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Anatomy of a fraudulent "grassroots" campaign: Citizens for a Sound Economy
in Oregon
By Noah Page
13 February 2004
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The campaign by the right-wing organization Citizens for a Sound Economy
(CSE) to overturn a legislatively approved tax increase in Oregon and
implement more than half-a-billion in cuts to public services was presented
by both CSE and its supporters as a "grassroots" political operation. This
claim is worthy of serious examination.

CSE, a Washington, D.C.-based corporate front group founded by David and
Charles Koch of Koch Industries, is very much a product of the conditions
that afflicted American capitalism in the postwar period. Only by examining
the forces that gave rise to it and looking closer-which is to say, in sharp
contrast to Oregon's media, looking at all-at the social layers served by
CSE, can this "anti-tax" campaign be understood.

In the early 1970s, corporate America faced serious challenges. With the end
of the postwar economic boom and the continuing-and increasingly
unpopular-war in Vietnam, domestic unrest was on the rise. A serious mass
radicalization, with definite anti-capitalist overtones, alarmed privileged
elites in both government and corporate circles.

This perceived threat was analyzed at the time by Lewis F. Powell, Jr., a
corporate attorney and future Supreme Court justice, in a document that has
since been dubbed the "Powell Manifesto." Written at the request of the U.S.
Chamber of Commerce leadership, Powell's memo was distributed widely to the
chamber's national membership of business executives and trade associations
in August 1971.

It began with an observation on how these populist attacks on "the free
enterprise system" were seen by the ruling elites:

"[W]hat now concerns us is quite new in the history of America. We are not
dealing with sporadic or isolated attacks from a relatively few extremists
or even from the minority socialist cadre. Rather, the assault on the
enterprise system is broadly based and consistently pursued. It is gaining
momentum and converts."

Powell recommended a specific response: "[T]he time has come-indeed, it is
long overdue-for the wisdom, ingenuity and resources of American business to
be marshalled against those who would destroy it."

This memo, the contents of which were later reported by investigative
journalist Jack Anderson, had a tangible result. In pronouncing the very
survival of the free-market system at stake and calling for a well-financed
counterattack, Powell's memo precipitated an immediate and vast influx of
corporate profits into establishing right-wing "think tanks" and beefing up
existing ones.

These groups included the Business Roundtable, founded in 1972 by the CEOs
of Alcoa, General Electric, U.S. Steel, and other companies; the Heritage
Foundation, founded in 1973 with a quarter-million-dollar gift from the
ultra-conservative businessman Adolph Coors; and the Cato Institute, founded
in 1977 by petroleum millionaire Charles Koch.

Koch Industries, founded in 1927 by right-wing extremist and John Bircher
Fred G. Koch, represents a particularly brutish element within the globe's
corporate elite. Much more could be said about it. For the present, it is
enough to observe that its ties with the family of George W. Bush and
conservative causes are well documented.

Here's a recent example: In September 2000, Koch Industries was indicted on
97 counts of environmental crimes. The company faced $352 million in fines,
if convicted. That same year, according to the magazine Mother Jones, David
Koch and his wife Julia contributed $487,000 to the Republican Party. In
April 2001, the Bush Justice Department accepted a guilty plea in which Koch
Petroleum Group agreed to pay a $20 million fine-pocket change for the Koch
family.

Koch Industries, based in Wichita, Kansas, owns holdings of oil, natural
gas, ranching, securities and finance firms. It is one of the world's
wealthiest corporations. In 1984, with an ally in President Ronald Reagan,
the Koch brothers launched a political group, Citizens for a Sound Economy,
which deliberately had a more activist bent than the Cato Institute.

Paul Beckner, who is the president of CSE, describes this mission on the
group's web site: "We are not a 'think-tank,' content to study the issues
and publish papers and reports," Beckner writes. "There are many groups
doing important work in this area. CSE's mission is to turn those ideas and
policies into action."

Two years later, another right-wing group, Americans for Tax Reform (ATR),
was launched out of Reagan's White House, intended as an in-house operation
to build support for the 1986 tax "reform" bill. ATR eventually became an
independent entity and is headed by right-wing strategist Grover Norquist, a
repugnant figure who has never been so precise about his own "ideas and
policies" as when he told National Public Radio journalist Mara Liasson on
May 25, 2001, that: "I don't want to abolish government. I simply want to
reduce it to the size where I can drag it into the bathroom and drown it in
the bathtub."

The extent to which CSE relies on corporate profits for its nationwide
operations is illustrated in a report published in October 2000 by the
non-profit consumer watchdog Public Citizen. According to this analysis, the
top 10 industry sectors contributing to CSE in 1998 were oil and gas
companies, telephone companies, tobacco products, electric companies, sugar
manufacturers, food retailers, auto manufacturers, and the pharmaceutical,
insurance and finance industries.

That year, CSE benefited from more than $13.8 million from corporate
contributors, conservative causes and a few wealthy individuals (e.g.,
former White House counsel C. Boyden Gray, $242,453). Top individual
corporate donors, meanwhile, included: US West Communications ($1.2
million), Philip Morris Companies, Inc. ($1 million), Koch Industries Inc.
($626,500), DaimlerChrysler Corp. ($535,000), and the General Electric
Company ($500 million).

The Washington Post examined CSE's stealth influence in an article published
January 29, 2000. CSE, the report noted, got more than $1 million from
Philip Morris Co. at the same time that the "grassroots" group was opposing
cigarette taxes. And while CSE was endorsing deregulation that would permit
US West to offer long-distance telephone service, that company contributed
$1 million of its own.

CSE's internal documents, the Post reported, "provide a rare look at think
tanks' often hidden role as a weapon in the modern corporate political
arsenal. The groups provide analyses, TV advertising, polling and academic
studies that add an air of authority to corporate arguments-in many cases,
while maintaining the corporate donors' anonymity."

The article, written by Post reporter Dan Morgan, went on to quote an
observation by Gary Ruskin of the Congressional Accountability Project: "It'
s part of a rent-a-mouthpiece phenomenon. There are mercenary groups that
function as surrogates when industry feels it's not advantageous for it to
speak directly."

It is worth pausing to note that this risk was cited as one reason in Powell
's memo to the U.S. Chamber of Commerce in 1971 that companies should
marshal the financial resources to fund such groups, instead of engaging
directly in propaganda work themselves. In Powell's words: "[T]here is [a]
quite understandable reluctance on the part of any one corporation to get
too far out in front and to make itself too visible a target."

CSE's campaign in Oregon, while relying on some small contributions from
individuals, primed its anti-Measure 30 pump significantly with its own
corporate-funded coffers in Washington, D.C. Items as small and
insignificant as office supplies and even balloons for campaign rallies were
paid for by the D.C. office.

CSE's contributors in Oregon were similarly weighted by large donations from
local companies and trade associations, including Columbia Helicopters, Inc.
($85,000), Adec, Inc. ($80,100), Seneca Sawmill Co. ($75,100), Jeld-Wen,
Inc. ($55,100), Freres Lumber Co. ($27,550) and the Oregon Grocery
Association PAC ($7,500).

Oregon is just one front in this national assault being waged by corporate
front groups like CSE and Americans for Tax Reform. Assured that Bush and
the Republican-controlled Congress will advance its national agenda, these
groups are now free to wage war at the local level, one state at a time.

The Wall Street Journal, in its February 5 editions, observed the
"encouraging news" from Oregon. Following Measure 30's defeat, Norquist's
ATR issued a press released that cited CSE's campaign as "the biggest
victory" in the February 3 election.

"With this Congress and President Bush, tax hikes in Washington are dead
before the words are even uttered," Norquist was quoted as saying. "And with
massive taxpayer victories in Alabama, California and now Oregon, the
national consensus against tax increases is firming up even in liberal
states."


--
"We must create a <economic> crisis in order to ensure that there is no
alternative to a smaller government." - Bush - Imprimus Magazine 1995.

"We seek to remove resources from the control of the state, thereby starving
it." - International Society for Individual Liberty - NeoCon Libertarian.

"Throughout his term, Bush has implied tax cuts would starve the government,
paying for themselves by causing budget deficits that, in turn, would place
heavy pressure on Congress to lower spending." - Jeff Lemieux - Senior
Economist - Progressive Policy Institute.

"They have an agenda which is to starve the government of revenue. But in
order to get it through, they keep on having to pretend that the tax cuts
are affordable, and so they've been suppressing the likely cost of
everything, including the war on terror." - Paul Krugman - Economist.