Making Policy:
The Rise of the Conservative Think Tank

The most important element of the big-business mobilization was the flow of corporate money to expand existing conservative research organizations and create a host of new ones. These organizations constitute the conservative wing of a network of policy-oriented research and discussion organizations that some sociologists argue are the major way in which big business influences major government policies in the United States. The conventional sociological analysis, however, has focused on the moderate and liberal elements of this network, such as the Council on Foreign Relations, the Committee on Economic Development, the Brookings Institution, and the Trilateral Commission and has treated the conservative ones as peripheral. In the 1970s and early 1980s corporate money flowed precisely into this periphery, and it became marginal no longer. This is not to say that

policy-planning organizations spoke with one voice during this period. They disagreed sharply on both foreign policy (over whether the central threat to the United States was international economic instability and inequality or growing Soviet military might) and domestic policy (over whether industrial policy or free-market measures offered the appropriate solutions to America's economic problems). The point is that the more conservative organizations predominated, and virtually all the groups moved to the right at least somewhat.^[33]

The sentiment underlying this flow of money was epitomized in A Time for Truth (1978), by William Simon, former secretary of the treasury and head of the Olin Foundation, who played as great a role as any in eliciting and coordinating the contributions. After arguing at considerable length how government spending, taxes, and regulation threatened capitalism and economic liberty, Simon issued a clarion call for business to fight back. The root trouble, he asserted, citing the writings of neoconservative Irving Kristol in particular, was that a "New Class" of government bureaucrats, intellectuals, journalists, and foundation heads hostile to capitalism had taken power in America and were using that power to undermine business. Political and cultural power had become at odds with economic power. Businessmen had allowed this to happen because they had retreated from politics, because they had become "more concerned with short-range respectability than with long-range survival." Worse still, they had contributed to their own demise by allowing their money to fund this New Class. Simon concluded that what businessmen needed to do, above all, was not lobby more energetically for specific legislation or spend more to elect suitable political leaders but support the growth of a "counterintelligentsia" in the foundations, universities, and media that would regain ideological dominance for business. Accordingly, he issued a series of marching orders to his peers: businessmen must shift their funding to foundations willing to support conservative scholars and research; they must "cease the mindless subsidizing of colleges and universities whose departments of economics, government, politics and history are hostile to capitalism"; and they must shift their support "from the media which serve as megaphones for anticapitalist opinion . . . to media which are either pro-freedom or . . . at least professionally capable of a fair and accurate treatment of procapitalist ideas, values, and arguments." Simon aptly captured a broader sentiment among big business, and well before his book

was published, it was doing what he bid, in particular pouring money into conservative policy-making bodies.^[34]

The American Enterprise Institute, long the flagship of conservative think tanks, saw its budget increase tenfold, from $0.9 million in 1970 to $10.6 million in 1983, thanks to corporate largesse and the fund-raising efforts of neoconservative intellectuals like Kristol. (During the same period the budget of the more liberal Brookings Institution only doubled, from $5.5 million to $11.9 million.) By the late 1970s AEI had forty-five full-time scholars in residence and many more adjunct scholars at various universities. It funded, in addition to research, four journals and a monthly television show. Among its six hundred corporate sponsors were the Lilly Endowment, the Smith Richardson Foundation, the Ford Motor Company, Reader's Digest, the Potlatch Corporation, and the Weyerhauser Foundation. Its board of trustees, headed by a vice chairman of Mobil, consisted almost entirely of corporate representatives; and a special development committee for raising a multimillion-dollar endowment included the chairmen or former chairmen of Citicorp, General Electric, General Motors, and Chase Manhattan Bank. To be sure, the mid-1980s saw AEI facing a fiscal crisis due to overexpansion and stagnant revenues. This was certainly not due, however, to a change of political heart among its business supporters but rather to internal mis-management and external competition from more activist, more conservative organizations.^[35]

The Hoover Institution at Stanford University, on the verge of bankruptcy in the early 1960s, had an annual budget of $8.4 million by 1983 (up from $1.9 million in 1970). About 40 percent of that money came from corporations and business-related foundations (much of the remainder coming from Stanford itself), and its board of overseers included David Packard of Hewlett-Packard and top officers of Standard Oil of California and the Sun Company. A third venerable conservative think tank, the Center for Strategic and International Studies at Georgetown University, was spending $8 million a year by the early 1980s.^[36]

Joining these established think tanks were a host of new ones, the largest, most famous, and most activist of which is the Heritage Foundation. Started in 1973 with several hundred thousand dollars from industrialist Joseph Coors, Heritage had an annual budget of $10.6 million by 1983. Its biggest contributors included the Scaife fam-

ily, Coors, and nearly one hundred corporations and foundations, though it also relied heavily on direct mail. The list of those who gave one hundred thousand dollars or more to the Heritage Ten campaign, which raised more than $35 million for the Heritage Foundation in the mid 1980s, shows the diversity of business support that even this most conservative of think tanks received, drawing together major corporations with owner-controlled companies, rich individual businessmen, and longtime supporters of right-wing causes. Included were Chase Manhattan Bank, Dow Chemical, Mobil Corporation, Pfizer, Reader's Digest, and SmithKline Beckman; Coors Industries, Mesa Petroleum, Mr. and Mrs. Joseph Coors, and Lewis E. Lehrman; Carthage Foundation, J. M. Foundation, Samuel Roberts Noble Foundation, John M. Olin Foundation, J. Howard Pew Freedom Trust, and the Sarah Scaife Foundation.^[37]

A wide range of corporations and foundations supported a growing network of conservative think tanks and policy centers.^[38] Perhaps the most active, innovative, and central were the Mellon-Scaife, Olin, and Smith Richardson foundations. The Scaife family trusts (the Sarah Scaife Foundation, the Allegheny and Carthage foundations, and the Trust for Sarah Mellon Scaife's Grandchildren), based in Gulf Oil, Alcoa, and Mellon Bank money, were probably the largest single donors to conservative causes, and their contributions were fairly representative. For years these trusts had given money primarily to population control and the arts, causes favored by Sarah Scaife. Beginning in 1973, however, when Richard Mellon Scaife (Sarah's son) effectively took charge of them, they turned their attention to conservative causes, providing support to the tune of about $10 million to $12 million a year. By 1980 the Scaifes had given more than $5 million each to the American Enterprise Institute, the Georgetown University Center for Strategic and International Studies, and the National Strategy Information Center, as well as $4.1 million to the Hoover Institution and $2.6 million to the Heritage Foundation (of which they, not Coors, were the major benefactor). They supported Friedman's and Wattenberg's public-television shows; conservative foreign-policy groups, such as the Committee on the Present Danger and the Committee for the Free World; conservative journals, such as The Public Interest and The American Spectator ; a series of procorporate legal foundations, including the Pacific Legal Foundation and the National Legal Center for the Public Interest and six of its regional affiliates; and a host of lesser think tanks.^[39]

Beginning in 1977 the John M. Olin Foundation, founded by the former head of the Olin Corporation, spent about $5 million a year to support "scholarship in the philosophy of a free society and the economics of a free market." The foundation supported AEI, Hoover, and Heritage; it underwrote Friedman's and Wattenberg's shows; it helped start a number of university centers for the study of economics and law, the Center for the Study of Religion and Society, and several probusiness legal foundations; and it funded a range of conservative publications, including The New Criterion and The American Spectator . Its director, William Simon, as I noted earlier, played a central role in the mobilization of big business.^[40]

The Smith Richardson Foundation, founded in 1935 by H. Smith Richardson with money from the Richardson-Vicks Company, had done mostly routine philanthropy until 1973 when son Randy Richardson took over and directed its money more exclusively to conservative causes. Three years later, on the recommendation of Kristol, the Foundation hired Leslie Lenkowsky as director of research. Lenkowsky was instrumental in directing much of the foundation's yearly budget of $3 million to the support of supply-side economic theory, which became central to the ideology of the Reagan administration. The Smith Richardson Foundation provided a grant to Jude Wanniski, a Wall Street Journal editorial writer, which, along with an appointment at the American Enterprise Institute, helped him write The Way the World Works . It also subsidized Kristol's journal, The Public Interest , which published several of Wanniski's early articles and other seminal supply-side pieces. In addition, the foundation helped underwrite two other supply-side books, George Gilder's Wealth and Poverty and Bruce Bartlett's Reaganomics: Supply-Side Economics in Action , and gave grants for studying supply-side economics to Hoover, Heritage, and other conservative think tanks. As Wanniski once remarked, "The Smith Richardson Foundation has been the source of financing in the supply-side revolution." Together with Scaife and Olin, the foundation also helped establish in the late 1970s a series of free-enterprise centers, including the Washington University Center for the Study of American Business, the University of Chicago Center for the Study of the Economy and the State, and the University of Rochester Center for Research in Government Policy and Business.^[41]

Together Scaife, Olin, and Richardson also contributed more than three hundred thousand dollars to found the Institute for Educational Affairs (IEA). The brainchild of Kristol and Simon, who sought

to coordinate more effectively the production of conservative ideas, IEA acted as a clearinghouse for channeling corporate money into suitable conservative intellectual projects. By 1982 it had 145 corporate donors and had dispensed several million dollars in grants. It specialized in funding alternative conservative newspapers and journals on college campuses and providing internships for promising young journalists who might then move on to careers at conservative newspapers and publications.^[42]

The development of conservative policy-making organizations embodied all the salient features of the political mobilization of big business: the simple expansion of political activity; its resolutely conservative, antistatist cast; and, most important, its hegemonic quality in regard to both its base of support and its goals. Support for conservative think tanks crossed most lines of intraclass cleavage. The corporations and corporate foundations that funded think tanks represented a cross-section of American business and did not fit the stereotype of the smaller, labor-intensive, domestically oriented, peripheral Sun Belt company. The rise of conservative think tanks also reflected an effort to go beyond influencing specific pieces of legislation to shaping the broader agenda of politics as well. These organizations were not mere talking shops; they were conduits for channeling personnel and ideas into the Reagan administration. Some, like AEI, provided the broad justifications for conservative ideas; others, especially Heritage, offered proposals for specific policies. Each year Heritage produced dozens of brief reports focused on public-policy issues for distribution to members of Congress and their staffs, executive-branch officials, and the press. Perhaps the most important collection of these reports was Mandate for Leadership: Policy Management in a Conservative Administration (1981), which provided major guidance to each department and agency in the early years of the Reagan administration. The conservative policy-making network was also the source of the two works that especially inspired conservative cadres within the administration, George Gilder's Wealth and Poverty and Charles Murray's Losing Ground: the Smith Richardson Foundation, as I have noted, funded Gilder, and the Manhattan Institute and the Olin Foundation supported and publicized Murray.^[43]

In addition, the major think tanks provided a great many high-level appointees to the Reagan administration. In Reagan's first term alone, fifty came from Hoover, thirty-six from Heritage, thirty-four

from AEI, and eighteen from the Center for Strategic and International Studies. Murray Weidenbaum, the first chairman of the Council of Economic Advisors; Martin Anderson, Reagan's first chief domestic-policy adviser; Jeanne Kirkpatrick, ambassador to the United Nations; James C. Miller III, Reagan's second budget head; James Watt, secretary of the interior; and William Bennett, head of the National Endowment for the Humanities and later secretary of education, as well as many others, all had close ties to conservative policy groups. The Heritage Foundation in 1982 began to publish its Annual Guide to Public Policy Experts , which served as a kind of directory of potential conservative appointees.^[44]

Of course, many of Reagan's top advisers came with more conventional credentials as corporate executives with ties to more moderate policy groups like the Council on Foreign Relations and the Committee on Economic Development.^[45] The conservative organizations, however, provided a leavening of more ideologically committed conservatives. In the absence of these organizations the ideas of supply-side economics, so important in justifying across-the-board tax cuts and in making tax breaks for business acceptable to the public, would probably have remained the half-articulated insights of a few true believers; these true believers would have remained an isolated group discussing their ideas in obscure places rather than moving into positions of considerable influence—for example, David Stockman as budget director and Norman Ture and Paul Craig Roberts as assistant secretaries of the treasury. The whole dynamic of the early Reagan years, pitting conservative activists against more conventional and cautious advisers (so nicely chronicled in Stockman's The Triumph of Politics ), would have been absent.

Conservative think tanks thus provided an effective interface between the world of big business and the world of conservative ideologues, making the former more ideological than otherwise and the latter more influential.^[46] The result was what Sidney Blumenthal has called a "whole new species," of "Counter-Establishment intellectual-politico": "In the past, Republican Administrations had been staffed almost completely by big businessmen and party professionals. While these groups were still represented, they were now joined by the Counter-Establishment ideologues, whose network provided a ready reservoir of closely connected and intensely committed appointees."^[47]