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Democrats take on the Koch brothers

By Dana Bash, CNN Chief Congressional Correspondent
updated 5:56 PM EDT, Fri May 16, 2014
  • Senate Majority Leader Harry Reid calls out Koch brothers for anonymous campaign donations
  • Democrats are trying to make the Koch brothers midterm villains
  • Kochs donate tens of millions of dollars to fund anti-big government campaigns
  • Critics say their wealth has outsized influence on elections

Washington (CNN) -- Flooding the airwaves this election year in battleground states across the country are Democratic ads featuring two men not on any ballot, and not even politicians.

They're the Koch brothers, billionaire businessmen and GOP mega donors.

Senate Majority Leader Harry Reid takes the unusual step of regularly ripping Charles and David Koch from the Senate floor. He says they have "no conscience," calling them "un-American." And now, is proposing a constitutional amendment to ban the kind of anonymous political giving the Kochs engage in and, some experts say, perfected.

Other high-profile Democrats are hitting the Kochs, too -- from Vice President Joe Biden to former Vice President Al Gore, who this week argued Republicans are reluctant to publicly accept the existence of man-made global warming for fear of crossing the Koch brothers.

"I don't think it's particularly complicated. They will face primary opponents financed by the Koch brothers and others who are part of their group," Gore said.

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Democratic sources tell CNN it's a carefully crafted strategy to make the Koch brothers the 2014 election villains -- the personification of the rich manipulating the political system -- bankrolling a GOP agenda to get richer.

"The Koch brothers seem to believe in an America where the system is rigged to benefit the very wealthy," Reid says as part of his regular anti-Koch rant.

Democrats are also trying to goad Republicans into publicly defending them as a way to attack GOP candidate as being in the Kochs' pockets.

Senate showdown likely coming over campaign spending

It begs the question: How wealthy are they?

Forbes magazine puts Charles and David Koch as the fourth-richest men in the United States, with a fortune of more than $41 billion.

An oil, gas and textile conglomerate

Their oil, gas and textile conglomerate, Koch Industries, makes products people use every day: Dixie Cups, toilet paper, Stainmaster products and even LYCRA. Their business is privately held. The brothers own 84% of Koch Industries shares.

Their libertarian politics come from their father, Fred Koch, a chemical engineer whose experience working in the Soviet Union instilled an aversion to big government.

Charles and David Koch spend tens of millions of their personal wealth to push those anti-big government views. But exactly how much they donate is impossible to track because it is cloaked in secrecy. They fund groups that are not required to disclose donors -- groups that work to determine the outcome of federal, state and even municipal elections.

"They are very secretive in the way they operate politically," explained Dave Levinthal of the Center for Public Integrity, which tracks political spending.

"They have a very vast and wide network of non-profit and limited liability companies," he said.

It's a huge web of roughly three dozen conservative groups funded, at least in part, by the Kochs. One group, Freedom Partners, acts as a hub of sorts. It is funded by the Kochs and 200 other like-minded businessmen. If that sounds confusing, that's probably the point.

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Their IRS filing from 2012 shows Freedom Partners raised more than $250 million that election year.

One of the most prominent Koch-backed groups is Americans for Prosperity, which the brothers helped found. David Koch is still on the board, and one of his few public speeches each year at AFP's annual meeting.

AFP puts its money where its mouth is

Could spend $125 million this cycle

An AFP official told CNN that it's on course to spend more than $125 million this midterm election year, which would be unprecedented, and likely more than the party apparatus will spend.

And like the political parties, that money will go toward television ads, ground operations and voter data collection. But unlike the political parties, AFP's money comes from anonymous donations.

"We're going to shield the privacy and the First Amendment rights of the folks who support us," AFP President Tim Phillips said.

Phillips says he is proud to have the Kochs' support, but also says they have 90,000 donors from all 50 states as well.

"They're interested in the policies we're pursuing. They're interested in, are we going to have cheap, affordable, reliable energy," Phillips said. They're interested in are we going to stop tax increases from going thru the roof and hurting Americans, including businesses."

Democrats say the idea that money is going to opposing government regulation and environmental protections because of economic principle is laughable. They say it's really all about making the Kochs and like-minded businessmen richer.

To counter that, Koch allies argue that ethanol subsidies help Koch industries, but AFP and other groups the Koch's fund, lobby against the government assistance.

CNN sought an interview with Charles or David Koch, but the media-averse brothers declined.

A spokesman, instead, offered Nancy Pfotenhauer, their longtime friend and former employee.

"I would describe them as people who are driven by integrity, humility," Pfotenhauer said. The image of the Koch brothers as two fat cats with puppet strings controlling Republicans is "just not reality," she said.

Infusing America with libertarian ideals

Those who know Charles and David Koch say they have a long-term goal of infusing America with their libertarian ideals.

But each has a personal passion.

For Charles Koch, a soft-spoken intellectual who lives in the brothers' hometown of Wichita, Kansas, it's higher education. He has pumped millions into colleges and universities around the country, mostly to push free market economics with college students. He even founded the Cato Institute back in 1974, a think tank dedicated to studying and advancing libertarian ideals.

By contrast, David Koch lives in New York like a traditional big city billionaire. His passion outside of political advocacy is donating tens of millions to medical research, hospitals, and even the arts -- a liberal bastion. He gave $35 million to bring a dinosaur exhibit to the Smithsonian, and even restored the ballet at Lincoln Center -- which bears his name.

Their name might be on buildings and on Democrats lips, but they remain largely silent.

Earlier this year, shortly after Reid launched his anti-Koch campaign, Charles Koch took the rare step of penning an op-ed in the Wall Street Journal.

"Instead of encouraging free and open debate, collectivists strive to discredit and intimidate opponents. They engage in character assassination. (I should know, as the almost daily target of their attacks)," he wrote.

"Such tactics are the antithesis of what is required for a free society -- and a telltale sign that the collectivists do not have good answers," wrote Koch.

So, why don't they speak out more; do interviews to explain and defend themselves?

"I think that instinct is somewhat mediated by the, just the nastiness and the viciousness of these attacks that have real ramifications from the standpoint of security," Pfotenhauer said.

She and other Koch sources won't be specific, but insist they've had significant death threats against them personally, and threats against their businesses.

But the reality is that Charles and David Koch don't just cling to privacy because of security concerns. They're trying to limit public scrutiny -- even as Democrats make them the faces of fat cat influence.

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