The Kochs just aren’t easy to attack in the usual ways. Post–Citizens United, the left wanted to take down and intimidate anyone supporting Republicans or challenging the establishment, be they conservative or liberal. But the Kochs are tough. Their business is private—not subject to shareholder proxies. And it is hard to boycott. Charles and David Koch also choose to put some money into think tanks and nonprofits that have a greater degree of protection from disclosure. It also happens that those organizations are very effective. All this drives the left nuts.
As a result, its attack on the Kochs represented a bit of a twist. Mayer and crew knew that the two brothers, who are as stalwart as they come, would never give in to intimidation. So the Koch attack had other aims. One was to use the Kochs—as the left was doing with the Chamber of Commerce—as an example of the supposed evils of Citizens United and “dark money,” and to further their calls for disclosure. Another was to delegitimize the Kochs and any political work they did. Yet another was to throw up roadblocks—to slow down Koch work with harassing FOIA requests and IRS complaints. A final one was to make an example of the brothers, and make other donors fear they might face the same public defamation.
Holden thinks the first real hit came via Lee Fang, the same ThinkProgress employee who had made the spurious claim that the chamber was funded with foreign money. In a December 2009 piece in the Boston Globe, Fang recounted a Tea Party demonstration against Obamacare, noting that “few of the protestors were aware that a right-wing billionaire had paid” for the event, via its highly successful organization, Americans for Prosperity. The piece offered a misleading potted history of the Koch family fortune, but its key point was this: The Kochs’ “hidden presence in the health care debate illustrates the extent to which the Old Right is creating—and then hiding behind—the grassroots fervor of middle-class opponents of health reform.”
“That was their first argument,” recalls Holden. “That the grassroots wasn’t ‘real,’ that it was ‘astroturf,’ that citizens were being controlled by powerful forces. Because, gee, what average person would be upset by the greatest collapse of the economy since the Great Depression? Why would anybody be upset about universal health care, or bailing out banks and automakers, or all that spending? Why would they care? Obviously, somebody had to be controlling their minds.” (Holden can be a really sarcastic guy.)
The article also happened to be wrong. AFP, a 501(c)(4), is the ultimate grassroots organization. It has chapters in thirty-six states, and as of 2015 it had millions of members and volunteers. A lot of them give their time to the organization—attending rallies, pushing for legislative reforms, signing up new voters, getting out the vote. But a lot of them also give money, and that’s a big source of the group’s finances. Wealthier Americans also give, but the heart and soul of the group is a mass of ordinary impassioned Americans.
Holden found the piece ridiculous, and didn’t worry too much. But the Mayer article, which ran in August 2010, was a wake-up call. The entire corporate team understood that the left was getting ready to paint the company as Citizens United gone wrong, and a menacing force in American politics.
That’s one reason why Holden today finds himself spending a lot of time setting the record straight. The fifty-two-year-old grew up in Worcester, and still has a sharp Massachusetts accent. He’s been general counsel of Koch Industries since 2004, but as the attacks grew he stepped up his involvement with the corporate defense team—working with the company’s public affairs and communications teams. The tall, angular Irish Catholic is perfectly suited for the job. He gets the politics. He gets the law. He’s sharp, quick, and aggressive. But mostly, he knows better than to wind himself into an angry pretzel over every attack. He has a sort of wry, sarcastic, even humorous approach to a lot of what goes on. And that’s good for the Koch enterprise. Holden is a very normal and human kind of guy. (The mainstream media is constantly surprised that people who work for the Kochs are normal and human.)
At almost precisely the moment the Mayer article hit, Obama began his “shadowy group” stump speeches. The president often talked in generalities about conservative front groups, but he made an exception for the Kochs. He called their flagship group out by name. He did it for the first time on August 9, 2010, when he called groups with “harmless-sounding names like Americans for Prosperity,” and suggested it might be a “foreign-controlled corporation.” It was disingenuous to suggest that AFP was funded by foreign money (which is illegal). It was more disingenuous given that Obama knew it was backed by the Kochs. Which is why he was saying its name in the first place.
Because the administration was obsessed with the Kochs, as became clear in an incident at the end of August. White House economist Austan Goolsbee was providing a background briefing to reporters on tax policy—specifically reform of the corporate tax code and the White House’s complaints about tax avoidance. Goolsbee in the course of it almost casually claimed that Koch Industries didn’t pay any taxes. “So in this country we have…a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion-dollar business.” Out of the millions of companies in the United States to use as an example, Goolsbee had chosen one that most people have never heard of. And coincidence or not, it was the same day that Maryland representative Chris Van Hollen (still smarting from his DISCLOSE Act defeat) filed a complaint with the Federal Election Commission against AFP, challenging its status as a nonprofit.
The scandal wasn’t so much that Goolsbee had chosen Koch; it was how he’d have known to choose it. Koch is a private company. Its taxes are confidential. Goolsbee and other White House officials are barred by law from looking at confidential taxpayer information. (It’s also a felony to release confidential taxpayer information.) Either Goolsbee had illegally accessed information, or he had made the accusation up. Neither of which is good behavior by a senior official in the U.S. government.
No one in the press reported on the reference. But in the days that followed, Holden and the company heard from several sources about the mention. One participant had taken careful notes. The Weekly Standard revealed the Goolsbee reference on September 20, and it caused an instant controversy.
The White House’s first response was to have an anonymous official provide Politico with a series of justifications for how it had Koch information. It started off with a slippery statement: “No senior administration officials have any access to anyone’s tax returns.” (Did a junior one?) The anonymous official went on to say the information had come from public testimony to the President’s Economic Recovery Advisory Board (PERAB) (which Goolsbee had directed) as well as publicly available websites, including Forbes and the Koch Industries site. Holden instantly threw up a red flag, noting that there was no information about Koch’s taxes on its or Forbes’s websites. There was also nothing in the PERAB testimony about the company’s tax status. “My primary concern is, Why does our name keep coming up, why do they single us out?” he told the Weekly Standard.
California Republican representative Devin Nunes sent a letter to the House Ways and Means Committee asking for it to probe whether the White House had misused tax information. And Iowa Republican senator Chuck Grassley went straight to J. Russell George, the Treasury inspector general, asking for an investigation. George agreed to start one. The White House then tried a new way to calm the storm, this time saying that Goolsbee had been “mistaken.” It promised not to use the example again.
The story got even weirder three years later when, in the wake of the IRS revelations, the press began to look at Goolsbee’s comment with fresh eyes. The IRS had been helping out the president with conservative groups; had it been giving the White House information on companies too? Goolsbee on May 14—just a few days after the Lerner revelations—posted a bizarre tweet, in which he said “there was no secret info on koch bros.” and went on to claim he’d got the information from a news article. But, as Goolsbee later admi
tted, the article was from 2003, and it was about an entirely different Koch brother (there are four of them), and about how he didn’t pay corporate taxes in the state of Florida. A few days after that, Goolsbee deleted the tweet.
Thanks to continued administration obstruction, we still don’t know whether the White House accessed confidential information. In October 2011, more than a year after the event, TIGTA sent a letter to Grassley saying his investigation was complete. He also added that Grassley couldn’t see it. Why? Because the report was about confidential taxpayer information, and that meant it was confidential, even for congressional overseers. Amazingly, the White House was getting to hide behind the very law it was accused of breaking.
The government wouldn’t even release the information to the Kochs, even though it was their confidential taxpayer information at issue. Holden was hopeful for a while. A TIGTA agent had alerted him when the report was finished, and advised him that he could file a Freedom of Information Act request to obtain it. Holden did, and was denied by both Treasury and the IRS. The IRS told him to submit again. He did. Denied again. Holden had plenty else to be getting on with at the end of 2011, so he dropped the issue.
But an outside organization known as Cause of Action didn’t. At first it filed a FOIA asking about any White House requests for information from the IRS. After it got the runaround, it filed a FOIA lawsuit in fall of 2012 requesting documents showing “any communication by or from anyone in the Executive Office of the President constituting requests for taxpayer or return information.” Astonishingly, the IRS refused, again claiming that it did not have to turn over potentially illegal communication, because that potentially illegal communication dealt with “confidential” taxpayer information.
Even an Obama-appointed judge found this ludicrous. In August 2015, federal judge Amy Berman Jackson ordered the IRS to hand over any White House requests for taxpayer information. She wrote, “The Court is unwilling to stretch the statute so far, and it cannot conclude that [the confidentiality provision] may be used to shield the very misconduct it was enacted to prohibit.”
Yet to this day, the IRS has continued to resist that judicial ruling. The issue is likely destined for the full D.C. Circuit Court of Appeals, which Democrats packed with liberal judges in their waning days of Senate power, after unilaterally changing the Senate’s long-standing filibuster rules in November 2013. Which means we may never know about any White House taxpayer snooping.
* * *
The 2012 election started with a bang. Obama was running as the incumbent, which meant he could start his campaign early while the Republicans warred over a nominee. His organization didn’t waste any time. It ran its first national broadcast ad of his presidential reelection campaign on January 19, 2012. It was about Charles and David Koch.
Specifically, it was about Americans for Prosperity, which had just announced its own $6 million ad campaign, in which it intended to highlight the administration’s failures. AFP’s first ad, which ran in mid-January, focused on the politics behind Solyndra, the solar power company that went bankrupt in 2011. Investors behind Solyndra had helped fund Obama’s campaign, and the administration had later loaned hundreds of millions of dollars to the firm, which then collapsed. Obama’s ad was testament to just how sensitive he was to the issue and to those making it a voter topic.
The Obama ad predictably complained about “secretive oil billionaires” whose accusations weren’t “tethered to the facts.” It then pivoted to a brag about the administration’s economic and energy and ethics record. Nobody in Washington or the press could have any doubt who the “secretive oil billionaires” were.
In February 2012, Obama campaign manager Jim Messina blasted out a fund-raising e-mail to the president’s supporters entitled “They’re obsessed.” It slammed AFP as a “front group founded and funded by the Koch brothers.” It then went on to make the absurd claim that “those are the same Koch brothers whose business model is to make millions by jacking up prices at the pump.” He also claimed the company had committed $200 million to “try to destroy President Obama.”
Saudi Arabia has some control over oil prices. Koch Industries, which buys crude oil at world prices, refines it, and sells it back into a competitive market, does not. Koch doesn’t even own gas stations. And this was the president’s team—singling out people by name and spouting untrue facts.
Koch’s president for government and public affairs felt compelled to write to Messina and object to the scurrilous accusations. He pointed out the realities of refining. He noted that Koch had for months denied the $200 million rumor, which had been ginned up by the press. “It is an abuse of the president’s position and does a disservice to our nation for the president and his campaign to criticize private citizens simply for the act of engaging in their constitutional right of free speech about important matters of public policy.”
Messina seemed to take near glee in writing a return letter, claiming it was “cynical” to suggest that AFP was about average citizens “furthering democracy.” He then dared Koch to “verify” the point: “Disclose those donors,” he demanded, so that the public could make “that judgment.”
And right there was the strategy. Messina and the White House were trying to get another list of names. They knew that more than just the Koch brothers gave money to AFP. They wanted a list of all the donors, so that they could do to them what they were currently doing to the Kochs.
Obama followed up, tweeting the same demand from his personal account: “@Messina2012 challenges the Koch brothers to disclose the donors funding their attack ads.” A few minutes later, the president added, “Add your name to demand that the Koch brothers make their donors public.” The tweet contained a link to an Obama website with an online petition that read, “Americans for Prosperity, the special-interest front group run by the oil billionaire Koch brothers, is claiming that its donors are ‘tens of thousands’ of folks ‘from all walks of life.’ We’re asking them to prove it by disclosing their donors to the public.” Try to imagine George W. Bush conducting a campaign like this against Michael Bloomberg (who funds a nonprofit gun control group) or Tom Steyer (the pro–green energy, anti–Keystone pipeline activist who made a fortune in fossil-fuel deals overseas). The press would have had a meltdown over such hardball tactics.
The campaign rolled on this way through 2012, turning the Kochs into an ever-bigger bogeyman. “And gee, what happened in the end?” says Holden, back in sarcasm mode. “They complained the entire campaign—about the Kochs, and AFP, and Karl Rove and the like, and about how the entire electoral process had been taken over by sinister influences and dark money. And guess who won? Guess who outraised and outspent Mitt Romney? Barack Obama. Guess we didn’t do that good of a job, did we?”
Holden admits that this was in fact the feeling within the operation, that it had done a poor job on the electoral side of things. It had poured a lot of money and time into the election, and yet had failed to elect candidates to change the balance of power in the Senate (in a year favorable to Republicans) and failed to win the White House (against a president with a lot of political liabilities). “We’d had an irrational exuberance,” says Holden. “And too many in our camp fell into that thinking and we paid a heavy price. If this were a business, everybody would have been looking for a new job. So we decided to retool and rebuild.”
Retool they did, an effort that resulted in the most sustained and direct attack against the Kochs yet. The president had made a point of singling out AFP during 2010, and the Obama reelect had used the Kochs as a foil during 2012. But this would prove nothing compared to the belligerent assault in 2014 of yet another powerful Democrat: Senate majority leader Harry Reid.
* * *
Reid had over the 2012 campaign talked about the Kochs here and there, joining the left in the usual bashing parade. But his approach took a lurch toward the hostile around March 2014. A revamped AFP had entered the midterm cycle with a new strategy of running “accoun
tability” ads against a number of particularly vulnerable Senate Democrats—those in states where Romney had performed well in 2012. Most of the ads focused on health care, which had become a nightmare liability for congressional Democrats. Obama’s Healthcare.gov launch in 2013 had proved an epic failure. Americans couldn’t sign up; they were losing their doctors and insurance plans; prices were skyrocketing.
The AFP ads reminded voters of the history. A typical one, which ran against North Carolina senator Kay Hagan, featured a local woman who recounted, “Kay Hagan told us if you like your insurance plans and your doctors, you can keep them.” The woman went on to detail her own health insurance travails and steep new costs. Other ads featured Americans telling their life stories. One showed Julie Boonstra, a Michigan woman who’d been battling leukemia for five years and who explained how her insurance was canceled and her out-of-pocket costs had become “unaffordable.” The ad inspired liberal activists groups to team up to attack a leukemia patient. The mainstream press jumped in, quibbling over the definition of “unaffordable.” Democratic representative Gary Peters, running for the Michigan Senate, demanded that Michigan broadcasters pull the ad.
What worried Reid, however, was that the AFP broadcasts, which first started in the fall of 2013, were in fact proving highly effective. They were softening up the incumbents. The disapproval numbers for more than a half dozen Democratic senators started to rise.
This was a direct threat to Reid himself. If he lost the majority, he lost the majority leader’s office. In March, he took the highly unusual (and unseemly) move of going to the Senate floor itself to attack Boonstra and the Kochs. “Despite all that good news, there’s plenty of horror stories being told. All of them untrue, but they’re being told all over America. The leukemia patient whose insurance policy was canceled, who would die without her medication. Mr. President, that’s an ad being paid for by two billionaire brothers. It’s absolutely false,” he said.
The Intimidation Game Page 35
