Dark Money. Jane Mayer.
Market societies unrestrained by government inevitably experience relentlessly increasing inequality. The wealthy beneficiaries of inequality then have the resources to perpetuate and enhance this unfortunate cycle by capturing government and public opinion. In Dark Money, Jane Mayer shows how this cycle is made worse by a system that allows unlimited funding of campaigns, lobbying, and propaganda by dark money that maintains secrecy and avoids taxes. Thus the superrich are able to maintain public postures of high-minded innocence while secretly providing massive financing for programs that further increase inequality by favoring their interests at the expense of everyone else.
The dark money that is a key component of this process is money funneled through nonprofit organizations that can receive unlimited donations from corporations and individuals and spend funds to influence elections but are not required to disclose their donors. The main vehicles for this process are tax-free, nonprofit private 501 (c) foundations which were originally said to be for charity, social welfare, and education but not for politics. Super PACs like Karl Rove’s American Crossroads and business organizations like the Chamber of Commerce are also major vehicles for the use of dark money.
The history of private foundations began in 1909 with John D. Rockefeller’s request to set up a tax-free foundation. This request was first denied by congress because of its undemocratic nature. However, it was later approved by the New York state legislature with limitation to education, science, and religion. Over time, the numbers of private foundations and the issues they served multiplied rapidly so that by 2013, there were over a hundred thousand foundations with assets over $800 billion. The supposedly nonpolitical nature of these foundations was progressively undermined so that by the time of the Citizens United decision of 2010, they could be the source of enormous unlimited tax-free secret special interest political funding.
The transition of non-profit foundations from charitable organizations to political tools of the superrich accelerated in the 1970s. In 1971, Lewis Powell, a corporate lawyer, tobacco defender, and future Nixon-appointed Supreme Court justice, wrote a special memorandum for the business league. He called for “guerilla warfare” against what he saw as the anti-business threat posed by “perfectly respectable elements of society,” including “the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and politicians.” Public opinion was to be captured by exerting influence over these institutions and the courts, by demanding balance in textbooks, television, and news, and by donors demanding a say in university hiring and curriculum.
This was followed in 1976 by Charles Koch of the extremist libertarian Koch brothers laying out a road map for future takeover of American politics. His intent was to overturn the post WWII view of government as a force for good (including regulation of business, progressive taxation, and worker’s rights) and instead argue for limited government, drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry. Campaign contributions and lobbying were to be supplemented by a secretive long-term plan to capture public opinion by 1) investing in intellectuals, 2) investing in think tanks, and 3) subsidizing “citizens” groups that gave the appearance of public support.
In 2003, the Koch brothers began their “donor summits,” which were secretive meetings of large numbers of superrich donors for archconservative causes. By 2014, the impressive list of 300 or so secretive donors in this group included 18 billionaires with combined assets of $222 billion as well as numerous sub-billionaires, top Republican politicians, conservative media stars, and even two Supreme Court justices (all listed in the book). Goals now included winning the presidency, capturing the House and Senate, cementing control of congress by gerrymandering, capturing state legislative bodies, governorships, and supreme courts, and controlling the Republican Party. For the 2016 elections, the donor summit group alone pledged $889 million.
When Powell and the Kochs formulated their strategies, America’s greatest corporate fortunes were already poised to enlist their private foundations for the cause. Early participation by the Scaife, Olin, Coors, Koch, Bradley and other Family Foundations, which controlled hundreds of millions of dollars, and by scores of Fortune 500 corporations was only the tip of the iceberg. The powerful leaders of these families and corporations eventually funded hundreds of additional foundations in what was cynically called the “philanthropy plan” to change academia, the media, the courts, regulation, taxation, politics, government, and public opinion.
The effectiveness of this secret dark money was greatly facilitated by organization of these foundations into multiple additional layers. Donors at the top could contribute family, foundation, and corporate money to the next layer of foundations, some of which were mere conduits, or to organizations like the Chamber of Commerce and super PACs. These foundations and organizations could then disguise the self-serving nature of these donations by redirecting them to their actual targets without revealing the donor’s identities. The scope of this process became unlimited after the 2010 Supreme Court Citizens United decision that removed all restrictions on the size of the contributions to this system.
The enormous resources of this system are distributed to innumerable activities and organizations thoroughly interspersed in American life to maximize influence on politics and public opinion. Many examples of the numerous additional non-family foundations funded by the Kochs and others are listed and characterized in the book. Business Associations and PACs that hide donor’s identities are also listed and characterized in the book. Many examples of the numerous ideological think tanks like the American Enterprise Institute, the Heritage Foundation, and the Cato Institute funded by the Kochs, Scaife, and others are listed and characterized in the book. The establishment of right wing media outlets and organizations like the Tea Party and the sponsorship of media stars like Rush Limbaugh, Sean Hannity, Laura Ingraham, and Glenn Beck are discussed in the book.
Numerous partisan university institutes and activities were funded. A network of 5,000 scholars was established in 400 colleges and universities. Koch foundations alone funded pro-corporate programs in 283 colleges and universities. Twenty-four right wing academic centers were privately funded, such as George Mason University’s Koch-funded Mercatus Center and Institute for Humane Studies. The conservative Olin Foundation funded Harvard Law School’s influential Center for Law, Economics, and Business. The Olin foundation and later Scaife and the Kochs funded the Federalist Society, which grew to 150 law school chapters and 42,000 right-leaning lawyers. The Olin Foundation backed the Collegiate Network which funded a string of right wing newspapers on college campuses.
The book’s depiction of how extensively these many organizations and activities penetrate American life cannot be recounted in a brief review. A few examples may suffice to illustrate the depth of resources and breadth of scope involved: 1) Richard Scaife, the billionaire heir to Mellon Banking, Gulf Oil, and Alcoa Aluminum, estimated that he spent $1 billion on philanthropy, of which $670 million was to influence public opinion by bankrolling 133 of conservatism’s most important movements. 2) A carefully staged ten year legal campaign using the “social welfare” corporations Citizens United and Speech Now succeeded in removing campaign financial restrictions to increase the influence of the superrich. 3) From 2003 to 2010, 140 conservative foundations contributed $558 million as 5,299 grants to 91 nonprofit organizations to promote denial of climate change. Three-fourths of these funds were untraceable due to use of conduits. In addition, efforts were made to discredit, defund, and fire leading climate scientists.
4) Finally, even complete right wing takeover of targeted state governments is not out of reach. This has actually happened for all three branches of government in Wisconsin. In 2010, Scott Walker was elected governor after promotion at the Koch’s Americans for Prosperity Tea Party rallies and with support from Koch Industries (second largest campaign contributor) and the Republican Governor’s Association (also supported by the Kochs) to work around state contribution limits. The out-of-state Kochs also contributed to sixteen legislative candidates who all won, helping conservatives control both houses of the legislature.
The state Supreme Court majority was captured by funneling $10 million (which exceeded campaign contributions for all candidates combined) through the Wisconsin Club for Growth and Wisconsin Manufacturers & Commerce to elect three conservative justices in 2007, 2008, and 2011 and to replace the liberal chief justice with a conservative. This provided the final step to victory when the right wing packed state Supreme Court upheld the right-wing program passed by Walker and the legislature by a partisan 4 to 3 vote. Subsequently, in the 2012 recall election the Walker campaign collected $36.1 million (more than 1/2 from out of state) v. $6.6 million for the opposition, and state redistricting resulted in Republicans gaining 62% of the legislature after winning only 45% of the vote in 2018.
