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Quixotic ‘80 campaign gave birth to Kochs’ powerful network

First Published      Last Updated May 17 2014 07:54 pm

He backed the full legalization of abortion and the repeal of laws that criminalized drug use, prostitution and homosexuality. He attacked campaign donation limits and assailed the Republican star Ronald Reagan as a hypocrite who represented "no change whatsoever from Jimmy Carter and the Democrats."

It was 1980, and the candidate was David H. Koch, a 40-year-old bachelor living in a rent-stabilized apartment in New York City. Koch, the vice-presidential nominee for the Libertarian Party, and his older brother Charles, one of the party's leading funders, were mounting a long-shot assault on the fracturing American political establishment.

The Kochs had invested hundreds of thousands of dollars in the burgeoning libertarian movement. In the waning days of the 1970s, in the wake of Watergate, Vietnam and a counterculture challenging traditional social mores, they set out to test just how many Americans would embrace what was then a radical brand of politics.

It was the first and only bid for high office by a Koch family member. But much of what occurred in that quixotic campaign shaped what the Kochs have become today - a formidable political and ideological force determined to remake American politics, driven by opposition to government power and hostility to restrictions on money in campaigns.

That election also handed the Kochs their first political setback, driving them to rethink their approach to libertarian ideas. Since then, they have built a powerful network of political nonprofit groups that is exempt from most campaign reporting requirements and contribution limits but will spend tens of millions of dollars to influence the 2014 election. They have exerted enormous influence on American politics, battling government regulation and casting doubt on the urgency of climate change. Instead of replacing the Republican Party, they have helped to profoundly reshape it.

"The 1980 campaign was instructive in helping them learn what ideas resonated," said Robert A. Tappan, a Koch Industries spokesman, "and at the same time, giving them an understanding of the implications of the electoral political process."

Business Meets Politics

The Kochs, heirs to a family oil refining and marketing business, were unlikely entrants in a presidential campaign.

Politics was a dangerous game for those in business, Charles Koch argued in a 1974 speech to libertarian thinkers and business leaders in Dallas. Subsidies and special treatment demanded by corporations had helped turn Americans against free enterprise. Business had colluded with the Nixon administration to design price controls and other "socialistic measures."

The most effective response was not political action, Koch argued, but investment in pro-capitalist research and educational programs.

"The development of a well-financed cadre of sound proponents of the free enterprise philosophy is the most critical need facing us today," he said, according to a copy of his speech in a Libertarian Party archive at the University of Virginia, one of thousands of documents reviewed by The New York Times for this article. The Times was alerted to the archive by American Bridge, a liberal political organization that has been critical of the Kochs.

By the end of 1974, Koch helped found what would become the Cato Institute, today one of the country's leading libertarian research institutions. He was joined in that effort by Ed Crane, chairman of the 3-year-old Libertarian Party. The two men believed that libertarian ideas had to be more accessible to the average person if they were to change the country. Over dinners at Charles Koch's house in Wichita, Kansas, and in correspondence with both brothers and their mother, Crane worked to persuade the family that a vibrant party organization was critical to advancing that goal.

The family would become the Libertarian Party's most important donors.

But their other consuming interest was business: Charles Koch, then in his first decade as president of Koch Industries, had aggressively expanded the firm's holdings in oil refineries, petroleum products, and commodities, while David Koch worked as an executive at the company's engineering subsidiary.

As the brothers became more politically active, Koch Industries repeatedly butted against the federal government's new energy regulations. One month before Charles Koch's speech in Dallas, a federal audit found that Koch and two other companies had broken federal oil price controls. In 1975, a Koch subsidiary was cited for $10 million in overcharges on propane gas.

The family's frustrations were captured in a fundraising letter that Charles Koch wrote on behalf of the 1976 Libertarian presidential candidate, Roger MacBride, a co-creator of the "Little House on the Prairie" television series. Koch excoriated Presidents Richard M. Nixon and Gerald R. Ford for backing price controls, and attacked legislation to impose fuel economy standards as "one of the many demonstrations of the bankruptcy of the Republican alternative to Democratic interventionism."

New Financing Tool

The Supreme Court handed the Kochs an important weapon in a 1976 decision in Buckley v. Valeo. The court opened two loopholes in a 2-year-old campaign finance law that had placed tight controls on what candidates, parties, and private individuals could spend on campaigns: A candidate could spend an unlimited amount of his or her money running for office; and an individual was free to spend an unlimited amount of money promoting candidates so long as the spending was not coordinated with them.

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