promote the company’s private interests. But Thomas McGarity, a law professor at the University of Texas, who specializes in environmental issues, told me that “Koch has been constantly in trouble with the E.P.A., and Mercatus has constantly hammered on the agency.” An environmental lawyer who has clashed with the Mercatus Center called it “a means of laundering economic aims.” The lawyer explained the strategy: “You take corporate money and give it to a neutral-sounding think tank,” which “hires people with pedigrees and academic degrees who put out credible-seeming studies. But they all coincide perfectly with the economic interests of their funders.”

In 1997, for instance, the E.P.A. moved to reduce surface ozone, a form of pollution caused, in part, by emissions from oil refineries. Susan Dudley, an economist who became a top official at the Mercatus Center, criticized the proposed rule. The E.P.A., she argued, had not taken into account that smog-free skies would result in more cases of skin cancer. She projected that if pollution were controlled it would cause up to eleven thousand additional cases of skin cancer each year.

In 1999, the District of Columbia Circuit Court took up Dudley’s smog argument. Evaluating the E.P.A. rule, the court found that the E.P.A. had “explicitly disregarded” the “possible health benefits of ozone.” In another part of the opinion, the court ruled, 2-1, that the E.P.A. had overstepped its authority in calibrating standards for ozone emissions. As the Constitutional Accountability Center, a think tank, revealed, the judges in the majority had previously attended legal junkets, on a Montana ranch, that were arranged by the Foundation for Research on Economics and the Environment—a group funded by Koch family foundations. The judges have claimed that the ruling was unaffected by their attendance.

“Ideas don’t happen on their own,” Matt Kibbe, the president of FreedomWorks, a Tea Party advocacy group, told me. “Throughout history, ideas need patrons.” The Koch brothers, after helping to create Cato and Mercatus, concluded that think tanks alone were not enough to effect change. They needed a mechanism to deliver those ideas to the street, and to attract the public’s support. In 1984, David Koch and Richard Fink created yet another organization, and Kibbe joined them. The group, Citizens for a Sound Economy, seemed like a grassroots movement, but according to the Center for Public Integrity it was sponsored principally by the Kochs, who provided $7.9 million between 1986 and 1993. Its mission, Kibbe said, “was to take these heavy ideas and translate them for mass America. . . . We read the same literature Obama did about nonviolent revolutions—Saul Alinsky, Gandhi, Martin Luther King. We studied the idea of the Boston Tea Party as an example of nonviolent social change. We learned we needed boots on the ground to sell ideas, not candidates.” Within a few years, the group had mobilized fifty paid field workers, in twenty-six states, to rally voters behind the Kochs’ agenda. David and Charles, according to one participant, were “very controlling, very top down. You can’t build an organization with them. They run it.”