presumably against their wishes, and after a long period of successful stealthiness— recently been uncovered and widely reported in the media. The
Kochs have occasionally even spoken to the press (though generally in
vague terms). By contrast, our initial web search results found John Me-
nard Jr. to have been completely silent in public about policies related
to Social Security and taxes. Our subsequent closer look confirmed that
point and extended it. We found no public utterances whatsoever by Me-
nard about any policy issues, or even about politics in general. In light of the fact that Menard is a sufficiently public figure that one can uncover important details about his political contributions, his politically charged corporate policies, and even his personal and sexual life, our inability to locate a single politically meaningful statement by him must surely reflect a deliberate political silence.
In harmony with the stealth politics theory, Menard’s silence clearly
does not reflect an apolitical attitude or an avoidance of political commit-ments. Menard has been highly active politically. His financial support of Scott Walker and numerous other conservative candidates, as well as his
contributions to the Koch network, strongly suggest that his preferences
on taxes, Social Security, government regulation, and related issues are
well to the right of the preferences of average Americans. Furthermore,
Menard has leveraged his wealth for political purposes in idiosyncratic
ways that go far beyond political contributions.
On a more methodological note, it is important to emphasize that our
deeper examination of Menard’s political talk and actions did not identify any coding errors. Our exhaustive follow- up inquiries into Menard did not reveal any relevant public statements that had escaped our web- scraping
procedure. Instead, this follow- up confirmed that he was completely silent,
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politically, in public. Our case- study search for additional evidence confirmed that Menard actively deploys his wealth for political purposes, and indeed it revealed that Menard engages in some atypical and quite interesting forms of political action that turn internal policies of his company into political instruments. This case suggests that in other cases as well, billionaires who engage in standard political spending that is discoverable by systematic web searches may also carry out additional, unknown types of
political activity. Measurement error is seen not to be an issue in this case.
Carl Icahn
In the autumn of 2013, Carl Icahn held the #18 position on the Forbes list of wealthiest Americans, with a net worth of $20,300,000,000.37 Three years later— after one of the worst investment stretches of his career, due in large part to sagging values in the energy sector38— Icahn had dropped to #26. But he still had a net worth of $15,700,000,000, no mean sum.39
Icahn was raised in a basically middle- class home in a modest neigh-
borhood in Queens, New York. Much like Warren Buffett, Icahn built
his wealth through investment. After working as a stockbroker for seven
years, he founded the business that would become Icahn Enterprises, a
conglomerate that now holds investments in a wide range of industries in-
cluding energy, retail, transportation, casinos, and manufacturing. Icahn gained notoriety in the 1980s as what some called an “activist investor”
but others called “corporate raider” or “buccaneer.” He executed hos-
tile takeovers of several prominent publicly traded corporations. His dramatic takeover of Trans World Airlines (TWA) in 1985 was one of his
earliest and most notable successes.40 Since then, Icahn has waged proxy
battles over several companies, including a persistent but unsuccessful effort in the 1980s and 1990s to take over USX (the holding company for
United States Steel),41 and, more recently, a high- stakes, high- visibility—
but also unsuccessful— 2013 battle with fellow billionaire Michael Dell
over control of Dell’s eponymous computer company.42
We selected Icahn for close study because he deviated more sharply
than any other billionaire we studied from the pattern found in our chap-
ter 2 regression analysis predicting the direction of policy- related actions on taxes and Social Security. Based on his scores on the independent variables predicting the directionality of actions, the model predicted that Icahn would engage in fairly substantial right- leaning political action. But our data showed no policy- focused political action at all by Icahn, in either
four billionaires up close
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a liberal or a conservative direction, and a bit of speech that actually took a liberal stand. Icahn has had a substantial public persona, frequently appearing on television— especially on CNBC. But our web- scraping proce-
dure revealed only one public statement on taxes or Social Security policy, in which Icahn supported increasing income taxes for the wealthy. We
found no policy- related actions at all.
Our reanalysis of his public appearances confirmed that Icahn gener-
ally did not speak about politics in specific terms before about 2015. Thus he was correctly scored for the time period covered by our systematic
data- collection process. As to his actions: while our original searches had revealed that Icahn hosted a few candidate or party political fund- raisers during the earlier period, he was scored as much less active than most billionaires at his level of wealth. Closer inspection confirmed that Icahn was indeed much less politically active before 2015 than the statistical analysis predicted. But he has recently ramped up his political activity a great deal, largely in the rightward direction that the model predicts.
Icahn emerged in our original data as essentially silent and mostly po-
litically inactive. Our subsequent deeper investigation transformed this
impression, with respect to his behavior after the period of our main study.
Beginning in 2015, Icahn became a vociferous participant in politics, making a number of specific policy statements and publicly stating his support for Donald Trump— with whom he had had a decades- long relationship
that was centered on his involvement with the Trump Taj Mahal casino in
Atlantic City.43 In 2015 Icahn announced plans to launch a $150,000,000
super PAC dedicated to fiscally conservative policy causes including cor-
porate tax “reform” (i.e., mainly rate cutting).44 In late 2016, after Trump’s election as president, Icahn accepted an advisory role on business regulation with the Trump administration— a position that immediately raised
ethical red flags, given Icahn’s wide- ranging investments.45 Icahn’s involvement with the Trump administration turned out to be brief; he resigned
from his position as a special adviser on regulations in mid- 2017 amid
revelations that he was attempting a regulatory rollback that would save
him personally millions of dollars.46
The fact that Icahn was (in earlier times) mostly silent about politics
certainly does not mean that he was altogether silent on other topics.
Icahn has long been highly vocal about issues of corporate governance,
and he has consistently cast these issues in quasi- political terms. For example, as of June 2017 his blog was headed by a self- quote from a 1988
Texaco shareholders meeting: “A lot of people die fighting tyranny.
The least I can do is vote against it.”47 While this quote seems to have a
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strongly political flavor, in context it represents advocacy for shareholder power within corporate governance institutions, and the tyranny in question involves the power of boards a
nd CEOs over shareholders.48
Icahn shifted toward public engagement on more traditional political
matters in early September 2015, when he announced his support for Don-
ald Trump. Icahn explained that Trump would help the country by cutting
the regulatory burden on business.49 He then went on to formally endorse
Trump’s presidential candidacy during a September 30 interview on CNBC:
I’m sort of being an activist in the country now. I think it’s sort of a no- brainer.
You can’t keep it going the way it is. We’re dysfunctional. . . . You don’t have limited government today. You’ve got an extremely strong Federal Reserve, so on the one hand you’re saying, oh, we’ve got to watch the deficit, and all these Tea Party guys, oh, we can’t spend money, and they don’t look around, right next door, at the Fed in the last few years has gone out and printed up four trillion dollars. . . . You need a guy in there that understands business and understands that kind of thing, and understands the . . . risks in what the Fed is doing now. . . .
[Donald Trump] is sending a message to the middle class, and literally how screwed they are getting . . . How do you justify a mediocre CEO getting $42 million a year and the guy who’s working for him out there, really doing the work, is getting $50 thousand a year. I mean, there’s no justification for it in a free society where you can just vote.50
Icahn’s views in this statement are somewhat mixed in terms of classic
liberal- conservative economic distinctions— they lean toward Trump- style populism— but they are unambiguously political.
Later in the fall of 2015, Icahn escalated his intervention into politics.
He announced the creation of a super PAC and committed $150,000,000
of his own money. It is not clear whether this actually happened, but Icahn did write a letter to Congress discussing his motivation. In that letter he strongly opposed corporate tax “inversions,” in which US companies re-locate and reconstitute themselves as entities headquartered in another
country. He saw this trend as harming the US economy and argued that
it can be ended through “international tax reform” that dramatically re-
duces the taxes US companies pay when they bring cash into the domestic
economy from foreign subsidiaries.51
While this letter took a clear stance in favor of lowering one particu-
lar kind of tax on businesses, Icahn mentioned no additional policies in
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the letter. He subsequently published an op- ed in the New York Times in which he again argued against tax inversions, without taking a stand on
any other policies.52 This rather specialized tax activism represents the bulk of Icahn’s specific policy statements, but he has also made some general comments with policy relevance. For example, in the context of a
dispute with Bernie Sanders regarding union contracts in an Atlantic City casino, Icahn wrote, “The income gap in this country is a major problem
and I agree (with certain exceptions) that those that manage capital, as
well as many CEOs, are ridiculously overpaid. If this problem is not ad-
dressed, there may well be disastrous consequences for the country.”53
On balance— and taking into account events subsequent to our statis-
tical analyses— Icahn presents a very unusual profile as a political actor.
He has recently become heavily committed to speech and action on one
relatively narrow issue related to the taxation of multinational businesses.
In addition, he has expressed a blend of fiscally conservative concerns
about the Federal Reserve, populist concerns about the fate of the mid-
dle class, and liberal or progressive concerns about inequality. This profile makes Icahn a fascinating political figure, one who (like campaigner Trump) has combined a definite lack of adherence to the orthodoxies of
either major political party with a high level of wealth and fame that enables him to command attention for his views when he wants to com-
mand it. Icahn’s early political silence and inactivity may reflect the fact that, before Trump, there was no major political figure— Republican or
Democratic— who shared Icahn’s more- or- less populist mixture of views
and could win Icahn’s verbal and financial support.
In terms of measurement concerns, Icahn presents no particular prob-
lems for our account of stealth politics. We have found no evidence of
coding errors or missed political speeches or actions during the period covered by our quantitative analyses. More substantively, Icahn’s signifi cant media footprint during the period covered by our searches— together with
his subsequent vociferous (and unconventional) speech and action— tend
to confirm our general points that billionaires have easy access to the media, and that billionaires who hold less unpopular opinions tend to speak out more. At the same time, Icahn’s case reminds us that actors can and
do change their profiles of political speech and participation, in reaction to shifts in the national political context, their personal situations, or for other reasons.
From a broader analytic point of view, Icahn may actually have little
to do with the stealth politics theory one way or the other. The theory
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may simply not apply. Icahn’s somewhat populist policy views— while rep-
resenting an increasingly important ideological strand in American and
Western European politics— do not fit neatly along the economic liberal-
conservative political continuum around which some of the theory’s pre-
dictions are built.54 Icahn’s fit with the stealth politics framework is also complicated by the related fact that several of Icahn’s stands were less
unpopular with the general public than the extreme economic conserva-
tism of most billionaires. When Icahn has taken on potentially unpopular
positions, such as his most apparently self- interested stand (in favor of cutting taxes on corporations when they repatriate profits, which would add
to the value of his companies with big overseas cash reserves), he has been somewhat shielded from consumer or political punishment by his distance
from the companies he had invested in. Hence, Icahn’s early silence was
probably not motivated by the fear of popular disapproval that provides
the main motivation for stealth politics. Instead, as we have suggested,
Icahn may have been silent and inactive because the world of American
politics did not then resonate with his populist worldview. But when Don-
ald Trump appeared on the political scene, Icahn suddenly found a major
ally and a motive for acting and speaking out vigorously.
This suggests that if Trump, Steve Bannon, or others should manage
to reshape American politics around support or opposition to right- wing
populism, or if many other populist billionaires emerged, our theory might need to be modified accordingly. But in the predominantly economically
liberal versus economically conservative political world that existed at the time of our study (and persists at the time we are writing), the stealth politics theory accounts well for the behavior of most billionaires— who, on economic issues, generally range along a continuum from extreme conservative to left- centrist. The theory simply does not apply to an individual like Icahn who holds quirky or populist views. If one wanted to mod ify the theory to apply to Icahn, one might conceptualize the holding of populist views as an omitted variable that— in an economically liberal ver sus conservative world— should be included as a predictor of political si lence and inactivity.
David Koch
D
avid Koch and his brother Charles were tied at the #4 position on the
Forbes list of wealthiest Americans in fall 2013. Each had a net worth
four billionaires up close
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of $36,000,000,000.55 As of fall 2016, David’s net worth had risen to
$42,000,000,000, and it jumped to $48,500,000,000 by the autumn of 2017,
although— as high- tech billionaires’ fortunes climbed even faster— Charles and David Koch then stood at just #6 on the Forbes list, below Gates, Bezos, Buffett, Zuckerberg, and Ellison.56
David Koch is the executive vice president and a principal owner of
Koch Industries, a privately held conglomerate founded by his father,
Fred, that has holdings in a wide range of industries, including energy,
manufacturing, agriculture, and financial services. Koch Industries has
grown substantially— both before and after Fred’s sons took it over. It
is now the second- largest privately held company in the United States,
bringing in over $100 billion in revenue annually.57 As a privately held
company, Koch Industries does not have to disclose much detailed infor-
mation about its operations, and the Kochs have tended to be as secretive about their businesses as they are about their political activities. Koch Industries appears to value growth above all. (We earlier mentioned that
it regularly reinvests some 90 percent of its earnings.) Koch Industries
has been described as a “giant private equity fund . . . looking to invest wherever it sees potential for long- term profits.”58 It expanded into electronics in late 2013, through a $7.2 billion acquisition of Molex, which
makes parts for a range of consumer electronics products. More quietly
(through Koch Membrane Services) it has made substantial investments
in water bottling and supply— a play that has been described as laying the
“foundation of a privatized water industry.”59 Despite its closely guarded secrets, it is clear that Koch’s business interests are wide ranging.
We selected David Koch for close study because he was the most devi-
ant case in our regression predicting the ideological direction of policy-related actions in the opposite direction from Carl Icahn. That is, David Koch’s policy- specific actions related to taxes and Social Security were farther to the political right than predicted by the model. Unlike several other of the very wealthiest billionaires, Koch is definitely not center- left on economic issues. He is a hard- line economic conservative.
Billionaires and Stealth Politics Page 11
