New Koch: Rebranding the Koch Brothers

Jane Mayer, New Koch: Rebranding the Koch Brothers. The New Yorker, 25 January 2016. “The billionaire brothers are championing criminal-justice reform. Has their formula changed?… On the night of November 2nd [2015], well-dressed Wichita residents formed a line that snaked through the lobby of the city’s convention center. They all held tickets to the Wichita Metro Chamber of Commerce’s annual gala, which had drawn thirty-five hundred people. The evening’s featured speaker, Charles Koch, had lived in town almost all of his eighty years, but few locals—even prominent ones—had ever laid eyes on him. Charles, along with his brother David, owns virtually all of the energy-and-chemical conglomerate Koch Industries, which is based in Wichita and has annual revenues of a hundred and fifteen billion dollars. Charles’s secretive manner, right-wing views, and concerted campaign to exert political influence by spending his fortune have made him an object of fascination, especially in his home town. “You never see him,” one local newsman whispered.”

Starting in 2010, a controversial series of rulings by the federal judiciary and the Supreme Court essentially licensed unlimited political spending by corporations, unions, and individuals. Charles and David—a seventy-five-year-old patron of the arts, who is the wealthiest resident of Manhattan—were unusually prepared to take advantage of this shift. They had set up a broad alliance of donors and advocacy organizations to support conservative candidates who share their “pro-business” opposition to regulation, entitlements, and taxes. This network has since become one of the most powerful political forces in the country: a libertarian advocacy group backed by the brothers, Americans for Prosperity, has directors in thirty-four states. According to Politico, twelve hundred people work full-time for the Koch network—more than three times the number of people who work for the Republican National Committee.

A new, data-filled study by the Harvard scholars Theda Skocpol and Alexander Hertel-Fernandez reports that the Kochs have established centralized command of a “nationally-federated, full-service, ideologically focused” machine that “operates on the scale of a national U.S. political party.” The Koch network, they conclude, acts like a “force field,” pulling Republican candidates and office-holders further to the right. Last week, the Times reported that funds from the Koch network are fuelling both ongoing rebellions against government control of Western land and the legal challenge to labor unions that is before the Supreme Court….

…[F]or the 2016 election cycle, [Charles Koch] has organized a small circle of ultra-wealthy conservatives to spend nearly nine hundred million dollars on campaigns and advocacy—an unprecedented sum. The identities of the circle’s other members have remained secret. This private jackpot is more than twice the sum that was spent by the Republican National Committee in the 2012 Presidential-election race. Most of the leading Republican Presidential candidates have attended gatherings of the donor circle in the hope of winning its financial backing….

As the Kochs prepare to launch the most ambitious political effort of their lives, they appear to be undergoing the best image overhaul that their money can buy. Last fall, Charles sat down in his office with Kai Ryssdal, the host of public radio’s “Marketplace.” Koch said of his company, “Our attitude is to, in starting any initiative, any business, is to focus on how we can create value for others rather than how we maximize profit.”…

“They are embarked on an extraordinary exercise in rebranding,” David Axelrod, the former political adviser to President Barack Obama, said of the Kochs. In Axelrod’s view, the growing media accessibility of the Kochs is a relatively minor part of their image campaign. He points to a series of public-policy initiatives that they launched recently, all of which counter their plutocratic image by showcasing a concern for the poor. In the past year, Koch Industries has become one of the leading backers of a bipartisan coalition for criminal-justice reform, supporting legislation that aims at reducing prison sentences for nonviolent drug offenders, many of whom are poor people of color….

“It’s all part of a very well-conceived strategy to change the image of the Koch brothers as dark and plotting oilmen ideologues,” Axelrod said. [Fraser] Seitel, the public-relations expert, observed, “They’re waging a charm offensive to reset the image of the Kochs from bogeymen shrouded in secrecy to philanthropists who are supporting black colleges and indigent defense.”…

Mike Paul, the president of Reputation Doctor, a public-relations firm based in Manhattan, also views efforts such as the LIBRE Initiative as attempts to improve the Kochs’ image. He points out that a string of huge legal judgments against Koch Industries had given the brothers a reputation as “the heads of the Toxic Empire.”…  [R]esearchers at the University of Massachusetts Amherst, using statistics from the Environmental Protection Agency, found that Koch Industries was one of only three companies in America that ranked in the top thirty for air, water, and climate pollution. Paul suggested that the Kochs, in order “to win people over,” decided that they had to “look more compassionate—and so their theme is that they care about the poor.”…

The Kochs’ strategy began to change after the last Presidential election. Having spent so much money trying to defeat Obama, they were stunned when he was reëlected. As late as Election Day, their political advisers were assuring them that Mitt Romney had secured the Presidency. The 2012 defeat led the Kochs and their advisers into an intense period of review. Most of the postmortem took place in private, but in March, 2013, a clue to the Kochs’ line of thinking was offered by Arthur Brooks, the president of the American Enterprise Institute. In a speech at the annual Conservative Political Action Conference, Brooks, who frequently attends the Kochs’ political retreats, offered a diagnosis of what had gone wrong in 2012.

Brooks told the audience that a single statistic explained why conservatives had lost. In polls, he said, only a third of respondents agreed that Republicans “cared about people like” them. And fewer than half of Americans believed that Republicans cared about the poor. Conservatives had an empathy problem. This was important, Brooks explained, because Americans almost universally believed that “fairness matters.”…

Conservatives didn’t have a policy problem, Brooks assured the audience: free-market economics still offered the best solutions for America. Republicans just needed different packaging for their message. “In other words, if you want to be seen as a moral, compassionate person, talk about fairness and helping the vulnerable,” Brooks said. “You want to win? Start fighting for people! . . . Lead with vulnerable people. Lead with fairness!” He added, “Telling stories matters. By telling stories, we can soften people.”…

The need for a new sales pitch was urgent. Around the time that Arthur Brooks was advising conservatives to appear more compassionate, the Times reported on its front page that Koch Industries had piled thirty-foot-high mounds of petroleum coke—a by-product of oil refining that is sold abroad as fuel—next to a poor, inner-city neighborhood in Detroit. Residents complained that the filthy soot was coating everything….

As the Koch network began marshalling a hundred million dollars for 2014 races—and nearly twice as much for other kinds of activism—the brothers embarked on a new public-relations plan. The company hired Steve Lombardo, who had been a top executive at the global P.R. firm Burson-Marsteller, as its chief of communications and marketing….

Lombardo believed that the key to creating a positive brand was to reach the public’s “subconscious mind,” as he wrote in O’Dwyer’s, the public-relations trade journal. The most effective “pathway” to the subconscious, he argued, was “storytelling,” in part because it tapped into emotions. He expanded on this in a Koch Industries newsletter. “Building a brand is telling a story,” he explained, adding, “It is about giving people a sense of who you are, what you believe in, and what you are doing to improve their lives.”…

The planning for the Kochs’ political makeover took place in private, but in June, 2014, a leak from one of their twice-yearly donor summits provided a glimpse of their thinking. Lauren Windsor, a liberal blogger who hosts an online news program called “The Undercurrent,” obtained audio recordings of the secret gathering, which was held at a resort near Laguna Beach, California. Soon afterward, she began posting them.

In one session, entitled “The Long-Term Strategy: Engaging the Middle Third,” Richard Fink, who was introduced to the donors as the Kochs’ ”grand strategist,” offered a summary of the new plan. Fink, who has a Ph.D. in economics from New York University, has been the Kochs’ closest political adviser since the eighties. He was an executive vice-president and a director on the board of Koch Industries, and also a board member of Americans for Prosperity. After the losses of 2012, Fink explained, he had surveyed twenty years of research into the political opinions of moderates, including a hundred and seventy thousand surveys conducted in the United States and abroad. His conclusion, he told the donors, was that if conservatives wanted to win over Americans they needed to change their pitch.

In a ballroom overlooking the Pacific Ocean, Fink began, “We got our clocks cleaned in 2012.” The demographic challenge, he said, was formidable. The United States was essentially divided into three parts. The Kochs, he said, had already “been very successful in mobilizing” the first third, which comprised conservatives and libertarians who shared their political vision. Another third, he said, would never support them: these were “the collectivists.” (In the nineteen-fifties and sixties, the John Birch Society used this term to conflate liberals and Communists.) Fink continued, “The battle for the future of the country is who can win the hearts and minds of that middle third. . . . Whoever can mobilize a majority of that thirty per cent will determine the direction of the country.”

The “middle third,” Fink said, tended to think that liberals cared more about ordinary people. What did the middle third think about corporations? “Big business they see as very suspicious—‘They’re greedy. They don’t care about the underprivileged.’ ”

Fink, thinking that he was only among friends, confided that the critics weren’t entirely wrong….

When he saw impoverished people “on the street,” he admitted, his gut reaction was: “Get off your ass and work hard, like we did!”

Unfortunately, he continued, voters in the middle third had a different reaction when they saw the poor. They felt “guilty about it.” Rather than just being concerned with expanding “opportunity” for themselves, he said, this group was also concerned with expanding “opportunity for other people.” For these voters, the government-slashing agenda of the Kochs was a stumbling block. Fink acknowledged, “We want to decrease regulations. Why? It’s because we can make more profit, O.K.? Yeah, and cut government spending so we don’t have to pay so much taxes. There’s truth in that.” But to the “middle third” these positions seemed motivated not by ideological principle but by greed….

“We’ve got to convince these people we mean well, and that we’re good people,” Fink said….

The company’s internal research had shown that Americans wanted a clean environment, widespread good health, high standards of living, security, freedom, peace, and opportunity for both themselves and others. This posed a problem, given that the Kochs and their network opposed environmental regulation and government action on global warming, and supported privatizing Social Security and health care.

But Fink had a solution. “This is going to sound a little strange,” he acknowledged. “So you’ll have to bear with me.” The Koch network, he said, needed to present its free-market ideology as an apolitical and altruistic reform movement to enhance the quality of life—as “a movement for well-being.” The network should make the case that free markets forged a path to happiness, whereas big government led to tyranny, Fascism, and even Nazism….

“Who can be against well-being?” [James] Otteson [professor of political economy at Wake Forest University’s business school] exclaimed. “The framing is absolutely critical.”

Fink…explained that another way to “earn the respect and good feeling” of the “middle third” was to publicize partnerships with unlikely allies. He talked up Koch Industries’ partnerships with the United Negro College Fund and the National Association of Criminal Defense Lawyers, both of which the company had financially supported, on a smaller scale, for years….

It is true that, at least as far back as 1980, when Charles Koch enlisted David, then a company executive, to run for Vice-President of the United States on the Libertarian Party ticket, the brothers have publicly supported radical reform of America’s criminal-justice system. The platform of the Libertarian Party in 1980 called for an end to all prosecutions of tax evaders and the abolition of a number of federal agencies whose regulations Koch Industries and other businesses have chafed at, including the E.P.A., the Occupational Safety and Health Administration, and the Federal Election Commission, whose campaign-spending limits the brothers opposed. But the Kochs, as hard-line libertarians, have had goals quite different from those of many of their liberal allies. Their distaste for the American criminal-justice system is bound up in distrust of government and a preference for private enterprise. Until recently, the criminal-justice victims the Kochs focussed on were businessmen who had run afoul of the modern regulatory state—that is, people like them….

David Uhlmann, who is now a law professor at the University of Michigan, argues, “The Koch brothers are not interested in criminal-justice reform because they suddenly became interested in the number of poor and minority Americans who are in prison. By their own admission, they became interested because they were prosecuted in Corpus Christi. They and their allies want to take us back to 1970, before the regulatory state.”

Jeffrey Winters, a political-science professor at Northwestern University and the author of the 2011 book “Oligarchy,” regards attacks on the Justice Department by ultra-wealthy players with vested interests as “very worrisome.” Winters notes that “one of the greatest challenges in history has been to create legal governing institutions that are stronger than the strongest people in society. Oligarchs have long deployed their wealth and power to free themselves of constraints that others in society face.”…

More questions about the Kochs’ motives arose last fall [2015], when criminal-justice-reform legislation working its way through Congress changed dramatically. In October, the Senate Judiciary Committee passed a sentencing-reform bill that had bipartisan support. Several weeks later, the House Judiciary Committee added provisions that, environmental and consumer-safety advocates say, would weaken the government’s ability to prosecute an array of corporate crimes. According to critics, the new measures would unreasonably raise the standard required for the government to hold corporate executives criminally liable for wrongdoing; the government would have to prove that the executives hadn’t just committed a crime but knowingly done so, even in instances of dire consequence to the public, such as lethal pollution and unsafe food or drugs.

Uhlmann, the former Justice Department official, warned, “For thirty years, Congress has insisted that companies know their legal obligations, and that they fail to do so at their own peril. This legislation would erode the venerable principle that ignorance of the law is no defense.” He went on, “While we need to reduce the Draconian sentences imposed on nonviolent drug offenders, the Kochs are using criminal-justice reform as a Trojan horse for their efforts to weaken environmental, health, and safety regulations.”…

Mike Paul, the head of Reputation Doctor, isn’t surprised that the Kochs’ rebranding has encountered troubles. “You can’t just use spin to make it look like you’re doing the right thing,” he says. “Ultimately, the currency that the Kochs are after is trust. And it’s won only by showing consistency, transparency, and evidence of real change.”