by  Jane  Mayer


Buoyed by their success in Wisconsin, the Kochs began to focus in earnest on the presidential race. It had taken years, but by 2012 they were becoming a rival center of power to the Republican establishment. Political insiders who had once scoffed at them now marveled at the breadth of their political operation.

While amassing one of the most lucrative fortunes in the world, the Kochs had also created an ideological assembly line justifying it. Now they had added a powerful political machine to protect it. They had hired top-level operatives, financed their own voter data bank, commissioned state-of-the-art polling, and created a fund-raising operation that enlisted hundreds of other wealthy Americans to help pay for it. They had also forged a coalition of some seventeen allied conservative groups with niche constituencies who would mask their centralized source of funding and carry their message. To mobilize Latino voters, they formed a group called the Libre Initiative. To reach conservative women, they funded Concerned Women for America. For millennials, they formed Generation Opportunity. To cover up fingerprints on television attack ads, they hid behind the American Future Fund and other front groups. Their network's money also flowed to gun groups, retirees, veterans, antilabor groups, antitax groups, evangelical Christian groups, and even $4.5 million for something called the Center for Shared Services, which coordinated administrative tasks such as office space rentals and paperwork for the others. Americans for Prosperity, meanwhile, organized chapters all across the country. 

The Kochs had established what was in effect their own private political party.

Secrecy permeated every level of the operation. One former Koch executive, Ben Pratt, who became the chief operating officer of the voter data bank, Themis, used a quotation from Salvador Dali on his personal blog that could have served as the enterprises motto: "The secret of my influence is that it has always remained secret."

Robert Tappan, a spokesman for Koch Industries, defended the secrecy as a matter of security, because "Koch has been targeted repeatedly in the past by the Administration and its allies because of our real (or, in some cases, perceived) beliefs and activities concerning public policy and political issues," overlooking decades of secrecy from the John Birch Society onward.

This consolidation of power reflected the overall national trend of increasingly large and concentrated campaign spending by the ultra-wealthy in the post-Citizens United era. The spending, in turn, was a reflection of the growing concentration of wealth more generally in America. As a result, the 2012 election was a tipping point of sorts. Not only was it by far the most expensive election in the country's history; it was also the first time since the advent of modern campaign-finance laws when outside spending groups, including super PACs and tax-exempt nonprofit groups, flush with unlimited contributions from the country's richest donors, spent more than $1 billion to influence federal elections. And when the spending on attack ads run by nonprofits was factored in, outside spending groups might well have outspent the campaigns and the political parties for the first time.

The Koch network loomed as a colossus over this new political landscape. On the right, there were other formidable donor networks, including the one assembled by Karl Rove, but no single outside group spent as much. 

On its own, in 2012 the Kochs' network of a few hundred individuals spent at least $407 million, almost all of it anonymously. 

This was more than John McCain spent on his entire 2008 presidential bid. And it was more than the combined contributions to the two presidential campaigns made by 5,667,658 Americans, whose donations were legally capped at $5,000. 

Politico Kenneth Vogel crunched the numbers and discovered that in the presidential race the top 0.04 percent of donors contributed about the same amount as the bottom 68 percent. 

No previous year for which there were data had shown more spending by fewer people. The staggeringly lopsided situation made 2012 the starkest test yet of Louis Brandeis's dictum that the country could have either "democracy, or we may have wealth concentrated in the hands of a few," but not both.

The Kochs' growing clout was evident in a confidential internal Romney campaign memo dated October 4,2011. Romney, like virtually every ambitious Republican in the country, was angling for David Koch's support. The memo described him plainly as "the financial engine of the Tea Party," although it noted that he "denies being directly involved."

Romney, it revealed, had hoped to woo Koch in a private tete-a-tete at the billionaire's beachfront mansion in Southampton, New York, over the summer. But to the campaign's dismay, Hurricane Irene had washed the meeting out. With the Iowa caucuses looming, and Chris Christie out of the race, Romney tried again in the fall.

Shortly after the memo was written, Romney took two controversial campaign stances that were guaranteed to please the billionaire brothers. 

First, he reversed his earlier position on climate change. In his 2010 book, No Apology, Romney had written, "I believe that climate change is occurring—the reduction in the size of global ice caps is hard to ignore. I also believe that human activity is a contributing factor." When he hit the campaign trail in June of 2011, Romney reiterated this view and stressed that it was "important for us to re\air our emissions of pollutants and greenhouse gases that may well significant contributors to the climate change and the global warming that you re seeing." But at a rally in Manchester, New Hampshire, in late October, he suddenly declared himself a climate change skeptic. "My view is that we don't know what's causing climate change on this planet," he said. "And the idea of spending trillions and trillions of dollars to try to reduce C02 emissions is not the right course for us," he declared. By the time he accepted the Republican nomination in Tampa the following summer, Romney treated the notion of acting on climate change as a joke. "President Obama promised to begin to slow the rise of the oceans. And to heal the planet," he mocked. "My promise is to help you and your family."

A week after first reversing himself on climate change, Romney skipped a campaign event attended by every other Republican presidential candidate in Iowa in order to speak at Americans for Prosperity's annual Defending the American Dream summit in Washington. There he delivered a keynote address that could have passed as an audition for David Koch, who was in the audience. Romney had governed Massachusetts as a northeastern moderate, but now he unveiled a budget plan reminiscent of Paul Ryan's.

Soon afterward, Romney proposed to cut all income tax rates by one-fifth. According to the nonpartisan Tax Policy Center, Romney's proposal would save those in the top 0.1 percent an average of $264,000 a year, and the poorest 20 percent of taxpayers an average of $78. The middle class would get on average $791. Romney also proposed other items high on his donors' wish lists, including eliminating estate taxes, lowering the corporate tax rate, and ending taxes owed by companies that had shipped operations overseas. Taken as a whole, the Tax Policy Center said the proposal would add $5 trillion to the deficit over the next decade. Romney said he would make up the difference by closing unspecified tax loopholes.

Charles Koch often described his support for slashing taxes as motivated by a concern for the poor. "They're the ones that suffer" from "bigger government," he argued in an interview with his hometown paper. 

Yet there was no getting around the fact that the numbers added up to a disproportionately huge gift to the already rich. "These guys all talk about the deficit, but there's not a single tax benefit for the wealthy they'll get rid of," Dan Pfeiffer, Obama's former communications adviser, later pointed out. "What really made them furious," he said, "was when we started talking about closing the loopholes for private jets!"

If these policy shifts were designed in part to win the Kochs' support, they succeeded. 

By July, David Koch not only embraced Romney but threw a $75,000-per-couple fund-raiser for him at his Southampton estate. Romney and Koch were described as exuding a "confident glow" as they and their wives descended the stairs following a private half-hour chat before the other guests arrived. A few weeks later, Romney chose Ryan as his running mate. The pick was opposed by Romney's campaign consultant, Stuart Stevens, and proved baffling to Obama because of the unpopularity of Ryan's extreme budget plan. But conservative donors, including David Koch and his wife, Julia, had lobbied for Ryan. It was one more indication that an invisible wealth primary was shaping the discourse and the field long before the rest of the country had the chance to vote.

With two of the largest fortunes in the world at their disposal— together worth an estimated $62 billion by 2012—Charles and David Koch were perfectly positioned to take advantage of the growing importance of money in American politics. 

Yet the presidential campaign still proved difficult for them to manage. With the eclipse of the party professionals by outside funders, virtually any novice with enough cash, including other donors in their own circle, could now disrupt the process……


As the general campaign got under way, Obama too had to worry about rich donors. He had been itching to make economic fairness the center of his presidential campaign. But some of his advisers worried that populism was a dangerous force to play with in an era when both parties were increasingly reliant on hugely wealthy patrons. 

Obama, though, had sought the presidency in part because he hoped to alter the relationship between powerful financial interests and those who govern. "One of the reasons I ran for President," he had said, "was because I believed so strongly that the voices of everyday Americans - hardworking folks doing everything they can to stay afloat—just weren't being heard over the powerful voices of the special interests in Washington."

The Occupy movement had further emboldened him. So he decided to kick off his reelection campaign at the end of 2011 in the tiny town of Osawatomie, Kansas. There, in the place where Theodore Roosevelt had delivered a fiery speech in 1910 demanding that the government be "freed from the sinister influence or control of special interests," he tried to tackle the thorny issue of America's growing economic inequality.

Obama denounced the "breathtaking greed" that had led to the housing market's collapse, as well as the Republican Party's "you're-on-your-own economics." 

He also had some stinging words for big money's influence on politics. "Inequality distorts our democracy," he warned. "It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and it runs the risk of selling out our democracy to the highest bidder."


The words were ringing. The audience cheered. The problem, though, was that no matter how keenly Obama wanted to address economic inequality, he was going to have to turn to his party's own billionaires and multimillionaires for help. 

Soon, in fact, Obama would set a record for the number of fund-raisers attended by an incumbent president. 

He continued to speak out, even directly to the donors, telling one small gathering of moguls that included Microsoft's co-founder Bill Gates, the richest man in America, "There are five or six people in this room tonight that could simply make a decision—this will be the next president—and probably at least get a nomination, if ultimately the person didn't win. And that's not the way things are supposed to work." But like it or not, Obama was, as one top progressive donor, the former head of the Stride Rite shoe company Arnold Hiatt, put it, "in a bind."

In an early 2012 meeting in the Roosevelt Room, his campaign manager, Jim Messina, shocked the president by sharing the bad news that they now expected outside Republican spending against him to reach $660 million.

"How sure are you?" Obama asked.

"Very sure," replied Messina.

Obama had reserved some of the harshest words of his presidency for the Citizens United ruling, saying that he couldn't "think of anything more devastating to the public interest." So he had steadfastly refused to encourage supporters to form an "outside" super PAC that could accept unlimited contributions on his behalf. "I think we need to switch our position," Messina said. "Until people understand it's important to you, they're not going to give."

Soon after, Obama bowed to the new economic reality and reversed himself. His campaign began encouraging supporters to give to the pro-Obama super PAC, Priorities USA. It wasn't the first time Obama had been rendered a hypocrite in order to raise funds. 

In 2008, after championing campaign-finance reform in the Senate, he broke his own pledge to accept public financing as a presidential candidate. Obama admitted that he suffered "from the same original sin of all politicians, which is: We've got to raise money." But he insisted that he would fight to reform the system: "The argument is not that I'm pristine, because I'm swimming in the same muddy water. The argument is that I know it's muddy and I want to clean it up."

The extent to which the same moneyed interests tainted both parties, though, became clear after Priorities USA aired its first television ad. It was an emotional tirade from a steel mill worker whose plant was closed down by Bain. "He'll give you the same thing he gave us: nothing. He'll take it all," the worker said of Romney. The Obama campaign then underscored the powerful message from the super PAC with its own ad, calling Romney a "job destroyer" and his firm "a vampire."

At the time, a number of thoughtful economists and academics from both ends of the political spectrum were deeply concerned about the finance industry's impact on the country's growing economic inequality. While high-earning executives particularly in the finance industry were prospering, wage earners were stagnating. Experts ranging from former Treasury secretary Lawrence Summers to the neoconservative theorist Francis Fukuyama worried that the trend was threatening the middle class and overwhelming the political system.

Yet when Obama's ads broached these crucial issues, Wall Street-linked Democrats erupted in anger. Steven Rattner, who had made millions at the investment bank Lazard Freres and whose wife was the former finance director for the Democratic Party, denounced the ads as "unfair." Harold Ford Jr., a former Democratic congressman from Tennessee who had migrated to Wall Street, protested that "private equity is a good thing in many, many instances." Cory Booker, the mayor of Newark, New Jersey, who was a rising star in the party and who had numerous supporters in the finance industry, went on national television and, to the fury of the White House, said "this kind of stuff is nauseating to me on both sides."

Bill Clinton dealt the final blow. In an interview on CNN, he said, "I don't think we ought to get into the position where we say this is bad work—this is good work." 

From 2006 until 2009, Chelsea Clinton, the daughter of the former president, worked as an associate at Avenue Capital Group, a $14 billion private equity and hedge fund firm. Marc Lasry, co-founder of Avenue Capital, was a major Clinton supporter as well as a $1 million investor in a fund managed by the Clintons' son-in-law, Marc Mezvinsky. The Clinton administration had been rife with Wall Street tycoons. 

Now, as the Obama administration was teeing up Romney's rapacious business record as his key disqualification, Clinton summarily announced that Romney's "sterling business career crosses the qualification threshold." (At the time, Hillary Clinton reportedly disapproved of her husband's comment, privately saying, "Bill can't do that again.")

In response, the Obama campaign tailored its message more carefully. For the most part, rather than hammering Romney's wealth directly, it relied on sly symbolism to address the touchy issue of class. "There was too much blowback, so we used cues," says Margolis. "We showed him standing next to Trump's private jet."

Regardless of what the donor class thought, the anti-Bain ads proved among the most effective of the campaign. When nervous Obama campaign aides prescreened the ads in focus groups, "they kept telling us to relax! 'Stop asking if it's unfair,'" Margolis recalls. Evidently, the broad public was deeply uneasy about the winner-take-all ethic of corporate America. Yet, according to the Princeton University professor of politics Martin Gilens, because of the outsized influence that the affluent exert over the political process, "under most circumstances the preferences of the vast majority of Americans appear to have essentially no impact."

The perception gap between the donor class and the rest of the country was unceremoniously exposed in September when Mother Jones revealed a secret recording made that May by a member of the waitstaff at a high-end fund-raiser for Romney. 

Outrage spread as the public eavesdropped on Romney assuring wealthy supporters gathered for cocktails at a mansion in Boca Raton, Florida, that the votes of 47 percent of the population weren't of concern to him.


Romney's assertion came in response to a question about how he planned to "convince everybody you've got to take care of yourself." The subtext seemed to be that the country was rife with freeloaders. "My job is not to worry about those people. I'll never convince them they should take personal responsibility for their lives," Romney replied. "There are 47 percent of the people who will vote for the president no matter what." As he described them, they were people who were "dependent upon government, who believe they are victims, who believe government has a responsibility to care for them, who believe they are entitled to health care, food, to housing, you name it." These were "people who pay no income tax," he said, and so "our message of low taxes doesn't connect." He seemed to be implying that nearly half the country consisted of parasites.

This was no slip of the tongue. Romney was expressing what The Wall Street Journal described as the "new orthodoxy" within the Republican Party. In a new twist on the old conservative argument against government aid for the poor, it denigrated nearly half the country as what the Journal called "Lucky Duckies" freeloading off the rich. 

This startling theory held that because many members of the middle class and working poor received targeted tax credits, such as the earned income tax credit and the child tax credit, which reduced their income taxes to zero, they were "a nation of moochers," as the title of a book written by a fellow at the Wisconsin Policy Research Institute put it.

Behind the theory were several nonprofit organizations tied to the Kochs and other wealthy ideologues, including the Heritage Foundation and AEI. Foremost perhaps was the Tax Foundation, an anti-tax group founded in opposition to Roosevelt's New Deal that had been resurrected by Charles Koch's cash and directed for some time by Wayne Gable, the president of the Charles Koch Foundation and head of Koch Industries' Washington lobbying operation. As Scott Hodge, president of the Tax Foundation, explained it simply, there were "two Americas: the nonpayers and the payers."

Critics immediately pointed out that the theory ignored the many other taxes paid by lower - and middle-income Americans, including sales taxes, payroll taxes, and property and gas taxes, which took a disproportionately large share of their income. The theory also overlooked the unique circumstances of retirees, students, veterans, and the unwillingly unemployed.

 And it completely ignored the many tax breaks disproportionately enjoyed by the wealthy, from mortgage and charitable deductions to the preferential treatment for unearned income that kept Romney's income taxes at an effective rate of 14 percent. 

But the flattering distinction between "makers" and "takers" advanced by conservative think tanks and scholars had won great favor in wealthy, conservative circles. In fact, some conservatives who opposed virtually every other tax increase had started calling for new taxes on meager earners, ostensibly for the country's civic good. As Slates David Weigel cheekily wrote, "Republicans have finally found a group they want to tax: poor people."

The Blackstone billionaire Stephen Schwarzman made this argument nine months before Romney was caught saying essentially the same thing. When asked in a Bloomberg television interview if, given the dire state of the economy, his own taxes should be raised, Schwarzman, who was one of the most vigorous defenders of the carried-interest loophole, suggested that, to the contrary, the poor needed to pay more. "You have to have skin in the game," he said. "The concept that half of the public isn't involved with the income tax system is somewhat odd, and I'm not saying how much people should do, but we should all be part of the system." 

In addition to its political obtuseness, the comment betrayed complete ignorance of the history of the income tax, which began as a tax only on the 0.1 percent and was never designed to target the poor.

At the time, Schwarzman's comment got little attention. 

But when the rest of the nation learned from Romney's remarks that the super-rich considered nearly half of them freeloaders, the reaction was explosive. 

Obama's internal polling numbers, which had hovered steadily in the range of 48 to 50 percent, shot up to 53 percent over Romney. The damage was even more pronounced in battleground states, where Romney's numbers plummeted. Within days, polls showed that fully 80 percent of the country had heard about the remark—more, one pollster said, than knew of the existence of North Korea.

The Obama campaign delightedly held its fire while Romney tried to explain but never disavowed it. 

Finally, after ten days, Obama's team went on the air with a new television ad slamming the 47 percent gaffe. It was not the original version the campaign had created. The first version, which never aired, cast Romney's remark against a backdrop of impoverished Americans whose woeful portraits seemed borrowed from Walker Evans or from Robert Kennedy's tour of Appalachia. SO

But in the version that aired, the poor had been banished, replaced by the middle class. The ad now featured female factory workers wearing protective eye gear, a Latino construction worker near a ladder, redolent of upward mobility, and steely-eyed retired veterans in VFW hats. 

This wasn't just about the poor. By parroting his donors, Romney had cast the election, the "Mother of All Wars," as a fight between a tiny, privileged clique and virtually everyone else…….