If Plutocrats Have Been Leasing American Democracy, They Are Now On A Path To Owning It Outright

Thursday evening we saw how Ro Khanna, a corporate shill posing as a Democrat while willing to cut Social Security and Medicare benefits, is being bankrolled by some of the most insidious anti-democracy forces in America. Crooked banksters and hedge-fund managers who should be in jail are buying out America’s entire electoral system, not just Silicon Valley’s.

In the winter of 2000, just as John McCain and George W. Bush were entering a pivotal series of Republican primaries, a mysterious new campaign ad appeared on television stations in New York, Ohio and California. The ad showed McCain’s disembodied head floating over belching smokestacks as a narrator intoned about votes McCain had made against solar and renewable-energy incentives— policies that in reality he had supported. The ad was sponsored by a group called Republicans for Clean Air.

The financial backers behind Republicans for Clean Air were the Texas billionaires Charles and Sam Wyly. They had a history of supporting Bush, but they were also heavily invested in a company seeking government-induced increases in alternative-energy production. The revelation that a single Texas family could so easily insert itself into the political process set off a round of frenzied indignation, and after McCain’s loss, it became crucial fodder for his effort to reform the national campaign-finance system. In 2002, along with a Democratic senator, Russell D. Feingold, he helped push a bill through Congress that ranked alongside some of the most sweeping efforts to contain “special interest” money in American history: the Tillman Act of 1907, which banned corporate contributions to candidates; the Smith-Connally Act of 1943, which prohibited union donations to candidates; and the Federal Election Campaign Act of 1971, which placed strict limits on what individuals could give to parties and campaigns.

Before 2002, parties could accept unlimited donations from individuals or groups (corporations, labor unions, etc.) so long as they devoted the funds — so-called “soft money” — to the amorphous act of “party building.” The McCain-Feingold law, as it came to be known, banned soft-money contributions, and it also prohibited political groups that operate outside the regulated system and its donation limits— like the Wylys and their Republicans for Clean Air— from running “issue ads” that appear to help or hurt a candidate close to an election. It implemented tough fines and even prison terms for those who illegally coordinated with the official campaigns.

In 2010, the Citizens United decision by the Supreme Court effectively blew apart the McCain-Feingold restrictions on outside groups and their use of corporate and labor money in elections. That same year, a related ruling from a lower court made it easier for wealthy individuals to finance those groups to the bottom of their bank accounts if they so chose. What followed has been the most unbridled spending in elections since before Watergate. In 2000, outside groups spent $52 million on campaigns, according to the Center for Responsive Politics. By 2012, that number had increased to $1 billion.

The result was a massive power shift, from the party bosses to the rich individuals who ran the super PACs (as most of these new organizations came to be called). Almost overnight, traditional party functions — running TV commercials, setting up field operations, maintaining voter databases, even recruiting candidates — were being supplanted by outside groups. And the shift was partly because of one element of McCain-Feingold that remains: the ban on giving unlimited soft money to parties. In the party universe, rich players like the Wylys, Tom Steyer or the Kochs were but single planets among many. The party bosses had to balance their interests against those who brought just as much to the table in the form of money or votes. A party platform has to account for both the interests of the oil industry and those of the ethanol industry; those of the casino industry and those of the anti-gambling religious right; those of Wall Street and those of labor.

With the advent of Citizens United, any players with the wherewithal, and there are surprisingly many of them, can start what are in essence their own political parties, built around pet causes or industries and backing politicians uniquely answerable to them. No longer do they have to buy into the system. Instead, they buy their own pieces of it outright, to use as they see fit. “Suddenly, we privatized politics,” says Trevor Potter, an election lawyer who helped draft the McCain-Feingold law.

…The president of Americans for Prosperity is Tim Phillips. Tall and fit at 50, Phillips holds forth with evident delight, betraying the slight accent of his native South Carolina, on whatever topic is at hand. (A somewhat larger than usual breakfast, for instance, earns an emphatic “I’m in awe of our country at this moment.”) After attending Jerry Falwell’s Liberty University, Phillips worked on several congressional races before starting a consulting firm with the Christian Coalition leader Ralph Reed. The Kochs hired Phillips in 2005 to make Americans for Prosperity into a force that could defeat liberalism and elect true free-market conservatives— ones who understood that when business gets hurt, people lose jobs and the country suffers— and make them pay a price if they strayed. (David Koch is the chairman of the group’s foundation, while Charles Koch has no formal role.)

Americans for Prosperity started small, with an effort in Charles Koch’s home state of Kansas to defeat a proposed tax increase; it then moved on to spearhead a quixotic fight against the teachers’ union over pay in Wisconsin. As recently as 2008, the group’s activities were negligible, and it had just $7 million in its operating budget, according to its Internal Revenue Service filing. But after Citizens United, donations poured in. In 2012, it raised $115 million. It is impossible to know the identities of the donors, though the group’s annual closed-door conferences are regularly attended by many of the biggest conservative donors in the country, including the hedge-fund executive Foster Friess and the casino magnate Sheldon Adelson.

Where does the money go? Americans for Prosperity obviously spends a lot on television, but it also maintains offices in 35 states with 600 paid staff members. The group funds phone banks, big-ticket events and many other details like beer cozies and water bottles. Its biggest chapter is in Florida, where its 50 paid staff members work out of 10 offices and constitute a year-round organization that rivals that of the state Republican Party.

The A.F.P. offices are in the same brick corporate campus in Arlington, Va., that housed George W. Bush’s campaign in 2004. The narrow white hallways and gray cubicles would be somewhat grim if not for Phillips’s insistence that each staff member place an image of something he or she holds dear on their nameplates (a pinup of the actress Jane Russell, the logo of the University of Virginia or, on Phillips’s own door, a photo of the band U2, with his own head pasted atop Bono’s body). A.F.P. operates at such a low hum that it would have been hard to guess, at the moment I was visiting, how many different operations its staff members were overseeing simultaneously. There was a $1 million ad buy criticizing the Democrat Mark Begich in Alaska, as well as a new ad campaign against Senator Mark Udall, Democrat of Colorado. There was a series of rallies attacking the Democratic Senate candidate Bruce Braley in Iowa and a door-knocking campaign for Rick Scott.

Then there was the balloon. Phillips pointed to a photograph on the wall, depicting a scene from an event Americans for Prosperity held in Bozeman, Mont., in 2009: a 70-foot balloon awaiting takeoff. “We called it the ‘Cost of Hot Air,’ ” Phillips said. At the time, A.F.P. was trying to counter the movement to establish a cap-and-trade system. Many Republicans, including John McCain, supported such a system, and a bipartisan implementation of it seemed likely upon Obama’s election. A.F.P.'s balloon was part of a national tour to block it. “We put on the side of the balloon: ‘Cap and trade means: higher taxes, lost jobs, less freedom’— six words.” It made dozens of trips, including one over Al Gore’s house in Tennessee. All the while, Americans for Prosperity, joined by other conservative groups, directed ads and phone calls pressuring lawmakers to vote against the major cap-and-trade bill when it came up for a vote in 2009; Phillips helped to rebrand the bill more negatively as “cap and tax.” It died in the Senate, and support for cap-and-trade among Republican officeholders fell to a negligible level, where it remains today. “I rode more hot-air balloons in that year-and-a-half period than I ever want to ride again,” Phillips said. “I do not like hot-air balloons.”

…The environmental impact of the Koch family is not entirely an abstract question. Koch Industries is the second-largest private company in the country, and its holdings include oil refineries, oil-services companies and one of the nation’s biggest fertilizer manufacturers. Another Koch property is the paper-goods producer Georgia-Pacific, whose plant in Palatka, Fla.— at the end of the narrow Rice Creek tributary of the St. Johns River— is seen by Scott opponents as an object lesson in how political donations can materially affect the planet.

In July, I went to see the plant with Lisa Rinaman, who heads an environmental group called St. Johns Riverkeeper, and two of her local friends, Sam Carr and Robert Virnstein. Because the plant, a hulking pale green structure festooned with smokestacks and rusting steel drums, is closed to outsiders, we approached it by water, in Virnstein’s pontoon boat. Georgia-Pacific employs 1,000 people at the plant, which produces Brawny paper towels and Angel Soft bathroom tissue. The plant also has a state permit to disperse certain amounts of wastewater into the creek. As such, Rinaman takes occasional boat trips to the plant, like this one, to keep a careful eye on the consequences. It’s work that she does not trust the state to do under Rick Scott.

In Rinaman’s view, the Kochs have reason to be bullish on Scott. More than a decade earlier, before Koch Industries owned it, Georgia-Pacific ran into trouble with state and federal regulators over the pollution from its mill on Rice Creek. The plant’s salty, dioxin-tainted wastewater was creating a putrid odor— “It was horrendous,” Carr said. “Oh, God. You’d come over the bridge and the smell was just unbelievable” — and worse, it was leading to “masculinization” among the creek’s native mosquito fish. The regulators settled on a solution that left environmentalists even more alarmed. Georgia-Pacific would need to take specific steps in an attempt to bring its pollution in the creek into compliance with clean-water standards. But if those steps failed, it was to then divert the wastewater to the much larger (and therefore more dilutive) St. Johns River, an ecological treasure. “It was one of those slap-in-the-face rulings,” Rinaman said.

Koch Industries bought the plant in 2005. Georgia-Pacific says that the $200 million in improvements that it completed were roughly twice the outlay that had been required by state and federal regulators. Even environmentalists saluted the effort. “Now, this is one of my favorite fishing holes,” Carr said as we sat on the creek. As if on cue, a giant alligator splashed in the water in front of us. “That was a big one!”

But even though the creek was cleaner, the plant’s pollutants were still above legal limits. So Georgia-Pacific, convinced it had done all it could and eager to move on, began making plans to build a $30 million pipeline to the St. Johns River. The Crist administration refused to grant it a permit to use the pipeline until it cleared a few more hurdles; these included a new kind of dioxin test that the state Department of Environmental Protection promoted as more sensitive than those commonly in use, but which was not validated under state rules. Georgia-Pacific, arguing that it should be required only to use formally sanctioned tests, managed to resist using the new method through the end of Crist’s term.

Crist had appointed two successive heads of the Department of Environmental Protection, both trained scientists with decades of experience in environmental policy. When Rick Scott took office, his choice for the post was Herschel Vinyard, an executive with a military contractor called BAE Systems Southeast Shipyards; previously, he had been a corporate lawyer specializing in regulatory issues. One of Crist’s environmental appointees said the department would be primarily concerned with “ensuring Florida’s dynamic natural resources, state lands, waterbodies and beaches are protected”; Crist himself challenged the department to create “a strategy to protect our state from the effects of climate change.” The Scott administration, by contrast, described Vinyard’s mission as “protecting the natural resources of Florida, while creating the best possible mechanisms for job creation in the state.”

Nearly every initiative related to climate change was dropped. Vinyard laid off 58 employees and declared a “time out” on the state policy of purchasing ecologically sensitive land for protection. He also worked with the State Legislature to change the rules for environmental permits, shifting the burden of proof onto groups trying to block them. To the dismay of many editorial boards across the state, he instituted a bonus system that encouraged workers to expedite the process by which companies received permits of every kind.

One company to which Vinyard granted a permit was Georgia-Pacific— the permit it had been seeking for many years under the Crist administration. The Department of Environmental Protection under Scott required some containment and monitoring measures that environmentalists had sought— officials of the department say it was among the strictest permits they had ever issued— but not the extra dioxin test. The Legislature also passed a provision banning the state from requiring any environmental test that was not on its officially recognized list. In Rinaman’s view, this language seemed suspiciously designed to exclude the test that the Crist administration had been pushing on Georgia-Pacific. Scott signed the provision into law; he also instituted a freeze on any new regulations, and then shed existing regulations by the hundreds.

Scott’s deregulatory efforts did not go unnoticed. Americans for Prosperity invited Scott to speak at the group’s Defending the Dream summit in 2013. “Here we are, two and a half years into his term, and he’s created more than 370,000 jobs in the state of Florida,” Slade O’Brien, the Florida director of the group at the time, said by way of introduction. “And one of the ways he did that was by eliminating over 1,000 burdensome regulations.” When Scott spoke, he noted that the number had grown to 2,600.

There are people running for office who understand the nature of this problem and are committed to fixing it. No one gets endorsed by Blue America who isn’t. The candidates we endorse do understand and are committed. It’s a red line in the sand. We don’t endorse wish-washy centrists, Wall Street-owned hacks or careerists, even if they wave blue banners and call themselves Democrats. There are no good Republicans on this issue— but there are plenty of bad Democrats.

Today might also be a good time to bring up another facet of encroaching plutocracy— multimillionaires buying themselves (or their children, as in the case of Florida New Dem, Patrick Murphy) congressional seats. Below is a list of this cycle’s top 10 self-funders. One, Florida sociopath Curt Clawson— who spent the most ($4,017,543 of his own money, 86% of what his campaign cost)— is already in Congress. He used all that cash to win a special election to replace Republican Party coke dealer Trey Radel. Most of the other biggest spenders this cycle have already lost. This is the whole sordid list in order of how much of their own money they used:

• Curt Clawson (R-FL-19)- $4,017,543 (86%)
• Paul Mitchell (R-MI-04)- $3,167,626 (100%)- lost primary
• Thomas MacArthur (R-NJ-03)- $3,000,000 (96%)- likely winner
• George Demos (R-NY-01)- $2,500,000 (89%)- lost primary
• Dave Trott (R-MI-11)- $2,423,402 (71%)- likely winner
• Tom Sanchez (D-TX-33)- $1,475,000 (99%)- lost primary
• Sean Eldridge (D-NY-19)- $1,340,000 (44%)- likely loser
• Ben Streusand (R-TX-36)- $1,301,030 (93%)- lost primary
• Matt Rosendale (R-MT-01)- $1,126,547 (84%)- lost primary
• Brian Ellis (R-MI-03)- $1,007,214 (55%)- lost primary

Self-funding plutocrats… not a very good investment bet... even if Florida Governor (and Medicare fraud millionaire) is about to write his campaign a personal check for $22 million to save his ass. One final thought from Bernie Sanders before we get to the short Noam Chomsky clip below. After Federal Reserve Chair Janet Yellen delivered a speech on income and wealth inequality in the U.S. Bernie issued a statement all 100 senators should have (but didn't): "Janet Yellen is right. Income inequality is the worst it has been since the 1920s. Now that we have a Fed Chair who recognizes the problem, the Fed must act as boldly to rescue the disappearing middle class as it did when it bailed out too-big-to-fail banks. The Fed has got to demand that big banks significantly increase affordable loans to small businesses to create jobs, instead of parking its money at the Fed and making risky bets on Wall Street.”