The Great Libertarian Conspiracy

Democrats campaign against people they don't understand.


Back in 2008, if you pressed a libertarian planning to vote for Barack Obama, chances are he'd yelp out the name Austan Goolsbee. The Libertarians for Obama website (which, appropriately, shut down after November 2008), claimed "Obama's chief economic adviser—a friend from the University of Chicago, where they both taught—sounds an awful lot like a libertarian." The Atlantic's Megan McArdle repeatedly pinned her preference for the Democrat on his closeness with Goolsbee, "one of my favorite professors, and a hell of an economist." The libertarian economist David Friedman cited Goolsbee when musing to the San Francisco Chronicle that Obama might end up emulating the liberals who launched New Zealand's wildly successful deregulation project in the 1980s.

Two years later there probably isn't a libertarian-leaning person on earth who still thinks Obama has it in him to pull a Nixon-goes-to-China when it comes to downsizing government. The president has followed up George W. Bush's big-government disaster with a big-government catastrophe, setting consecutive annual records for spending, deficits, and debt while extending the pernicious too-big-to-fail doctrine all the way to the auto parts business. And every day on the hustings in advance of the Democrats' midterm drubbing, Obama campaigned against a wholly fictional Bush record of deregulation and spending cuts.

"Between 2001 and 2009," the president falsely claimed in September, "a very specific philosophy reigned in Washington: You cut taxes, especially for millionaires and billionaires; you cut regulations for special interests; you cut back on investments in education and clean energy, in research and technology. The idea was if we put blind faith in the market, if we let corporations play by their own rules, if we left everybody to fend for themselves, America would grow and America would prosper." As any good 2008 libertarian for Obama could tell you, that description does not square with Bush's record of jacking up federal education spending by 58 percent in real terms, increasing significant regulations and regulatory spending at rates not seen since Richard Nixon, and boosting discretionary spending more than any president since Lyndon Johnson.

And what about our University of Chicago hero Austan Goolsbee? In September he became chairman of the president's Council of Economic Advisers. Just before the appointment, Goolsbee gave a background briefing to reporters on behalf of the administration in which he trashed the most influential donors the libertarian universe has ever seen: Charles and David Koch, funders of the Cato Institute, the Mercatus Center, the Institute for Humane Studies, and much more. (David Koch sits on the Reason Foundation's Board of Trustees.)

"So in this country, we have partnerships, S corps, we have LLCs—we have a series of entities that do not pay corporate income tax, some of which are really giant firms," Goolsbee said. "You know, Koch Industries, I think, is one, is a multibillion dollar business, and so that creates a narrower base, because we got literally something like 50 percent of the business income in the U.S. is going to businesses that don't pay any corporate income tax."

How would an administration apparatchik even know about the tax status of a privately held company (which, according to a Koch lawyer quoted by The Weekly Standard, does indeed pay corporate taxes)? That's what the Treasury Department's inspector general was looking into at press time. An administration spokesperson claimed to Politico that Goolsbee's comment "was not based on any review of tax filings" and that "we will not use this example in the future."

Yet the administration has continued to single out the Kochs for criticism. Since August, when The New Yorker's Jane Mayer published a widely cited hit piece about "the billionaire brothers who are waging a war against Obama," the president, various administration officials, and scores of commentators have zeroed in on Koch Industries in a way that the right focused on George Soros during the Bush era: as a shadowy, self-interested, all-powerful bogeyman attempting to hijack American democracy.

New York Times columnist Frank Rich accused the Kochs of plotting "a billionaires' coup" to secure "corporate pork," tax cuts, and a blank check for Wall Street bailouts. "What the Koch brothers have bought with their huge political outlays," opined Times columnist Paul Krugman, "is, above all, freedom to pollute." The New York Observer's Yasha Levine concluded that the brothers are "not very" libertarian, as evidenced by their fondness for "using government subsidies to maximize their own profits." The Democratic National Committee hammered Koch Industries for laying off 118 workers at a North Carolina plant: "The question for the Kochs is instead of spending money on secret campaigns to fill the government with candidates that will enact their special interest agenda, why aren't they spending that money on saving those American jobs?"

And in August, Obama hinted darkly at the motives of the Koch-funded group Americans for Prosperity. AFP, said the president, is "running millions of dollars of ads against Democratic candidates all across the country. And they don't have to say who exactly the Americans for Prosperity are. You don't know if it's a foreign-controlled corporation. You don't know if it's a big oil company, or a big bank."

If these attacks appear to lack a consistent theme, it's because Democrats need the Koch bogeyman to accomplish so many political tasks. The narrative that emerged after the Mayer article, which became a kind of pre-election Rosetta Stone for Democrats trying to decode why they were going to lose in 2010 and maybe 2012, boils down to a strained four-part theory: 1) The ruthlessly powerful Kochs are "covertly" waging a war against Obama on behalf of right-wing Republicans; 2) they are doing so chiefly out of their own corporate self-interest (mostly to pollute) and a general "pro-corporate" agenda; 3) they are creating and/or co-opting populist anti-government sentiment they don't necessarily believe in; and 4) this is all a direct effect of the Citizens United decision, in which the Supreme Court lifted restrictions on political speech by corporations (though wealthy individuals such as the Kochs have always been free to spend their money on political messages).

What a long, strange trip it has been for the Kochs. In 1980 David Koch was the vice presidential candidate of the Libertarian Party, when he and Ed Clark (a self-described "low-tax liberal") ran on a platform that included abolishing the CIA and FBI. Not long before that, according to Senior Editor Brian Doherty's definitive history Radicals for Capitalism, Charles Koch had openly considered buying the progressive opinion magazine The Nation before helping to launch Inquiry, which published such writers as Noam Chomsky and Marcus Raskin. The conservative flagship National Review beat The New Yorker by a solid 31 years with its cover-story shocker that "anarchists, backed by corporate big money" were "infiltrat[ing] the freedom movement." Horrors!

Although I assume that being the No. 1 political enemy of the U.S. government must be harrowing or at least irritating to the Kochs (with whom I have interacted less than I have with any other Reason Foundation board member, and indeed less than I have with George Soros), I can't help but smile at what this weirdly asymmetrical conflict symbolizes. There are millions of people—including me, including the Kochs, including people who have never heard of the Koch family—who feel some basic affinity for the notion that that government is best which governs least. Although this is a bedrock tradition in the American polity, it has had almost zero representation in Washington, D.C., during the last decade of bipartisan misgovernment.

Yet libertarians are supposed to be a threat to the republic. Just imagine if we had any political power!

Matt Welch (matt.welch@reason.com) is editor in chief of reason.