Barney Frank

Mr. Speaker, given the role that former Majority Leader Richard Armey has played in significantly increasing the role in militant conservatives in the Republican party, the article in the Washington Post on December 25 is important information that all Members should know.

[From The Washington Post, Dec. 25, 2012]

Freedom Works Tea Party Group Nearly Falls Apart in Fight Between Old

and New Guard

(By Amy Gardner)

The day after Labor Day, just as campaign season was

entering its final frenzy, FreedomWorks, the Washington-based

tea party organization, went into free fall.

Richard K. Armey, the group's chairman and a former House

majority leader, walked into the group's Capitol Hill offices

with his wife, Susan, and an aide holstering a handgun at his

waist. The aim was to seize control of the group and expel

Armey's enemies: The gun-wielding assistant escorted

FreedomWorks' top two employees off the premises, while Armey

suspended several others who broke down in sobs at the news.

The coup lasted all of six days. By Sept. 10, Armey was

gone--with a promise of $8 million--and the five ousted

employees were back. The force behind their return was

Richard J. Stephenson, a reclusive Illinois millionaire who

has exerted increasing control over one of Washington's most

influential conservative grass-roots organizations.

Stephenson, the founder of the for-profit Cancer Treatment

Centers of America and a director on the Freedom Works board,

agreed to commit $400,000 per year over 20 years in exchange

for Armey's agreement to leave the group.

The episode illustrates the growing role of wealthy donors

in swaying the direction of FreedomWorks and other political

groups, which increasingly rely on unlimited contributions

from corporations and financiers for their financial

livelihood. Such gifts are often sent through corporate

shells or nonprofit groups that do not have to disclose their

donors, making it impossible for the public to know who is

funding them.

In the weeks before the election, more than $12 million in

donations was funneled through two Tennessee corporations to

the FreedomWorks super PAC after negotiations with Stephenson

over a preelection gift of the same size, according to three

current and former employees with knowledge of the

arrangement. The origin of the money has not previously been

reported.

These and other new details about the near-meltdown at

FreedomWorks were gleaned from interviews with two dozen

current and past associates, most of whom spoke on the

condition of anonymity in order to talk freely.

The disarray comes as the conservative movement is

struggling to find its way after the November elections,

which brought a second term for President Obama and

Democratic gains in the House and Senate. Armey said in an

interview that the near-meltdown at his former group has

damaged the conservative cause.

``Freedom Works was the spark plug, the energy source, the

catalyst for the movement through the 2010 elections,'' Armey

said, referring to the GOP midterm sweep. ``Harm was done to

the movement.''

Stephenson, 73, declined a request for an interview. Matt

Kibbe, the group's president, and Adam Brandon, its senior

vice president, declined to discuss the issue.

``I don't comment on donors,'' Brandon said. ``He's on our

board, he's a board member like anyone else. That's it. I see

him at board meetings.''

Stephenson, a longtime but little-known player in

conservative causes, is a resident of Barrington, Ill., a

northwest suburb of Chicago known for its affluence and

sprawling horse estates such as his Tudor Oaks Farm. He

founded the Cancer Treatment Centers of America in 1988

following his mother's death from bladder cancer, according

to the for-profit company's Web site and his public remarks.

Stephenson also holds investments in a broad portfolio of

other businesses, including finance and real estate

companies.

Stephenson has a passion for libertarian politics

stretching back to the 1960s, when he attended seminars

featuring ``Atlas Shrugged'' author Ayn Rand and economist

Murray Rothbard, according to those who know him at

FreedomWorks. Like Armey, Stephenson was an early supporter

of Citizens for a Sound Economy, the conservative lobbying

group founded by oil billionaires Charles and David Koch in

1984 that split into Freedom Works and Americans for

Prosperity 20 years later. The Kochs, known for bankrolling a

variety of conservative causes, kept control of AFP, while

Stephenson and Armey stayed with FreedomWorks.

FreedomWorks has been on a remarkable run in recent

election cycles, growing its annual budget from $7 million to

$40 million in just a few years and helping lead the tea

party movement against Obama's agenda. The group was among

several that rose up last week in opposition to a failed

proposal from House Speaker John A. Boehner (R-Ohio) to raise

federal taxes on millionaires.

The group played a crucial role in ushering a wave of tea

party candidates into office in recent years, staging

rallies, hawking books and videos, and organizing media

appearances with conservative personalities such as Glenn

Beck and Rush Limbaugh.

``I've enjoyed my association with FreedomWorks,'' said

Sen. Mike Lee (R-Utah), who defeated incumbent Bob Bennett

with help from the group. ``Matt Kibbe and Dick Armey

endorsed me early in my candidacy for the U.S. Senate, and

they were a big help to me.''

Despite such testimonials, FreedomWorks has struggled with

accusations that it is an ``astro-turfer''--a national

organization of big-money donors that swept in to lay claim

to an independent movement.

According to public records, FreedomWorks received more

than $12 million before the election from two corporations

based in Knoxville, Tenn.: Specialty Investments Group and

Kingston Pike Development. The firms were established within

a day of each other by William S. Rose III, a local

bankruptcy lawyer.

Rose, who could not be reached for comment, has said

publicly he would not answer questions about the donations.

But according to three current and former FreedomWorks

employees with knowledge of the donations, the money

originated with Stephenson and his family, who arranged for

the contributions from the Tennessee firms to the super PAC.

Brandon, FreedomWorks' executive vice president, told

colleagues starting in August that Stephenson would be giving

between $10 million and $12 million, these sources said.

Brandon also met repeatedly with members of Stephenson's

family who were involved in arranging the donations, the

sources said.

Stephenson attended a FreedomWorks retreat in Jackson Hole,

Wyo., in August at which a budget was being prepared in

anticipation of a large influx of money, according to several

employees who attended the retreat. At the retreat,

Stephenson dictated some of the terms of how the money would

be spent, the employees said.

``There is no doubt that Dick Stephenson arranged for that

money to come to the super PAC,'' said one person who

attended the retreat. ``I can assure you that everyone around

the office knew about it.''

Among other things, Stephenson wanted a substantial sum

spent in support of Rep. Joe Walsh (R-I11.), a tea party

favorite and Stephenson's local congressman, several who

attended the retreat recalled. Walsh garnered national

headlines during the campaign when he questioned whether his

opponent, Tammy Duckworth, a former Blackhawk helicopter

pilot who lost both legs in Iraq, was a ``true hero.''

Despite internal misgivings about the value of the

investment, FreedomWorks spent $1.7 million on ads supporting

Walsh; he lost the race.

Two watchdog groups last week asked the Federal Election

Commission and the Justice Department to investigate the

donations from the two Tennessee companies. The groups,

Democracy 21 and the Campaign Legal Center, say the

arrangement could violate federal laws that prohibit

attempting to hide the true source of a political

contribution by giving it under another name. (Brandon

declined to comment on the complaints, but he said the

group's books were in order.)

Partnership unravels

For years, FreedomWorks was headed by an unlikely duo:

Armey, 72, the old-guard poi who wears a black cowboy hat

even when he's not on his Texas ranch, and Kibbe, 49, who

sports mutton-chop sideburns and has a passion for the

Grateful Dead.

But the most important relationship appears to be the bond

between Kibbe and Stephenson, who bridged their age gap

through shared libertarian views and Kibbe's battle with

testicular cancer a decade ago, Armey and others said. They

said Kibbe, after being given a terminal diagnosis, was

encouraged by Stephenson to get treatment at his cancer

clinics; more than a decade later, they said, he is cancer-

free.

Until this year, the partnership between Kibbe and Armey

worked well. Armey's renown as a former House member drew

media attention and crowds of conservative activists--most of

them old enough to remember Armey's role in the Republican

revolution in Congress in 1994. And Kibbe's youthful

intellectualism drew a new generation of libertarian soldiers

into the FreedomWorks fold. In 2010, the two co-wrote a book,

``Give Us Liberty: A Tea Party Manifesto,'' that became a New

York Times bestseller and a successful marketing tool for

FreedomWorks, which collected the book's proceeds and used it

to attract donations.

The partnership came to a crashing end when Armey marched

into FreedomWorks's office Sept. 4 with his wife, Susan,

executive assistant Jean Campbell and the unidentified man

with the gun at his waist--who promptly escorted Kibbe and

Brandon out of the building.

``This was two weeks after there had been a shooting at the

Family Research Council,'' said one junior staff member who

spoke on the condition of anonymity because he was not

authorized to talk to the media. ``So when a man with a gun

who didn't identify himself to me or other people on staff,

and a woman I'd never seen before said there was an

announcement, my first gut was, 'Is Freedom Works in danger?'

It was bizarre.'?''

By nearly all accounts, including from those loyal to him,

Armey handled his attempted coup badly. Armey says he was

stepping in because of ethical breaches by Kibbe

and Brandon, accusing them of improperly using FreedomWorks

staff resources to produce a book--ironically, named

``Hostile Takeover''--for which Kibbe claimed sole credit and

was collecting royalties. The use of internal resources for

Kibbe's benefit could jeopardize the group's nonprofit tax

status; the group denies any impropriety.

``This is not only about this one incident,'' Armey said.

``But that one incident was a matter of grievous concern.''

Armey also accused Brandon, Kibbe and other staff members

loyal to them of squeezing him out of media appearances and

management decisions while using his name to market the

group.

Armey appeared out of touch and unsure of how FreedomWorks

operated when he took over that Tuesday morning, according to

interviews with more than a dozen employees on both sides who

witnessed the takeover. Sitting in a glass-walled conference

room visible to much of the staff, he placed three young

female employees on administrative leave, then reversed

himself when they burst into tears; his wife lamented aloud

that maybe they had ``jumped the gun.''

In subsequent meetings, Susan Armey passed her husband

notes that several employees assumed contained suggestions on

what to say. According to a recording of a staff conference

call provided to The Washington Post, Armey bewildered his

audience by demanding more FreedomWorks support for Todd

Akin, the Missouri Republican whose Senate campaign had

already cratered after his comments about ``legitimate

rape.''

``It was clear that under Armey's leadership, the

organization as we knew it was going to be driven into the

ground,'' said one junior employee.

Enter Stephenson, who agreed to the multimillion-dollar

financial incentive to push Armey out and install Kibbe back

at the helm.

The payments were necessary, several FreedomWorks leaders

said, because Armey was threatening to sue over Kibbe's book

deal.

``It was very clear to him that I would not work with

Matt,'' Armey said, referring to Stephenson. ``He felt that

Matt knew the levers and understood it better than I did and

was very urgent to reinstate that.''

Brandon, back in the No. 2 spot as executive vice

president, scoffed at the notion that the group is in trouble

or that the dispute with Armey was indicative of a larger

problem for the tea party. He said Freedom Works has 2.1

million members, nearly 4 million fans on Facebook and a

budget that has grown sixfold in five years. He also pointed

to the elections of Senate conservatives Ted Cruz in Texas

and Jeff Flake in Arizona as evidence of the group's

electoral success.

``We doubled our budget, and we doubled our membership,''

Brandon said, referring to the group's growth since 2011.

``That's how we ended up the year.''

(Alice R. Crites contributed to this report)

Mr. Speaker, Paul Krugman has consistently and articulately defended programs that are essential for the quality of life for our most vulnerable residents, and exposed the flawed morality and impaired logic of those who seek to use the existence of a large national debt as an argument for exacerbating inequality in the United States. His column for Monday, December 31 is an excellent example of this, and I hope all Members will pay attention to its message.

Brewing Up Confusion

(By Paul Krugman)

Howard Schultz, the C.E.O. of Starbucks, has a reputation

as a good guy, a man who supports worthy causes. And he

presumably thought he would add to that reputation when he

posted an open letter urging his employees to promote fiscal

bipartisanship by writing ``Come together'' on coffee cups.

In reality, however, all he did was make himself part of

the problem. And his letter was actually a very good

illustration of the forces that created the current mess.

In the letter, Mr. Schultz warned that elected officials

``have been unable to come together and compromise to solve

the tremendously important, time-sensitive issue to fix the

national debt,'' and suggested that readers further inform

themselves at the Web site of the organization Fix the Debt.

Let's parse that, shall we?

First of all, it's true that we face a time-sensitive issue

in the form of the fiscal cliff: unless a deal is reached, we

will soon experience a combination of tax increases and

spending cuts that might push the nation back into recession.

But that prospect doesn't reflect a failure to ``fix the

debt'' by reducing the budget deficit--on the contrary, the

danger is that we'll cut the deficit too fast.

How could someone as well connected as Mr. Schultz get such

a basic point wrong? By

talking to the wrong people--in particular, the people at Fix

the Debt, who've been doing their best to muddle the issue.

For example, in a new fund-raising letter Maya MacGuineas,

the organization's public face, writes of the need to ``make

hard decisions when it comes to averting the `fiscal cliff'

and stabilizing our national debt''--even though the problem

with the fiscal cliff is precisely that it stabilizes the

debt too soon. Clearly, Ms. MacGuineas was trying to confuse

readers on that point, and she apparently confused Mr.

Schultz too.

More about Fix the Debt in a moment. Before I get there,

however, let's move on to Mr. Schultz's misdiagnosis of the

political problem we face.

Look, it's true that elected politicians have been unable

to ``come together and compromise.'' But saying that in

generic form, and implying a symmetry between Republicans and

Democrats, isn't just misleading, it's actively harmful.

The reality is that President Obama has made huge

concessions. He has already cut spending sharply, and has now

offered additional big spending cuts, including a cut in

Social Security benefits, while signaling his willingness to

retain many of the Bush tax cuts, even for people with very

high incomes. Taken as a whole, the president's proposals are

arguably to the right of those made by Erskine Bowles and

Alan Simpson, the co-chairmen of his deficit commission, in

2010.

In return, the Republicans have offered essentially

nothing. Oh, they say they're willing to increase revenue by

closing loopholes--but they've refused to specify a single

loophole they're willing to close. So if there's a breakdown

in negotiations, the blame rests entirely with one side of

the political divide.

Given that reality, think about the effect when people like

Mr. Schultz respond by blaming both sides equally. They may

sound virtuously nonpartisan, but what they're actually doing

is rewarding intransigence and extremism--which, in the

current context, means siding with the G.O.P.

I'm willing to believe that Mr. Schultz doesn't know what

he's doing. The same can't be said, however, about Fix the

Debt.

You might not know it reading some credulous reporting, but

Fix the Debt isn't some kind of new gathering of concerned

citizens. On the contrary, it's just the latest addition to a

group of deficit-scold shops supported by billionaire Peter

Peterson, a group ranging from think tanks like the Committee

for a Responsible Federal Budget to the newspaper The Fiscal

Times. The main difference seems to be that this gathering of

the usual suspects is backed by an impressive amount of

corporate cash.

Like all the Peterson-funded groups, Fix the Debt seems

much more concerned with cutting Social Security and Medicare

than with fighting deficits in general--and also not nearly

as nonpartisan as it pretends to be. In its list of ``core

principles,'' it actually calls for lower tax rates--a very

peculiar position for people supposedly horrified by the

budget deficit. True, the group calls for revenue increases

via unspecified base broadening, that is, closing loopholes.

But that's unrealistic. And it's also, as you may have

noticed, the Republican position.

What's happening now is that all the Peterson-funded groups

are trying to exploit the fiscal cliff to push a benefit-

cutting agenda that has nothing to do with the current

crisis, using artfully deceptive language--as in that

MacGuineas letter--to hide the bait and switch.

Mr. Schultz apparently fell for the con. But the rest of us

shouldn't.

Mr. Speaker, my thanks go to the chair of the committee, the gentlewoman from Florida, the ranking member from California (Mr. Berman), and the new ranking member from New York (Mr. Engel) for giving us a chance to try to achieve not just justice but love, the love of a father for children for whom he grieves daily because they were illegally and abusively kidnapped.

As the gentlewoman from Florida pointed out, this kidnapping was in violation of a decision by the family court in Massachusetts giving full custody to the father. Members will not be surprised to learn that there have been very few complaints, that I've ever heard of, of there being a bias in favor of fathers in those courts. Some say there's a bias in favor of mothers. There is certainly a presumption, as I understand it, in favor of mothers. So for a court to say unequivocally that the father gets sole control is a strong indication of the unfitness of the mother.

And so the case is very clear; but I want in my remarks, Mr. Speaker, to address the Government of Egypt. There's a new government in Egypt. There are points of friction between Egypt and the United States. We have a great interest in a good relationship. The foundation of peace in the Middle East began in 1979 with the Camp David Accords. America has consistently provided Egypt with more foreign assistance than all but a handful of nations. And in this current period when there are issues that could arise that could divide us, I urge the Egyptian Government not to put or keep in place a serious problem, not an irritant. It's more than an irritant when a loving father who has been given custody of his children because of the court's decision that the mother is unfit by virtue of a drug addiction, when he is denied the ability to have his paternal instincts honored, to be able to honor and protect his children. And I urge the Government of Egypt: do not minimize the extent to which this will be an obstacle.

I will not be here in a week, Mr. Speaker. I didn't think I'd be here this week. But I know that my successor in Congress, Mr. Kennedy, and my colleagues, the chair of the committee and the ranking member, will not forget this. The Government of Egypt will be seeking from this House support of measures, and there are a lot of reasons why we want to work together. I plead with them, do not allow what to us is a very serious issue--perhaps to some in Egypt it appears minor--but to have a father's children taken away from him and kidnapped with the implicit cooperation of the prior Egyptian Government is a grave problem. If the current Egyptian Government does not correct this situation, it will be an obstacle to the kind of cooperation that is in our mutual interest.

I hope we get a very large, indeed unanimous, vote for this resolution and the Egyptian Government understands that it is not just justice but its best interests that call for compliance.