The Unwinding: An Inner History of the New America

Connaughton never left Capitol Hill, so he never saw the blighted parts of Washington. For the next twenty years, Connaughton would remain a Biden guy, but he only worked for the senator for four years. In that period, the job of Biden’s staff was to rehabilitate his image, to make him look important and powerful enough to the presidency one day. Connaughton worked right outside Biden’s office for three years before he decided he needed to go to law school so he could more easily go back and forth between politics and the private sector. He went to Stanford and clerked for D.C. Court of Appeals Chief Judge Abner Mikva.

Mikva took Connaughton with him when he accepted the job as President Clinton’s counsel in October of 1994. Connaughton was not given a clear job description, but he was given a desk formerly used by a volunteer named Kathleen Willey who was known to have a special relationship with the president. Another desk had recently been vacated by Linda Tripp, an executive assistant to Vince Foster who had committed suicide the year before. Connaughton remained in awe of the White House the entire time he worked there. When he started, many of Clinton’s friends were under investigation by Kenneth Starr over the Whitewater scandal. Clinton was also being sued for sexual harassment by Paula Jones, and Republicans would soon win control of the House of Representatives. The Clinton Administration was off to a rocky start and blowing through White House Counsels. Shortly after joining the team, Mikva was told by someone from the Clinton communication team that Mikva needed to announce he had looked into Whitewater and found nothing. His job was to be loyal to Clinton and defend him. Instead, Mikva told reporters that he thought Clinton was uncomfortable due to the various investigations.

Connaughton was bored by the job in part because his role had never been defined. He had learned that power worked the way fundraising did—you wanted people to ask for favors. There were two kinds of people in Washington, those who crossed the room at a party to greet someone and those who waited for others to greet them. The latter were the ones with actual power.

The highlight of Connaughton’s White House career came over an obscure item in Newt Gingrich’s “Contract with America,” the Private Securities Litigation Reform Act of 1995, a law Republicans had drafted to weaken antifraud protections from the Securities Exchange Act of 1934. Wall Street and Silicon Valley supported it, and Connaughton argued it was a corporate power play and got Mikva to push Clinton to demand changes to the law. One late night in June of 1995, Connaughton and Mikva were called to meet Clinton in his private study. Clinton was persuaded to make the demand and personally asked Connaughton if it was the right thing to do. Connaughton came to believe the Clintons had gotten into politics to help real people, and he would later go on cable news to defend Clinton during the fervor of the Monica Lewinsky scandal. Despite Clinton’s objections, the bill passed. He vetoed it. Congress overrode the veto with several Democrats joining the Republicans (Biden voted with Clinton).

At the end of the year, Mikva quit the White House, and Connaughton left to join a law firm, a lucrative job that bored him. Jack Quinn, Mikva’s replacement at the White House, asked Connaughton to write some speeches. When Quinn left the White House at the end of 1996 to restart his lobbying firm, Arnold & Porter, he asked Connaughton to join him. Clinton had banned senior officials from contacting federal officials for five years after leaving the White House, but the rule did not apply to Connaughton who was not a senior official.

Peter Thiel was three years old when he realized he would die someday, which began a lifelong obsession with that prospect. Peter was born in Germany, but due to his father’s job as a chemical engineer for various mining companies, he spent parts of his childhood in Cleveland and apartheid-era South Africa before moving to Foster City, California, about twenty minutes north of Stanford University, in 1977. Back then, the surrounding area was not typically referred to as Silicon Valley. The technology firms in the area catered to businesses, and home computers were for hobbyists alone. The Valley was egalitarian and offered a great example of postwar middle-class American life. The average house in Palo Alto cost $125,000, and the commercial parts of town included variety stores, movie theaters, and a mall anchored by Macy’s and Woolworth’s, not luxury stores. The public schools were some of the best in the country, as the tax revolt which would sweep California and lead to underfunding of schools was still a year away. Peter Thiel moved in to the Valley in the last year of its middle class heyday, right before everything about it, including its moniker, would change.

The Thiels were conservative evangelical Christians who believed the government failed at everything from interest rates to public safety. Peter was very smart, and in the 70s and 80s, it was fairly common for people into the same things as Peter—chess, computers, math, J.R.R. Tolkien—to ascribe to the worldview of libertarianism. He became enamored with this theory and found Ayn Rand’s libertarian novels to be prescient and impressive. He matriculated at Stanford in 1985, a year he would describe later as being very optimistic.

Thiel was awkward, given to long stutters or fits of silence while trying to compose his thoughts. In a philosophy class his sophomore year, Thiel met another brilliant student, Reid Hoffman, who was, unlike the rest of Thiel’s friends, politically liberal. At the time, the Stanford campus was embroiled in a fight over the school’s core curriculum, with some students even occupying the president’s office in protest. In 1987, Thiel and another friend entered the fray by starting a conservative publication called The Stanford Review. Thiel’s publication was a mix of high-minded attacks on ideology and sarcastic ridicule of political correctness. After entering Stanford Law School, the Review, now edited by Thiel’s friend David Sacks, began covering speech codes, gay rights, and attacks on the campus’s new definitions of sexual coercion. Thiel and Sacks wrote a book called The Diversity Myth to rail against political correctness and multiculturalism on campus. Though Thiel pushed a hostile view of homosexuality in all of his publications, he himself was living as a closeted gay man. He would come out in 2003 and only to some close friends.

After law school, he dedicated himself to defending and profiting from capitalism. He wanted as much money as possible, but he also wanted to be the next William F. Buckley. He worked in finance in New York for a while where he recognized everyone seeking status all around him and saw even those who made more money than he did running out of money because bankers were expected to live, eat, and drink well in order to appear successful. He decided to move back to Silicon Valley in 1996.

By then, the internet had transformed the Valley into Silicon Valley. While the computer industry had largely left for Seattle, the internet was ascendent after the launch of the internet browser Netscape. Netscape was unprofitable, but its stock rose tenfold. Between 1995 and 2000, the number of Web users doubled each year, and Yahoo!, Amazon, and eBay all went public. The dot-com boom was nascent when Thiel arrived in 1996 and founded a hedge fund, Thiel Capital Management.

In the summer of 1998, he gave a lecture at Standard on currency trading and met a young Ukrainian-born computer programmer named Max Levchin. Levchin, excited by Thiel’s youth and casual appearance, pitched Thiel on two startup ideas, one of which was about using encryption to pay through handheld digital devices. Thiel offered $240,000 and said he would help Levchin raise twice more. The two men bonded over math puzzles and set up a company called Confinity. Thiel encouraged Levchin to adopt his technology so that it would be used to store money on Palm Pilots and other devices, and then users could send money from one device to another through a software application they called PayPal. They secured $4.5 million in financing, and the company fast became a hit, although not for the Palm Pilot capabilities. Instead, the PayPal website (which required an e-mail address alone to join) grew seven percent a day within a few weeks of the company’s launch.

Thiel went on a hiring spree, hiring Hoffman and Sacks along with other Stanford grads he knew. The company offered stock options and even cryogenics as part of its benefits package. Thiel’s goal was to disrupt the world and especially the transnational, government-controlled world of monetary policy. In 1998, he and Levchin had both read a book called The Sovereign Individual which described a future dominated by computers and decentralized governments and finance, a world which would empower individuals but also exacerbate wealth inequalities. The book showed a libertarian dystopia, and it inspired PayPal.

By 1999, the average house in Palo Alto cost $776,000, and the shopping centers were now anchored by Bloomingdale’s and Louis Vuitton stores. PayPal grew exponentially and was one of the few survivors of the stock market crash that burst the dot-com bubble. In 2002, eBay purchased PayPal, and Thiel left the company with $55 million. The leaders at the company, the so-called “PayPal Mafia,” went on to found YouTube, Tesla, LinkedIn, Yelp, and other companies. Thiel moved to a condo in the Four Seasons in San Francisco and started Clarium Capital Management. He had begun his life as a tech mogul.

The Clinton impeachment trial ends. There are parties celebrating the end of the millennium. Reports indicate that the number of millionaires is on the rise, and there is a new hip list of A-listers attending parties as the nation is wealthy and optimistic about the future. Martha Stewart has started a billion-dollar empire, the internet boom is making fortunes for everyone, Countrywide is creating more subprime mortgages, Cone Mills is closing plants, and US financial firms are becoming massive due to the end of the Glass-Steagall Act. Bill Clinton is quoted in remarks about the sun setting on the twentieth century but still rising on the USA.

In 2003, Dean’s younger son, Ryan, came to live with him in North Carolina. Dean was divorcing his second wife and moved him and Ryan into his family house. His mother was living in the apartment in the back of it, and he saw it as a modern day The Andy Griffith Show, with Andy, Opie, and Aunt Bee all living together. His house was steeped in the past and looking toward the future.

By then, Dean hated the convenience store business, finding the daily operations boring, and disliking that he could only pay minimum wage to the poor people willing to work for it, people with drug addictions and other problems. He thought many of his over 200 employees were stealing from him, and he thought fast food was bad for all parties involved—the worker, the consumer, the owner, and distributor. Dean had a partner overseeing his stores and books, first his now-former brother-in-law, and then his best friend, Chris, who he’d known for decades. Chris was a good partner until his thirty-seventh birthday, when Dean found out he had an addiction to crack and had been stealing from the businesses. Dean agonized over what to do. Napoleon Hill had written of the “mastermind,” a coordinated effort between two people for a known purpose, but Hill had no advice for this situation. Remembering a story about Abraham Lincoln choosing to cut down a damaged tree he loved, Dean decided to cut Chris loose, even though it ruined Chris’s life.

Dean would later see losing Chris as the first of a series of blows that eventually led to him getting out of the convenience store business. Two brothers from India negotiated to buy one of his truck stops in Stokesdale for $1.5 million. Dean invested part of the money on a Back Yard Burgers franchise across the street from the Piedmont Mall in Danville. Back Yard Burgers was aimed more at a white middle-class clientele than other fast food chains. He opened the location on December 13, 2004. Three days later, his father, whose painkiller addiction had worsened over the years, shot himself in the heart. Dean felt that his father’s biggest mistake was that he considered himself a sinner and did not realize that he had the power of God in him to do whatever he wanted.

Hurricane Katrina hit New Orleans on August 29, 2006, and Dean watched from North Carolina as oil refineries along the Gulf coast shut down and the price of diesel shot from $2.25 to $3.50 per gallon. Dean struggled to keep his tanks full and was accused of price gouging, but he and other independent gas station owners had to inflate prices lest they lose all supply instantly. Katrina was an epiphany for Dean who grew angry to learn how much the US depended on oil from adversarial nations. He blamed politicians who had chosen greed and trusted multinational corporations. He researched ways of becoming energy independent.

Just before Katrina hit, Wal-Mart had come to a nearby county. Two more stores were coming in six months, and unemployment in the area was so high that 2500 people applied for just 307 “associates” positions that paid an average of $9.85 an hour. Dean researched big box stores and learned that 86 cents of every dollar went to them once one opened up in an area. Big box stores ruined small-town life by shutting down the small shops that were pillars of communities, devastating local areas. While Wall Street and Silicon Valley made fortunes, the Piedmont was close to a depression. After that research, Dean changed political views. He’d always voted Republican, but now he blamed George. W. Bush and even his hero Ronald Reagan for teaming up with multinational and oil corporations. One day, he found a website about peak oil, a theory crafted by a geologist in 1956 that said that the world would peak in oil production in 2005 and then start to dry up. Dean had a vision of what that would mean—trucks not running, food stranded on the roads, riots, maybe martial law or a coup. Just as discovering Napoleon Hill had stuck with him forever, he knew his peak oil discovery would too. It led him to biofuels.

Dean learned ethanol was expensive to produce but that biodiesel took less energy and money. Since it was made of triglycerides, biodiesel could be made from soybeans, animal fats, or even waste cooking oil from restaurants. Plus, a truck could run on biofuel with slight adjustments. With money from Rocky Carter, Dean purchased a portable biodiesel reactor and some canola, a winter cover crop that Dean read was perfect for making biodiesel. This, he knew, was what would set him free and allow him to live his dream life as a farmer.

For a while in the late 1990s, Tammy got back together with her high school sweetheart, Barry, the father of her firstborn. They got married but began to fight after seven years together. After the marriage ended, Tammy stopped going to the south side church where Barry’s family was prominent and instead began attending an interracial megachurch in Akron called the House of the Lord. For a couple years, church was her life. She had lived in four different places on the south side, which had become worse than the east side. In July 2005, she divorced Barry and left him her house. In August, she bought a house in a township on the northern edge of Youngstown. She moved there in August, but then Packard Electric declared bankruptcy.

For the two decades she had worked there, Packard had chipped away at its workforce, dropping nearly ten thousand employees between the 1970s and 2005. The company had by then become the largest employers in some sections of Mexico, and Tammy watched as the auto parts plants and their unions went the same way as the steel mills, only at a slower pace. In 1999, Wall Street firms urged General Motors to spin off Delphi Automotive Systems, the big company into which GM had consolidated all of its parts manufacturers (including Packard). When Tammy’s factory came under Delphi, it was no longer profitable, and it was clear that the spinoff had been a tactic to break up the American workforce. Delphi executives committed accounting fraud and took billions in losses due to a GM sales slump, declaring Chapter 11 bankruptcy in 2005. The bankruptcy only applied to Delphi’s North American operations and allowed it to reorganize under a new CEO who specialized in making troubled companies profitable again by slashing them into small pieces. He was given as much as $35 million, while other executives pocketed $87 million in bonuses and a half billion dollars in stock options. JPMorgan Chase and Citigroup lent Delphi $4.5 billion and would get that and fees back before all other debtors. The winner in the bankruptcy would be those parties, while the losers would be Delphi’s American workforce, most of whom would be bought out.

Tammy didn’t see any of this coming. Pushing forty, she was making $55,000 a year with overtime and was only thirteen years away from retirement. She was taking classes at Youngstown State with hopes of maybe becoming a counselor. She would lose most of her pension, but on December 31, 2006, she took the buyout and knew that God would open large doors for her.

Headlines describe protests over the war in Iraq, anger at the French for not supporting the war, the Bush Doctrine, and the deaths of 16 servicemen. Latinos are now the largest minority group in the country, the Pope attacks homosexuals, and a family fears being able to connect when the end of days starts. Paris Hilton is noted for never having been in a Wal-Mart, and housing is said to be a safe haven for investors. The narrator of a Frederick Seidel poem promises to find weapons of mass destruction while drinking wine on the street and experiencing homelessness.

A family of light-skinned immigrants lived in the South Bronx; the mother was a member of the massive garment workers union, the father was a shipping room foreman for a clothing store. The family’s youngest son went to various public schools and then to City College. America at the time was still anchored by the postwar middle-class democratic order and its proud institutions, including General Motors, CBS News, and the U.S. Army, the last of which the boy would find a home in for his entire life. He joined ROTC in 1958, and he became a second lieutenant. The captain went to Vietnam in 1962, Birmingham in 1963, and, now a major, Vietnam once more in 1968.

He worked his way up the ranks to a White House Fellow just before Watergate, then battalion commander in South Korea where he focused on reestablishing order and dignity to the post-Vietnam Army, then to the Pentagon in the Carter and Reagan administrations. The major general reluctantly followed the White House’s orders on transferring 4,000 missiles to the CIA as part of the Iran-Contra affair, but it got him named deputy national security adviser, where he helped clean up the mess and won notoriety. He was efficient and inspiring at a time when the country was about to win the Cold War.

In 1989, he was awarded his fourth star and became the youngest Chairman of the Joint Chiefs of Staff under George H.W. Bush. He led the first two American wars since Vietnam, a brief fight in Panama against a drug dealer, and Desert Storm, which was won by focusing on a doctrine of clear goals important to the nation, broad political support, overwhelming force, and an early exit. Both sides of the political divide trusted him because he was the embodiment of the political center.

In 1995, he declared himself a Republican, though a friend warned him not to do so because something had grown rotten in the party and too many Republicans now had a spirit of cruelty and irrationality. The general could have been the first Black president, but he chose not to run. In 2000, he was called back to service. He became the Secretary of State for George W. Bush, even though he was warned that the president was likely to ignore his advice. After 9/11, the president began to turn his attention to Iraq, despite the secretary’s caution.

But the center was no longer there. The secretary was trying to function inside a world that no longer functioned and in an administration run by ideologues who hated institutions. The president wanted his approval ratings and made the most popular man in America go to the UN to deliver lies about the threats Iraq posed to the world. Many Americans believed him, for he spoke with conviction and had never lied to them before. He represented the institutions they trusted, and he hurt himself more than he thought possible. When the war began, the president said he slept like a baby every night, and the secretary said he did too—he woke up screaming every couple hours.

Connaughton’s timing in lobbying was perfect. When he entered the business in 1997, companies spent around $1.25 billion on lobbying services, but by 2009, when he left, the amount had tripled. This drew hordes of politicians and former staffers to the field, including 42 percent of congresspersons and fifty percent of senators who left office between 1998 and 2004 alone. When Connaughton had started, the practice of leaving politics for lobbying work was considered selling out; when he left, it was thought of as cashing in.

In January 2000, Connaughton’s boss Jack Quinn left Arnold & Porter and started a new firm with Ed Gillespie. Unlike other firms which catered to one party, Quinn Gillespie & Associates could connect with both Republicans and Democrats, although Connaughton would only ever work for Democrats. He didn’t have the connections Quinn and Gillespie did, but he was good at the hard, skillful work necessary to succeed. He made a half million dollars a year even though practically nobody had heard of him.

Lobbying by then was no longer about getting clients in the room with more important people. Instead, it was about launching broad strategic campaigns that helped the media shape an issue and pushed local citizens to pressure their congresspeople for whatever issue was being lobbied for, a practice they called forming "grasstop” coalitions. Quinn helped one of his clients, Marc Rich, get a pardon from Clinton on his last day in office. Though Connaughton and Quinn had some lines they wouldn’t cross, they did work for Serbian nationalists as well as the Ivory Coast government said to be operating death squads. Connaughton had convinced himself the firm was helping by making sure the president there made elections happen, but he learned the Ivory Coast president simply wanted good PR.

Lobbying itself was based mostly on the social networks in Washington. A senator’s chief of staff might return a lobbyist’s call simply because the lobbyist might later trade a favor for him. The lobbyist would act as an advocate making a simple argument for a senator, but of course, the problem with lobbying is that the senator would only ever hear one side and often from a source who raised money for them. Connaughton would later say the problems in America could be traced to the cultural changes of the 1980s when people began to make such large amounts of money that they no longer felt embarrassed by how the money was made.

Connaughton became a Professional Democrat, one who connected special interests to party members by fundraising. Everyone in Washington knew each other, and Connaughton got sick of having to attend so many events. He remained single, though if he had married, he might have gotten even richer as part of a power couple in which each spouse would take turns in the public and private sectors, trading insider information. Some power couples operated exclusively in the financial sector and the axis of Wall Street and Washington, going in and out of banking committees, Treasury, regulators, and banking firms. Connaughton called this cabal “the Blob.”

Quinn Gillespie ended up doing a fair share of fundraising. It would typically host a breakfast buffet in its conference rooms during the middle of the week when senators were usually in town. The senator would talk to the donors for a bit and walk out with money. Senator Chris Dodd was especially good at these breakfasts, and Connaughton learned he could get the senator on the phone whenever he wanted as long as the fundraising events were ongoing. In 2001, he and Quinn raised $75,000 for Biden, who was then the chairman of the Senate Foreign Relations Committee. Biden sent Connaughton a note telling him that he would always be there for him. Connaughton’s only real connection in Washington had been Biden, but he had never sold himself as someone who had the senator’s ear, though that illusion was a lucrative one.

When Quinn Gillespie was bought by a London firm in 2003, he was offered an amount that would increase each year if the firm did better. He worked harder than ever to maximize revenues between then and 2007 so that he was rich by the time he finally did cash in.