Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (48 page)

All in all, super PACs and independent groups that could take unlimited contributions had spent a staggering $2.5 billion and, it seemed, changed nothing. Obama would remain in the White House, the Democrats would continue to dominate the Senate, and Republicans would continue to control the House.

Defeat on this scale did not sit well with the Kochs or their donors. “The donors were livid,” recalls one adviser. Disappointed but ever persistent and methodical, Charles Koch sent out an e-mail to his network informing them that the next donor seminar would be postponed from January until April while he and his operatives analyzed what went wrong. “
Our goal of advancing a free and prosperous America is even more difficult than we envisioned, but it is essential that we continue, rather than abandon, this struggle,” he wrote.

The media’s box score approach to politics, however, overlooked the many more subtle ways that money had bought influence. Hugely wealthy radicals on the right hadn’t won the White House, but they had altered the nature of American democracy. They had privatized much of the public campaign process and dominated the agenda of one of the country’s two major political parties.
David Koch, in fact, attended the Republican National Convention as an alternate delegate, a sign of how much the party had changed. (Arguably he had changed too. At the convention, he gave an interview supporting gay marriage, demonstrating that on this issue he had come far from the day when he had participated in the scheme to blackmail his brother. The Kochs did not, however, put their financial clout behind promoting gay marriage, and David’s private view had no visible influence on the Party.)

On a raft of other issues, though, including climate change, tax policy, entitlement spending, and undisclosed campaign contributions—which the Republican Party platform now embraced in a reversal from the past—the preferences of the Kochs and their political “partners” had prevailed. There was no more talk of strengthening the Clean Air Act, mockery of “Voodoo Economics,” support for “compassionate conservatism,” or expanding Medicare drug coverage, as there had been under the Bush presidencies. Government was a force for evil, not public good.

Contrary to predictions, the
Citizens United
decision hadn’t triggered a tidal wave of corporate political spending. Instead, it had empowered a few extraordinarily rich individuals with extreme and often self-serving agendas. As the nonpartisan Sunlight Foundation concluded in a postelection analysis, the superrich had become the country’s political gatekeepers. “
One ten-thousandth” of America’s population, or “1% of the 1%,” was “shaping the limits of acceptable discourse, one conversation at a time.”

Obama won, but he had few illusions that he had vanquished big money. “
I’m an incumbent president who already had this huge network of support all across the country and millions of donors,” he told a few supporters. It had enabled him to, as he put it, “match whatever check the Koch brothers want to write.” But, he warned, “I’m not sure that the next candidate after me is going to be able to compete in that same way.” Messina too was worried. “I think they erred badly with their strategy,” he said. “But I don’t think they’re going to make the same mistake twice.”

The day after the election, no one was hanging black crepe at the Republican Party’s state headquarters on Hillsborough Street in Raleigh, North Carolina. In Washington, pundits were proclaiming that Obama’s reelection proved the failure of big money, but in North Carolina, Republicans were toasting its triumph at the state level. The REDMAP plan that Ed Gillespie had described at the Kochs’ donor summit eighteen months earlier had worked remarkably well. Republicans had cemented their control of the state legislature and redrawn the boundaries of the congressional districts in North Carolina so artfully that despite getting fewer votes than the Democrats, they had won more congressional seats.
The same pattern was repeated in enough other states that the Republicans were able to hold on to the House of Representatives, despite a bigger 2012 turnout nationwide for Democrats. It was a strange anomaly but not an accidental one.

For the Koch machine, North Carolina had become something of a test kitchen.

“
A few years ago, the idea we had was to create model states,” Tim Phillips, the president of Americans for Prosperity, explained in 2013. “North Carolina was a great opportunity to do that—more so than any other state in the region. If you could turn around a state like that, you could get real reform.”

Phillips declined to say how much the Kochs’ political organization had spent in North Carolina to help conservatives take power. “It was significant” is all he would say. “It was one of the states in which we were most active.”

If the first phase of the project had been achieved by the Republican takeover of North Carolina’s state assembly in 2010, the second began in February 2011, when Tom Hofeller, a white-haired black belt in the dark art of carving congressional districts, or gerrymandering, as it was known, showed up at the Republican Party headquarters on Hillsborough Street.

There, a back room had been set aside for mapmaking.

The new census on which the congressional districts would be based hadn’t even been released yet. But Hofeller was nothing if not thorough. The advent of computers had turned redistricting into an expensive, cynical, and highly precise science. Hofeller, the foremost practitioner on the Republican side, had professionalized the vast ideological sorting of the country into warring partisan camps. On his laptop was a program called Maptitude that contained the population details of every neighborhood, including the residents’ racial makeup.

In the past, Hofeller had worked for the Republican Party. But by 2011, he was a private contractor, working for big outside money. Many of the financial details remained shrouded. But according to documents contained in a later lawsuit, he would eventually make ten trips to North Carolina to consult with local Republicans on how to create the largest number of safe seats possible.
For his services, Hofeller would earn more than $166,000.

The process was closely guarded, and access to the room was tightly controlled. But at least one well-known figure was allowed into the inner sanctum. Art Pope, the multimillionaire discount chain store magnate who was the state’s top political donor and a longtime ally of the Kochs’, became a frequent adviser.

“
We worked together at the workstation,” one of the technical experts, Joel Raupe, said in a later legal deposition. “He sat next to me.” Pope was a nonpracticing lawyer and held no elected office in the state, but the Republican leadership in the state legislature had quietly appointed him “co-counsel” to the politically sensitive project.

Gerrymandering was a bipartisan game as old as the Republic. What made it different after
Citizens United
was that the business of manipulating politics from the ground up was now heavily directed and funded by the unelected rich. To get the job done, they used front groups claiming to be nonpartisan social welfare groups, funded by contributions from some of the world’s largest corporations and wealthy donors like the
Kochs. The big outside money flowing into the most granular level of politics was transformative. “The Kochs were instrumental in getting the GOP to take over state legislatures,” observed David Axelrod, Obama’s erstwhile political adviser. “The GOP is top-down, but the Kochs had a different plan, which was to organize the grass roots. It’s smart. There’s no equivalent on the Democratic side,” he admitted. “They’re damn good organizers.”

According to a report by ProPublica, Hofeller and his team were hired for the job by a dark-money group called the State Government Leadership Foundation. This was actually an offshoot of the group that Gillespie had used to run REDMAP, the Republican State Leadership Committee. But unlike the main group, the offshoot was a 501(c)(4) “social welfare” organization that could conceal the identities of its donors. Adding one more layer of security to the operation in North Carolina was a state-level dark-money group calling itself Fair and Legal Redistricting for North Carolina.

The work, like the funding, was stealthy. Hofeller kept a PowerPoint presentation on his computer with admonitions such as “
Make sure your security is real.” “Make sure your computer is in a PRIVATE location.” He warned, “Emails are the tool of the devil.” He also stressed that those working with him should “use personal contact or a safe phone!” “Don’t reveal more than necessary.” “BEWARE of nonpartisan, or bipartisan, staff bearing gifts,” he added. “They probably are not your friends.”

In theory, redistricting was supposed to reflect the fundamental democratic principle of one person, one vote. The shifting U.S. population was supposed to be equally distributed in accordance with the new census figures, across all 435 of the country’s congressional districts. In a charade of fairness, Republican legislators overseeing the process in North Carolina crisscrossed the state to hold public hearings, gathering comments and suggestions from citizens about how the lines could best be drawn. “What we are here for is to basically hear your thoughts and dreams about redistricting,” the chairman of the state senate committee in charge of the process told a crowd in Durham.
In reality, however, Hofeller later admitted under oath that he never bothered to read the transcripts of the public testimony.

By the time Hofeller’s team was done, the new map severely reduced the number of congressional seats that Democrats could win. To achieve that, the operatives had packed minority voters into three districts that already had a high concentration of African-American voters. This left more of the surrounding territory white and Republican, and the Democrats in those areas stranded. In effect, the new map had resegregated the state into congressional districts in which minority voters could dominate their own neighborhoods but were unlikely to see their party gain majority power in the state.

Progressive groups immediately filed suit, alleging that the new maps violated the Voting Rights Act, which prohibits discriminatory elections. Republican officials defended the maps as fair. Here, too, however, a flood of undisclosed cash spent by dark-money groups affiliated with Pope and other members of the Koch network influenced the course of events.

The case was headed to the state’s supreme court where the Republicans held a 4–3 majority, making it likely that the Republican redistricting plan would get a friendly hearing.
But before that could happen, the judges were up for reelection in 2012, and conservatives worried that one Republican incumbent appeared likely to lose. His Democratic challenger seemed poised to tip the court’s political balance toward the Democrats, imperiling the Republican redistricting plan.

But a sudden wave of outside cash rescued Paul Newby, the Republican judge, just in time. Outside groups spent more than $2.3 million helping him, an unheard-of sum in such a judicial race.
The money trail was dizzyingly complex, making it all but impossible for ordinary citizens to follow, but among those contributing were Gillespie’s group, the Republican State Leadership Committee; Pope’s company, Variety Wholesalers; and the Kochs’ organization, Americans for Prosperity. The money paid for a barrage of media ads that touted the Republican judge’s toughness on crime.

On Election Day, Newby was narrowly reelected. Soon afterward, the state supreme court upheld the Republican-led redistricting plan. In 2015, however, the U.S. Supreme Court ordered it to reconsider the case on the grounds that the minority-packed districts were racially discriminatory. But by then, the North Carolina delegation had become ensconced in the House of Representatives, where it added to the Republican majority as it mounted a new wave of radical resistance to the Obama administration’s policies.

“The other side has killed us at that stuff,” admitted Steve Rosenthal, a Democratic strategist with ties to the labor movement. By channeling donors’ money to largely overlooked state and local races, Republicans succeeded not only in advancing their political agenda but in wiping out a generation of lower-level Democratic office holders who could rise in the future. And North Carolina was not the only place this happened.
Successive midterm losses in 2010 and 2014 cumulatively cost the Democrats more than nine hundred legislative seats and eleven governorships, according to an analysis by the Democratic National Committee.

Gillespie’s REDMAP plan had proved a stunning success. For years, North Carolina had been a politically divided, or “purple,” state. It had backed Barack Obama’s election in 2008 but not in 2012, when, seemingly overnight, it turned a deep shade of crimson. That November, Republicans added to their previous gains by winning the governorship and veto-proof majorities in both houses of the general assembly. It was the first time since Reconstruction that the Republican Party had complete control of the state’s government. And thanks to Hofeller’s expert maps, Republicans also now dominated the congressional delegation, whose makeup went from seven Democrats and six Republicans to nine Republicans and four Democrats in 2010.

But no one benefited more from the election than Art Pope. It transformed him from a backroom kingmaker in North Carolina into a very central public power.
Almost as soon as Pat McCrory, the new Republican governor, was sworn in, he stunned many in the state by appointing his benefactor, Pope, to be the state’s budget director. Voters had years before rejected Pope’s one bid for statewide office, his run for lieutenant governor in 1992. The state legislature had also turned down repeated bids by Pope for appointive jobs, including membership on the state university system’s board of governors. Pope was widely respected but not beloved. Richard Morgan, a Republican state legislator with whom he had a falling-out, described Pope as unpopular with colleagues because his attitude was “
my way, or everyone else is wrong.”

Now Pope was arguably the second most powerful official in North Carolina. As budget director, he had the governor’s ear, a supermajority in both legislative chambers, and massive authority over which government functions would and would not get funded. Cutting government spending had long been his dream. Morgan recalled that as a state legislator Pope had spent long hours analyzing the numbers. “
When he was done, there wasn’t a bone buried in the budget Art hadn’t dug up and chewed on.” Now he had the chance to remake the whole state.

It is unusual for those wielding plutocratic power in America to exercise it directly, according to Jeffrey Winters, the political scientist specializing in oligarchy. Direct rule by the superrich invites a dangerous amount of scrutiny. Those who have used their vast fortunes to secure public office in the United States, like Michael Bloomberg, the former mayor of New York City, typically have made an effort not to appear to be ruling
as
oligarchs or
for
them. Pope clearly sensed the peril. He took care to say that he would waive the usual salary and only stay in office for a year. But questions about self-interest arose almost immediately. As North Carolina took a whiplash-inducing lurch in favor of the haves at the expense of the have-nots, it stirred a heated debate about the influence of big money in the state’s politics in general and about the motives and financial designs of Art Pope in particular.

Within a few months, the legislature had overhauled the state’s tax code and budget from top to bottom. On almost every issue, the legislature followed the right-wing playbook that had originated in two think tanks, the John Locke Foundation and the Civitas Institute, which were founded by Pope and largely funded by the Pope family’s $150 million John William Pope Foundation. Critics described Civitas as Pope’s conservative assembly line and a powerful force pushing the state’s politics ever further to the right. Pope rejected the description. “It’s not my organization,” he protested. “I don’t own it.” The Pope family foundation, however, had supplied Civitas with more than 97 percent of its funding since its founding in 2005—some $8 million—and Pope sat on its board of directors. It also had supplied about 80 percent of the John Locke Foundation’s funding. A good bit of the remainder came from tobacco companies and two Koch family foundations.

In fact, starting in the 1980s, Pope and his family foundation had invested $60 million in the systematic development of a conservative infrastructure in North Carolina that functioned as a “
conservative government in exile,” according to Dee Stewart, a Republican political consultant in the state.

The think tanks were 501(c)(3) organizations, enjoying the same tax-exempt status as churches, universities, and public charities. Legally, these organizations were barred from participating in politics or lobbying to any substantial degree.
Yet the lines were a blur. Top officers at the Pope-linked think tanks, for instance, cycled back and forth into Republican campaigns and Americans for Prosperity, where Pope was a director. The think tank personnel wrote model bills, which they previewed for legislators, and boasted of their clout in the general assembly. Pope was proud of the achievement, telling the conservative Philanthropy Roundtable, “In a generation, we’ve shifted the public-policy debate in North Carolina from the centerleft to the center-right.”