Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right (27 page)

Another factor was Obama’s aversion to confrontation and hot rhetoric, which resulted in largely milquetoast messaging about Wall Street. Unlike Franklin Roosevelt, who blamed the “money changers” for the Great Depression in his first inaugural address, Obama’s public utterances were muted. In a matter of weeks, critics argued that he had ceded the mantle of populism to his Tea Party opponents. “
In an atmosphere primed for a populist backlash, he allowed the right wing to define the terms,” John Judis observed in the liberal
New Republic
magazine.

Despite Steinhauser’s efforts to police the Tea Party’s signs for racism and other expressions of hate, within two months of Obama taking office, the streets and parks were filling with rallies at which white protesters carried placards reading, “Impeach Now!” and “Obama Bin Lyin’.” Obama’s face was plastered on posters making him look like the Joker from the Dark Knight films, his skin turned chalk white, his mouth stretched almost to his ears, and his eye sockets blackened, with a zombielike dead gaze, over the word “Socialism.” A for-profit Internet activism company, ResistNet, featured a video titled “Obama = Hitler” on its Web site. One protester at a February 27 rally, who said he was with the group, carried a sign calling Congress slave owners and taxpayers “the Nigger.” Obama’s image was also photoshopped to look like a primitive African witch doctor, with a bone stuck through his nose.

Fink, the Kochs’ political lieutenant,
professed to be discomfited by the racism. But David Koch echoed the specious claims that Obama was somehow African in his outlook, even though he was born in America, abandoned by his Kenyan father as a toddler, raised mainly in Hawaii by his American mother, and had never set foot on the African continent until he was an adult. In a revealing later interview with the conservative pundit Matthew Continetti, David nonetheless disparaged Obama as “
the most radical president we’ve ever had as a nation” and opined that the president’s radicalism derived from his African heritage. “His father was a hard core economic socialist in Kenya,” he said. “Obama didn’t really interact with his father face-to-face very much, but was apparently from what I read a great admirer of his father’s points of view. So he had sort of antibusiness, anti–free enterprise influences affecting him almost all his life. It just shows you what a person with a silver tongue can achieve.”

Bill Burton, who is biracial himself, believes that “you can’t understand Obama’s relationship with the right wing without taking into account his race. It’s something no one wants to talk about, but really you can’t deny the racial factor. They treated him in a way they never would have if he’d been white. The level of disrespect was just dialed up to eleven.”

By the end of Obama’s second month in office,
Newsweek
ran a tongue-in-cheek cover story asserting, “We are all socialists now,” and even the lofty
New York Times
picked up the right wing’s framing of Obama as outside the American mainstream. In a presidential interview, the paper asked whether he was a socialist. Obama was apparently so stunned he had to contact the
Times
afterward to fully answer. “
It was hard for me to believe that you were entirely serious about that socialist question,” he said, noting that it was under his predecessor, George Bush, a Republican, not “under me that we began buying a bunch of shares of banks. And it wasn’t on my watch that we passed a massive new entitlement, prescription drug plan, without a source of funding.”

A
s Obama was put on the defensive about the economy, another line of attack was stealthily attracting the attention of many of the same wealthy financial backers. At the Kochs’ secretive January summit in Palm Springs, one of the group’s largest donors, Randy Kendrick, posed a question. Her shoulder-length cascades of frosted hair and flashy jewelry made her an unlikely-looking rabble-rouser, but Kendrick was an outspoken lawyer who had abandoned the women’s movement decades earlier for the Goldwater Institute, a far-right libertarian think tank in Phoenix, where she was on the board of directors. She and her husband, Ken, the co-owner and managing general partner of the Arizona Diamondbacks baseball team, had the kind of fortune that made people take note.

Earl “Ken” Kendrick, who hailed from West Virginia, had made many millions on Datatel, a company he founded that provided computer software to colleges and universities. He subsequently bought into the Woodforest National Bank in Texas, a private bank that was in 2010
forced to refund $32 million and pay a $1 million civil fine to settle charges of usurious overdraft fees. Hard-core economic and social conservatives—except for the state subsidies that paid for the Diamondbacks stadium and brought public transit to the field—the Kendricks were horrified by the election of Obama. They were charter members of the Kochs’ donor network, having written at least one seven-figure check. Their generosity had been a two-way street. They had supported institutions that the Kochs favored, such as the Institute for Humane Studies and the Mercatus Center at George Mason University. The Kochs had meanwhile supported the “Freedom Center” at the University of Arizona that they founded, where the Kendrick Professor of Philosophy taught “freedom” to college students.

Now Randy Kendrick wanted to know what the group planned to do to stop Obama from overhauling America’s health-care system. She had read the former Democratic senator Tom Daschle’s 2008 book,
Critical: What We Can Do About the Health-Care Crisis
, and was alarmed. She warned that Daschle, who favored universal health-care coverage, likely reflected Obama’s thinking.
Daschle was expected to become Obama’s secretary of health and human services. If the new administration adopted a plan of the kind Daschle was floating, she said it would kill business, hurt patients, and lead to the biggest socialist government takeover in their lifetimes. She was adamant. Obama had to be stopped. What was the plan?

Kendrick spoke with passion. Her interest in the issue was both political and personal. She argued that the choice of private health care had saved her from spending the rest of her life confined to a wheelchair after a leg injury. She had initially been told that because she suffered from a rare disorder, she couldn’t risk surgery. But a specialist at the renowned Cleveland Clinic had found a successful treatment. She survived the surgery and was now an active mother of teenage twins. “Randy was convinced that if America had government health care like Canada or Great Britain, she would be dead,” a friend who asked not to be identified confided.

It was a powerful testimonial, and the donors at the Koch seminar were deeply moved. But the Obama administration had never proposed government health care like that in Canada or Great Britain. Reached later, after the implementation of Obama’s Affordable Care Act, Donald Jacobsen, professor of molecular medicine at the Cleveland Clinic Lerner College of Medicine, who cared for Kendrick, recalled her as a generous donor but dismissed as nonsense her argument that Obama’s health-care plan ever threatened treatment of the kind that she received. “I can assure you that ‘Obamacare’ did not diminish our research efforts in any way,” he said. “However, the sequestration efforts of the right-wing conservatives and their Tea Party colleagues have hampered progress in medical research. The National Institutes of Health is suffering greatly, and it is very difficult for all investigators to obtain funding. You can’t blame the Affordable Care Act, but you certainly can blame the Republicans.”

Nonetheless, when Kendrick finished her emotional pitch, there was an awkward silence from the Kochs, according to two sources familiar with the meeting. The Kochs of course opposed the expansion of any government social program, including any potential universal health-care plan. But the sources said they hadn’t focused much on the issue. They had assumed the health-care industry would fight its own battles, in its own interest, so they hadn’t thought they’d need to step in. Instead, the Obama administration had cut deals with much of the health-care industry, winning much of its support. “They were unprepared on the issue,” said one of the sources.

Despite their later reputation for orchestrating opposition to Obamacare, it was actually Kendrick, not the Kochs, who first led the way.
She and a handful of other multimillionaires had recently helped fund an unsuccessful effort to prevent Arizona from “coercing” citizens into buying government-run, or any other kind of, health-care coverage. But Kendrick was not giving up. She was strong-minded and accustomed to getting her way. When she appeared every few weeks at the think tank, a former colleague recalled, “they would often line up and hand her a bouquet of flowers, like a queen.”

After the defeat in Arizona, Kendrick vowed to take her fight national. “Who do I have to give money to?” she asked Sean Noble, a Republican political operative in Arizona who had become her de facto personal political consultant. Kendrick demanded to know, “
What organizations are doing this?” according to an account written by Eliana Johnson for
National Review
.

At Kendrick’s request, Noble surveyed the field and found virtually no organization set up in early 2009 to take aim at Obama on the issue. Or at least none that was a 501(c)(4), the IRS code for a tax-exempt “social welfare” group that can participate in politics so long as it’s not the group’s primary focus. Unlike conventional political organizations, such nonprofits can hide the identities of their donors from the public, reporting them only to the IRS. Noble knew these so-called dark-money groups were especially appealing to wealthy individuals who wanted to influence politics without public attention, like the members of the Koch network.

Noble had attended Koch seminars with his former boss, John Shadegg, a staunchly conservative Republican congressman from Arizona whose father, Stephen, had been Barry Goldwater’s campaign manager and alter ego. For over a decade, Noble had worked for Shadegg, eventually becoming chief of staff of the congressman’s Arizona office. In 2008, however, Noble decided to go out on his own, opening a political consulting firm, Noble Associates, at his home in Phoenix. Kendrick, who had been a major supporter of Shadegg, was a prized client. She and Noble had worked closely for years. He hadn’t been invited to the January Koch meeting where she held forth, but she called him afterward for help. As he set up his business, her interest in launching a crusade against health-care reform, and her entrée into the Koch network, presented a lucrative opportunity.

Noble wasn’t a first-string player in Washington’s political big league, but he was respected and had a superabundance of charm. Fit and blond, with just enough gray around his temples to add gravitas to his cherubic features, he was unassuming and fun; even his political opponents found him hard to dislike. Noble described himself as a “Reagan Baby” who was raised in the tiny town of Show Low, Arizona—named by cardplayers—where as a boy he started the day listening to the national anthem on the radio with a hand over his heart. His mother, a homemaker, and father, a dentist, were Mormons and believed America was the promised land. In their household, Barry Goldwater was a hero, and Jimmy Carter a villain. When Carter was elected in 1976, Noble’s mother warned that the Soviet Union would take over the world. By the time he was in college, Noble was working for conservative candidates, eventually connecting with Shadegg. Along the way, he got married, had five children, and became a Mormon bishop in his Phoenix ward. Antiabortion and libertarian, he voted for Ron Paul in 1988. In many ways, he was a perfect fit for the Koch network, except for one thing. Noble, who contributed almost compulsively to a personal online blog called
Noble Thinking
, was chatty. Taking on Obama’s health-care plan with private money would require stealth.

O
n April 16, 2009, Noble and Kendrick began putting their plan in place when the Center to Protect Patient Rights (CPPR) was incorporated in Maryland. Physically, the organization existed only as a locked, metal mailbox, number 72465, inside the Boulder Hills post office at the edge of a desert road north of Phoenix. Later records would show Noble was its executive director. The effort was surrounded in such secrecy that when Noble was asked in a 2013 deposition who hired him, he declined to answer, citing confidentiality agreements, as ProPublica, the nonprofit investigative reporting concern, later reported.

Responding to the lawyer’s question, he said, “
I can’t tell you who I do work for.”

“Wait a minute,” the lawyer interjected. “I asked how your salary got set, and you’re telling me that you had a discussion with some people in 2009 and you’re refusing to tell me who?”

“I am,” Noble answered.

The identities of the donors remained opaque, but one thing clear from tax records was that Noble’s sponsors had an astounding amount of money. By June, the Center to Protect Patient Rights had accumulated some $3 million in donations. By the end of 2009, the sum reached $13 million. More than $10 million of that was quickly passed on to other tax-exempt groups, including Americans for Prosperity, which soon took a lead in attacking Obama’s health-care plan. By the end of 2010, the sum sloshing through the post office box belonging to the Center to Protect Patient Rights would reach nearly $62 million, much of it raised through the Kochs’ donor network.

The first tangible sign of this underground funding stream was a television ad called “Survivor.” It featured a Canadian woman named Shona Holmes who said, “I survived a brain tumor,” but claimed that if she had been forced to wait for treatment from Canada’s government health service, “I’d be dead.” Instead, she said, she had received lifesaving treatment in Arizona.
Fact-checkers later revealed that her dramatic story was highly dubious and that in fact the reason the Canadian health authorities hadn’t expedited her treatment was that she actually had a benign cyst on her pituitary gland. Nonetheless, the Americans for Prosperity Foundation, the charitable wing of the tax-exempt organization chaired by David Koch, spent $1 million airing the ad in the summer of 2009.