Devil's Bargain: Steve Bannon, Donald Trump, and the Storming of the Presidency

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Devil's Bargain: Steve Bannon, Donald Trump, and the Storming of the Presidency Page 12

by Joshua Green


  Trump hadn’t abandoned the idea of the White House. In early March, Kentucky senator Rand Paul, who was also eyeing a presidential run, asked Trump to go golfing in Florida to suss out his intentions. A few days later, Trump made his annual appearance at CPAC, delivering his anti-immigrant message to heavy applause. Then Astorino formally announced his candidacy for governor.

  Trump, piqued that GOP officials had not pushed Astorino aside, tweeted his displeasure: “The top leadership of the New York State Republican Party is totally dysfunctional—they haven’t won a major election in many years.” In another tweet, he formally abandoned the idea of running for governor: “While I won’t be running for Governor of New York State, a race I would have won, I have much bigger plans in mind—stay tuned, will happen!”

  A few weeks later, on April 12, 2014, Trump appeared at the New Hampshire Freedom Summit in Manchester, an early presidential cattle call, with Rand Paul and Ted Cruz. In his speech, Trump attacked Jeb Bush, still considered a blue-chip presidential prospect, for his recent comments that illegal immigrants were motivated “by love”—and the crowd responded by booing Bush. Trump got an even bigger reaction from an off-the-cuff attack on politicians. “The problem with politicians,” he said, “[they’re] all talk and no action. It’s true. All talk, it’s all bullshit.” Audience members stood up and cheered.

  It was clear Trump had connected. He left New Hampshire in a glorious mood. He wanted to golf. “On the helicopter back from New Hampshire, we stopped at Briarcliff Manor in upstate New York, where he owns a golf course,” Nunberg recalled. “We were shooting balls, and I printed out the press clippings from his speech. Everybody was writing about Trump and how Jeb Bush got booed. I said, ‘You see? This is gonna work.’”

  SIX

  THE ALT-KOCHS

  It was early December 2015, and Steve Bannon was wearing a full-on bombardier costume with leather jacket and goggles, and toting a goatskin flying helmet. He was dressed up as one of his favorite movie characters of all-time, Brigadier General Frank Savage, the tough-as-nails commander, played by Gregory Peck, who takes over a demoralized World War II bombing unit and whips them into fighting shape in the 1949 classic Twelve O’Clock High. Ordinarily, Bannon wasn’t big into cosplay. But this was a special occasion: the annual Christmas party thrown by the reclusive billionaire Robert Mercer, an eccentric computer scientist who was co-CEO of the fabled quantitative hedge fund Renaissance Technologies.

  As introverted and private as Bannon was voluble and outspoken, Mercer was nonetheless a man of ardent passions. He collected machine guns and owned the gas-operated AR-18 assault rifle that Arnold Schwarzenegger wielded in The Terminator. He had built a $2.7 million model train set equipped with a miniature video camera to allow operators to experience the view from inside the cockpit of his toy engine. He was a competitive poker player. He liked to relax by shaping gemstones. And he loved to dress up in costumes.

  Each year, Mercer and his family threw an elaborate, themed Christmas party at Owl’s Nest, his opulent waterfront mansion on Long Island’s North Shore. Past themes had included “Cowboys and Indians” and “The Roaring Twenties.” This year’s theme was “The End of World War II.” Mercer, styled as General Douglas MacArthur, had obtained an authentic World War II tank to park on his lawn and had flown in artifacts from the National World War II Museum in New Orleans: a piece of the USS Arizona recovered from the floor of Pearl Harbor, a parachute-silk wedding dress that once belonged to the French wife of an American GI, and the Medal of Honor given to PFC Arthur Jackson, a young Marine who single-handedly killed fifty Japanese soldiers on the South Pacific island of Peleliu in 1944. As guests mingled beneath tents spread across Mercer’s sprawling twelve-acre lawn, a group of Andrews Sisters impersonators provided the evening’s entertainment.

  Mercer, who was then sixty-nine, had recently developed another late-in-life interest: politics. From a distance, his hard-line antigovernment views appeared no different from those of any number of financial-industry power moguls scattered throughout the country, whose collective fortune financed the Republican Party and its affiliated think tanks and pressure groups. Up close, however, Mercer was . . .well, he was different. He resembled the bloodless capitalist hero in an Ayn Rand novel. Mercer wanted to bring back the gold standard and abolish the fractional-reserve banking system upon which the modern economy is built. He funded an Idaho activist who foments legal challenges to environmental laws, claiming they are part of a United Nations plot to depopulate rural America. He was once overheard by a Renaissance colleague insisting that radiation from the atomic bombs dropped on Japan in World War II actually improved the health of people outside the blast zone. “He’s a very independent thinker,” said Sean Fieler, a fellow conservative hedge fund manager who has worked with Mercer to lobby for a return to the gold standard. “He’s a guy with his own ideas, and very developed ideas.”

  Mercer’s budding interest in right-wing politics was propitiously timed. He started to become active just as the Supreme Court was getting ready to hand down its decision in the 2010 Citizens United case—the case David Bossie had brought—opening the floodgates for wealthy individuals to take a larger and more active role in electoral politics. Mercer excited the Republican political world because, though he was a talented poker player, he didn’t bluff about his intentions and he was willing, and even eager, to make an enormous ante to a candidate or a cause he believed in.

  Of course, Mercer’s eccentricity made it a bit difficult for ordinary Republican candidates to maneuver themselves into a position where they might catch the billionaire’s eye. The first horse Mercer bet on in a big way was a candidate so far out on the right-wing fringes that simply to describe him is to invite disbelieving laughter (which it often did). In 2010, a sixty-eight-year-old research chemist named Arthur Robinson, who lived on a sheep ranch deep in the Siskiyou Mountains of southern Oregon, decided to challenge the longtime Democratic congressman, Peter DeFazio. Calling Robinson a “research chemist,” while technically accurate, doesn’t quite do justice to the exotic nature of the man’s pursuits. A self-funded medical renegade, Robinson was consumed with extending the human life span and believed that the secret to staving off death and disease could be found in human urine. To that end, Robinson collected thousands upon thousands of urine samples, which he froze in vials and stored in massive refrigerators that stood among his wandering sheep. Robinson published a newsletter to share his findings and to periodically put out calls for more urine (“We need samples of your urine” read a typical house ad). Mercer was a subscriber to Robinson’s newsletter (this was likely the source of his claim that exposure to atomic radiation can benefit human health, a theory known as “hormesis”).

  Robinson, who understandably had difficulty enlisting the backing of the National Republican Congressional Committee, did not appear to pose a threat to DeFazio. He had as little money to put toward a congressional race as he did for his urine research. Yet six weeks before the election, a wave of ads began appearing on local television attacking DeFazio as a tool of the Democratic House majority leader Nancy Pelosi. Robinson had no idea where the ads were coming from. When reporters discovered that Mercer had funded the group responsible for airing them, Robinson was surprised but appreciative. “I don’t know him very well,” he confessed. “If he’s helping me in the campaign, then I’m grateful.” While he didn’t win, Robinson gave DeFazio his closest race in decades.*

  In the years afterward, Mercer spread his political largesse among a broad group of beneficiaries. Some of them fell closer to the mainstream of the conservative movement than did Arthur Robinson. They included Bossie’s group, Citizens United, as well as groups such as the conservative Heritage Foundation and the Federalist Society. As a rule, Mercer distrusted the political establishment, just as he shunned the Wall Street financial establishment. Even so, he drifted close enough in 2012 to contribute $25 million to the dark-money
network of wealthy conservative donors organized by Charles and David Koch, and he gave millions more to Karl Rove’s Super PAC, American Crossroads, and to another that supported Mitt Romney. At around this time, Mercer’s middle daughter, Rebekah, became more actively involved in the family’s political giving. When Romney lost the presidential election and Rove’s handpicked slate of Senate candidates was wiped out to a man, the Mercers became enraged and all but withdrew from their involvement in mainstream Republican politics. Led by Rebekah, the family members veered sharply to the right, establishing themselves as the alt-Kochs and using their fortune to back outsider candidates and causes of their own.

  As the evening stars rose over Owl’s Nest, friends and courtiers from all walks of life strolled across the Mercers’ lawn, magically transported, if just for the evening, back to 1945. Jack Hanna, the khaki-clad celebrity zookeeper, came wandering by (the Mercers gave $100,000 to his zoo). But the evening’s buzz was all about politics. With the presidential election less than a year away, Rebekah Mercer, who was dressed as Rita Hayworth, stood to be a figure of consequence. Texas senator Ted Cruz, dressed as Winston Churchill, was especially solicitous of her. As everyone gathered on the lush grounds of Robert Mercer’s estate was keenly aware, the Mercer family had given away more than $77 million to conservative politicians and organizations since 2008.

  You didn’t have to be a brilliant scientist to see the joy Bob Mercer derived from his annual Christmas pageant, or to understand that anyone hoping to curry favor with him would be wise to play along. This is how it came to be that adults who never imagined themselves dressing up in costumes—adults like Steve Bannon—wound up hunting for just the right period-appropriate accoutrements to make a positive impression. The effort could pay off handsomely. In fact, for Bannon, it already had. Over the past three years, the Mercers had become the key financial backers of a far-flung network of interlocking political and media groups that Bannon either had conceived of or had come to control. Bob Mercer was going to be vitally important to the presidential race. He was a man you’d dress up for. Bannon called him “the Godfather.”

  —

  For years before he joined Trump’s presidential campaign, Bannon had been a Washington figure of no particular distinction who tended to inhabit the far fringes of Republican politics, where he felt most at home. Sometimes, he drifted so far out on the fringe that he and his compatriots were shunned by mainstream right-of-center outfits such as the American Conservative Union, which throws the annual Conservative Political Action Conference. Bannon not only didn’t mind the slights, he reveled in the minor notoriety, playing up his image as the skunk at the garden party.

  In 2013, when CPAC banned a number of speakers for incivility and anti-Muslim animus, Bannon had Breitbart News organize a nearby counter-conference that he dubbed “The Uninvited” and personally emceed.* Featured guests included the blogger Pamela Geller, who called Muslims “savages”; Frank Gaffney, a former Reagan official who claimed that the Muslim Brotherhood had infiltrated the Obama administration; and Robert Spencer, the founder of Jihad Watch and Stop Islamization of America. (Geller and Spencer were later banned from entering the United Kingdom out of concern they would spark “inter-community violence.”)

  Bannon, in other words, was about the least likely candidate anyone could imagine to wind up being the recipient of millions of dollars from a wealthy conservative benefactor intent on radically reshaping American politics.

  And yet one donor thought otherwise.

  The reason Bannon appealed to Mercer and almost nobody else is that Mercer’s odd, charmed life had taught him to reject ordinary ways of thinking and reflexively seek advantage in places other people didn’t look or couldn’t see. It shaped his way of viewing the world and made him extravagantly rich. And the particular way in which Mercer had taken this worldview and applied it at Renaissance Technologies—by stringing together a series of models that functioned in tandem—was the same way that Bannon thought about politics and hoped to attack the system.

  The model that Mercer believed in so fiercely was devised by a mathematician and former code breaker for the Pentagon’s secretive Institute for Defense Analyses named Jim Simons. In the late 1970s, Simons was chairman of the math department at Stony Brook University on Long Island and an avid amateur speculator in commodities (he spent his wedding money trading soybean futures). Believing that he could bring mathematical rigor to the gut-driven practice of commodities trading, Simons began recruiting some fellow mathematicians and code breakers to help him automate the process of finding the best trades. These esoteric skill sets were more applicable to finance than they might at first seem. The job of a military cryptographer is to devise systems through which to send and spot signals amid a sea of noise, ideally signals so faint that others don’t detect them. Finding the patterns that constitute the signal, Simons realized, was not all that different from spotting hidden patterns coursing in a sea of seemingly random market data—patterns that might prove to be predictive and therefore profitable trading opportunities.

  What made Simons and his code breakers iconoclasts in the realm of Wall Street’s financial world is that the hidden patterns they were looking for were not supposed to exist. The prevailing view among academic economists at the time was that prices were efficient, and if it was possible to know ahead of time that stocks or soybeans were going to rise or fall, the valuations would have changed already—all relevant information was thought to be priced into the omniscient mind of the market. Money managers might get lucky for a spell and outperform a benchmark index. But efficient-market theory held that over the long term, they couldn’t consistently beat the market.

  Simons thought they could, if only they applied the right sort of expertise. With professional code breakers to detect systemic patterns in equity markets and mathematicians to write sophisticated algorithms, Renaissance Technologies, which Simons founded in 1982, built a program that traded on the basis of computer-generated signals. Before long, the firm was consistently outperforming discretionary traders. As his company flourished, Simons recruited additional mathematicians, astronomers, and computer scientists—but never economists or people with experience working on Wall Street. Simons considered them, in effect, to be intellectually corrupted by what he thought was the narrow and incurious way in which Wall Street trading houses approached financial markets. He himself had come from the academy and prized the independence of mind this background had instilled in him. And he believed, correctly, that his ability to think differently from the major Wall Street firms was the wellspring of his success. Struck by the limits of establishment thinking, he sequestered Renaissance on a campus on Long Island, far from Manhattan’s financial district, and hired only academic specialists trained in abstract thought. One of them, in 1993, was Bob Mercer.

  Mercer and a colleague, Peter Brown, were recruited mid-career from IBM’s research center, where they had revolutionized the field of computer translation. All his life, Mercer had romanticized computers. As a teenager growing up in New Mexico, he had taught himself programming by reading books. Having no access to a computer himself, he wrote programs in longhand in a wire-bound notebook. In high school, he finagled a job in a nearby Air Force weapons lab writing programs in Fortran. Mercer, who almost never grants interviews and rarely speaks, even in private company, once described with feeling the sense of bliss that overcame him in the job. “I loved everything about computers,” he recalled in a 2014 speech to a gathering of linguists. “I loved the solitude of the computer lab late at night. I loved the air-conditioned smell of the place. I loved the sound of the discs whirring and the printers clacking.” After earning a Ph.D. in computer science at the University of Illinois at Urbana, he joined IBM’s Thomas J. Watson Research Center in Yorktown, New York, where he became part of a team that was trying to teach computers to translate human language.

  At the time, the field of computer translat
ion was dominated by linguists. The agreed-upon approach was to teach computers the rules of syntax and grammar, so that they might develop sufficient “linguistic intuition” to be able eventually to translate, say, English to French. That is, after all, how people learn language. Mercer and Brown took an entirely different approach, chucking any concern about grammar and instead relying on a tool called an “expectation maximization algorithm”—a tool code breakers would use to find patterns. The pair got hold of Canadian parliamentary records, which are cross-published in English and French, and fed them into an IBM computer, which they instructed to look for correlations. Outside IBM, their unorthodox approach to translation was greeted with hostility (“the crude force of computers is not science,” huffed one linguist at a professional conference who reviewed their work). But pattern-hunting worked. A computer could learn to recognize patterns without regard for the rules of grammar and still produce a successful translation. “Statistical machine translation,” as the process became known, soon outpaced the old method and went on to become the basis of modern speech-recognition software and tools such as Google Translate.

  At Renaissance, Mercer and Brown applied this approach broadly to the markets, feeding all kinds of abstruse data into their computers in a never-ending hunt for hidden correlations. Sometimes they found them in strange places. Even by the paranoid standards of black-box quantitative hedge funds, Renaissance is notoriously secretive about its methods. But in 2010, one intriguing example of the patterns it turns up became public. As the author Sebastian Mallaby details in his history of the hedge-fund industry, More Money Than God, a group of scientists at the firm’s flagship Medallion Fund discovered a correlation between weather patterns and market performance. As Mallaby writes: “In one simple example, the brain trust discovered that fine morning weather in a city tended to predict an upward movement in its stock exchange. By buying on bright days at breakfast time and selling a bit later, Medallion could come out ahead.”

 

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