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Arkansans of the Year: Koch brothers 

Charles and David Koch's money helps Arkansas Republicans gain legislative majority.

Once upon a time, the major players in Arkansas politics were from, well, Arkansas. But the vagaries of campaign-finance law have opened the floodgates for deep-pocketed individuals, groups and corporations from far and wide to have their say, and then some. So it came to be that David and Charles Koch, billionaires from Kansas, didn't need to set foot in the state to have an outsized impact on historic elections that flipped the legislature from Democratic to Republican for the first time since Reconstruction.

The Koch brothers fund Americans for Prosperity, a conservative advocacy group based in Virginia. If you're an Arkansan with a mailbox, there's a good chance you've heard from AFP — it sent out more than a million mailers in the state over the last two years pushing the conservative line on local issues and elections.

What's the Koch agenda? As virulently anti-government libertarians (David Koch was the Libertarian party's vice-presidential candidate in 1980), the Koch brothers would like to see significant reductions in individual and corporate taxes and in the social safety net. The politicians and groups they fund are generally anti-union, anti-regulation and skeptical of global warming. Here in Arkansas, they would likely have an interest in stopping environmental regulation, slashing spending and taxes and stopping Medicaid expansion (they are strongly opposed to the Affordable Care Act).

AFP is probably best known for national attacks on President Obama and his agenda, but the group made a splash in the 2012 election cycle with a focus on going small, targeting local races and issues in 35 states with a $100 million budget.

Among those states was Arkansas, a prime target as the last state in the old Confederacy with a Democratic legislature, and with every seat up for election last year because of redistricting. In addition to the mailings, AFP led a bus tour through the state (featuring the actor who played Cliff the postman on "Cheers"!), blanketed the airwaves with television advertisements, made 60,000 phone calls and knocked on 15,000 doors.

"Out-of-state interest groups saw this past election cycle as their opportunity ... to turn another legislature," Arkansas Democratic Party spokesperson Candace Martin said. "So they took that opportunity."

AFP's Arkansas chapter reportedly spent somewhere in the neighborhood of $1 million during the election cycle, though the exact figure is impossible to know since AFP is not legally required to disclose how much it spends. AFP Arkansas state director Teresa Oelke declined repeated requests for comment on this story. In an Associated Press article last October, she said that AFP spent $900,000 in the state over the course of two years. Other conservative advocacy groups followed suit, spending unknown sums on mailings and advertisements, including the Faith and Freedom Coalition and 60 Plus (both also reportedly have gotten support from the Koch brothers).

The materials produced by these groups generated controversy for factually dubious information, including presenting procedural votes as support for taxes that legislators had in fact opposed. Many focused on candidates supposedly voting to support or oppose "Obamacare," though of course local legislators had no vote to cast on passing the federal healthcare law. Some mailers also had racial overtones, one using an image of a black doctor as the face of Obamacare.

One of the biggest buys was an AFP ad that made the surreal claim that people were leaving the state because of high taxes and government debt, which led Gov. Mike Beebe to accuse AFP of "trashing Arkansas."

"AFP deliberately sent out pieces of mail that distorted the record," Dan Roth, spokesman for the Democratic Legislative Campaign Committee, said. "If you have organizations spending vast sums to distort elected officials' records, it creates a different environment."

The DLCC responded by committing resources to the state for the first time in recent history, spending around $1 million. Even with DLCC support, Democratic candidates in targeted races were outspent 3-to-1 if outside money is included, according to Martin.

All of this spending, unprecedented in legislative elections in Arkansas, has been a bit jarring, both to candidates and voters. The candidates themselves mostly still operate on shoestring budgets, and it's relatively easy for an unaffiliated group to outspend the actual campaigns. In local elections, a little bit of money goes a long way.

"It's unknowable in terms of how many actual dollars [AFP spent]," Democratic political consultant Michael Cook said. "Maybe it was a million, maybe it was [more], but it was a ton of money and I can just tell you ... talking with candidates across the state ... it was just a presence that was felt in these races."

AFP's mission statement explains that it is "committed to educating citizens about economic policy and mobilizing those citizens as advocates in the public policy process." The language about "educating" is no accident — the group is classified as a 501(c)(4) non-profit under the U.S. tax code, which requires it to operate "exclusively for the promotion of social welfare."

Here's where things get slippery. Groups like AFP can satisfy IRS rules as long as they are primarily engaged in promoting the common good and general welfare of the community. That means that the boundaries for allowable activity are exceedingly vague — advocating on the issues without explicitly endorsing or opposing a candidate counts as promoting social welfare (and they can make an explicit endorsement if they like, it simply can't be their primary activity and they have to report what they spent).

If that sounds like a giant loophole, it is. Media from AFP and other 501(c)(4) groups often named specific candidates and expressed clear approval or disapproval ("Jon Hubbard stood with us" or "Butch Wilkins voted to support President Obama's healthcare plan"). It simply avoided language like "vote for." AFP's education efforts just so happened to take place in 32 House and Senate districts that had competitive races. When the AFP bus tour made a stop in Mountain View, where Republican Missy Irvin happened to be running for Senate, Missy Irvin happened to be on hand. This was one of many stops that featured a cheap-gas giveaway to potential voters that showed up.

Yet because of the legal loophole for 501(c)(4)s, AFP does not have to disclose who its donors are, even as they engage in activity that appears obviously political. Oelke has presented AFP as a grassroots organization raising money within the state, but the public remains in the dark about who — and where — the group's funders are. As long as they remain nominally independent of the campaigns, there are no limits on how much they spend.

"Even though they claim to be a non-partisan organization, this election clearly showed that they were a shell organization for the Republican Party," DLCC spokesman Roth said (DLCC is a 527 organization that, unlike 501(c)(4)s, must disclose its donors).

While Martin said that she believed that strong candidates and a superior ground game would keep Democrats competitive, she said that the mammoth spending advantage that outside groups granted Republicans was difficult to overcome, and helped give them the House and Senate.

"It definitely swung things," she said. "Obviously the balance of power is different now. It would be foolish to say that didn't have any effect, because obviously it did."

Of course, Arkansas went heavily for Republican Mitt Romney in the presidential election and Republicans had already made significant gains in the legislature in the wave election in 2010. So perhaps Arkansas was due to be a red state, and it's impossible to know whether it was the money that put Republicans over the top.

Cook believes that AFP's money was ultimately not the difference maker. The day after the election, he called AFP the election's "biggest loser" and cited a whopping 20 races that AFP had targeted and lost.

"At a certain point, when you have that much mail and that much television, it just becomes lost in all the noise," he said. "To a certain extent, people tune out."

Still, even if Cook is right that AFP lost more races than it won, the broader goal was presumably to gain control of the legislature, and that much was accomplished, even if it was by a nose in the House. And $1 million, for all of the noise that made in Arkansas, is a drop in the bucket for AFP. Even a small tilt in the outcome is likely a happy return for an investment this (relatively) small.

"In the grand scheme of things that's not a whole lot of money for billionaires," Cook admitted. "They have their agenda that they want to impose on various states so I would not be surprised to see them slapping down another million or two million dollars [in the next election cycle]."

Martin also expects AFP to continue spending big bucks in Arkansas. "They have apparently unlimited resources," she said. "We definitely have to operate under a new set of circumstances."

So we can expect all those mailers and phone calls and ads to be the new normal. Depending on your perspective, you might view this as either a happy increase in information and engagement with local elections, or the pernicious intrusion of big money over the public interest. Either way, the landscape of local races has dramatically changed, and there's no turning back.

The other question is how the new dynamic will impact policy. Elected officials will presumably be paying attention to AFP's always-vocal stands on the issues given the likely involvement of AFP when they're up for re-election.

Medicaid expansion will present a serious test. In the past, pressure from powerful local interests might have persuaded budget-conscious conservatives to jump at the chance to gain hundreds of millions of federal dollars. But does that pressure register if a group like AFP is willing to outspend everyone?

"Will the Republicans dance with them who brung them?" Roth asks. "They're going to have to decide whether they are going to uphold what's best for the constituents."

Republicans in particular may be very reluctant to stray from conservative dogma, given the threat of a primary challenge from the right. AFP successfully got involved in several Republican primaries last year.

One of them was the Senate race between former Rep. Rick Green and Sen. Bruce Holland. Green believes that a flood of AFP mailings attacking him — with what he says were false charges — were a deciding factor.

"I have been labeled as a moderate Republican, whatever that means," he said. "I felt like I was pretty conservative. But if you didn't vote in lockstep with exactly the agenda some put out there, then you were thrown under the bus."

Green expressed concern about how this would impact votes in the legislature. "You're agreeing to voice the opinion of some group in Virginia — are you really representing the people you aspire to represent?"

"You see this on the national level," Cook said. "Republicans toe the line so much because they are fearful of a primary challenge funded by these third-party groups. If that trickles down ... that could be bad for Arkansas and Arkansas policy."

As for the Koch brothers, among the world's richest people as heads of the petrochemical conglomerate Koch Industries, no one doubts that they are true believers in a libertarian ideology that advocates for low taxes and less government regulation. But it's hard not to notice how nicely that dovetails with their financial interests. That includes interests in Arkansas, among them a massive paper plant in Crossett.

Whether it's ideology or interest, the Koch brothers have never been shy about spending on politics. We'll likely keep hearing from them here in Arkansas, even if we never know it was them.

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