Citizens for a Sound Economy

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

This article is part of the Center for Media & Democracy's spotlight on front groups and corporate spin.

Citizens for a Sound Economy (CSE) was a powerful industry-funded think tank that promoted deregulation, low taxes, and policies favorable to its corporate donors. When the group was still active, the consumer advocacy organization Public Citizen wrote, "While CSE purports to be a grassroots voice of consumers, it is, more accurately, a front group for corporate lobbying interests that refuses to reveal its funding sources."[1]

CSE was co-founded in part by David H. Koch,[2] was funded principally by the Koch brothers ($7.9 million between 1986 and 1993, according to the Center for Public Integrity),[3] and continued to maintain strong links with them during its existence.[4] In 2003, an internal rift between CSE and its affiliated Citizens for a Sound Economy Foundation (CSEF) led to a split in which CSEF was renamed as a separate organization, called Americans For Prosperity.

In July 2004, CSE announced it was merging with Empower America to create FreedomWorks.[5]

Main article: FreedomWorks
Koch Wiki

The Koch brothers -- David and Charles -- are the right-wing billionaire co-owners of Koch Industries. As two of the richest people in the world, they are key funders of the right-wing infrastructure, including the American Legislative Exchange Council (ALEC) and the State Policy Network (SPN). In SourceWatch, key articles on the Kochs include: Koch Brothers, Koch Industries, Americans for Prosperity, American Encore, and Freedom Partners.

Ties to the Koch Brothers

CSE was co-founded in part by David H. Koch,[6] was funded principally by the Koch brothers ($7.9 million between 1986 and 1993, according to the Center for Public Integrity),[7] and continued to maintain strong links with them during its existence.[4] After founding the Cato Institute and the Mercatus Center, according to the New Yorker, the Kochs had "concluded that think tanks alone were not enough to effect change. They needed a mechanism to deliver those ideas to the street, and to attract the public’s support."[8] CSE was founded to be a "sales force" for those ideas, as David Koch explained to the Weekly Standard.[9]

Richard Fink, the first president of CSE, had previously founded the Mercatus Center, a think tank at George Mason University, with backing from the Kochs. Fink has also been on the boards of Koch Industries, Freedom Partners, and two of the Koch Family Foundations.[10]

Activities

Fighting for Corporate Donors' Interests

In a 2000 story on CSE, the Washington Post described it as one of the think tanks that play an "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."[4] While then-president Paul Beckner denied that CSE tailored its views to match those of financial backers, the Washington Post found that many of CSE's activities appeared to coincide with the interests of corporate donors.

A report by the nonprofit Public Citizen found that CSE's work often benefitted its donors:

"For instance, more than $1 million in contributions from the tobacco giant Philip Morris came when CSE was opposing new cigarette taxes. Donations totaling $1.25 million from US West coincided with CSE's lobbying for phone deregulation that would let US West offer long-distance service. Florida's three biggest sugar companies contributed nearly $700,000 when CSE fought a federal plan to protect the Everglades by restricting sugar cane growing on several thousand acres of land."[1]

Laying Groundwork for the Tea Party

In a 2013 study, researchers at the University of California-San Francisco found links between the Tea Party movement and "tobacco industry efforts to oppose smoking restrictions and tobacco taxes beginning in the 1980s," as reported by the university.[11]

"If you look at CSE, AFP and Freedom Works, you will see a number of the same key players, strategies and messages going back to the 1980s," said lead author Amanda Fallin, PhD, RN, also a CTCRE fellow. "The records indicate that the Tea Party has been shaped by the tobacco industry, and is not a spontaneous grassroots movement at all."[11]

CSE Backed Nader to Split Vote in 2004

While CSE generally backed conservative causes, in June 2004 it mobilized supporters in an attempt to place consumer activist Ralph Nader on the presidential ballot in Oregon. "We disagree with Ralph Nader's politics, but we'd love to see him make the ballot," Russ Walker, the Oregon director of CSE told Associated Press. CSE, along with other groups supporting incumbent President George W. Bush, reportedly aimed to draw votes away from Democratic challenger John Kerry.[12]

In spring 2004, the Nader campaign was not able to gather the signatures necessary to be listed on the Oregon ballot.[13]

In late June the Oregonian reported that Lee Coleman, a member of the Oregon State Republican Central Committee, said that a message left on his answering machine urging his support for the Nader ballot had included a return number of the Bush-Cheney campaign office in Oregon. Spokesman for the Bush campaign, Steve Schmidt, told the Oregonian that no paid campaign staffers were making calls to help Nader but said that some volunteers may have made calls from the campaign's office. "The campaign certainly understands that when Republican volunteers see that there are Democrat volunteers trying to restrict the choice and keep Ralph Nader off the ballot, that they should work to expand choice," Schmidt said.[12]

In July 2004, the Wisconsin chapter of CSE told the New York Times that "it was preparing to follow Oregon's example, by urging Republicans to sign petitions" when Nader's petition drive began in August.[14]

Nader was on the ballot in 34 states in 2004, including Wisconsin but not Oregon.[15] He received 411,304 votes (one percent) in the election.[16]

FEC Complaint Against CSE

On July 1, 2004, CNN reported that the Washington, D.C. advocacy group Citizens for Responsibility and Ethics in Washington (CREW) had filed a complaint with the Federal Election Commission about the activities of the Oregon branch of Citizens for a Sound Economy and the Oregon Family Council with regard to the Nader 2004 campaign for president.[17] The complaint argued that the use of phone banks to encourage conservatives to attend a Nader nominating convention was an illegal in-kind contribution to the Nader campaign.[18]

Matt Kibbe, president of CSE at the time, "denied the the calls were coordinated with either the Bush or the Nader campaigns," according to CNN.[18]

"Grassroots" Opposition to Health Care Reform (1990s)

As reported by Rolling Stone, CSE played a role in fighting health care reform during the Clinton administration, funded in part by tobacco giant Phillip Morris. Health care reform proposed by the Clinton administration was to be funded in part by taxes on tobacco. Memos archived in the Legacy Tobacco Documents Library "offer a detailed picture of the cigarette maker's [Philip Morris'] behind-the-scenes moves to defeat the Clinton health care reform in '94," according to Rolling Stone.[19] The memos include plans to pay CSE for a "grassroots" campaign aimed at Democrats in swing states:

"The House Energy and Commerce Committee will be a key battleground over the Clinton health care plan, and we are giving $400,000 to Citizens For A Sound Economy -- a free market based grassroots organization -- to run a grassroots program aimed at 'swing' Democrats on the Committee.
"We have also targeted the Democratic swing votes through third party groups, such as Citizens for a Sound Economy... As a result of the controversy emanating at the grassroots level, Subcommittee Chairman Waxman could not produce the votes to pass legislation out of his Subcommittee."[19]

Opposition to Clinton Energy Tax (1990s)

According to the New Yorker, in the 1990s CSE "waged a successful assault on Clinton’s proposed BTU tax on energy, for instance, running advertisements, staging media events, and targeting opponents. And it mobilized anti-tax rallies outside the Capitol -- rallies that NPR described as "designed to strike fear into the hearts of wavering Democrats."[8]

Campaigning for Bank Deregulation (1980s)

In the aftermath of the Wall Street crash of 1987, CSE reportedly "launched the effort to repeal Glass-Steagall protections keeping banks from gambling in securities," according to The Nation.[20] The law, which according to the New York Times had been passed in 1933 to create a "firewall between commercial banks, which take deposits and make loans, and investment banks, which underwrite securities," was finally repealed under the Clinton administration in 1999. During the Clinton years, CSE's Richard Fink "was also a member of the Democratic Leadership Council, which heavily influenced some but not all of Bill Clinton's policies," according to Lisa Graves.[21]

History

CSE was founded in 1984 by the Koch brothers along with Richard Fink and Matt Kibbe. Fink had previously headed the Mercatus Center at George Mason University, but according to the New Yorker, the Kochs had "concluded that think tanks alone were not enough to effect change. They needed a mechanism to deliver those ideas to the street, and to attract the public’s support."[8]

According to the Weekly Standard, David Koch described CSE as "a sales force that participated in political campaigns or town hall meetings, in rallies, to communicate to the public at large much of the information that these think tanks were creating […] Almost like a door-to-door sales force that some of the cosmetics organizations have."[9]

The Kochs provided some $7.9 million in support to CSE between 1986 and 1993.[8]

In 1984 Charles G. Koch, David H. Koch, and J. P. Humphries asked Rich Fink to develop a concept for a new organization that could advocate free-market policies effectively in Washington. Fink (now executive vice president at Koch Industries) produced a 110-page business plan, and CSE, along with the CSE Foundation, started operations later that year. Fink became the first president. Koch Industries and the Koch Family Foundations continued to give substantial financial support to the CSE and the CSE Foundation throughout their organizational tenure.

In 1988, Jim Miller, President Reagan's Director of the Office of Management and Budget, joined CSE's staff and board of directors.[22] This helped raise the profile of CSE enormously. Until then, it had campaigned mostly on tax issues (advocating a low, flat-rate tax), but now it started focusing on legal and regulatory issues, starting with a telecommunications and financial services.

In 1989, Wayne Gable succeeded Rich Fink as President.[23] (Gable later served as Managing Director of Federal Affairs at Koch Industries.)[10] That year, CSE Foundation rescued the Tax Foundation from financial trouble and restructured its management and board of directors.[24]

In 1991, Gable went on to become president of the Tax Foundation,[10] and Paul Beckner took over as president.[25] That year, CSE launched Citizens for Congressional Reform, which went on to become U. S. Term Limit.

In 1993, C. Boyden Gray became Chairman,[26] and CSE led a major press and public relations campaign to defeat the Clinton administration's 1993 proposal for an energy tax.[8] The Nation later reported, "While the Koch Foundations could not legally lobby against the tax, CSE rallied public opposition, especially in Oklahoma, where then-Senator David Boren agreed to help kill the tax.[27]

See also CSE huffs and puffs with Big Tobacco and "Free market environmentalism?".

Personnel

(as of July 2004)

Board of Directors

Former Directors

Other Personnel

Funding

CSE -- which was a 501(c)(4) tax-exempt organization -- had a related funding arm, the Citizens for a Sound Economy Foundation (CSEF), which was a 501(c)(3) tax-exempt organization.

In 2002, CSE had revenues of $3,590,890 and expenses of $3,726,684, based on data provided by Public Citizen.[1]

Donors

The Washington Post reported in 2000 that, "although the Kochs and a stable of wealthy individuals and foundations have continued to provide a base of support, corporate contributions now constitute the bulk of CSE’s income, which has grown from $4 million in 1991 to $ 15.5 million in 1998."[4] Corporate contributors mentioned by the Washington Post included:

Citizens for a Sound Economy Foundation

According to the annual report filed by the Foundation, the board members to CSE and CSEF were shared. (The 2002 return also notes three other organizations -- the Taxpayer Action League, the Tax Foundation, and Citizens for the Environment -- as related entities with the same board members. The Tax Foundation and Citizens for the Environment were, according to CSEF's IRS return, created during 1998.)

According to Media Transparency, between 1985 and 2002, CSEF received $16,928,712 in 108 separate grants from only twelve foundations:

In 2002, CSEF gained $920,000 in grants from three of these foundations, accounting for a little under one-quarter of the organisation's revenue. The Claude R. Lambe Foundation gave most, contributing $700,000 for general operating costs, while the Scaife Foundation donated $175,000 and the John M. Olin Foundation $45,000.[29]

Other CSE funders (not included in above funding total) have included:

Affiliations

CSE was a member of Project Relief, an alliance of corporations, trade associations, think tanks and law firms formed in December 1994 to promote the regulatory reform components of the House Republican "Contract with America." It was a member of the Cooler Heads Coalition, an industry-funded campaign sponsored by the National Consumer Coalition (an industry-funded front group) to spread skepticism about the science of global warming. It also belonged to the Health Benefits Coalition, which lobbies on behalf of the healthcare industry and has spent millions of dollars opposing a Patients' Bill of Rights and other patient protection proposals.

CSE used the PR services of Smith & Harroff, a political consulting and advertising agency.[30]

Other organizations with which CSE collaborated include:

Former Contact information

Organization no longer active.
Citizens for a Sound Economy
1523 16th Street, NW, 2nd Floor
Washington, DC 20036
Phone: (202) 783-3870
Fax: (202) 232-8356
Toll Free: 1-888-564-6273
E-mail: cse@cse.org
http://www.cse.org

Articles and Resources

Related SourceWatch Articles

External Resources

1990s

2000

2001

2002

2003

  • Shawn Zeller, "'Free Market' Crusaders," National Journal, January 11, 2003: "Just two weeks into her tenure as president and CEO of the newly formed Americans for Prosperity, Nancy Pfotenhauer is brimming over with ideas and enthusiasm for her new mission. ... Pfotenhauer said that AFP -- the nonprofit advocacy group that recently replaced the CSE Foundation after Citizens for a Sound Economy and the CSE Foundation parted ways -- wants to 'change the way decisions are made [by state and local governments], particularly on spending."
  • Statement by CSE Chairman, Former House Majority Leader Dick Armey" (CSE news release), October 31, 2003: "A note of clarification following recent media reports: Citizens for a Sound Economy (CSE) has not launched a new advocacy group. A recent dispute between CSE and what is now called Americans for Prosperity resulted in a split between the two organizations."
  • Steve Law, "Activist group brings money, draws concern", Statesman Journal(Salem, Oregon), November 1, 2003.
  • Diane Carman, "Textbooks held to bogus litmus tests", Denver Post, November 12, 2003.

2004

2007

References

  1. 1.0 1.1 1.2 1.3 Public Citizen, "Corporate Shill Enterprise," organizational Report, October 6, 2000, accessed July 2, 2014.
  2. Tom Hamburger, Kathleen Hennessey, and Neela Banerjee, Koch brothers now at heart of GOP power, Los Angeles Times, February 6, 2011.
  3. Cited in Jane Mayer, Covert Operations, The New Yorker, August 30, 2010.
  4. 4.0 4.1 4.2 4.3 Dan Morgan, "[http://www.ucsusa.org/assets/documents/global_warming/Dan-Morgan-Post-Story_1-29-00.pdf Think Tanks: Corporations’ Quiet Weapon; Nonprofits’ Studies, Lobbying Advance Big Business Causes]," Washington Post, January 29, 2000, p. A01, archived by ucsusa, accessed July 2, 2014.
  5. Citizens for a Sound Economy, "Citizens for a Sound Economy (CSE) and Empower America Merge to Form FreedomWorks," press release, July 25, 2004. Archived by Internet Wayback Machine, accessed July 2, 2014.
  6. Tom Hamburger, Kathleen Hennessey, and Neela Banerjee, Koch brothers now at heart of GOP power, Los Angeles Times, February 6, 2011.
  7. Cited in Jane Mayer, Covert Operations, The New Yorker, August 30, 2010.
  8. 8.0 8.1 8.2 8.3 8.4 Jane Mayer, "Covert Operations," New Yorker, August 30, 2010.
  9. 9.0 9.1 Matthew Continetti, "The Paranoid Style in Liberal Politics," Weekly Standard, April 4, 2011.
  10. 10.0 10.1 10.2 Freedom Partners, Board Members, organizational website, accessed July 2, 2014.
  11. 11.0 11.1 Elizabeth Fernandez, "Study: Tea Party Organizations Have Ties To Tobacco Industry Dating Back To 1980s," University of California-San Francisco, news release, February 8, 2013, accessed July 7, 2014.
  12. 12.0 12.1 Jeff Mapes, "Nader getting support from unlikely voters," The Oregonian, June 25, 2004, archived by FreedomWorks, accessed July 2, 2014.
  13. Jeff Mapes, "Nader's 1,000 fail to show," The Oregonian, April 6, 2004, archived by Internet Wayback Machine, accessed July 2, 2014.
  14. Michael Janofsky and Sarah Kershaw, "Odd Alliances Form to Get Nader on Ballot," New York Times, July 1, 2004.
  15. Ralph Nader, CNN candidates page, 2004 election, accessed July 2, 2014.
  16. Nader Fast Facts, CNN, page updated February 18, 2014, accessed July 2, 2014.
  17. Citizens for Responsibility and Ethics in Washington, "CREW Files FEC Complaint Against Citizens for a Sound Economy, Oregon Family Council, and Others," organizational press release, June 30, 2004.
  18. 18.0 18.1 "Group: Bush allies illegally helping Nader in Oregon," CNN, July 1, 2004.
  19. 19.0 19.1 Tim Dickinson, "Echoes of Philip Morris and Hillarycare," Rolling Stone, October 1, 2009.
  20. Lisa Graves, "ALEC Exposed: The Koch Connection," The Nation, July 12, 2011.
  21. Lisa Graves, "The Koch Cartel: Their Reach, Their Reactionary Agenda, and Their Record," The Progressive, July/August 2014.
  22. Hoover Institute, James C. Miller III, organization biography, accessed July 2, 2014.
  23. Wayne Gable, organization biography, C-SPAN, accessed July 2, 2014.
  24. Albert B. Crenshaw, "Research Group Buys Troubled Tax Foundation," Washington Post, archived on Highbeam.com, October 9, 1989, accessed July 2, 2014.
  25. Paul Beckner, organizational biography, CSPAN, accessed July 2, 2014.
  26. C. Boyden Gray, organizational biography, CSPAN, accessed July 2, 2014.
  27. Robert Parry, "Sidebar: Petrodollar Scholars," The Nation, 1997, archived by Internet Wayback Machine, accessed July 2, 2014.
  28. "Tax's Demise Illustrates First Rule Of Lobbying: Work, Work, Work". New York Times (1993). Retrieved on 2009-09-22.
  29. 29.0 29.1 Media Transparency, Citizens for a Sound Economy Foundation, grants report, archived by Internet Wayback Machine, accessed July 2, 2014.
  30. Smith & Harroff, Corporations, Associations, and Coalitions, past clients, organizational website, accessed July 2, 2014.

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