It was 105 degrees on a late April afternoon in the California desert town of Indian Wells. A blazing sun was beating down on the manicured grounds of the Renaissance Esmeralda Resort. A contingent of several dozen guests trickled into the hotel from the broiling outdoors wearing slacks and long sleeves, the women in silk blouses, the men sweating under sport coats. They were older and almost entirely white, and they had that well-kempt look that only privilege can bring. It was clear they were all together, both because they wore small black tags engraved only with their names and because they stuck out conspicuously from another set of guests who were about a third their age and were toned, tanned, tattooed, and quite fond of the poolside bar.
The boozier crowd was in town for the spring 2013 Stagecoach country music festival. The more groomed group had been invited by the billionaire industrialists Charles and David Koch to attend the latest in a running series of secretive political gatherings of the big-money conservative elite. Since 2003, twice a year the Koch brothers have brought together some of the top Republican politicians in the country, leading political operatives, and a hundred or more of the party’s most generous donors for closed-door “seminars” on how, as an invitation to Indian Wells put it, “to advance a plan to defend our free-enterprise system.” I had decided to travel to the California desert to try to get as close as I could to some of the most important—but least known—donors and operatives in politics. My aim was to get a sense of whether the Kochs and their donors were discouraged by the 2012 election six months earlier. After all, their political network had spent an estimated $400 million—an astounding and historic sum—in the run-up to Election Day, mostly beating up on President Barack Obama and his Democratic allies in Congress. Yet Obama had won handily and the Democrats gained seats in Congress.
But the election seemed not to be weighing on the Koch guests congregating in the hotel’s eight-story atrium lobby before the seminar’s opening dinner. One after another they made their way down a grand, curved double staircase built of tropical African hardwood, as if arriving for their coronation into politics’ most elite ranks. A few hours later, with the Stagecoach posse mostly off-site, the Koch invitees had the run of the place. Some rimmed the lobby bar, while others gathered in a private lounge. Hotel and Koch security roamed the lobby anxiously and stood sentry by the double glass doors to the lounge, talking through earpieces and watching over their prized guests. State troopers buzzed about—a sure sign that governors were present. I tried my best to blend in, pulling up a seat at the bar next to a middle-aged fellow with the creased tan skin and shaggy blond hair of an aging beach bum. He was not, in my best estimation, a likely Koch seminar participant. Turns out he was a marketing executive for Toyota, the main sponsor of Stagecoach, and he wasn’t particularly talkative. We watched the end of an NBA playoff game between the Oklahoma City Thunder and Houston Rockets, and I tried to make small talk during breaks in the action while keeping my eyes peeled for any circling big-name Republicans. I feigned disinterest in a conversation that Sen. Ron Johnson of Wisconsin was having with a group of donors as they walked by. Ken Ellegard, an Arizona car dealer and Republican donor, sidled up to the bar next to the Toyota marketing guy and me and ordered a vodka soda with a splash of cranberry. The conservative pundit Erick Erickson pulled up a seat at the far end of the bar and ordered food. Behind us, South Carolina governor Nikki Haley joined a small group at a high-top table near the bar. Nursing a glass of red wine, she held court for an hour about politics and stock car racing.
“That’s the governor of South Carolina,” I informed the Toyota guy in hushed tones, perhaps out of a subconscious desire to enlist an ally in my reconnaissance. I told him he was surrounded by masters of the universe, whose wealth the Koch brothers hoped to tap to reshape American politics, and that I was a reporter hoping to learn about their exclusive world. “The only Koch I know is Coca-Cola,” the Toyota guy said, shaking his head and chuckling (the brothers’ last name is pronounced “Coke.” Turning back to his cabernet, he conceded it was a relief to find out why everyone else was so much better dressed than he.
Not all the Koch summit attendees had followed the business casual dress code for daytime sessions. Billionaire tech entrepreneur Rob Ryan ambled through the Renaissance lobby in a rumpled white polo shirt, wrinkled khakis, and scuffed white sneakers. Rick Sharp, the former chairman of Crocs, Inc. and a regular at Koch seminars, regularly sported the ultra-casual, ultra-comfortable, and ultra-dorky foam clogs manufactured by the company at seminars. The point of the dress code is to suggest the aesthetic of an investors’ conference. And that’s pretty much what the Koch seminars are—political investors’ conferences. Prospective donors sit through jargon-laden presentations and get up close with politicians and operatives in whom they might invest money. The summits are designed to help donors “effectively achieve what we believe to be your policy, political and philanthropic goals,” as an email sent to attendees two months prior by senior Koch aide Kevin Gentry put it.1 Gentry promised an exclusive opportunity to engage with “several hundred of America’s top business owners and CEOs” to discuss “short-term policy threats in 2013 while building toward free-market gains in 2014 and beyond.”
The seminars are a brilliant way to raise political cash. For politicians and operatives, invitations are coveted. You got the closest thing to an endorsement from Koch World, plus a chance to go fishing in a stocked pond full of some the biggest donors in the land. It is the Kochs’ ability to pool donations from wealthy attendees—rather than just Charles’s and David’s personal fortunes (estimated at $36 billion each in 2013)2—that has put them among the leading forces in the increasingly competitive world of big-money politics. The more cash the Koch political network could raise in Indian Wells, the more influence it would have in setting the course for the then-rudderless Republican Party. Among the attendees at Indian Wells were Sens. Ted Cruz of Texas and Rand Paul of Kentucky and Govs. Bobby Jindal of Louisiana and John Kasich of Ohio, all prospective contenders for the party’s 2016 presidential nomination.
Just like an investor conference, the Indian Wells gathering included presentations from experts on a range of subjects: How to use elaborate databases to mobilize voters. How to craft messages that appeal to young, female, and Hispanic voters (though in Indian Wells those demographics appeared to be represented primarily by the hotel staff). How to recruit and train candidates who adhere to the Kochs’ small-government, anti-regulation philosophy.
Before the Kochs could shape the future of American politics, though, they needed to convince donors that they had learned from the bust that was 2012. That was perhaps the major task at Indian Wells. And it was the one facing all the well-funded operations on the right, from the Republican National Committee (RNC) to the groups powering the anti-establishment tea party to Koch World’s most direct rival for big-money supremacy—the American Crossroads operation, steered by veteran GOP operative Karl Rove.
The Democrats had their own issues. They had nowhere near the big-money network that the conservative side did. Rich liberals like George Soros and Peter Lewis had spent more than $200 million a decade earlier trying to elect John Kerry president, and after that failure, many remained leery about tossing their millions into electoral politics. Democrats were trying to rally the major donors they did have into a cohesive group that could keep the party united post-Obama, or at least avoid the toxic factionalism being fueled by deep-pocketed conservative groups. It wasn’t going to be easy. Lone-wolf liberal billionaires such as Michael Bloomberg and Tom Steyer were signaling a willingness to challenge the Democratic Party and its candidates on tricky issues like gun control and energy production. Some of the left’s most influential leaders were trying to head off deeper divisions by uniting the deepest Democratic pockets behind Hillary Clinton, but several major donors were bristling at the idea that Hillary represented the future of the party. They were signaling willingness to invest serious cash to boost a more progressive alternative to carry the party’s banner in 2016—and were actively looking for such a candidate.
The big-money jockeying on both sides would go a long way toward determining the shape of American politics for years to come. It was a striking departure from recent political history. A few dozen rich donors were now helping set the course of the two major political parties, challenging the power of elected and appointed party leaders who for decades had ruled politics with an iron grip. It used to be that if the party thought a particular politician would be a good soldier for them in Washington, they could use their recruiting, fund-raising, and networking infrastructure to propel that person to victory, if not in every case, then in many. Now, all it took to throw that into disarray was one affluent activist with a favorite candidate different from the party’s. Things could really get messy if multiple wealthy partisans had different ideas about the best candidate.
The historic conservative big-money spending spree in the 2012 election and its aftermath provided the first real glimpse of the chaos that this new reality could bring. Yet none of the participants wanted to take the blame, since it would play into the hands of their rivals. If donors decided the Koch operation had squandered their cash in 2012, it could mean more money in 2014 for Rove’s operation—or vice versa. Rove, who made his name as former president George W. Bush’s political guru, had emerged in the new world as sort of the shadow boss of the business-backed GOP establishment. That put him at odds with an increasingly influential cluster of fiscal hard-liner groups eager to raid his donor base, as well as with some parts of the Koch operation, which had come to represent the strain of uncompromising fiscal conservatism that spurred the anti-establishment tea party movement to major wins in the 2010 midterm election. The Kochs’ political team had entered into a tenuous collaboration with Rove’s Crossroads network in 2010 and again in 2012. But Rove had not attended any recent Koch summits, and the distrust between the two camps ran deep.3 Some in Koch World viewed Rove as representative of a philosophically compromised brand of pocket-padding big-government conservatism, while Rove’s allies regarded the Kochs as uncooperative ideologues willing to sacrifice the good in futile pursuit of the perfect. The tentative alliance was showing signs of fraying after 2012, when Rove’s operation suggested that tea party groups and candidates were hurting the GOP. With so much money at stake and so many fingers pointing following the 2012 disaster, the rivalry had never been fiercer.
At Indian Wells, the Kochs’ operatives and allies were trying to walk a fine line between contrition and self-preservation as they assessed the election for their donors. Conservatives had a lot to learn from Obama’s campaign and its well-funded allies, they said. Liberals had spent their cash more effectively than conservatives on campaign advertising, messaging, and voter mobilization, asserted presenters, who showed the donors comparisons of television ads to make the point. But the most effective groups on the right were those funded by the Kochs’ network, according to the Koch-allied operatives giving the presentations. Additionally, the Kochs’ main political operation, Americans for Prosperity (AFP), which spent $179 million during the 2012 campaign cycle,4 had a far more effective voter mobilization force than either Mitt Romney’s Republican presidential campaign or the Republican National Committee, donors were told. The takeaway was unmistakable: the Koch operation was a better steward of the donors’ cash than either the official Republican Party or rival private groups such as Rove’s.
The philosophical divide between the business conservatives and the fiscal hard-liners erupted during another panel in Indian Wells moderated by Greta van Susteren, a top host on the conservative Fox News network. It featured Govs. Nikki Haley, Bobby Jindal, and John Kasich. Kasich found himself on the defensive over his support for a government health care expansion for hundreds of thousands of low-income Ohioans. Jindal, Haley, and several of the donors opposed the expansion, made possible by Obama’s signature health care reform law—Obamacare—and Kasich took some heat from the crowd.
The argument dovetailed with a larger debate conservatives were having about the direction of the Republican Party after its 2012 chastening. More centrist figures, including Kasich and Rove, seemed to want to broaden the party’s appeal by dialing down its fiery rhetoric on lightning-rod issues like immigration reform, abortion rights, and gay marriage while stepping up its outreach to young, working-class, and minority voters. When one donor at the summit declared that the party needed to fight the perception that it was “the all-white party,” the Indian American Jindal quipped, “We can’t be the all–Indian American party, either.” Then there were the fiscal conservative purists like the Kochs, who opposed the minimum wage and social programs that appealed to working-class voters, but mostly shied away from social issues. And, of course, there was still a prominent core of well-funded religious conservatives who wanted the GOP to focus more attention on opposing gay marriage and abortion rights. After 2012, when their issues were blamed for key Republican losses, they began actively recruiting new big donors to stave off what they felt was an increasing push by the better-funded Rove and Koch operations to marginalize them.5 These were delicate debates that once would have been hashed out by elected officials within the party apparatus, sometimes in rounds of platform committee votes, other times behind closed doors, but usually with some measure of accountability. Now, the new rules of money and politics allowed the ultra-rich a seat at the head of the table for these debates—often without the public ever knowing that the debate had even occurred.
The Koch operation, in particular, has prided itself on keeping the seminars—and Koch political activities generally—shrouded in secrecy and beyond access to reporters like me, ostensibly to make publicity-averse donors feel comfortable. As seminar emcee Kevin Gentry put it while coaxing donors to open their checkbooks at a 2011 gathering, “There is anonymity that we can protect.” Ironically, his remarks and others from that seminar were recorded and leaked to the press.6 Eager to avoid any more of that, Koch operatives at Indian Wells conducted background checks on the Renaissance Esmeralda waitstaff and collected smartphones, iPads, and other electronics before many sessions. Attendees were told to protect their meeting materials and not post anything on blogs, Facebook, or Twitter. No one did. Nor did I get anywhere near the formal sessions. What I learned came from various sources who were in the sessions or had access to people who were.
Usually at their seminars, the Kochs would have rented out all the hotel rooms, allowing them to more easily bar reporters or other unwanted interlopers from entering the premises. When I tried to crash their winter 2011 seminar, held at another tony California desert resort six miles down the road in Rancho Mirage, California, I was informed not long after entering the hotel that the grounds were closed for a private function, and I was escorted outside by security. Guards wearing gold lapel pins bearing Koch Industries’ K logo threatened “a citizen’s arrest” and a “night in the Riverside County jail” if I continued asking questions and taking photographs.7
So I was elated to have gotten inside the Renaissance Esmeralda during the April 2013 seminar—if only to spend two days hanging out by the lobby bar, on the massage table, or at the pool bar, soaking up Miller Lites and bits of conversation. I diligently avoided eye contact with Koch officials and operatives who knew me by sight. There were a few close calls, such as when I entered the lobby men’s room and spotted Americans for Prosperity president Tim Phillips at the urinals, prompting me to turn on my heel in retreat.
By the time I drove my rented Chevy Impala from the Holiday Inn Express, where I was staying, to the gates of the Renaissance Esmeralda on the final full day of the seminar, it was clear something had changed. There was a security checkpoint manned by several guards in the driveway outside. The driver in front of me slowed, rolled down the window, gave a knowing nod, and was waved through without even a cursory check of a clipboard that presumably held a list of approved guests. I figured I’d try the same and—surprisingly—got the same result. The hotel lobby was quieter than it had been. Stagecoach, it seemed, had pulled out of town. It was all Koch donors and operatives now, including several who I knew would recognize me. There was nowhere to hide, and I imagined I would soon be thrown out—or worse. I noticed Sen. Johnson schmoozing two donors at a poolside cabana. I’d heard someone who attended these seminars describe Johnson as the Kochs’ “model legislator.” Figuring I had to make my last few moments count, I walked over and sat down nearby. It was just me, the Kochs’ model senator, and the two wealthy backers he was talking to, identified by their name tags as Ned Diefenthal and Rob Ryan.
Diefenthal, it turns out, is a Louisiana metal titan, and he was complaining to Johnson about the incompetence of the Republican National Committee. Johnson did not reject Diefenthal’s complaint, instead suggesting that RNC chairman Reince Priebus was aware of the weakness Diefenthal had flagged, but also implying that the Kochs might be a viable alternative to the RNC—at least for the function in question. “That’s what they’re trying to do here and that’s what Reince is trying to do,” Johnson said. But Diefenthal, whose family over the years had donated more than $280,000 to the RNC, was riled up. Priebus “keeps sending me letters asking for money. I’m not giving him any money. He doesn’t know what to do with it,” said Diefenthal, suggesting that he considered the Koch political network a better investment.8 By this point I was subtly trying to interrupt the conversation to introduce myself. But Diefenthal was on a rant and wasn’t leaving any gaps where I could interject. When he finally paused for a breath, I jumped in. I explained that I was a reporter—a declaration that journalistic standards required me to make before conducting an interview—and then led with a blunt question: do big donors and outside groups like those at the seminar have too much influence in politics?
Before I finished my question, Johnson rose from the cabana couch and stepped around me. “It’s—it’s—it’s pretty hot,” he stammered, marching toward the nearby doors to the hotel lobby, donors in tow. Ryan, a tech billionaire, started to follow, but pivoted toward me. Pointing a stubby finger in my face, he scolded, “That’s pretty rude, you know? You interrupted a private conversation,” which, of course, I had. I didn’t disagree, and apologized again.
I caught up with Johnson a few months later, and repeated my question about whether big donors and outside groups had too much influence in politics. Johnson said he encourages business owners like those at the Koch seminar to become more politically engaged and argued they’d do well to avail themselves of new channels for spending big money in elections. “People feel they have to influence the political process because the federal government is doing so much harm to them personally, to their personal freedoms, to their organizations, to their businesses, to their ability to create jobs,” he said. Johnson also stressed that during the conversation I’d overheard in Indian Wells, he hadn’t been criticizing Priebus, a fellow Wisconsinite, but rather allowing Diefenthal and Ryan to vent their frustrations. “That’s just sort of the process. People got to get things off their chest,” said Johnson. Johnson’s only criticisms were that the Republican Party, its congressional delegation, and the various conservative outside groups didn’t coordinate their messages—an argument he’d made during a seminar panel moderated by media entrepreneur Tucker Carlson—and that they didn’t employ strategic planning like that common in business. “A lot of that doesn’t exist within the political realm, and it’s frustrating for me and it’s frustrating to people like those two gentlemen who you overheard at least part of that conversation,” he said. He and the donors had gone to a hotel room to continue their conversation after my interruption, he told me, adding, “Those seminars are supposed to be totally confidential, and I respect that. They weren’t real happy with you sittin’ down.”
I assumed the jig was up. Surely one of them would alert security that their sanctum had been breached. So I found the nearest Koch security guard, figuring it was better to present myself as an honorable member of the fourth estate than to be tracked down like a fugitive. I handed him my business card, explained that I was a reporter, and told him that I was hoping to talk to Rob Tappan, a Koch public relations guy I had spotted earlier. I was ushered to the head of Koch security, Larry Moorman, and the head of hotel security, Armando Limon. How had I gotten past the checkpoint at the entrance? Limon asked. I’d just driven in, I explained. “That’s surprising,” Limon said, looking down while flicking my business card with his thumb.
I was expecting an unpleasant exchange with Tappan, who had done a stint flacking for the mercenary military firm Blackwater9 and was now the pointed spear of Koch Industries’ antagonistic Washington public affairs shop. I’d covered plenty of politicians and companies that took a bare-knuckle approach toward dealing with the press—from the scandal-plagued Hartford County (Connecticut) sheriff’s office to Hillary Clinton’s 2008 presidential campaign to Fox News—but none of it had quite prepared me for Koch Industries. Its PR team seemed to revel in publicly shaming journalists, pitting them against the outlets that carried their journalism,10 and accusing them of bias and of colluding with an anti-Koch liberal conspiracy. Their pushback ratcheted into high gear in 2010, when scrutiny increased after the Koch political network started seeding the tea party movement. They denied that the Koch brothers, their companies, or their foundations had ever given any money “specifically to support the tea parties”11—the word specifically a conspicuous bit of plausible deniability—and became particularly virulent over an exposé in the New Yorker by reporter Jane Mayer. She asserted that the Kochs’ political activity supported policies that boosted their profits at the expense of the environment. Koch Industries assailed Mayer’s reputation with tough Web ads and letters to her editors and to the judges of awards for which she had applied. She soon found herself the subject of unfounded plagiarism claims, while the website Gawker reported on rumors that a private investigator “was hired to dig up dirt on Mayer in the wake of the Koch brothers story”12—though neither was traced back to Koch Industries.
When I emailed Tappan links to stories in the New York Post and on Gawker chronicling the plagiarism claims and the private-eye rumor and asked whether there was any connection to Koch, he responded, “I don’t know what you are referring to”13—though he did point out that Koch Industries had raised questions14 about Mayer’s reliance on the work of a liberal blogger “which she failed to acknowledge.” In fact, Mayer had acknowledged the blogger’s work. When she was asked years later, while receiving a journalism award, about “the most serious threat” she’d received from the government in the course of a career’s worth of reporting on sensitive military and intelligence matters, Mayer said it wasn’t from the government. “It was the story I did about a couple of billionaires who fund politics, the Koch brothers,” she said, recalling that while she was working on the story, “maybe just coincidentally, I became the subject of a private eye’s investigation into everything in my life. Looking into legal files, former romances, you name it. Everything was turned over. Every story I’d written, books I’d written. They put all my writing through some kind of forensic program that looks for plagiarism, and were hoping to try to expose me in some way or another. And that was actually pretty threatening, and scary.”15
The Kochs also had turned their ire on me. They once wrote a top editor at Politico, where I work, to suggest I be barred from covering the Kochs because I had once, a decade earlier, worked for a nonprofit journalism outlet backed partly by grants from liberal billionaire George Soros’s foundation,16 which also had funded advocacy groups that seized on the Kochs as poster children for the corruptive power of big money in politics. The outlet was so removed from any influence by its funders that I had no idea Soros was among them until years afterward. Another time, Koch Industries posted my emails with Tappan and various Koch-linked operatives on its corporate website in an item accusing me of journalistic misconduct.17 The item, and the Kochs’ aggressive media strategy more generally, reflected poorly on the company, concluded the well-respected blogger Dave Weigel, who has defended the Kochs against unfair press coverage but also called out their PR shop for lying.18 Yet when Tappan greeted me in Indian Wells, he was all sunshine and smiles. He wondered why I hadn’t given him “advanced warning” of my plans to swing by and asked if I had “self-identified” or talked to any Koch guests. “The hotel is pretty much locked down now,” he told me almost apologetically, before signaling to Limon, Moorman, and another security guard that it was time to escort me out. As the cavalry walked me to my car, Tappan asked me casually where I was staying during the summit. “Just down the road,” I offered.
“In Palm Springs?”
“No, in Rancho Mirage,” I said, “close to the hotel that hosted the 2011 conference”— from which I’d also been escorted. Driving off the hotel property under their watchful gaze, past the same security guards I’d seen on the way in, I wondered why Tappan was curious about my accommodations. Oh, well, at least I’d gotten some good stuff and wasn’t in jail, I thought, tweeting later that I had been “politely escorted” from the Koch conference by Koch and hotel security.19 Apparently proud of his handiwork, Limon retweeted me.
My good cheer faded when I returned to the Holiday Inn Express and was startled by the ring of my hotel room phone. I picked it up, and the line went dead. I called the front desk asking if the hotel was trying to get in touch. Nope, the clerk said, it was a man who had asked for me but didn’t identify himself. I hadn’t told a soul—not even my wife—where I was staying, so I racked my brain for plausible explanations. The front desk said they couldn’t track the number, so that was out. I tried to dismiss it as a wrong number. But given my and others’ history with the Kochs and the fact that the caller had my name, I couldn’t let it go. So I called my wife, hoping she’d convince me it was nothing. Instead, she suggested I either get on an earlier flight home or change hotels. Heeding her advice, I started to pack, but I also figured I might try to put my concerns to rest by emailing Tappan for a possible explanation. “Sorry to bug you again,” I wrote, “but I received an odd hang-up phone call to my hotel room a little before 8 pm, and—since you’re literally the only person who has any clue where I’m staying—I was wondering if you were trying to get in touch with me.”
Not waiting for a response, I packed up the car and headed toward the airport, but I didn’t get far before I got a call from the rental car company’s emergency assistance team. My car had been reported as “suspicious or abandoned” to the Riverside County sheriff. So, at the urging of the rental car representative, I dialed a Riverside County sheriff’s deputy named Sean Patrick, who told me that either “hotel security or the client”—the Kochs—had called him out to the hotel, where they provided the license plate number and asked him to investigate why the car was on the property. But my car was no longer on the property—I had been gone for more than two hours by the time Patrick arrived at the hotel and was provided the plate number, according to Riverside County sheriff’s office dispatch logs I obtained later under the California Public Records Act. Patrick conceded it was “kind of weird” that the hotel or Koch officials would still want to report a long-gone car. And when I told him I felt kind of intimidated and wondered if I should be concerned, the deputy suggested I provide my social security number and birth date, just in case anything should happen to me.
By this time, Tappan had emailed me back. “I didn’t ring you this evening—don’t know where you are staying.” Huh. “So weird,” I responded. “Other than telling you I was in a hotel right near the resort that hosted the 2011 Koch conference, no one had any idea of even the town in which I was staying. Kind of spooked me a bit, in combination with the Riverside County sheriff telling me that my rental car was reported abandoned after I left the hotel. Odd stuff.” Tappan replied, “I don’t want to belabor this, but just to reiterate, I didn’t call you at your hotel, and I still don’t know which hotel where you were staying at.”
Trying to get to the bottom of this mystery later, I asked a public relations executive at Marriott, which owns the Renaissance Esmeralda, if hotel security had reported my rental car as suspicious. They hadn’t. So I asked Tappan if someone affiliated with Koch had done so, and why he’d asked me where I was staying. “No one did any such thing,” he said of the call to the sheriff. As for the questions about where I was staying, “I don’t remember discussing that with you, but to the extent I did, it was just idle conversation,” Tappan said.
That’s the thing about the Kochs’ style. Maybe Tappan didn’t know who reported my rental car. Maybe his inquiries about my hotel were just chitchat. But the Koch operation’s aggressive approach and penchant for plausible deniability always keep you wondering.
A day later, the Kochs wrapped up their April 2013 seminar without me, and donors participated in a fitting—and fittingly effective—ritual that has marked the conclusion of most of their confabs. After a closing speech about the importance of unburdening business from governmental interference, the donors were encouraged to make pledges to a pool of cash that Koch operatives distribute to a constellation of handpicked groups, many of which are represented at the seminars. While quite a number of donors make their end-of-seminar pledges privately, others stand up and announce them, giving the pledge session an auction-like feel, with donors trying to outdo one another. The final tally can be an effective gauge of enthusiasm. That sum—like much about the Kochs’ political activity—is usually a tightly held secret. “You never know how much they raise, because they don’t tell you,” billionaire Minnesota media mogul Stan Hubbard, a regular attendee, told me.20 But occasionally the number leaks out, and I thought it might be especially telling after Indian Wells, given that Republicans were coming off a bruising defeat and the Koch operation was facing its share of questions about what it had done with the $400 million it had raised for its 2012 efforts.21 I expected the pledge tally to reflect some dampened enthusiasm. Only it didn’t. A source told me later that they raised $70 million. That’s 43 percent more than they raised at the conference after their first high-profile, and highly productive, big-money spending spree, in the 2010 midterm elections. Coming out of Indian Wells, they were on pace to far surpass both their 2010 midterm effort and their $400 million 2012 effort—meaning the checkbooks of political billionaires weren’t closing over one bad election. In a letter to the brothers on “what we might have done better and what we might do better for the next election,” Hubbard spoke for many of the donors in the Koch network when he pledged his ongoing support. “Charles and David, please know that you can count on me, my wife and our family to stand foursquare with your ongoing efforts to preserve our unique American way of life,” he wrote.22
Indian Wells was a snapshot of an extraordinary shift: the reordering of the political system by an elite fraternity of the superrich and a small brain trust of consultants who cater to them. Starting in 2010, a few dozen of the wealthiest donors turned on a gusher of mega-checks that have made them more important than the thousands of grassroots activists, small individual donors, and even party leaders put together. Together, these donors have injected into campaigns sums that were once unimaginable, even as recently as the 2008 presidential election. During that election cycle, so-called outside spending of the sort that can be funded by massive checks totaled $338 million. In 2012, it was $1 billion,23 and that didn’t include hundreds of millions in additional spending by more secretive groups like those in the Koch network that don’t have to disclose as much information to the Federal Election Commission (FEC).
Intentionally or not, this new system has eroded the power of the official parties that have rigidly controlled modern politics for decades by doling out or withholding pork-barrel spending earmarks and campaign cash. Suddenly, party leaders have none of the former to offer (the result of symbolic belt-tightening reforms), and far less of the latter than big donors operating outside the party system. The result is the privatization of a system that we’d always thought of as public—a hijacking of American politics by the ultra-rich.
The foundation of this new system was laid ten years before the 2012 election, ironically by those working to diminish the role of big money in politics. These legislators and activists had pushed through a 2002 bill limiting mega-checks—parties could no longer accept them, and political committees could no longer spend them on certain campaign ads. That sparked a brief period in which bold donors and operatives steered money further outside the system, into groups that spent on ads and political organizing (some of which drew legal scrutiny). Then in 2010, a pair of federal court decisions came down that freed the ultra-rich to legally spend with even more impunity, and secrecy, than they’d had even before 2002. The catch was, they couldn’t give the unlimited money directly to candidates or political parties. It had to go to independent groups that aren’t allowed to coordinate their efforts with politicians or parties. The most impactful of the decisions was the Supreme Court’s now-famous January 2010 ruling in a case called Citizens United vs. Federal Election Commission that struck down restrictions on corporate- and union-funded political ads. The restrictions, which had been reinforced by the 2002 law, had limited how explicit ads could be in supporting or attacking candidates. But a 5–4 majority of justices ruled the restrictions to be an unconstitutional infringement on free speech, and without such limitations, corporations and labor unions could spend as much as they wanted on aggressive campaign advertising. Two months later, the D.C. Circuit Court of Appeals issued a decision that was lower-profile but profound in impact. It allowed individuals (as well as unions and corporations) to give as much as they wanted to a new breed of independent political committee that came to be known as a super PAC, which could spend unlimited sums boosting or attacking candidates—again, as long as those new groups remained separate from the candidates’ campaigns and parties.
The result? In 2012, the amount parties and candidates could accept was downright insignificant compared to what the super PACs and other big-money groups were allowed to take. The most an individual or group could donate was $5,000 to candidates and $30,800 to the national party committees. That may not sound paltry, but it was nothing compared with the unlimited checks pouring into the super PACs and other outside groups empowered by the court decisions. Citizens United did more than change the rules. It changed the mind-set of big donors and big-money operatives. Perhaps more importantly, it introduced the idea that a single ultra-donor, or a well-connected consultant with the ears of a handful of mega-donors, could fundamentally shift a campaign for the US presidency, not to mention a handful of Senate or governors’ races or dozens of House races.
It’s not just the politicians who’ve benefited from the mega-donors. The gusher of checks has sparked a gold rush among Washington’s private political class. All manner of consultants jockey to tap this new vein of big money coursing into the system, knowing that all it takes to succeed is the ear of a single donor. Those who rise to the top gain wealth and power, pretty much irrespective of how their candidates fare. This secretive and hypercompetitive world, largely unregulated, has attracted a mix of accomplished political operators and young innovators offering new services, along with a fair number of scammers. The common thread is this: almost everyone now recognizes that the action—and the money—is outside the party system.
Perhaps no one personified this change more than Karl Rove. He had risen to the pinnacle of the official party system, only to step aside in disgrace, then build a big-money shadow party of sorts that made him more powerful than ever. The left had no real analogue of Rove, though its elite operatives were increasingly becoming super PAC players in their own right. There was more power outside the official Democratic Party structure for folks like Harold Ickes, whose long connections to Bill and Hillary Clinton gave him access to the party’s deepest pockets, and David Brock, whose compelling biography and fleet of bare-knuckle nonprofit attack groups made him a golden boy among rich Democrats. They’d done well for themselves, too. Ickes’s companies have reaped millions in payments from big-money groups and campaigns. Brock’s various groups have raised $95 million since 2003,24 and they paid him a handsome $428,000 in 201225—a sum that, given his fund-raising prowess, probably underrepresented his value in the new big-money politics. Jim Messina, who managed Obama’s reelection campaign, was also building a power base outside the party. Rove, the right’s undisputed fund-raising king, has gone out of his way to insist that he doesn’t earn a dime from the Crossroads outfit he fronts. But his close relationships with donors and his multiplatform media presence have afforded him a comfortable lifestyle nonetheless. I learned that one mega-donor Rove advised, Steve Wynn, in 2012 flew Rove and his new wife aboard Wynn’s 737 to Italy for their honeymoon, where they cruised the Mediterranean on Wynn’s 184-foot yacht.
Below shadow-party chieftains like Rove, Messina, Ickes, and Brock is a younger generation that before the new political economy made its debut might have followed a path from government to traditional party or campaign consulting. These are people like Bill Burton, who left Obama’s White House press office to start a super PAC that raised $80 million for Obama’s reelection. Soon after Election Day, he found himself in a plush consultancy. What is called the operational side—the folks who spend this big money—has attracted some of the most ambitious and innovative operators, and they have done well for themselves. Among the breakout GOP stars of 2012 were Michael Dubke, Carl Forti, and Zac Moffatt, who were forty-two, forty, and thirty-three years old, respectively, on Election Day 2012. In recent years they all started their own consultancies, which rode the big-money wave and landed each of the men in gleaming new million-dollar homes soon after the voting ended.
Washington political lawyers are also fishing in this pond. Their job is to advise big donors, outside groups, parties, and candidates on what they can and can’t do in the ever-shifting legal landscape. They get paid hefty fees for doing it. Perkins Coie, the firm that represents top Democrats including Obama and Harry Reid, as well as the super PACs and party committees supporting them, has been paid more than $20 million since 2009, according to FEC records. The lawyer for Crossroads, a former FEC chairman named Tom Josefiak, begins each meeting of outside groups with a “legal invocation,” as it’s called by operatives. But they’re not making fun. He was once praised in a meeting with donors as “the guy who keeps us from ever having to wear orange jumpsuits.”26
In another corner of the marketplace, you have a group whose primary function is to act as gatekeepers for the rich, screening potential recipients of their client’s largesse to see if they’re worthy. This group includes Michael Vachon, who advises George Soros on political giving; Andy Abboud, who counsels the Las Vegas casino billionaire Sheldon Adelson; Mike Britt, advising rival casino titan Steve Wynn; and Andy Spahn, who serves Jeffrey Katzenberg. Mere access to these advisors is a valuable commodity for fund-raisers and super PAC operatives, so the gatekeepers are often players in their own right. The more the boss gives, the higher the gatekeeper’s stature.
The effect on the politicians has been to force the most ambitious among them to engage in a marathon mating dance in which they look to pair up with mega-donors who might subsidize their careers. Just a week after Election Day 2012, a couple of Republican governors mentioned as centrist candidates for the party’s 2016 presidential nomination, Bobby Jindal of Louisiana and John Kasich of Ohio, each made a pilgrimage to meet privately in Las Vegas with the biggest single known 2012 whale, Sheldon Adelson, who spent upward of $100 million on that year’s elections.27 The Kochs’ August 2013 summit, held on the outskirts of Albuquerque, drew a handful of top 2014 Senate candidates from across the political spectrum, including Tom Cotton of Arkansas, Steve Daines of Montana, Joni Ernst of Iowa, and Mike McFadden of Minnesota. The more centrist among them—Cotton, Daines, and McFadden—also attended an October 2013 Crossroads summit hosted by Rove. His summit drew a number of other Chamber of Commerce–type GOP Senate hopefuls, including Thom Tillis of North Carolina and Reps. Shelley Moore Capito of West Virginia and Bill Cassidy of Louisiana—and featured talk among business donors about how to defeat tea party candidates. On the other side of the aisle, 2014 Texas gubernatorial candidate Wendy Davis, a rising liberal star, and Massachusetts senator Elizabeth Warren, often discussed as a liberal 2016 presidential alternative to Hillary Clinton, quietly huddled with some of the richest liberal donors at a November 2013 meeting at Washington’s posh Mandarin Oriental hotel.
If you’re trying to raise money, the data prove there’s no better strategy than chasing the wealthiest people. In the 2012 election all told, roughly eight million small donors gave a total of about $500 million to Obama, Romney, and the main groups that backed them.28 It took only forty-six hundred big donors to match that tally. In other words, in a presidential campaign that centered on the question of who would better represent the middle class, the top 0.04 percent of donors gave about as much as the bottom 68 percent.29
After the 2012 election, I set out to determine to what extent the new big money had altered American politics. So I visited with a range of veteran party operatives and fund-raisers whose resumes went back a few decades. On the day after my run-in with Koch security, for instance, I headed to an airy modern condo in the hills above Palm Springs, California, to meet with a pair of old hands in GOP fund-raising, Keith Coplen and Brian Kraft. Now mostly retired, Coplen and Kraft are credited with pioneering big-donor maintenance programs starting in the late 1960s while raising money for various state and national party committees and candidates, including Richard Nixon and Ronald Reagan. “Back in those days, donors gave so much less, and the consultants weren’t getting rich,” said Kraft as orchestral music rode a warm desert breeze wafting through the patio’s glass doors. “There was no such thing as a professional campaign class or industry prior to somewhere in the mid-1960s.”
But even then, recalled Coplen, donors craved the feeling of being insiders. So Coplen and Kraft created a big-donor club for the California GOP called the Golden Circle of California, and made John Wayne the chairman. The annual dues were $1,000, for which donors received a heavy wood-mounted bronze plaque declaring them “one of California’s most distinguished and dedicated citizens,” as well as access to periodic briefings and shindigs. “The annual party was on John Wayne’s yacht with the movie stars—it was unbelievable, the donors loved it,” said Coplen. “Who doesn’t want to be one of California’s most distinguished and dedicated citizens?” he cracked, showing me his own plaque demonstrating that he had paid his dues through 1975. The club—which they ramped up during Reagan’s governorship and augmented during his presidency through his national Citizens for the Republic PAC—created an illusion. That illusion, said Kraft, “was that, every morning, Ronnie woke up and turned to Nancy and said, ‘Honey, did Brian renew his Golden Circle dues?’ Because that was how it was played—all smoke and mirrors.”
Today, the biggest donors give way more, and the perks they get are way better. A $1,000 donor is now considered on the low end of the middle tier and can expect attention roughly commensurate with what members of Coplen and Kraft’s Golden Circle got back in the 1970s, when $1,000 was considered a major donation. People who give the federal maximum to a candidate—$5,200 in 2014—are solidly in the middle tier, but they get actual face time with candidates or at least advisors. And today’s biggest donors, those who give millions through the new channels, get real say in advertising campaigns and strategy. In other words, what used to be an illusion is now real.
What donors want, exactly, tends to vary. Some crave the feeling of being “in the room” with powerful politicians crafting strategy, even if their actual input is minimal, limited to the “smoke and mirrors” described by Kraft. Others want to put their imprint on the campaign. Some prefer to do it all anonymously, like many of those at the Koch conference in Indian Wells. Others love the attention—for themselves, their ideas, or both. Foster Friess, the mega-donor whose millions buoyed Rick Santorum, could barely contain his enthusiasm when I interviewed him after the super PAC he funded helped lift his candidate to victory in Iowa. “I’m so excited about becoming this instant celebrity with all you guys calling me. I mean, gosh, CNN, New York Times, Reuters, the Associated Press, I can’t believe it,” he gushed. “I was a pretty obscure eighteen-handicap golfer out here in Jackson Hole. Now I’m getting all this attention.”
Friess’s main issues—fighting what he calls “Islamofacism” and increasing the place of religion in public life—had little to do with his business. In fact, Friess no longer had much in the way of active business, and once told me he was proud to have “paid the full load” of taxes for his entire life. Of course, there are cases where donors’ political giving does overlap with their financial interests. But it’s a tricky matter to determine which came first. Dallas leveraged-buyout billionaire Harold Simmons, a top GOP donor who died in December 2013, believed regulations generally stifled business. He also specifically opposed federal regulatory roadblocks that could have limited the earning potential of his pension fund investments and planned nuclear waste dump in west Texas. Yet when Simmons was warned about the scrutiny that could accompany his $30 million political spending spree30 in the run-up to the 2012 election, he replied, “I want President Obama to know my name.”31 Hollywood producer Jeffrey Katzenberg, one of Obama’s top donors and fund-raisers, gave or steered more than $3 million to boost the president’s reelection effort. He was invited to lunch in 2012 in Washington with Vice President Joe Biden, Secretary of State Hillary Clinton, and Chinese president-in-waiting Xi Jinping, whose personal approval Katzenberg was seeking in order to create a studio in the hugely lucrative Chinese market. Xi flew to Los Angeles to meet with Katzenberg soon after the lunch, and within a few days a deal was announced, though a Katzenberg spokesman insisted it wasn’t secured using his ties to the Obama administration.32
Though I’d spent years watching deep-pocketed interests interface with government, big giving never struck me as a particularly effective way for billionaires to get what they wanted. Savvy CEOs with major interests before government consider lobbying a more effective way to boost or protect their interests. Lobbying, in other words, is for financial gain, while big campaign contributions are mostly for passion or ego. The data back up this assessment. A 2012 analysis of hundreds of publicly traded companies found that for every 10 percent increase in corporate lobbying spending, corporate incomes rose by more than 0.5 percent; that may seem tiny, but it can mean hundreds of thousands of dollars for even medium-sized companies.33 By contrast, the casino mogul Sheldon Adelson in 2012 steered tens of millions of dollars to super PACs expressly devoted to boosting nine different candidates. Only one of them won on Election Day, and there wasn’t much that politician could do for Adelson unilaterally.34 It was a pretty paltry rate of return.
Sure, a liberal study estimated that Adelson, who was worth $28.5 billion in 2013,35 could have benefited to the tune of an estimated $2 billion from Mitt Romney’s tax plan,36 but that assumes that controversial elements of such an initiative could clear Congress—a big assumption. And Adelson’s own explanations for the spending spree were no less baffling. He suggested, for instance, that he believed the Obama administration was punishing him with a bribery investigation against his Las Vegas Sands company, and predicted that a second Obama term would bring “vilification of people that were against him.”37 But if Adelson was worried about being targeted by the federal government, his flashy campaign spending to defeat Obama was the least wise way to protect himself, according to disgraced lobbyist Jack Abramoff.
“That’s an astonishingly naive comment,” said Abramoff, who was sentenced to six years in prison for conspiring to bribe public officials.38 “That isn’t gonna help you. Look, take it from me. I was prosecuted by the Bush Justice Department—the Bush Justice Department, all right?—and I gave them plenty of money. They went out of their way to show they weren’t playing favorites.” Adelson’s giving shouldn’t be looked at as transactional, Abramoff asserted. “He’s the kingmaker of the Republican Party. He doesn’t have to win races. It’s irrelevant to him. This is his toy.”
Money has made everyone headstrong rather than wise. As veteran Republican Party fund-raiser Brian Kraft put it to me during our conversation in Palm Springs, there used to be dire consequences for bucking your party leaders. “As a congressman, you went against the Speaker or you went against the party structure? Forget it. You wouldn’t get funded, and if you got reelected, they’d lock you out of the bathroom. They can’t do that anymore. Now everybody is an independent actor. Everybody has their own funding, and you’ll get even more if you tweet ‘Boehner just lowered the boom on me and I told him to go fuck himself.’ He doesn’t even have a bridge in your district he can throw you anymore.”39
Democrats have so far mostly avoided the big-money havoc uprooting the Republicans, but that’s unlikely to last. Steve Mostyn, a Houston trial lawyer and major Democratic donor, told me a few weeks after the 2012 election that many on the left were bracing for possible conflict on their side.40 “There is a possibility of the same type of demolition derby on both sides,” he said.41
The way the new big-money politics was shaping up, such derbies seemed inevitable.