The Intimidation Game (35 page)

He finishes, “My bottom line is this. I decided I could not run and cower from this, that I'd be setting a bad example. And I feel my voice—for whatever that voice is worth—is maybe worth a little bit more. Because I didn't run away.”

Mark Holden
has one of the coolest yet hardest jobs in the world. It's cool, because he's general counsel for Koch Industries, one of the biggest companies in the country. Koch does manufacturing, refining, ranching, fertilizers, paper, finance, and things you didn't even know existed. It has more than one hundred thousand employees worldwide, and brings in more than $100 billion a year. Holden is the top lawyer for all that. Which is pretty cool.

It's hard, because Holden works for Charles and David Koch. And Charles and David Koch have over the past five years been turned by the left into the most publicly reviled people in America, possibly the world. Dealing with that—which is one of Holden's jobs—is a pain in the ass. And hard.

Five years ago, most people had never heard the name Koch. If they had, they assumed it was something you bought at McDonald's, with a smile. Koch is big, but it is also a private company, and it is based in Wichita, and its core businesses aren't the sort of stuff the average consumer interacts with. Five years ago, Koch was pretty much as big as it is today. Five years ago, the Koch brothers were well into a lifetime of putting money into politics. Nobody had made that an issue up to then. So what changed?

Citizens United
, of course. Holden traces a more precise beginning to that Jane Mayer article in the
New Yorker
in August 2010, the one she titled “Covert Operations,” the one in which she managed to pound out ten thousand words about an organization she claimed nobody knew a single thing about. The left loves to label things “secret.” It sounds really shady. And it uses the word “secret” a lot when describing the Kochs.

The Kochs aren't secret at all—or at least no more than most Americans. Charles and David Koch are some of the biggest philanthropists in the country; they individually and through their business underwrite universities, cancer research centers, arts centers. Their corporate structure is known, and subject to the same regulation as any other firm. David Koch once ran for the presidency, and a lot is known about the brothers' free-market political philosophy and the organizations they run. There is a nonprofit group called Freedom Partners, which is structured like a trade association. They started Americans for Prosperity, a 501(c)(4) that maintains a grassroots network with 2.3 million average Americans as members. There is KochPAC, which is the official political action committee for Koch Industries. And others.

The Kochs just aren't easy to attack in the usual ways. Post–
Citizens United
, the left wanted to take down and intimidate anyone supporting Republicans or challenging the establishment, be they conservative or liberal. But the Kochs are tough. Their business is private—not subject to shareholder proxies. And it is hard to boycott. Charles and David Koch also choose to put some money into think tanks and nonprofits that have a greater degree of protection from disclosure. It also happens that those organizations are very effective. All this drives the left nuts.

As a result, its attack on the Kochs represented a bit of a twist. Mayer and crew knew that the two brothers, who are as stalwart as they come, would never give in to intimidation. So the Koch attack had other aims. One was to use the Kochs—as the left was doing with the Chamber of Commerce—as an example of the supposed evils of
Citizens United
and “dark money,” and to further their calls for disclosure. Another was to delegitimize the Kochs and any political work they did. Yet another was to throw up roadblocks—to slow down Koch work with harassing FOIA requests and IRS complaints. A final one was to make an example of the brothers, and make other donors fear they might face the same public defamation.

Holden thinks the first real hit came via Lee Fang, the same
ThinkProgress
employee who had made the spurious claim that the chamber was funded with foreign money. In a December 2009 piece in the
Boston Globe
, Fang recounted a Tea Party demonstration against Obamacare, noting that “few of the protestors were aware that a right-wing billionaire had paid” for the event, via its highly successful organization, Americans for Prosperity. The piece offered a misleading potted history of the Koch family fortune, but its key point was this: The Kochs' “hidden presence in the health care debate illustrates the extent to which the Old Right is creating—and then hiding behind—the grassroots fervor of middle-class opponents of health reform.”

“That was their first argument,” recalls Holden. “That the grassroots wasn't ‘real,' that it was ‘astroturf,' that citizens were being controlled by powerful forces. Because, gee, what average person would be upset by the greatest collapse of the economy since the Great Depression? Why would anybody be upset about universal health care, or bailing out banks and automakers, or all that spending? Why would they care? Obviously, somebody had to be controlling their minds.” (Holden can be a really sarcastic guy.)

The article also happened to be wrong. AFP, a 501(c)(4), is the ultimate grassroots organization. It has chapters in thirty-six states, and as of 2015 it had millions of members and volunteers. A lot of them give their time to the organization—attending rallies, pushing for legislative reforms, signing up new voters, getting out the vote. But a lot of them also give money, and that's a big source of the group's finances. Wealthier Americans also give, but the heart and soul of the group is a mass of ordinary impassioned Americans.

Holden found the piece ridiculous, and didn't worry too much. But the Mayer article, which ran in August 2010, was a wake-up call. The entire corporate team understood that the left was getting ready to paint the company as
Citizens United
gone wrong, and a menacing force in American politics.

That's one reason why Holden today finds himself spending a lot of time setting the record straight. The fifty-two-year-old grew up in Worcester, and still has a sharp Massachusetts accent. He's been general counsel of Koch Industries since 2004, but as the attacks grew he stepped up his involvement with the corporate defense team—working with the company's public affairs and communications teams. The tall, angular Irish Catholic is perfectly suited for the job. He gets the politics. He gets the law. He's sharp, quick, and aggressive. But mostly, he knows better than to wind himself into an angry pretzel over every attack. He has a sort of wry, sarcastic, even humorous approach to a lot of what goes on. And that's good for the Koch enterprise. Holden is a very normal and human kind of guy. (The mainstream media is constantly surprised that people who work for the Kochs are normal and human.)

At almost precisely the moment the Mayer article hit, Obama began his “shadowy group” stump speeches. The president often talked in generalities about conservative front groups, but he made an exception for the Kochs. He called their flagship group out by name. He did it for the first time on August 9, 2010, when he called groups with “harmless-sounding names like Americans for Prosperity,” and suggested it might be a “foreign-controlled corporation.” It was disingenuous to suggest that AFP was funded by foreign money (which is illegal). It was more disingenuous given that Obama knew it was backed by the Kochs. Which is why he was saying its name in the first place.

Because the administration was obsessed with the Kochs, as became clear in an incident at the end of August. White House economist Austan Goolsbee was providing a background briefing to reporters on tax policy—specifically reform of the corporate tax code and the White House's complaints about tax avoidance. Goolsbee in the course of it almost casually claimed that Koch Industries didn't pay any taxes. “So in this country we have…a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion-dollar business.” Out of the millions of companies in the United States to use as an example, Goolsbee had chosen one that most people have never heard of. And coincidence or not, it was the same day that Maryland representative Chris Van Hollen (still smarting from his DISCLOSE Act defeat) filed a complaint with the Federal Election Commission against AFP, challenging its status as a nonprofit.

The scandal wasn't so much that Goolsbee had chosen Koch; it was how he'd have known to choose it. Koch is a private company. Its taxes are confidential. Goolsbee and other White House officials are barred by law from looking at confidential taxpayer information. (It's also a felony to release confidential taxpayer information.) Either Goolsbee had illegally accessed information, or he had made the accusation up. Neither of which is good behavior by a senior official in the U.S. government.

No one in the press reported on the reference. But in the days that followed, Holden and the company heard from several sources about the mention. One participant had taken careful notes. The
Weekly Standard
revealed the Goolsbee reference on September 20, and it caused an instant controversy.

The White House's first response was to have an anonymous official provide
Politico
with a series of justifications for how it had Koch information. It started off with a slippery statement: “No senior administration officials have any access to anyone's tax returns.” (Did a junior one?) The anonymous official went on to say the information had come from public testimony to the President's Economic Recovery Advisory Board (PERAB) (which Goolsbee had directed) as well as publicly available websites, including
Forbes
and the Koch Industries site. Holden instantly threw up a red flag, noting that there was no information about Koch's taxes on its or
Forbes
's websites. There was also nothing in the PERAB testimony about the company's tax status. “My primary concern is, Why does our name keep coming up, why do they single us out?” he told the
Weekly Standard
.

California Republican representative Devin Nunes sent a letter to the House Ways and Means Committee asking for it to probe whether the White House had misused tax information. And Iowa Republican senator Chuck Grassley went straight to J. Russell George, the Treasury inspector general, asking for an investigation. George agreed to start one. The White House then tried a new way to calm the storm, this time saying that Goolsbee had been “mistaken.” It promised not to use the example again.

The story got even weirder three years later when, in the wake of the IRS revelations, the press began to look at Goolsbee's comment with fresh eyes. The IRS had been helping out the president with conservative groups; had it been giving the White House information on companies too? Goolsbee on May 14—just a few days after the Lerner revelations—posted a bizarre tweet, in which he said “there was no secret info on koch bros.” and went on to claim he'd got the information from a news article. But, as Goolsbee later admitted, the article was from 2003, and it was about an entirely different Koch brother (there are four of them), and about how he didn't pay corporate taxes in the state of Florida. A few days after that, Goolsbee deleted the tweet.

Thanks to continued administration obstruction, we still don't know whether the White House accessed confidential information. In October 2011, more than a year after the event, TIGTA sent a letter to Grassley saying his investigation was complete. He also added that Grassley couldn't see it. Why? Because the report was about confidential taxpayer information, and that meant it was confidential, even for congressional overseers. Amazingly, the White House was getting to hide behind the very law it was accused of breaking.

The government wouldn't even release the information to the Kochs, even though it was their confidential taxpayer information at issue. Holden was hopeful for a while. A TIGTA agent had alerted him when the report was finished, and advised him that he could file a Freedom of Information Act request to obtain it. Holden did, and was denied by both Treasury and the IRS. The IRS told him to submit again. He did. Denied again. Holden had plenty else to be getting on with at the end of 2011, so he dropped the issue.

But an outside organization known as Cause of Action didn't. At first it filed a FOIA asking about any White House requests for information from the IRS. After it got the runaround, it filed a FOIA lawsuit in fall of 2012 requesting documents showing “any communication by or from anyone in the Executive Office of the President constituting requests for taxpayer or return information.” Astonishingly, the IRS refused, again claiming that it did not have to turn over potentially illegal communication, because that potentially illegal communication dealt with “confidential” taxpayer information.

Even an Obama-appointed judge found this ludicrous. In August 2015, federal judge Amy Berman Jackson ordered the IRS to hand over any White House requests for taxpayer information. She wrote, “The Court is unwilling to stretch the statute so far, and it cannot conclude that [the confidentiality provision] may be used to shield the very misconduct it was enacted to prohibit.”

Yet to this day, the IRS has continued to resist that judicial ruling. The issue is likely destined for the full D.C. Circuit Court of Appeals, which Democrats packed with liberal judges in their waning days of Senate power, after unilaterally changing the Senate's long-standing filibuster rules in November 2013. Which means we may never know about any White House taxpayer snooping.

The 2012 election started with a bang. Obama was running as the incumbent, which meant he could start his campaign early while the Republicans warred over a nominee. His organization didn't waste any time. It ran its first national broadcast ad of his presidential reelection campaign on January 19, 2012. It was about Charles and David Koch.

Specifically, it was about Americans for Prosperity, which had just announced its own $6 million ad campaign, in which it intended to highlight the administration's failures. AFP's first ad, which ran in mid-January, focused on the politics behind Solyndra, the solar power company that went bankrupt in 2011. Investors behind Solyndra had helped fund Obama's campaign, and the administration had later loaned hundreds of millions of dollars to the firm, which then collapsed. Obama's ad was testament to just how sensitive he was to the issue and to those making it a voter topic.