Koch Brothers and How to Buy U.S. Government

UYGUR: Now, we come at the story of the Koch Brothers and how you can buy our government? David and Charles Koch each worth $21 billion. They own Koch industries, an oil and chemical giant that stands the second largest privately owned company in the U.S. In 1980, David Koch ran to the right of Ronald Reagan as a libertarian party`s vice presidential candidate. When that failed, they changed tactics and decided to buy Washington instead. This is a story of how they did that.

First of all, they decided then, you know what, why don`t we start think tanks? So, they funded 35 conservative or libertarian groups. They spent almost $48 million to fight global warming or that opposition to global warming groups, of course. That was from `97 to 2008. I wish they would fight global warming, they do the opposite. And we`ll tell you why in a second. They also funded the CATO Institute, the Federalist Society, and Americans for prosperity. These are some of the largest conservatives groups in the country. Now, let`s go to America for prosperity. They spent $40 million in the 2011 election cycle mainly against Democrats.

They use that in 100 races across the country in Congress. And with that money, they held rallies, they did phone banks, they canvas door to door, basically pretending to be grassroots when in fact, all they cared was not just about the congressman but specifically about the House Energy and Commerce Committee. And what did they do there? Well, they spent $279,500 and they gave it to 22 of 31 Republicans on the committee. They also gave 32,000 to five Democrats. Now, why did the Americans for prosperity care about the new Republicans on the House panel? Well, I`m going to get to that in a second.

But look at what they did with the freshman. Five of the six freshmen benefited from Americans for prosperity in 2010. So, hey, they are definitely on their side. Nine of the 12 signed on to the pledge on greenhouse gases that they wanted Americans for prosperity wanted them to take. So, what was that pledge? Well, here it is. They said that the pledge on greenhouse gases is quote, “ask politicians to denounce a democratic led effort to compel oil refineries to clean up emissions of greenhouse gases through a so-called Cap-and-Trade system.” Now, do you get what`s happening here, folks?

They are in the oil business and they are saying, hey, we don`t want oil refineries to get cleaned up. Because if you clean up oil refineries and have less pollution and less global warming, it costs the Koch brothers a tremendous amount of money. So, they invest a little bit of money to buy these politicians, they specifically target the commerce and Energy Committee and then voila, look at that, hey, those are all my boys! And what`s the first thing they want to do? The Republicans of course want to limit the EPA from controlling global warming. Say, hey, back off the oil refineries. Those guys paid our bills. That`s how our politicians get bought and in this case by the Koch brothers.

With me now is Kathleen Hennessey, reporter from the “Lost Angels Times,” she co-wrote a fascinating story about the link between the Koch and the GOP in today`s paper. All right. Kathleen, this program by the Kochs to buy influence seems has been an enormous success, is that right?

KATHLEEN HENNESSEY, LOS ANGELES TIMES: It`s certainly been successful. I don`t think I would say that they were buying influence so much as they were.

UYGUR: Renting it?

(LAUGHTER)

HENNESSEY: They set out several years ago to sort of beef up their political operations. They were among many Republicans, you know, during the Bush era who felt that small government, free market policies were not being followed and they decided several years ago to sort of amp up some of their operations. And I think we`re seeing, it was a gradual process and we`re seeing the results of that now.

UYGUR: And it was just a lovely coincidence that they`re free trade, free market policies wound up helping them pollute a little more. I mean, that`s just how it goes, right?

HENNESSEY: Well, they would say that, you know, they are certainly — that they believe that a certain amount of regulation is too much regulation. This is a long standing ideological position for David and Charles Koch. David Koch was a libertarian candidate in 1980 as you mentioned. So, you know, they would argue that this is their ideological position and they`ve been true to it. And may also benefit their company`s bottom line. Certainly both seem to be true at this point.

UYGUR: Let me ask you about Representative Mike Pompeo, he`s from their home district and he has some interesting ties to them. Can you tell us about that a little bit?

HENNESSEY: Sure. Congressman Pompeo has a long relationship with the Koch brothers there. He received a bit of investment in a company that he started many years ago which he since sold. And, you know, he`s from their home district. So, he`s known quantity to them and connected to their industries and for instance, he hired a former Koch lawyer as his chief of staff.

UYGUR: That`s funny. Again, a wonderful coincidence where they invest in his business, he makes some money and then when he`s in Congress, he hires their guy as chief of staff. Again, probably just a coincidence. So, let`s go to Fred Upton who is also on the committee. Now, he was a little skeptical in regards to the right wing talking point on global warming. He originally tells a little bit about that. Where was his original position and where is he now?

HENNESSEY: Well, his original position and his original statements indicate that he at the very least considered global warming a serious problem that needed to be taken seriously. He as part of an effort to win the chairmanship once Republicans had won in November, won control of the House, he had to, you know, make sort of a campaign for the chairmanship and there was some opposition from other conservative groups and he made a lot of steps basically sort of toughening up his rhetoric on the EPA in particular and its role in regulating greenhouse gases. And he was successful in that effort. And, you know, became the chairman and shortly after came out and wrote an Op-ed in “The Wall Street Journal” basically endorsing the same policy that Americans for prosperity has been advocating for a long time.

UYGUR: They`re among these top ten donors. He gets the money from them. Kind of changes his position, all of a sudden, he thinks global warming is no big deal. But probably a wonderful coincidence. All right. Now, one last question for you real quick. You know, we got the pollution that might come from refineries, et cetera, but there`s actually an excellent investment for them because it also affects their taxes, right? Tell us a little bit about that.

HENNESSEY: Well, I don`t want to say that this is part of a — I guess that their approach and their tactics is one that`s sort of been taken by democratic fundraisers and benefactors as well, that they sort of in many ways describe themselves as following the playbook of George Soros and other — and that they are trying to coordinate sort of various groups advocating for a point of view and that`s what they would argue that they are doing in this effort.

UYGUR: All right. I know. Their point of view saving them millions perhaps billions in taxes. Well, look at that. Again, a wonderful coincidence.

All right. Kathleen Hennessey of L.A. Times, thank you so much.

HENNESSEY: Thanks, Cenk.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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