American Enterprise Institute
last updated: January 19, 2009
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The American Enterprise Institute for Public Policy Research (AEI), based in Washington D.C., has been a leading member of the neoconservative advocacy community for nearly three decades and is one of the more prominent U.S. policy institutions. AEI’s advocacy agenda extends from free-market economics to militarist security policies. AEI says that it seeks “to defend the principles and improve the institutions of American freedom and democratic capitalism—limited government, private enterprise, individual liberty and responsibility, vigilant and effective defense and foreign policies, political accountability, and open debate.”1
Among the better known figures based at the institute are several former George W. Bush administration officials and advisors who were key promoters of the “war on terror” policies put in place after the 9/11 terrorist attacks, including John Bolton, Paul Wolfowitz, Richard Perle,John Yoo, and David Frum. President Bush highlighted the enormous influence the institute had in his administration during a January 2003 speech at an AEI dinner celebrating neoconservative forefather Irving Kristol. After commending AEI for having "some of the finest minds in our nation," the president said, "You do such good work that my administration has borrowed 20 such minds."2
By late 2008, as the George W. Bush presidency was drawing to a close, three of AEI’s high-profile scholars—Michael Ledeen, Joshua Muravchik, and Reuel Marc Gerecht—had left the think tank. All three were regarded as key proponents of Bush’s “war on terror” policies, including the invasion of Iraq and antagonism toward Iran, and each had been based at AEI for several years. Although it was unclear whether the scholars were forced out of AEI, one observer reported that many neocons saw the departures as part of a “vicious purge” against them that was being spearheaded by an opposing faction within the think tank.3 The National Interest’s Jacob Heilbrunn (author of the 2007 book They Knew They Were Right: The Rise of the Neocons), wrote, “If neocon influence really is on the wane at AEI … it would signal the end of its domination over the think tank over the past several decades. Like Bush, AEI may be on the verge of trying to reinvent itself. The change that [Barack] Obama promised during the campaign seems to be reaching Washington in unexpected places.”4
Militarism
Although AEI’s scholars have expertise in a range of social and domestic policy issues, the institute is well known for pushing militarist foreign and security policies that tend to reflect the views of neoconservatives and other hardline nationalists. Many of its scholars were vociferous public promoters of attacking Iraq—even before the 9/11 terrorist attacks—and pushed for an expansive “war on terror.” AEI was also closely associated with the now-defunct Project for the New American Century (PNAC), a neoconservative letterhead group that served as an important vehicle for forging a broad coalition of conservative political actors behind an aggressive post-Cold War U.S. agenda during the year’s leading up the 9/11 attacks.
During the final years of George W. Bush's administration, AEI writers and scholars turned their attention to Iran and other Mideast hotspots. Among their efforts was the establishment in 2006 of the Iran Enterprise Institute, described by writer Laura Rozen as "a privately funded nonprofit drawing not just its name but inspiration and moral support from leading figures associated with the American Enterprise Institute." She added, "The Iran Enterprise Institute is directed by a newly arrived Iranian dissident whose cause has recently been championed by AEI fellow and former Pentagon adviser Richard Perle."5
AEI also played an important role in buttressing arguments for the continued U.S. occupation of Iraq and served as a key advocacy organization for the push to approve the 2007 troop “surge.” Following the 2006 November midterm elections, AEI scholar Frederick Kagan, an outspoken proponent of increasing troop levels in Iraq, wrote in theWeekly Standard, "We face a stark choice now. We can either maintain bases and large forces in Iraq, or we can withdraw. If we withdraw, the Iraqi Army will collapse, and we will not be able to help it except by re-entering the country in large numbers and in a much worse situation."6
In early 2007 Kagan coauthored, with retired Gen. Jack Keane, an AEI plan titled "Choosing Victory: A Plan for Success in Iraq,” which was meant to serve as a blueprint for a U.S. troop surge in Iraq.7 The report was produced with the help of an AEI study group called the Iraq Planning Group, which seemed directly aimed at countering the influence of the similarly named Iraq Study Group (ISG), a group of experts enlisted by the Bush administration in early 2006 to make recommendations to help resolve the growing problems with the Iraq War. The ISG, which was co-chaired by the realist-inclined former Secretary of State James Baker and former Rep. Lee Hamilton (D-IN), concluded in its final report released in December 2006 that there was "no magic bullet" that could solve the debacle in Iraq. It argued that the United States needed to approach Iraq's neighbors, including Syria and Iran, as part of a "diplomatic offensive" aimed at easing tension in the region.8 Initially, the Bush administration seemed to ignore the ISG’s advice and implemented a troop surge smaller than that proposed by AEI but in line with other of its recommendations. By the summer of 2008, some influential administration figures appeared more willing to consider diplomacy in the region, against AEI recommendations.
In a July 24, 2008, AEI event, Kagan and Keane, echoing the presidential campaign message of Sen. John McCain (R-AZ), argued that the surge had accomplished all of its goals.9 Ignoring conflicting assessments that place major responsibility for the decreasing violence in parts of Iraq on Sunni opposition to the insurgency and payouts from the U.S. government to armed groups,10 the events’ speakers stressed that only by keeping troops indefinitely in Iraq could the gains purportedly won by the surge be secured. "All the trends are in the right direction … [and] the only way [they] can be reversed is if we walk away," argued Keane.11
A number of AEI scholars, past and present, have been outspoken proponents of expanding U.S. intervention in the Middle East and taking military action against Iran, including Ledeen and Gerecht, who both took posts at the Foundation for Defense of Democracies (FDD) after leaving AEI, and Michael Rubin, who worked as a consultant in the Donald Rumsfeld-led Pentagon. In September 2007, AEI held a forum that addressed Ledeen's then-newly published book, The Iranian Time Bomb: The Mullah Zealots' Quest for Destruction.12 Among those speaking at the event were Ledeen (who was AEI's "Freedom Scholar"), Clifford Mayof the closely associated FDD, and former CIA head James Woolsey. Reporter Jim Lobe said of the book, "Judging by the excerpts that have been released to date, Ledeen's latest tract will be entirely predictable, although, in addition to emphasizing, as he has for much of the last several years, the urgent need to support and fund the [Iranian] regime's domestic opposition, he concludes that '[t]his presidential administration or the next will likely face a terrible choice: appease a nuclear Iran, or bomb it before their atomic weapons are ready to go. While a sad exclamation point at the end of nearly 30 years of failed policy, confrontation may be virtually inescapable. Like other ideological wars of the 20th century, this war will likely only end when one side has lost.'"13
According to Middle East analyst Gareth Porter, former AEI resident fellow Gerecht was "more aggressive than anyone else" in making the misleading argument "that Iraq's Shiites, liberated by U.S. military power, would help subvert the Iranian regime."14 In September 2005 testimony to the U.S. House Armed Services Committee, Gerecht argued that diplomacy with Tehran was a dead end. Pointing to the Clinton administration's efforts to "give peace a chance," which Gerecht said had included apologizing for "the supposedly bad behavior of the entire Western world toward Iran for the last 150 years," Gerecht argued, "American apologies in revolutionary clerical eyes mean only one thing—weakness. And showing weakness to power-politic-loving Iranian clerics is not astute. This is 101 in Iranian political culture. Yet I'm willing to bet that most analysts dealing with Iran at the State Department and the CIA probably thought American soul-searching was a good thing, that the political elite in Tehran would respect us more."15
In a widely quoted September 3, 2007 Newsweek article, Gerecht remained on message: "Iran represents a much greater threat than Europe typically recognizes. It is not a status quo state that favors stability, as most pundits and governments portray it. Iran is, instead, a radical revolutionary force determined to sow chaos beyond its borders. Assuming that normal negotiations can bring it around is, therefore, a grave mistake. The mullahs don't want peace in Iraq—just the opposite. War may come, but not because negotiations break down. The likely trigger is an Iranian provocation."16
In March 2007, Gerecht shared his arguments with a European audience during a "U.S.-European Traveling Debate" cosponsored by AEI and the German Marshall Fund, which included stops in Berlin, Brussels, and Paris. Titled, "Iran and the Bomb: Will It Get It and What Will It Mean?" and including Gerecht, the Washington Post's David Ignatius, as well as several policy figures from European countries, the debate series was aimed at discussing "what courses of action the United States and its allies can take against Iran" in light of Tehran's refusal to halt uranium enrichment activities despite considerable diplomatic pressure.17
History
Founded in 1943, AEI is one of the oldest policy institutes in Washington. AEI traces its origins to a New York City-based business association called the American Enterprise Association (AEA), which was founded in 1938 and soon after World War II opened a Washington office to lobby against government intervention in the domestic economy. AEA, which brought together some of the country's largest corporate firms, substituted "institute" for "association" and became one of the nation's first policy think tanks. Lewis Brown, president of Johns-Manville Corp., was the principal figure behind AEA, which from its beginning had a strong pro-business posture. Like the AEA, AEI is dedicated to the "maintenance of the system of free, competitive enterprise."18
One of the institute's earliest supporters on Capitol Hill was Gerald Ford, who as a congressional representative praised the institute in 1950, beginning what AEI describes as a "long and happy relationship with the president-to-be." A key figure in AEI's early history was William Baroody, who joined AEI as president in 1954 and was responsible for bringing some of the country's most conservative economists into the institute, including Milton Friedman and Paul McCracken. Under Baroody's leadership, AEI succeeded in injecting conservative reform ideas into national news media. Baroody also helped ensure not only that congressional and executive officials heard the policy ideas of AEI scholars, but also that AEI associates moved into high government positions, especially in the Ford, Reagan, and George H.W. Bush administrations.19
After his presidency ended in 1976, Ford went to AEI, bringing with him a retinue of conservative figures, including Arthur Burns, Robert Bork, David Gergen, and James Miller III. The institute boasts about this era that, "AEI had become a hotbed of innovative ideas—on deregulation, tax reform, trade policy, social welfare, and the revitalization of defense and foreign policy—that were about to debut on the political stage."20
It was also during the 1970s that neoconservative icon Irving Kristol, father of Weekly Standard editor William Kristol, became closely involved in AEI's fortunes. In his 1995 book Neoconservatism: The Autobiography of an Idea, Kristol recounts how Baroody, having been attracted by Kristol's writings in The Public Interest and the Wall Street Journal, invited him to be an honorary fellow at the institute. The relationship, Kristol implies in the book, resulted in AEI expanding its free enterprise focus to include social issues and Cold War defense policies, topics closely covered by neoconservative writers. Attracted by the emergence of this new ideological grouping, writes Kristol, Baroody "made a determined effort to recruit 'neoconservatives' to AEI, and did in fact recruit, early on, Jeane Kirkpatrick, Michael Novak, Ben Wattenberg, as well as many others.... [Baroody's] task was facilitated by the appearance on the scene of a rejuvenated Bradley Foundation and John M. Olin Foundation, now staffed by younger men and women who had been exposed to, and influenced by, 'neoconservative' thinking. Among them special note has to be made of Michael Joyce of Bradley, who turned out to be an accomplished neoconservative thinker in his own right."21
In the 1980s, the Reagan administration recruited an array of AEI associates, leaving AEI offices relatively empty. Whether on foreign policy issues, such as support for the Nicaraguan contras or the "freedom fighters" in Africa, or on domestic issues such as corporate deregulation, former AEI figures played a prominent role. Though the Reagan years were a heyday for AEI ideas, the time was difficult for the institute. Baroody, who had authored AEI's slogan, "Competition of ideas is fundamental to a free society," died in 1981, and it wasn't until the late 1980s that the think tank started recovering from the organizational and financial crises that followed his death.
With the emergence of several new conservative think tanks, including theHeritage Foundation and Cato Institute, AEI's influence appeared to diminish. Despite this, President Ronald Reagan in 1988 acknowledged the institute's pervasive influence in spearheading the "Reagan Revolution." According to Reagan, "The American Enterprise Institute stands at the center of a revolution in ideas of which I, too, have been a part. AEI's remarkably distinguished body of work is testimony to the triumph of the think tank. For today the most important American scholarship comes out of our think tanks—and none has been more influential than the American Enterprise Institute."22
With the 1986 appointment of Christopher DeMuth as president, AEI's fortunes and reputation began to recuperate. DeMuth, who served as an administrator of the Office of Management and Budget in the first Reagan administration before moving to AEI, served as head of the organization for 22 years and oversaw tremendous growth. AEI’s annual revenue increased dramatically during DeMuth’s tenure, rising to nearly $40 million by 2005,23 though this declined by $10 million the following year. 24
DeMuth also oversaw the institute during what was perhaps its most influential period—the first administration of George W. Bush. Nearly two dozen AEI fellows were given administration roles or advisory posts. AEI predicted it would play a prominent role in the Bush administration. In a December 2000 Washington Post article, Dana Milbank wrote, "It's noon in the American Enterprise Institute's 12th-floor dining room, where Irving Kristol, Norman Ornstein, and other luminaries lunch. On the menu is swordfish and white wine. On the agenda is a Bush transition. If George W. Bush becomes president, says AEI scholar Douglas Besharov, beckoning to the dining room, 'this whole place empties out.'"25
In mid-2008, AEI named a new president, Arthur Brooks, who formally took over the post on January 1, 2009.26 According to his AEI biography, Brooks “researches and writes about the connections between culture, politics, and economic life in America.… He is the author of Who Really Cares, which examines American charitable giving; Gross National Happiness: Why Happiness Matters for America—And How We Can Get More of It; and a textbook on social entrepreneurship.”27 Brooks left his position as the Louis A. Bantle Professor of Business and Government Policy at Syracuse University's Maxwell School of Citizenship and Public Affairs to take over the AEI presidency.
Activities and Staff
AEI headquarters are located in a building on Washington's 17th Street that is a warren of right-wing operations. Before it shuttered most of its operations in 2006, the Project for the New American Century had its offices there. Several PNAC principals, including Gerecht, Bruce Jackson, Gary Schmitt, and Tom Donnelly, moved from PNAC to AEI. Also located in the same building are the offices of the Weekly Standard, which often serves as a favored outlet for AEI scholars. The Philanthropy Roundtable, the rightist association of foundations that split off from the Council of Foundations in the early 1980s, also found a home in the AEI building.
According to AEI’s website, as of early 2009, it had approximately 190 staff members working at its headquarters in Washington.28 In addition, AEI has several dozen adjunct scholars and fellows working at research universities around the United States. AEI conducts and publicizes policy research through various research divisions and publications. Its website reports, “AEI research is conducted through three primary research divisions: Economic Policy Studies, Social and Political Studies, and Defense and Foreign Policy Studies. It also works through several specialized programs such as the Brady Program on Culture and Freedom, the AEI-Brookings Joint Center for Regulatory Studies, the National Research Initiative (which sponsors research by university-based scholars), the AEI Press, and its magazine, The American.”29
Aside from Brookings, AEI has teamed up with several other research institutes to undertake joint projects. In 2003, for example, AEI and the conservative judicial association Federalist Society launched a project and website called NGOWatch to monitor nongovernmental organizations (NGOs), especially those involved in foreign policy and international relations. Later reorganized and renamed Global Government Watch,30the initiative was initially launched at an AEI conference entitled "NGOs: The Growing Power of an Unelected Few," which was cosponsored by the Institute of Public Affairs, a rightist Australian think tank. According to the conference organizers, "NGOs have created their own rules and regulations and demanded that governments and corporations abide by those rules."31
Presumably, AEI’s own influence on policy making was not one of its primary concerns, an irony alluded to by some commentators in their criticism of the initiative. Ralph Nader wrote, "During the past 22 years, the AEI, their nearby corporate patrons, their allied trade associations and corporate think tanks have, in effect, taken over the executive branch, the Congress, and promoted the judgeships of right-wing corporate lawyers.... What's left to do? How to keep its corporate supremacists writing those big checks? Why, go after the liberal or progressive nongovernmental associations. Describe them as a collage of Goliaths running an all-points wrecking machine over government and business.”32
The membership of AEI's board of trustees reveals the institute's strong ties to the corporate community. Members include Bruce Kovner (Caxton Associates), John Faraci (International Paper), Raymond Gilmartin (formerly of Merck), Harvey Golub (formerly of American Express), Roger Hertog (formerly of Alliance Capital Management), Mel Sembler (Sembler Company), William Stavropoulos (Dow Chemical), and Wilson Taylor (CIGNA), among many others.33 Over the past several decades, AEI's board of trustees has included representatives of scores of the nation's top corporations, including Rockwell, Amoco, Hewlett Packard, Exxon Mobil, Texas Instruments, Eli Lilly, and Citicorp. Former board members include Dick Cheney (whose wife Lynne is an AEI fellow), then at Halliburton, and Kenneth Lay of Enron.
Among the many corporate contributors to AEI is the Walton Family Foundation, which was founded by the same family that started Wal-Mart. According to the New York Times, Wal-Mart "has discovered a reliable ally: prominent conservative research groups like the American Enterprise Institute, the Heritage Foundation, and the Manhattan Institute.”34 In August 2006, AEI visiting scholar Richard Vedder wrote an opinion article for the Washington Times, extolling Wal-Mart's benefits to the American economy, writing that, "There is enormous economic evidence that Wal-Mart has helped poor and middle-class consumers, in fact more than anyone else.” The article prominently identified his ties to the AEI but failed to mention Wal-Mart's contributions to AEI.35
AEI's council of academic advisers includes such leading neoconservatives and conservatives as James Q. Wilson, Gertrude Himmelfarb, Jeremy Rabkin, and Samuel Huntington.36 Among the many AEI scholars are Nicholas Eberstadt, Mark Falcoff, David Frum, Newt Gingrich, Irving Kristol, Roger Noriega, Richard Perle, Danielle Pletka, and Ben Wattenberg.37
Funding
AEI's nearly $30 million in annual revenue (as of 2006) comes from a mix of corporate, individual, and foundation donations.38 Major donors include the heavy hitters of the conservative foundation world: the Smith Richardson Foundation, the Olin Foundation, the Scaife Foundation, and the Lynde and Harry Bradley Foundation, as well as smaller right-wing foundations such as Carthage, Earhart, and Castle Rock. From 1985 through 2005, AEI received more than $40 million from right-wing foundations.39
AEI has a policy on corporate support: "National and multinational corporations who support AEI maintain close relationships with the institute's scholars and regularly receive top-level research and analysis on specific policy interests and priorities. In addition, corporations provide important input to AEI on a wide variety of issues."40
According to People for the American Way, corporate donors to AEI have included the General Electric Foundation, Amoco, Kraft, Ford Motor Company Fund, General Motors Foundation, Eastman Kodak Foundation, Metropolitan Life Foundation, Procter & Gamble Fund, Shell Companies Foundation, Chrysler Corporation, Charles Stewart Mott Foundation, General Mills Foundation, Pillsbury Company Foundation, Prudential Foundation, American Express Foundation, AT&T Foundation, Corning Glass Works Foundation, Morgan Guarantee Trust, Alcoa Foundation, and PPG Industries.41
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