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The Koch Empire and Americans for Prosperity

by PAM MARTENS

Lily Tomlin said it best: “No matter how cynical you become, it’s never enough to keep up.” Despite two solid years of progressive media tracking the billionaire Koch brothers’ funding of right wing front groups, new details have emerged which show a more sophisticated and ominous network than previously understood.

One of the key organizations funded by a Koch-controlled foundation is Americans for Prosperity (AFP).  While it has been widely documented and publicized that the group is orchestrating the Tea Party, AFP is also a veritable smorgasbord of other “grassroots” personalities.  The AFP or the AFP Foundation have  spawned the following identities:

DefendingtheDream.org (August 27-28 D.C. summit for right wing strategizing and rally);

SayNoCapandTrade.org (kill tax on production of greenhouse gases);

NoInternetTakeover.com (attacks on the Federal Communications Commission);

SickofSpending.com (“…how to recruit, educate, organize, and mobilize fed up Americans to stop the radical left-wing agenda…”);

RegulationReality.com (“…educate citizens about the EPA’s attempt to implement radical global warming regulations…”);

NovemberIsComing.com (phone bank; go door to door to beat back those liberals);

TaxCutsForAll.com (don’t raise taxes on the rich);

SpendingCrisis.org (shrink the Federal government);

CaliforniaSoS.com (cut spending in California);

United4NoOn4.com (kill Amendment 4 in Florida that would give voters more say in local legislative decisions; an ironic position for people who say they want to promote more liberty).

Americans for Prosperity also created PatientsUnitedNow.com and orchestrated hundreds of rallies to help kill the public option in health care reform.

Americans for Prosperity now has chapters in 30 states, including those with the largest number of voters.  As part of the focus on state level efforts, key right wing foundations are funding another nonprofit, the State Policy Network, which says it has free market think tanks in every state. The work of most of the groups is to push for privatization of public services and public schools. The State Policy Network is fueling a new, rapidly growing  movement: right wing funded groups posing as independent investigative media outlets. So far, there is West Virginia Watchdog, Old Dominion Watchdog in Virginia, Texas Watchdog, Illinois Statehouse News, Missouri News Horizon, Capital Report New Mexico, Idaho Reporter, the Commonwealth Foundation’s Pennsylvania Independent, TNReport of Tennessee, the Pelican Institute’s Capital Reporter in Louisiana, Pacific Research Institute’s Cal Watch Dog in California, Idaho Freedom Foundation’s Idaho Reporter, the Cowboy State Free Press in Wyoming, and others in various stages of getting up and running.

Doing the recruiting for investigative reporters for a number of these right wing news sites is Claire Kittle, the former Program Officer for Leadership and Talent Development at the Charles G. Koch Charitable Foundation.  The State Policy Network publishes strategic planning articles on how these newly anointed investigative reporters can network with each other and get stories they pen to dominate the internet and be picked up by mainstream media.

Tactically using its state chapters and YouTube,  Americans for Prosperity was able to blanket the internet with a McCarthyesque video depicting the progressive One Nation Working Together rally in Washington D.C. on October 2 as a communist-inspired, Socialist Party march.  Despite a coalition of 400 organizations involved in the March, including the AFL-CIO, American Federation of Teachers, UAW, NAACP, Rainbow Push Coalition, the video exclusively highlights the contingent of Socialists, making it appear that they dominated the march.  The clip runs with the headline: “Proud Socialists March at Left-Wing Protest in DC.”   The video clip plays the Russian Anthem in the background (while calling it the Soviet Anthem) and, at one point on the video, shows a young woman portrayed as if she is  singing the lyrics.  People commenting on-line clearly believe this music was playing at the progressive march.  At TeaPartyPatriots.org, a poster commented:  “Any comments on the One Nation rally? … hard to believe people in this country would disgrace their own country by playing the Soviet Anthem.” At JoeTote1.blogspot.com, a person using the moniker Joe Tote said: “For God’s Sake! They were marching to and singing the old Soviet anthem!”  I contacted people in the know who were at the march in the vicinity of the Socialist contingent.  I was told that no such music was played.

The use of the music by Alexander Alexandrov suggests evil genius at work.  The music, although it now has new lyrics, is associated with the murderous Stalinist regime and evoked a firestorm of criticism in Russia when it was reintroduced as the National Anthem in 2000.  At the time, Russian historian Leonid A. Sedov was quoted in the Los Angeles Times in opposition to the reintroduction, stating: “A national anthem must not disgust even some part of the population. We know too well that there are a lot of people in this country who can’t hear this anthem without shuddering.”

If you put the title of the video in the Google search engine inside double quotes (“Proud Socialists March at Left-Wing Protest”) it brings up 232,000 links, as of this writing.  This is McCarthyism on steroids.

Charles and David Koch, who tied for 5th place in the 2010 Forbes list of the richest Americans with $21.5 billion each, are the controlling shareholders of Koch Industries Inc., a private global conglomerate with a presence in over 60 countries, including interests in oil, refining, pipelines, paper products, chemicals, and fertilizer.  Its commodities trading operation stretches from New York to London, Geneva, Singapore, Mumbai, and Rotterdam. Koch Industries has revenues of $100 billion, according to the Koch Industries, Inc. web site.  Despite the full throttle push for “free markets,” the Koch brothers have never allowed their company’s stock to trade in those “free markets.”  Georgia-Pacific was immediately delisted from the New York Stock Exchange following its purchase by Koch Industries, Inc.

In 2000, 60 Minutes did a story on Koch Industries, revealing the details of what one of the dissident brothers, Bill Koch, was alleging in Court documents.  “Bill Koch filed a lawsuit in federal court claiming that much of the oil collected by Koch Industries was stolen from federal lands. At the trial, 50 former Koch gaugers testified against the company, some in video depositions. They said Koch employees had a name for cheating on the measurements.”  It was called the Koch Method.  “The company used the Koch method with virtually all its customers.  In the 1980’s alone, Koch records show those so-called adjustments brought the company 300 million gallons of oil it never paid for. And it was pure profit.  Bill Koch says that profits from that oil were a minimum of $230 million…In December 1999, the jury found that Koch Industries did steal oil from the public and lied about its purchases – 24 thousand times.”

The brothers refer to their philanthropic work as the “Koch Family Foundations.” Listed on the Koch Industries Inc. web site are the Fred C. and Mary R. Koch Foundations (the deceased parents of Charles and David); the Charles G. Koch Charitable Foundation, the David H. Koch Charitable Foundation and the Kansas Cultural Trust, renamed the Koch Cultural Trust in 2008. The web site does not list the Claude R. Lambe Charitable Foundation which is controlled by Charles Koch.

Claude Lambe was a real estate developer and insurance broker in Kansas.  He invested in a company formed by Fred Koch in 1934, the Buffalo Oil Corporation.   Lambe’s wife, Pauline, died in 1976;  Lambe died in 1981.  According to a Koch Industries publication, Charles Koch was left in charge of  Lambe’s estate. Charles Koch and his wife, Elizabeth, serve as Directors on the Foundation’s board.  Hopefully,  Lambe wanted to fund all of these right wing causes because that’s what his foundation has been doing since his death.

A click to the foundation section of the Koch Industries web sites brings up clean, wholesome images: beautiful, migrating white pelicans in various stages of flight at a Koch funded wetlands; an ethereal cluster of snow-dotted ballerinas in fluffy white tutus  performing at Lincoln Center.  But beyond white-feathered pelicans and tulle-feathered ballerinas, there is the deep sense that Koch is out to feather its own nest.

The Free State Project

We have a right wing “grassroots” group of our own here in New Hampshire with ties to Koch money.  Called the Free State Project, it was the creation of Jason Sorens.  (While the group advocates for the elimination of tax-funded public education, Dr. Sorens teaches political science at the taxpayer funded State University of New York at Buffalo.)

Dr. Sorens is an example of a core strategy of the right wing funding network.  Taking a cue from corporate research that teaches if you want to create brand loyalty for life, you must reach your target market at an early age, many of the right wing nonprofits offer internships and associate programs for promising undergraduates and grad students.  They look for two things in particular: writing skills and computer/internet savvy.  These individuals are called the “talent” and are viewed in the same light as Merck views its “thought leaders” in the launch of a new drug.  In many cases, they are funded and nurtured for life.  The Charles G. Koch Charitable Foundation has at least six staff members with the word “Talent” in their title, for example, Manager of Talent, Director of Talent, Coordinator of Talent.  It explains on its web site that over 700 individuals have gone through its paid Summer Fellow program and have gone on to work at places like Cato, the Wall Street Journal, Department of Justice, World Bank, and Council of Economic Advisors.

Dr. Sorens was funded by two Koch funded organizations: the Mercatus Center and the Institute for Humane Studies.  When he was ready to launch his audacious plan to convert New Hampshire into a free markets stronghold, he was assisted on the morning of February 27, 2004 with a big-wig press conference at the Washington D.C. headquarters of the wealthy and well connected American Enterprise Institute, also funded with Koch money as well as the rest of the A-list of conservative foundations.  According to its most recent 990 tax filing, available to the public at www.guidestar.org, the American Enterprise Institute had assets of $104 million in 2008 and received grants and contributions of $59 million that year.

The concept was a bit far fetched even for the conservative reporters at the event.  Dr. Sorens proposal was, via coaxing on the internet, to  get 20,000 Libertarians to move to New Hampshire and take over state and local politics by being hyper activists.  To potential recruits, Dr. Sorens pitched the gambit as creating a migration and sanctuary for freedom-loving people.  To the American Enterprise Institute, he pitched it as a means of leveraging an anti-regulatory agenda to benefit business, not just in New Hampshire but in other states as well. “Once New Hampshire moves dramatically in a free market direction, we are going to continue to attract individuals and businesses from other states.  And other states are going to have to reform their own laws in order to avoid losing their tax base to our state,” Dr. Sorens told the audience.

Dr. Sorens and Mercatus had a plan to move that theory along.  Dr. Sorens and William P. Ruger, an Assistant Professor at the Texas State University, San Marcos co-authored a study with the Koch-funded Mercatus Center on Freedom in the 50 States: An Index of Personal and Economic Freedom.  The study ranks the 50 states in terms of personal and economic freedoms.  Exactly 13 days after the study on Freedom in the 50 States was released, the 1851 Center for Constitutional Law at the Buckeye Institute for Public Policy Solutions in Ohio, another free markets nonprofit, used the document in testimony on a House Bill in Ohio threatening to “initiate legal action” if the bill was signed into law. The testimony noted, from the report, that “Ohio recently ranked 38th in an index of economic freedom amongst the 50 states.” The bill the Center was against would have eased mortgage loan modifications to prevent foreclosures.  Koch foundation money provides support to the Buckeye Institute for Public Policy Solutions.

Dr.  Sorens’ belief in the individual’s pursuit of freedom and democracy has been called into question with this post he made at the Cato Institute:  “The ‘collective action problem’ helps to explain why only narrow interests will successfully organize and achieve policy victories, and why these will come at the expense of the citizenry.  Interest groups can achieve these victories only because voters are deeply, irremediably ignorant of philosophy, politics, economics, and public policy. Trying to educate voters is hopeless because they lack the proper incentives to learn and employ political knowledge.”

One hard-learned lesson for the big money funders is that frequently when you get some real grass in your grassroots movement, the corporate script is not followed as neatly as in  pure astroturfing. (Astroturfing refers to campaigns or movements that are orchestrated by special interests but masquerade as spontaneous grassroots uprisings.) The first offshoot of the Free State Project effort was in Grafton, New Hampshire and was as subtle as a Wall Street hostile takeover.  Locals say about $1 million was spent buying up properties and recording the names in limited liability corporations so the real money behind the purchase could not be discovered. But the Free Staters living in the homes were quite visible and vocal.  One man set up a web site to harass local officials, declaring: “This is a list of New Hampsters who have oppressed libertarians…Don’t vote for them, don’t hire them, don’t buy from them, don’t sell to them.”  The list, titled “Blood Bath and Beyond”  named a Judge, the Selectmen, the Selectmen’s Clerk, an attorney, a police chief, and various police officers. The web site has not been taken down.

The brazenness of the takeover talk rankled the local residents; a heated town meeting ensued, with unfavorable national press for the Free State Project. The Boston Globe called it “Grafton’s Messy Liberation.”

Things have since quieted down in Grafton while heating up in the tolerant town of Keene.  A handful of Free Staters, most of whom advocate a totally voluntary society and no government regulation on any business, have engaged in the following stunts: standing topless in the quaint town square; holding a bag of marijuana in front of the police with the intent of getting arrested, to challenge drug laws; pretending to drink alcohol in city council meetings to press for drinking in public places; holding “School Sucks” signs at the public middle school to challenge taxation for “government” education; chanting outside of the private homes of a police officer and sitting judge who are not popular with the Free Staters.  Public opinion in Keene has now turned decidedly against the Free Staters.

Another individual who has spent time in Keene, New Hampshire and helped the Free State Project movement along is Peter Eyre.   Eyre interned at the right wing Cato Institute (which received funding from Koch); then became a Fellow at the Charles G. Koch Charitable Foundation.  Next  Eyre spent two and one half years at the Institute for Humane Studies (also supported by Koch money and the same Institute that supported the work of Dr. Sorens).  In early 2009,  Eyre moved on to Bureaucrash, a project affiliated with another right wing think tank, the Competitive Enterprise Institute (CEI).  (CEI ran TV ads in a dozen cities on “global warming alarmism” one week before Al Gore’s documentary, “An Inconvenient Truth” premiered.)  The Institute for Humane Studies links Bureaucrash as a previous internship partner with the Charles G. Koch Summer Fellow Program.  Exxon and Koch charitable funds have supported the Competitive Enterprise Institute.   Eyre’s  more recent pursuit was to travel around the country promoting libertarian ideas in a motor home named Marv with colleagues Jason Talley and Adam Mueller.

What could possibly explain all this right wing and deregulatory attention on a state of 1.3 million people?  For one, New Hampshire hosts the first Presidential primary.  For another, Koch Industries, Inc.  purchased Georgia-Pacific Corp. for $21 billion in 2005, paying a 39 percent premium over its share price on the New York Stock Exchange at the time.  Georgia-Pacific is one of the world’s largest paper companies.  Its household consumer brands include  Angel Soft, Brawny, Quilted Northern, Sparkle, Vanity Fair, and Dixie.  Georgia- Pacific owns no timberland.  Its Wood and Fiber Supply division must seek out sources of wood from industrial, institutional or individual landowners.   New Hampshire is 84 per cent forest land according to the New Hampshire Department of Resources and Economic Development.  But there is a growing environmental and land conservation movement in New Hampshire.  That could pose a problem for lumber interests.

Are the Koch brothers alone in outsized funding of right wing groups?  No; but they are among the most proactive and sophisticated in exerting rightward political pressure on  universities, media, state legislatures, Congress, and the town halls of America.

A check of tax filings at GuideStar.org shows there is currently over $6 billion in assets in foundations that promote the free market mantra.  Where did the money come from? Some of the largest pro-corporate agenda foundations include old wealth from big consumer brands like Coors, Vicks, Borden, Gulf Oil, F.W. Woolworth, Amway; and new money from John Templeton and Walmart.  The tycoons of yesteryear handed down an axe to grind against government interference in big business and that has been carefully nurtured by a labyrinth of modern tycoons and front groups.  These are masterful tacticians who understand image is everything; who understand that if you plow enough money into marketing and public relations and advertising, you can build an invincible brand.  You can even turn a sow’s ear into a silk purse by rehabilitating the deregulatory/free markets brand that fleeced the public, took their homes, left the financial system of the country in ruins and then used taxpayer money to attempt to bail itself out.  But don’t think about that; think about the new and improved “freedom” brand.

A week from today we’ll take an in-depth look at the new kid on the block: a mysterious right-wing nonprofit that won’t reveal where its mega bucks are coming from.

PAM MARTENS worked on Wall Street for 21 years; she has no security position, long or short, in any company mentioned in this article.  She writes on public interest issues from New Hampshire.  She can be reached at pamk741@aol.com

Pam Martens has been a contributing writer at CounterPunch since 2006. Martens writes regularly on finance at www.WallStreetOnParade.com.

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