By the time CNBC’s election-night anchors welcomed Dick Armey on the air, the networks had already called it for Barack Obama. The only thing left was for Mitt Romney to concede.
But Armey, the former House majority leader, saw no reason to surrender. “You got Florida running, seems to me, headlong into a recount, and Ohio I don’t think is settled by any means,” he told viewers.
Armey drove to his home outside Dallas after the TV appearance and planted himself on the couch, flipping anxiously between Fox News and C-SPAN, nourishing a flicker of hope right up until 12:55 am, when Romney finally capitulated.
After three decades in politics, Armey had seen Republicans lose plenty of elections. But this one really hurt. He knew it would be his last election as the face of the Tea Party, and it wasn’t supposed to end this way.
One month earlier, Armey had agreed to resign as chairman of FreedomWorks. Throughout the mid-aughts, FreedomWorks had tried—and repeatedly failed—to ignite a modern Tea Party movement. When populist anger over out-of-control federal spending gripped the nation in 2009, the organization had transformed itself almost overnight from a B-list nonprofit to the Tea Party’s unofficial headquarters in Washington.
The ascent was engineered by a pair of unlikely allies. With his Texas swagger, Armey, 72, was FreedomWorks’ charismatic frontman. Forty-nine-year-old Matt Kibbe, an ex-congressional aide with muttonchops and Grateful Dead posters, was its behind-the-scenes strategist. Through their long crusade, the two had become as close as family, and Kibbe saw Armey as a father figure.
But at the very moment that their small-government revolution was finally happening, Armey and Kibbe declared war on each other, just weeks before the most important election of their lives.
in his stetson hat and cowboy boots, Armey cut an improbable figure in Congress when he was elected in 1984. He sneaked out to the Potomac River for early-morning fishing. To save money, he slept in the House gym.
Armey fought hard to cut government spending, and when he won a few high-profile battles, GOP leaders took note. They invited him to help write their Contract with America, a set of promises—to audit Congress for waste, to downsize committee staffs—that became the Republican platform for the 1994 midterms. When voters handed control of the House to Republicans for the first time in 40 years, Armey was elected majority leader.
Despite his rise, Armey lacked political instincts, forgetting people’s names and arriving late to votes because he was chatting with his staff. He also talked himself into controversy. He referred to Hillary Clinton as “Marxist” and to Massachusetts Democrat Barney Frank—an openly gay congressman—as “Barney Fag.” (Armey said he accidentally mispronounced Frank’s name.)
Matt Kibbe had stumbled into free-market economics as a teenager in Erie, Pennsylvania, where his father was a factory manager. At 15, Kibbe bought the album 2112 by the band Rush, which was dedicated to novelist Ayn Rand. Curious, Kibbe picked up Rand’s book Anthem at a garage sale and was enthralled. By the time he entered the workforce, Kibbe’s small-government principles were unshakable. He quit a job at the Republican National Committee after President George H.W. Bush broke his no-new-taxes pledge, and he resigned from the U.S. Chamber of Commerce when it endorsed President Clinton’s 1993 health-care reform.
In 1996, Kibbe joined an organization called Citizens for a Sound Economy (CSE), founded by billionaire industrialists Charles and David Koch to do for the right what labor unions and Ralph Nader’s consumer advocates had long done for the left.
Kibbe was CSE’s second in command when doctors diagnosed him with Stage IV cancer in 2001. He underwent surgery to remove the tumor in his stomach; to the surprise of his doctors, the procedure revealed that the cancer wasn’t terminal. Kibbe recovered, but the experience changed him.
“It radicalized me,” Kibbe says. Time was too short. He needed to get something done.
Armey joined CSE as co-chairman after he retired from Congress in 2003, providing political star power that the organization lacked. He made $430,000 a year, on top of the $750,000 salary he earned as a lobbyist for the firm DLA Piper.
But shortly after Armey’s arrival at CSE, a boardroom dispute split CSE in two. The Kochs broke off and founded Americans for Prosperity while Kibbe partnered with Armey to form FreedomWorks in 2004.
Kibbe wanted to make sure FreedomWorks couldn’t disband the way CSE had, Armey says, so he structured the nonprofit with an unusual three-person board of trustees that had the final say in all organizational matters; Kibbe and Armey took two of the three seats. Together, they rallied activists to support small-government initiatives throughout the country and organized anti-tax protests each April 15 at post offices around the country—rarely drawing more than two dozen people. No matter what they tried, Kibbe and Armey couldn’t seem to get any momentum. And without the Kochs’ financial backing, FreedomWorks struggled to make payroll.
Everything changed on the morning of February 19, 2009, when CNBC’s Rick Santelli was asked live on the air for his reaction to the Obama administration’s latest plan to assist homeowners.
Santelli turned to the traders on the floor of the Chicago Mercantile Exchange: “This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” The traders booed. “President Obama, are you listening?” he continued.
As Santelli’s red face blasted across the internet, FreedomWorks’ staff saw an opening. Within hours, FreedomWorks created the website IAmWithRick.com, rallying the public to oppose federal bailouts. Soon FreedomWorks was flooded with calls.
Reporters struggling to understand the leaderless Tea Party movement found in Armey a quotable spokesman. Criticism from the left—such as when White House spokesman Robert Gibbs blamed “Dick Armey’s group” for “getting people to go to town halls and yell at members of Congress”—only cemented FreedomWorks’ credibility. At the same time, Kibbe quietly paid conservative radio hosts Glenn Beck and Rush Limbaugh to endorse the organization on the air. These “embedded media” segments were paid advertisements cloaked as editorial opinions.
Despite being Beltway elites, Armey and Kibbe emerged as emissaries for the populist, anti-Washington revolution. The New Yorker described Armey—who flew first-class and had a chauffeur—as “the de-facto leader of the Tea Party movement.” Newsweek called Kibbe—a former chief of staff to a Republican congressman—a Tea Party “mastermind.”
As FreedomWorks’ profile expanded, contributions doubled from $7 million to $14 million between 2008 and 2010. Its number of volunteers jumped from 500,000 to 1.2 million. Fueled by Tea Party enthusiasm and FreedomWorks’ help, the GOP picked up 63 seats in the House in the 2010 midterms—enough for control of the chamber—six seats in the Senate, six new governorships, and nearly 700 seats in state legislatures.
It was finally happening—Armey and Kibbe were at the center of the most powerful conservative movement in a generation. Together they wrote a best-selling book, Give Us Liberty: A Tea Party Manifesto.
“We had a great working relationship,” Armey says, “and we were really making a difference.”
As FreedomWorks took off, executives turned to a delicate question: what are we going to do about Armey?
It was partly an issue of succession. Armey, the face of the organization, turned 70 in 2010. He wouldn’t be around forever, and board members wanted a plan for a post-Armey FreedomWorks, an executive says.
At the same time, Armey’s public comments were making FreedomWorks executives cringe. For example: in a March 2010 speech, he inaccurately described the early American Jamestown colony as a “socialist venture,” falsely identified Alexander Hamilton as an opponent of strong central governments, and struggled to recall Winston Churchill’s name. To FreedomWorks executives, Armey was becoming a liability.
Armey didn’t object that the group was grooming Kibbe as his replacement, but he had no plans to step down. He had been forced to resign as a DLA Piper lobbyist in August 2009, when the firm’s drug-company clients—who supported Obama’s health-care initiative—complained about his vocal opposition to the legislation. Armey left Washington and began working from Texas. Without the $750,000 salary from DLA Piper, he thought he was more likely to die than retire.
Kibbe’s wife, Terry, had a solution to the Armey problem, a former FreedomWorks staffer says: she thought her husband should take his place.
Terry Kibbe was more ambitious than her husband. The former staffer says that in 2010 Terry instructed Adam Brandon, then FreedomWorks’ press secretary, to promote Matt Kibbe—not Dick Armey—as the face of the organization. Around that time, FreedomWorks employees began rerouting Armey’s press requests to Kibbe, former officials say.
FreedomWorks’ media department soon began calling attention to Kibbe’s fondness for the Grateful Dead and the 1998 cult film The Big Lebowski. Brandon told Armey he was “branding Kibbe” to make him more appealing to young people, a demographic the organization wanted to reach. As his public image evolved from conservative wonk to hipster economist, Kibbe hit the cable-news circuit. And in the fall of 2011, Kibbe signed a contract to write another book, Hostile Takeover—this time without Armey.
As Election Day approached, staffers noticed a change in Kibbe. “The priorities had shifted from elections and campaigns and grassroots and public-policy fights to something else,” says a former FreedomWorks official. “It was about Matt Kibbe: selling books and doing Glenn Beck TV.”
One morning in August 2012, FreedomWorks’ press secretary had told Armey’s assistant, Jean Campbell, to cancel his previously scheduled appearance on CNBC’s The Kudlow Report because she wouldn’t have time to brief him. When Armey learned of the change, he was confused. Since when did he need a twentysomething press secretary to brief him? Then he learned that a FreedomWorks staffer had contacted the show to ask if Kibbe could fill Armey’s slot.
“I hit the roof,” Armey says. “They consciously tried to get me to break my commitment with Kudlow in order to get Kibbe on.”
After the Kudlow incident, Armey says, others in the media told him they’d had interview requests rerouted to Kibbe as well.
(Adam Brandon denies that staff at FreedomWorks ever intercepted Armey’s interview requests, adding that FreedomWorks assigns each media request to the staff member best suited to address it.)
Armey resolved to confront Kibbe, man to man, as soon as possible.
Days later, more than 100 FreedomWorks employees, activists, and donors gathered at Wyoming’s Snake River Lodge & Spa, a 155-room luxury hotel at the foot of Jackson Hole Mountain. Tea Party stars Rand Paul and Ted Cruz were among the speakers at the two-and-a-half-day retreat. Arriving at the resort, Armey saw signs of his reduced standing everywhere. He says that the event’s program had a picture of Matt Kibbe in the front and listed him only in the back. “It was death by a thousand slights,” Armey says.
He couldn’t find the right moment to confront Kibbe. But before the retreat ended, an employee handed Susan Armey a document. “I’m supposed to get the leader Armey to sign this,” the employee said.
Back home in Texas, Armey studied the document. It was a legal agreement between Kibbe and FreedomWorks intended to “memorialize the pre-existing understandings” about Kibbe’s book, Hostile Takeover. Armey was being asked to certify that no “significant FreedomWorks resources were used in the writing of the book” and that “Matt Kibbe is the sole author and copyright owner.”
But Armey had no “pre-existing understanding” with Kibbe. And because many employees had helped produce the book they wrote, he figured Kibbe had used significant staff time for this book as well. Two former FreedomWorks employees say that about 15 of the 40 staffers helped with Kibbe’s book. But Brandon says Kibbe wrote the book over his Christmas vacation with little staff help.
Finally, because the first book had been contracted as property of FreedomWorks, any earnings associated with it belonged to the organization. This document, however, made clear that Kibbe himself would own Hostile Takeover and any revenue it generated. He had received a $50,000 advance for the book.
Diverting nonprofit resources for personal use is a violation of federal tax code. If Kibbe had used “significant staff resources,” he would have put FreedomWorks’ tax-exempt status at risk. Kibbe, Armey says, “had put the organization in jeopardy, and he had done it to line his own pockets.”
Brandon disputes this assertion, arguing that Kibbe had no interest in profiting from the book but wanted to retain the copyright because he had written it. FreedomWorks’ in-house lawyer reviewed and cleared the contract before Armey received the agreement, Brandon says.
Furious, Armey flew to Maine to show the document to FreedomWorks’ third trustee: C. Boyden Gray, a former White House counsel.
Armey and Gray called a special meeting of the board for Tuesday, September 4, 2012. Kibbe arrived at Gray’s D.C. law office without knowing why he’d been summoned. When they were around a conference table, Armey argued that Kibbe had pilfered his media requests and used FreedomWorks’ resources to profit personally.
The trustees voted two to one—Armey and Gray for, Kibbe against—to remove Kibbe from the board, and then put Kibbe and Brandon on administrative leave.
Before Kibbe left, the trustees asked him to sign a document preventing him from launching an organization similar to FreedomWorks for the next four years, a FreedomWorks executive says, adding that the agreement came with a $100 signing bonus: “It was meant to be insulting.” (Armey denies that there was a signing bonus and says that the document was just a confidentiality agreement.)
Kibbe refused to sign.
At FreedomWorks headquarters, some 30 anxious staffers surrounded the rectangular table in the conference room when Armey and his wife marched in. Armey announced that Kibbe and Brandon had been put on leave, but he didn’t explain why.
FreedomWorks staff divided into two camps. While some senior employees respected Armey’s authority, many newer ones weren’t old enough to remember his days in Congress and—because Armey worked from Texas—didn’t really know him. In Kibbe, they found a hip libertarian who hosted parties at his home. Younger staffers developed a “cultish admiration” for Kibbe, a former official says. To the young staffers, Armey seemed ill-suited to run the organization.
“In our limited experience dealing with Armey, [we] saw him as this lovable grandpa,” says a young staffer. “To see him tailspin into this power-hungry, totally out-of-touch person was really frightening.”
On the day after the takeover, Armey and his wife flew to Colorado for a donor event. On their way back to Washington, they stopped at the Chicago home of Richard Stephenson. A reclusive millionaire, Stephenson was a big FreedomWorks donor and Kibbe’s strongest ally on the board of directors.
When Armey arrived, Stephenson introduced a therapist who he suggested could mediate Armey and Kibbe’s dispute. Armey didn’t know it, but Kibbe had flown in from Washington and was waiting in another room. “If you think you’re going to therapize me into working with Matt Kibbe again, you’re kidding yourself,” Armey told the therapist.
He had previously told Stephenson that the allegedly rerouted media requests gave him a legal case against FreedomWorks for tortious interference. He calculated damages at $8 million—the potential earnings Armey felt he’d sacrificed by staying at FreedomWorks. (The figure is based mostly on Armey’s $750,000 annual contract with DLA Piper.)
Either Kibbe goes or I go, Armey said. “And if I go, I’m going to have to sue. I can’t go away with empty pockets.”
As Armey left, he saw Kibbe on a couch in an adjacent room. Neither said a word.
The next afternoon, C. Boyden Gray summoned Armey to his Washington office: Stephenson was willing to pay Armey $8 million to retire. The deal would be arranged as a consulting contract between Armey and Stephenson, payable in annual installments of $400,000 over 20 years. In return, the trustees would reinstate Kibbe as FreedomWorks president and Armey would leave the organization after the election. Armey accepted.
Kibbe and Brandon were back in the office by the end of the day and spent the next few weeks settling scores, former staffers say. They labeled employees who had been helpful to Armey as “collaborators” and stripped them of authority. Kibbe promoted two young staffers who had remained loyal to him during the crisis, and he donated his $50,000 book advance to FreedomWorks. (Brandon denies punishing employees and says all promotions were merit-based.)
Armey returned to his Texas ranch not as the commanding general of the Tea Party but as a retired civilian. He says he spends a lot of time thinking about the book he plans to write. It’s part autobiography, part economic-policy treatise. He insists he doesn’t miss the action in Washington. “I’ve got so much going on right now over the book that I don’t sleep as well because I wake up with my head full of ideas.”
Meanwhile, FreedomWorks is struggling. Key staffers and board members have fled, and first-quarter fundraising has slipped. Things may get worse. Two watchdog groups have asked federal authorities to examine $12 million in suspicious donations that FreedomWorks received right before the election.
(Brandon says everything is just fine. “We haven’t had to lay anybody off,” he says, adding that FreedomWorks has sold 16,000 tickets to an upcoming event.)
Following the disastrous 2012 election, public support for the Tea Party has crumbled, and establishment GOP figures such as Karl Rove have launched initiatives to prevent less electable Tea Party candidates from winning primary campaigns. At its most recent tax-day rally at the Capitol, the crowd numbered in the dozens—a turnout that recalled FreedomWorks’ early days. Now, more than ever, the movement could use a pair of battle-hardened activists.
A version of this story first ran in the Washingtonian.