to be that their views and actions should be open to public scrutiny. Do
they have sound, public- regarding reasons for the policies they seek? Or are their actions based on misunderstandings (lack of touch with ordinary peoples’ lives, for example), or upon narrow self- interest? It is hard for average citizens to examine, to criticize, or— if necessary— to try to counteract billionaires’ political actions, if those actions have low visibility and if the billionaires do not speak out in public to justify them.
Anyone who— like ourselves— believes that the essence of democracy
is political equality, and who favors an equal voice for each citizen in the making of public policy, is bound to be troubled by the accumulating evidence of “unequal democracy,” in which the voices of affluent or wealthy
Americans tend to be amplified.51 But even those who stop short of ad-
vocating full majoritarian democracy would do well to think through the
implications of a system in which money- based political influence is not accompanied by open discussion and accountability.
chapter five
Reshaping State and Local Politics
National politics gets most of the buzz, but state and local politics matter too. In our federal system, state governors, state legislatures, and county or municipal governments have primary responsibility for ed u cation— elementary, secondary, and college; for medical care; for streets, highways, police, and fire protection; and for much more. They even decide who gets to vote in federal as well as state elections; whether voting is made hard or easy; whether congressional district boundaries are drawn to be competitive or are gerrymandered for partisan advantage. The roughly
$2.5 trillion that states, counties, towns, and cities spend every year amounts to nearly two thirds as much as what the national government spends in total— on everything from Social Security and Medicare to national defense.1
Many billionaires play an active— though usually very quiet— part in
funding candidates’ campaigns for state and local offices. Some wealthy
donors seek special favors from the states where they live or do business: tax breaks, state contracts, exemptions from regulations. Individually, the cost of each of those special favors may often seem small (if one considers a few million dollars small), but they probably add up across the country to many billions of dollars, dollars that most US taxpayers would not want to give away if they knew about them.
In certain states, including Wisconsin, Kansas, and North Carolina, billionaires’ influence has gone much further than that. In those states, billionaires and organizations that they control have helped elect extremely wealthy friendly governors and so many wealthy friendly state legislators that the control of state governments has changed drastically, and economics related public policy has veered in new, extremely conservative directions. It is no exaggeration to say that those billionaires have helped reshape state politics.
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Often, billionaires’ state and local activities are invisible to all but a few attentive observers. Indeed, the very obscurity and invisibility of state politics can be an advantage to wealthy donors and activists. If their efforts successfully escape public attention, they may be able to exert political influence without provoking resentment or opposition.
In this chapter we first take a general look at the state and local level political efforts of wealthy contributors, including major efforts to reshape state politics. We then focus on one particular political strategy, the strategy of “boundary control,” which some billionaires have used with
considerable success. In the boundary control strategy, federal level and state level campaign contributions are coordinated so as to win state level favors and benefits while warding off federal level interference.
Billionaires in State and Local Politics
State and local governments are important both because the states enjoy
primary (though not always exclusive) jurisdiction over many key areas
of public policy, and because they often oversee the implementation of
federal laws. That means that states (and local governments too) often have substantial discretion about how federal laws will actually work. For example— as the result of a Supreme Court decision2— the states get to
decide whether or not to use the Affordable Care Act to extend Medicaid
eligibility to lower income Americans who make a little more money than
the official poverty line. Beyond medical care, recent years have witnessed substantial policy changes in many states and cities around the country on a diverse range of issues— changes that stand in stark contrast to national
level gridlock.3 To repeat: state and local politics matter.
Wealthy individuals may actually have more opportunities to have a
big impact on political outcomes at lower levels than nationally. Billionaires are even bigger fish than usual in these smaller ponds. And the low visibility of state and local politics means that billionaires’ efforts can often go largely undetected and unresisted.
Several political scientists have written about this phenomenon. For
example, the localization of politics can serve as one means of what E. E.
Schattschneider referred to as restricting the “scope” of political conflict, thereby shutting out much of the population and disproportionately benefiting pressure groups driven by narrow, upper class interests.4 Building on Schattschneider’s ideas, Grant McConnell warned that a shift in power
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away from the national government to state governments can increase
the power of elites, private organizations, and corporations to win self
interested benefits. As a general matter, McConnell argued that private
interests tend to gain more influence as the “size of constituency” involved in governance decreases— as it does when moving from the national government down to lower levels of governance.5
One reason why individual billionaires are bigger fish at lower levels is that the total amount of money spent on elections (particularly in the many cases when those elections are not competitive6) is significantly less than the amount spent on national elections. So one billionaire’s contributions constitute a bigger fraction of the total and can make a very big splash.
In Illinois, for example, a 2017 donation of $20,000,000 by billionaire Ken Griffin to support incumbent Governor Bruce Rauner’s 2018 reelection
campaign was— all by itself— equal to roughly one- fifth of the total amount of money previously spent in Illinois by all candidates (of both parties) in the most expensive election for governor.7 (That same donation would have constituted less than 1 percent of the total cost of the 2016 national presidential election.8) Such big contributions on the state and local levels probably have an
outsized impact on electoral outcomes. They likely “buy” more gratitude
and greater loyalty to contributors by the officials they help elect. Billionaires seem to know this— and some of their representatives are shockingly open about it. Andrew Ogles, the Tennessee director of the Koch brothers’ Americans for Prosperity group (discussed in depth below), for
example, told a Boston Globe reporter, “The return on investment in time is much greater at the state than the federal level.”9
State and local level contributors also have an especially good chance of getting something for their money because governments on the state and local levels are frequently controlled by a single dominant party that can actually get things done. As of 2017, seventeen states had lower houses of their legislatures with majority parties that controlled two thirds or more of the available seats. In even more states, (twenty four of them) the upper houses were controlled by lopsided majorities.10 In fact, fully half the states— twenty five of them (if o
ne includes Nebraska11)— had unified one
party government across both houses of the legislature and the executive.12
It is difficult to quantify exactly how many of the thousands of local governments around the country are controlled by one party, but given both the increasing partisan homogeneity of cities and our country’s history of dominant, one party political machines, it is unlikely that there is much more partisan diversity in governments on the local than the state level.13
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In states and cities with strong unified government— unlike the federal
government, which has often been paralyzed by divided party government,
filibusters, and gridlock14— the majority party can often push through just about any policy it wants. As a result, major funders of the dominant party can hope for big returns on their investments.
Wealthy Contributors on the State and Local Levels
Billionaires are heavily involved in both elections and policy making processes on the state and local levels.
State elections have been flooded with billionaires’ money. An analysis by the Center for Public Integrity has identified ten national orga nizations— comprised of numerous state level affiliates— that spent more than a million dollars each on state level elections between 2014 and 2016, with the most prominent groups spending upward of $60 million.15 These
organizations sometimes use complex schemes to shield the identity
of their contributors— or simply do not disclose contributors at all. But investigative work has revealed that billionaires are among their biggest investors. The Center for Public Integrity’s report indicates, for example, that Sheldon Adelson, Ken Griffin, and the Koch brothers (or Koch Industries) each contributed more than $3 million to the Republican Governors Association over that three year period. Adelson and the Kochs also contributed millions to the Republican Attorneys General Association.
Influential Trump donor Robert Mercer, too, made substantial state level investments in conservative groups. Billionaires’ contributions to the left or center of the political spectrum have generally been fewer and smaller, though Michael Bloomberg has been a top ten donor to the Democratic
Governors Association.
Billionaires have also spent large sums on local races. In Chicago, Ken
Griffin— a Republican— gave around $1 million to the 2015 reelec tion
campaign of Mayor Rahm Emanuel, a Democrat.16 Numerous wealthy
Re publicans contributed to Emanuel’s campaign too. Prominent investor—and extreme fiscal conservative— David Herro kicked in $150,000.17
Con servative investor Muneer Satter and his wife also made a six figure contribution.18 Sam Zell— a conservative billionaire with diversified interests—donated $50,000.19 In Philadelphia, three libertarian founders of the Susquehanna International Group— a prominent trading and investment firm— contributed a combined $7 million to the mayoral campaign of Democrat Anthony Williams.20 In Dallas, several billionaires, including
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Harlan Crow and Ray Hunt, have created super PACs in order to influence city council races.21 Billionaires have even spent money on school board elections.22 Big money has a long reach.
The most important state and local level political groups have provided
more than just money. Some have invested in campaign infrastructure, in
ways that parallel or even rival the work of the major political parties. Most prominent among them is Americans for Prosperity (AFP), the central
organization in the Koch brothers’ network.23 A team of Harvard based
researchers led by Theda Skocpol found that, as of 2015, AFP had permanent, paid state political directors in thirty four states. Those directors led a network of about 2.5 million conservative activists who are active in both state and local politics. State directors— many of whom are assisted by paid staffs— raise money, produce political advertisements, lead voter turnout operations, and perform other functions typically associated with political parties.24
The billionaire controlled AFP may be the most important organization in American politics outside the Republican and Democratic parties.
Attempts to match or counteract its influence from the left have not been successful so far. Following heavy state level Democratic Party losses during the Obama presidency, liberal donors— including those involved with George Soros’s Democracy Alliance— resolved to invest more in state
level campaign infrastructure,25 but these efforts did not produce much in the way of immediate results.26 The stunning Democratic losses of 2016,
and alarm at the subsequent Trump presidency, may have mobilized a
few centrist and liberal billionaires to do more. So a more robust state
level apparatus for the left may be in the works, though it faces daunting obstacles.27 The fact is that— at least on economic issues— truly liberal billionaires are very hard to find.
On the right, too, AFP has not gone unchallenged. The politics of billionaires has been shaken up by the election of Donald Trump, who was initially opposed by the Kochs and by most other wealthy Republicans
but got crucial support from unorthodox billionaire Robert Mercer and
Mercer funded Steve Bannon.28 After Trump took office, he gave Bannon
a top White House position but was eventually forced to fire him. Bannon returned temporarily to Mercer funded Breitbart News and declared war on “establishment” Republican officials. In 2017 and 2018, Bannon,
Mercer, and a few other wealthy Republican donors backed right wing
populist challengers in GOP primaries for the Senate and the House of
Representatives, causing considerable turmoil within the party.29 But the
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Kochs’ Americans for Prosperity— backed by the much more numerous
libertarian and orthodox conservative billionaires— has vast resources to fight back.
Wealthy donor organizations are especially active during election campaigns, but they do not always lie dormant between elections. They often insert themselves into important policy debates through lobbying and grassroots mobilization. AFP and other ideologically conservative groups, for example, were very active during the years immediately after 2010, when
state governments were drawing new legislative district boundaries and
were deciding whether or not to expand Medicaid as part of the Affordable Care Act.30 As of early 2017, nineteen states— many of them strongly influenced by AFP— had chosen to turn down free federal dollars and reject Medicaid expansion.31 AFP and other groups also worked closely with the American Legislative Exchange Council (ALEC) and with ALEC’s locally focused subsidiary, the American City County Exchange. ALEC is a conservative policy group that produces “model” state level legislation and works to get it adopted. Often that legislation benefits business members of ALEC with tax cuts, looser regulations, and right to work laws aimed at weakening organized labor. State legislators, who frequently lack the
time and resources to learn much about public policies on their own, often rely on ALEC for cues about how to vote.32 Besides the directly business
friendly measures, ALEC’s model bills concern a wide range of other policies including pro gun stand your ground laws and restrictive voter ID requirements that discourage voting by low income and minority Americans, who generally oppose ALEC’s agenda.33 In many instances, ALEC drafted
bills are pushed into law by AFP and other conservative groups.
Some wealthy donor groups go beyond simply attempting to sway
legislators’ stands on specific pieces of legislation; they also seek to win over the hearts and minds of important sectors of the population on key
political issues. The Koch led Libre Initiative (aime
d at Latino communities) and Generation Opportunity (aimed at millennials), for example, attempt to advance a free market ideology among groups of Americans
who are not usually thought of as receptive to conservative appeals.34 The conservative State Policy Network (SPN) even created its own “news”
service, called “watchdog.org,” which is run by the Franklin Center for
Government and Public Integrity— an SPN member group. The Franklin
Center, funded by contributions from a small number of wealthy individuals who bankroll Donors Trust and the Donors Capital Funds, is designed to appear to be politically neutral and separate from other conservative
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endeavors. Despite this appearance, the Franklin Center relies on research produced by other conservative SPN entities to develop its news and opinion pieces.35
Taken together, billionaires’ activities appear to have produced impressive results, helping to win elections and reshape public policy. Electorally, conservative Republicans— who in recent years have had a much more
robust state level infrastructure than Democrats— have thrived in state
politics. After the 2016 elections, Republicans controlled a solid thirty
three of fifty state governorships and sixty nine out of ninety nine state legislative chambers. They enjoyed unified party control of government in twenty five states (compared to only seven states for Democrats).36 This high water mark capped a series of electoral successes that reflected a
long term strategy, a strategy executed by coordinated conservative activists who were funded by billionaires from across the country.37
The Republicans’ state level victories also had implications for future
elections on both national and local levels. On the national level, they
allowed many of the same activists and investors who contributed to Republicans’ electoral successes to play prominent roles in redrawing congressional districts. For example, new, pro Republican boundaries were drawn by Republican dominated state legislatures and governors after
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