GOP NOVEMBER 24, 2013
On a Thursday evening at the end of August, a respectable, older crowd waited in the ballroom of the Double Tree in Wilmington, Delaware, to hear Jim DeMint speak. The dashing former South Carolina senator and Tea Party icon had been flying around the country on a private jet to stump for the cause of defunding Obamacare, and Wilmington was the last stop on his nine-city tour. In Dallas, he was joined by his protégé Ted Cruz, but most of the time it was just DeMint and his barker, Michael Needham.
In that Delaware ballroom, Needham, a dark-haired, square-jawed young man, dressed in a sensibly checkered button-down shirt and pleated khaki pants, was warming up the crowd. He strutted around the makeshift stage with the kind of robustness that masks a certain Washington stiffness. “Can we, in the month of September, achieve defunding Obamacare?” he boomed. “Yes, we can!” yelled the crowd.
Needham is the 31-year-old CEO of Heritage Action, the relatively new activist branch of the Heritage Foundation, the storied Washington think tank that was one of the leaders of the conservative war of ideas ever since it provided the blueprint for Ronald Reagan’s first term. Although DeMint is Heritage’s president, it was Needham who had designed much of the defund Obamacare strategy. Beginning in 2010, when Heritage Action was founded, Needham pushed the GOP to use Congress’s power of the purse to eviscerate the Affordable Care Act. He formed a grassroots army, which he used to keep congressional Republicans in line. “They make six hundred phone calls and have a member of Congress in the fetal position,” says one GOP congressional staffer.
After months of furious lobbying, Needham sold, at most, 20 members of the House on his plan of attack. In the end, this was enough to cement the party line—and lead the GOP to a spectacular, deafening loss.
Sorting through the wreckage, Washington conservatives can barely contain their anger at Needham for his ideological inflexibility and aggressive, zero-sum tactics. “Their strategic sense isn’t very strong,” griped a prominent Republican lobbyist. “They’ve repeatedly been wrong about how to handle this.” Says a senior House Republican aide, “Mike Needham played a large role in defeating ideas that would have worked out better.”
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But the wrath is not solely reserved for Needham; his employer now inspires plenty of disgust among conservatives, too. Increasingly in Washington, “Heritage” has come to denote not the foundation or the think tank, but Heritage Action, Needham’s sharp-elbowed operation. Instead of fleshing out conservative positions, says one Republican Senate staffer, “now they’re running around trying to get Republicans voted out of office. It’s a purely ideological crusade that’s utterly divorced from the research side.” (“If Nancy Pelosi could write an anonymous check to Heritage Action,” adds the House aide bitterly, “she would.”)
As a result, the Heritage Foundation has gone from august conservative think tank revered by Washington’s Republicans to the party’s loathed ideological commissar. “It’s sad, actually,” says one Republican strategist. “Everybody forgets that Heritage was always considered the gold standard of conservative, forward-looking thought. The emergence of Heritage Action has really transformed the brand into a more political organization.”
Needham’s strategy has also sparked a war inside the halls of the foundation itself, where many feel duped by the stealthy yet brutal way the Heritage Action takeover went down. Some now wonder whether the foundation can ever recover its reputation as a font of ideas. “I don’t think any thoughtful person is going to take the Heritage Foundation very seriously, because they’ll say, How is this any different from the Tea Party?” says Mickey Edwards, a former Republican congressman and a founding trustee of the Heritage Foundation. Looking at the organization he helped to create, Edwards finds it unrecognizable. “Going out there and trying to defeat people who don’t agree with us never occurred to us,” said Edwards. “It’s alien.”
Until his retirement last spring, Edwin Feulner, a ruddy, bespectacled grandfather of modern conservatism, loved telling his think tank’s founding myth to every batch of new hires: In 1971, he and Paul Weyrich were two Republican Hill staffers who witnessed President Richard Nixon’s plan to fund a supersonic transport plane defeated in the Senate. Two days later, the American Enterprise Institute (AEI), then the only conservative think tank in town, delivered a positive assessment of the plane. When Weyrich asked why the report arrived after the fight was over, the people at AEI told him that they didn’t want to be seen as influencing the vote.
This, the story goes, was why Feulner and Weyrich decided to found Heritage: to influence the vote. It was also why their model focused on short backgrounders, rather than long reports, so that congressmen could get a quick opinion on their way to the floor. Unlike AEI or Brookings across town, Heritage set up shop on the Hill, down the street from Congress. And unlike AEI and Brookings, Heritage was not so much about exploring ideas as it was about pushing a political line.
Still, Feulner, a reserved and bookish type, helped preserve at least a patina of learning and bipartisan cooperation for the sake of good policy. Heritage was instrumental, for instance, in shaping Bill Clinton’s welfare reform, advocating for ideas such as work requirements. Obamacare’s individual mandate was a concept born at Heritage. And despite an ongoing debate about whether the organization should be tougher about how it made its policy recommendations to lawmakers, most Heritage policy analysts and management, including Feulner, tried to keep a clean distinction between their work and outright lobbying. Whenever the idea of creating a political action arm came up, says a longtime Heritage scholar, “the answer was always no, because it would undermine the status of our research.”
Says a senior House Republican aide, “Mike Needham played a large role in defeating ideas that would have worked out better.”
But all this changed in 2008, when Barack Obama won the presidency and began to push his healthcare plan through Congress. People at Heritage watched in horror as the Center for American Progress, which they’d long derided as a liberal political operation masquerading as a think tank, out-muscled them in the policy fight on the Hill. They watched the Tea Party grow from a smattering of ornery protesters into a national movement. The idea of a Heritage lobby came up again, with greater urgency. And this time, it had a wily shepherd to see it through: Thomas A. Saunders III.
A graduate of the Virginia Military Institute, Saunders made his money in private equity and, before that, as a Wall Street hustler in the heady 1980s. Press reports from the time describe him as a sort of Gordon Gekko meets Rhett Butler, “a relentless salesman whose aggressiveness would be insufferable if it were not softened by a Virginia gentleman’s manner.” Over the past 20 years, he became a major GOP donor, contributing a half-million dollars to the Republican National Committee, as well as to the campaigns of such far-right candidates as Michele Bachmann. In April 2009, Saunders was elected chairman of the board at Heritage, and he made the case that the think tank would be foolish not to take advantage of the moment and pursue the activist option. Feulner acquiesced with the understanding that the new lobbying outfit would be subservient to the greater Heritage Foundation.
And so, less than a year after Saunders’s election, the word came down at Heritage that the think tank was about to sprout a political arm called Heritage Action. “A small number of people at the top decided it and then presented it to management as a fait accompli,” says one former Heritage staffer. “From day one,” says the former Heritage scholar, “there was massive consternation and concern.” Many were against it, fearing it would tarnish Heritage’s reputation for scholarship. Others had more brass-tacks concerns: How would authority be delegated and how would the money be mingled? The organizational details, say insiders, were left vague. “We had some time to make our concerns known,” says the former staffer. “But it was a matter of days, not months.”
On April 12, 2010, Feulner announced the birth of Heritage Action in an op-ed in The Wall Street Journal. “The Heritage Foundation has been called ‘the beast’ of all think tanks,” the op-ed declared. “Last week our beast added new fangs with the creation of a new advocacy organization.” Feulner’s co-author was Heritage Action’s 28-year-old new CEO, Michael Needham.
Like all good revolutionaries, Michael Needham had a sterling upbringing, the kind that allows a young man to pursue ideological purity free from worry about consequence or reality. Needham’s mother is a former Saks Fifth Avenue executive; his father runs a boutique investment bank. The future Tea Party rabble-rouser grew up on the Upper East Side. He attended Collegiate, a prestigious New York prep school, then Williams. As a political science major and, eventually, the editor of the college newspaper, Needham loved to provoke his liberal classmates, arguing that Social Security was unnecessary and that the minimum wage hurt the working poor. “It’s amazing how little reflection he’s given to his privilege,” says a classmate. "It was all kind of a game to him. It was an experiment in winning.”
After Needham graduated from Williams in 2004, Bill Simon Jr., a former California Republican gubernatorial candidate and fellow Williams alum, helped Needham secure the introductions that got him a job at the foundation. Ambitious and hard-working, he was promoted, in six months, to be Feulner’s chief of staff. According to a former veteran Heritage staffer, Needham is intelligent but “very aggressive”: “He is the bull in the china closet, and he feels very comfortable doing that.” (“I consider him a friend,” says the college classmate, “but he’s a huge asshole.”) In 2007, Needham, whose father has given generous donations to both Rudy Giuliani and the Heritage Foundation, went to work for Giuliani’s presidential campaign. When the campaign folded, Needham followed his father’s footsteps to Stanford Business School and then came back, at Feulner’s bequest, to run Heritage Action.
Needham, who in his time at Heritage, had been a proponent of ramping up the foundation’s lobbying efforts, was also given a lieutenant. He wasn’t the seasoned lobbyist who might be expected to keep tabs on his young boss, but a 31-year-old evangelical named Tim Chapman who had a few years experience working on the Hill. Heritage elders viewed Chapman, a boyish young man with freckles and strawberry blond hair, as the golden retriever to Needham’s pitbull. The two were installed in a townhouse down the street from Heritage headquarters, which soon came to be known, dismissively, as “the Frat House.” A young staff of about a dozen people worked there, hanging around in easy chairs, tossing a football around. The foundation scholar recalls stopping by and noting that the conversations at the Frat House sounded “more the way you’d expect a bunch of interns sitting around to sound, talking politics, trying to figure things out.” (A spokesman for Heritage Action disputes this characterization.)
But the elders were wrong to dismiss Needham and Chapman. Between throws of the football, they designed a brutally effective way to activate Heritage’s base of almost 700,000 donors, as well as to harness the diffuse Tea Party fervor across the country. In nearly every congressional district, they recruited Heritage Action “sentinels,” usually ordinary citizens with a surplus of time and enthusiasm, who were trained, outfitted with information kits, and asked to recruit and organize the local faithful. When Needham sounded the alarm, the sentinels and their infantries flooded the offices of their representatives with vitriol.
Housing Needham and Chapman outside the mothership proved a fateful decision. Heritage Action had been sold to the foundation staff as the mere executioner of the policy that Heritage analysts cooked up. Increasingly, however, the old guard at Heritage found that this was not the case. The failure to clearly delineate money, authority, and organization among Heritage and Heritage Action “gave Mike and Tim a lot of running room to wreak havoc,” says the scholar. They were approaching Congress on their own, fund-raising on their own, without any Heritage supervision but using the Heritage brand. According to the former Heritage staffer, “There was a growing sense among policy folks that there was a rogue group using the Heritage name and doing things they didn’t know about.”
This caused a massive backlash at Heritage headquarters. The former veteran Heritage staffer recalled “lots of angry meetings, and not just in the policy shop, but even in the marketing department.” Another staffer remembered screaming fights in the building.
In management meetings, it was usually Needham, representing Heritage Action, against much of the room, and he often won out because he came to the table with a national army at his back. Neither he nor Chapman seemed to suffer pangs of self-consciousness about their youth and inexperience compared with the patriarchs sitting around them. “I was always struck at how they felt absolutely no intellectual modesty,” says the former veteran Heritage staffer. “They felt totally on par with people who had spent thirty years in the field and had Ph.D.s.” The staffer recalls watching Needham interact with Feulner in large meetings. “It was just bizarre,” the staffer says. “There was not a lot of respect coming from Mike to Ed, and Ed kind of laughed it off. I always thought he crossed a lot of lines.”
But gradually, insiders say, even Feulner began to bristle at Needham and Chapman’s abrasive behavior. A few times, concerned over the fate of the relationships he had built on the Hill over his decades at Heritage, he gave them a stern talking-to. “But they knew as everyone else did that Feulner had set a date when he was going to retire, so they knew they just had to outwait him,” says the former scholar. “It was like a Shakespearean plot unfolding in front of us,” says the former veteran staffer.
Eventually, says the former staffer, Heritage Action “had to be moved back into the headquarters to have some adult supervision.” But it didn’t do much good: The boys brought their football, their easy chairs, and their aggressive tactics with them. By the time Feulner retired in April 2013, there was an eerie feeling at Heritage, described by several former high-level staffers, of waking up to realize that all the blank spots in the relationship between the foundation and Heritage Action had already been filled in by Needham and Chapman. Heritage had completely changed. “People in the building kind of woke up and realized, Wow! We were a totally different organization,” says the former veteran staffer. “How did that happen?”
In the run-up to Feulner’s retirement, the board had considered a number of candidates that would have provided some modicum of continuity with Feulner’s tenure. But once DeMint had gotten wind of the job, he began to lobby the board, making his desire for a wider political platform known. There had been resistance at Heritage to hiring a former member of Congress rather than a Ph.D., but Saunders, the chairman of the board, predictably liked the idea of a more activist president. When DeMint was finally hired, Heritage veterans understood that they had lost their last chance to stop the Heritage Action china-busting revolution. “At the end of the day, that was really an affirmative decision to double down on the political model,” says the scholar. “The battle was over.”
DeMint was known nationally as a warrior for purity, spending more of his time seeking out like-minded candidates for the U.S. Senate rather than passing legislation. But, at Heritage, DeMint found kindred spirits in Saunders and Needham, who created a Heritage Action scorecard to grade Republican members of Congress on their ideological mettle. (The standard is so high that, at this writing, the House Republican caucus gets a paltry 66 percent rating.)
DeMint also shared another bond with the two men: unlike the Heritage ruling class of yore, none of them had Ph.D.s. All three, however, had MBAs. Their preference for incentivizing behavior on the Hill with scorecards and primary challenges was “a very MBA approach to politics,” the former scholar noted ruefully. “There’s really no room there for deliberation or argument.”
Once he took the helm, DeMint set about reorganizing the business. Under Feulner, the Heritage Foundation ran as a decentralized confederation of so-called research silos—health care, national security, education—whose staffers each focused on a specific area. DeMint instituted a system of multidisciplinary teams that sprung up depending on the issue of the day that Heritage happened to be pushing. Moreover, now a Heritage staffer’s career trajectory was tied to the success or failure of that team.
DeMint also brought in his own management lineup from his Senate days: Ed Corrigan, Wesley Denton, and Bret Bernhardt. At Heritage, the three became DeMint’s enforcers. There is now a political check on all Heritage research papers to make sure they conform to the political and tactical line before they go out the door. Corrigan killed one such paper, defending the law authorizing National Security Agency practices as constitutional, only to have the Brookings Institution, a relatively liberal think tank, publish it. Corrigan also put the kibosh on several policy papers on the implementation of the Affordable Care Act, including one by Heritage scholar Edmund Haislmaier about what states should do on Medicare expansion. Because the official Heritage strategy was now to defund Obamacare, any paper acceding to a reality in which the law existed was verboten. The scandalous Heritage report on immigration, co-authored by a scholar who had once claimed that Hispanic immigrants have lower IQs than whites, was also the product of DeMint’s approach: Policy analysts were shut out of the discussion, and the paper, which was written to conform with DeMint’s anti-immigration stance, did not go through the standard vetting procedure.
Then there were the stylistic changes. DeMint was constantly on television, flying around in private jets, cruising around town in black cars. “Ed Feulner, he was always about the institution and the institution being bigger than him,” says the former Heritage staffer. “Then you look at the past twelve months of Jim DeMint and Mike Needham—it’s totally different. It’s all about them.”
And if Heritage Action was sold to Heritage staffers as a subsidiary to the think tank, under DeMint, the relationship has been reversed. There is talk inside Heritage that the foundation’s $82 million budget is being pared back, with the savings funneled into Heritage Action’s coffers. (A spokesman for Heritage Action denies this is the case.)
As a result of these changes, defections from Heritage, which began as a trickle about a year and a half into Needham’s tenure, have accelerated under DeMint. Heritage Foundation has lost Michael Franc, who ran its government relations division for nearly 17 years; its main number cruncher, William Beach; and the head of the American studies silo, Matthew Spalding. Gone too are J. D. Foster, who studied the finances of entitlement programs; Asia scholar Derek Scissors; and star national security wonk Mackenzie Eaglen. “You can certainly map the brain drain that’s occurred,” says a Republican Senate staffer. “What you have now is Heritage Action with a research division.”
The Heritage Foundation made neither Feulner nor DeMint available for comment, but a spokesman did respond to a detailed list of questions from The New Republic with the following statement: “I am happy to report that from its beginning, Heritage’s mission has been to build an America where freedom, opportunity, prosperity and civil society flourish. That was the case under Ed Feulner and, happily, continues to be the case under Jim DeMint.”
The biggest casualty of the takeover has been Feulner’s crown jewel: Heritage’s legendary relationships on the Hill. On issue after issue, Needham’s ideological flame-throwing has made Heritage Action enemies in even the most conservative corners of Congress. Says the House GOP aide, “People on the Hill are very much rubbed the wrong way by a former Giuliani staffer who is around thirty years old, running around and determining whether they’re conservative or not.”
With DeMint’s arrival, Heritage’s government relations team, which once boasted the ability to meet with 250 GOP and as many as 40 Democratic congressmen on any given day, disappeared. “The people at government affairs would go down to the Hill, and they had Hill folks saying, ‘Listen, we don’t want to meet with you because of what the folks at Heritage Action did yesterday,’” says the former Heritage staffer. Heritage analysts now have a hard time getting meetings on the Hill, even with Republicans. The congressional staffer told me that, for many Republican members of the House, “their research staff is probably not dealing much with Heritage anymore. They’re systematically going elsewhere for their information.”
Shortly after this summer’s farm bill debacle (Heritage Action pushed members to rid the bill of its food-stamp half, then still sent out a “no” alert on the revised bill, hanging out to dry members from agricultural districts), the outrage was such that the Heritage Foundation was bannedfrom the weekly lunches of the Republican Study Committee (RSC), a conservative caucus of House Republicans. This was particularly ironic as the RSC and Heritage were once interwoven: In the 1970s, Feulner had been the RSC’s first executive director. “It really speaks volumes about a betrayal of trust,” says the Republican strategist. The House GOP aide puts it more starkly: “There are over two hundred thirty bridges to be burned in the House. Over two hundred of them are burned, and they maybe have about thirty more left.”
The frustration grew in the build up to the budget fight as Heritage Action organized DeMint’s nine-city tour, and Needham blitzed the conservative media—giving constituents the impression that defunding Obamacare in one knockout move was perfectly plausible. In meetings, congressional staffers couldn’t even get Heritage Action to entertain the possibility that the strategy might fail. “They never wanted to discuss anything past defund,” recalls the Republican staffer. “We would ask, ‘What if [Democrats] say no and don’t budge, what do you do then?’ They kept saying: ‘That’s not our role. You figure it out.’ ” In an August interview with CSPAN, Needham was asked a similar question: How can Republicans achieve their goal of defunding Obamacare without control of the Senate or the White House? “I think that, rather than trying to figure out where we’re going to be at the end of September,” Needham said, his underbite jutting contemptuously, “we should actually fight for something.”
But congressional staffers couldn’t fully ignore Needham. Heritage Action sent e-mails out to its grassroots army, telling its foot soldiers to press their representatives to hold the defund-or-else line. Many Republicans, who felt less than certain about the defund strategy, felt entrapped, especially when these angry constituents confronted them at town halls. “They created this false narrative,” says the Republican staffer. Inevitably, the semi-regular Hill meetings between staffers and Heritage Action grew tense. As the staffer explains, “People came away with the feeling that they’re willing to drive a truck off a cliff, but with no purpose.”
On the morning of October 16, just hours before a deadline whose crossing could have pushed the United States into default, and hours before a deal averted that possibility and ended the 16-day government shutdown, after weeks of pushing House Republicans not to back down from the defund Obamacare plan that had gotten everyone to this point to begin with, Needham appeared on Fox News. “Everybody understands that we’re not going to be able to repeal this law until 2017 and that we have to win the Senate and we have to win the White House,” he said.
The hypocrisy was not lost on many House Republicans, who, for all those weeks, had lived in fear of Needham and Heritage Action. As the day wore on, the video made the rounds to much indignant headshaking. “A lot of people were upset,” says the Republican staffer. “If it was impossible, then why was he going around the country convincing other well-intentioned people that it was absolutely doable? To suddenly say at the end that we knew this all along struck a lot of people as disingenuous.” It struck others as a lily-livered delusion. “It was like a general applauding himself for reaching the top of the hill, while the army is being slaughtered at the bottom,” says one Republican strategist.
And yet Needham’s blithe remark came as no surprise to the former veteran staffer at the Heritage Foundation. “One of the hallmarks of that millennial profile is an inability to acknowledge mistakes,” the staffer said, sounding equal parts bemused and exasperated. “Everything is right and nothing was a mistake, and they can spin it any way they want.”
In keeping with this philosophy, later that morning, Heritage Action would issue another alert. Despite Needham’s admission that the imminent repeal of the Affordable Care Act was a lost cause, the alert warned House members to vote against the budget deal. “Heritage Action opposes the Senate-negotiated proposal and will include it as a key vote on our legislative scorecard,” it said. To this day, Needham stands by his strategy. It “may feel like bullying to a member of Congress,” he told Politico Magazine, “but it’s the reality of the world that we live in.”
Julia Ioffe is a senior editor at The New Republic.