Non-profit

Cato Institute

Logo of Cato Institute. (link)
Website:

www.cato.org%20

Location:

WASHINGTON, DC

Tax ID:

23-7432162

Tax-Exempt Status:

501(c)(3)

Budget (2018):

Revenue: $36,679,802
Expenses: $30,381,673
Assets: $84,854,531

Formation:

1977

President:

Peter Goettler

Contact InfluenceWatch with suggested edits or tips for additional profiles.

The Cato Institute is a libertarian think tank based in Washington, D.C. Founded by Libertarian Party activist Ed Crane, libertarian economist Murray Rothbard, and businessman Charles Koch, the organization conducts policy research in support of libertarian policies and has been credited with bringing libertarianism into the political mainstream. 1

The Cato Institute supports libertarian positions on a range of political issues. The Cato Institute is aligned with right-of-center economic policy, supporting reductions in federal taxes, widespread economic deregulation, free trade, and minimized government spending on entitlement programs. The Institute has also supported left-of-center positions on a number of social issues, calling for the expansion of immigration, the legalization of all drugs, left-of-center changes to policing, reduced incarceration, decreased military spending, and a non-interventionist approach to foreign policy. 2

In October 2011, Charles Koch and his brother, business partner, and fellow libertarian political activist David Koch, filed a lawsuit to gain control of Cato Institute shares owned by former Institute chair William Niskanen after his passing, sparking renewed tension between Crane and Koch after an earlier split regarding the philosophy of the Cato Institute. 3 The controversy led to a split within the institute, with then-president Crane accusing Charles Koch of trying to “transform Cato from an independent, nonpartisan research organization into a political entity that might better support his partisan agenda.” 4 In June of 2012, Charles and David Koch agreed to end their lawsuit over the shares in exchange for Crane retiring from his position as president and CEO of the Cato Institute. 5

Former Barclays Capital Executive Peter Goettler is the current president and CEO of the Cato Institute. 6 The Cato Institute has received funding from a number of right-of-center organizations, including the Donors Capital Fund, the Lynde and Harry Bradley Foundation, and the Charles G. Koch Charitable Foundation. The Institute has also received funding from a number of left-leaning organizations, including the Gilder Foundation, the Walton Family Foundation, Google, and Facebook. 7 8

History

The Cato Institute was founded by libertarian activist Edward Crane, economist Murray Rothbard, and businessman Charles Koch in 1977 in San Francisco with an initial investment by Koch. 9 Originally called the Charles Koch Foundation, the Cato Institute was designed as a libertarian think tank to compete with the American Enterprise Institute, a right-of-center think tank, and the Brookings Institution, a left-of-center think tank. 10

The Cato Institute has since expanded to become one of the largest think tanks in the world and the most prominent libertarian think tank in the country. In 1992, Charles Koch resigned from the board of directors at the Cato Institute, despite remaining involved in funding the organization. 11

In the early 2000s, the Cato Institute rose to national prominence for its work with the George W. Bush administration, working as the intellectual force behind former President George W. Bush’s unsuccessful attempt to partially privatize Social Security with individual retirement accounts. The Institute has been credited for bringing libertarian policies into the mainstream of public policy debates, publishing libertarian policy research and recommendations for lawmakers. 12

Advocacy

The Cato Institute is the most prominent libertarian think tank in the world, publishing policy research and recommendations. The Institute supports both left-of-center and right-of-center policies, pushing an agenda that emphasizes deregulation of the market and decreased government spending.

Despite supporting several left-leaning policies, the Cato Institute is a member of the State Policy Network (SPN), a consortium of conservative and libertarian think tanks that focus on state-level policy reform to promote free-market economics. 13

Economic Regulation

The Cato Institute is a proponent of free markets and has called for substantial repeals of many federal economic regulations. The Institute has criticized antitrust statutes for imposing outdated regulations that harm consumers, argued for the repeal of environmentalist regulations on individuals and businesses, and supported efforts to limit or even abolish the regulatory power of the Food and Drug Administration (FDA). 14 15 16

The Cato Institute supports the idea of personal responsibility and individual action in the free market, arguing for a reduction in government regulations on finance, trade, labor, the internet, and telecommunications. In each of these industries, the Cato Institute has expressed support for increased privatization, allowing consumers and producers to negotiate without the interference of federal, state, or local regulations. 17

In labor, the Cato Institute has supported efforts to repeal the federal minimum wage and pass federal law barring states from imposing minimum wages. 18 The Institute has also called for the repeal of labor laws, including the pro-union National Labor Relations Act, the Family and Medical Leave Act, and most of the Americans with Disabilities Act. 19 The Cato Institute has also supported efforts to remove all public health and safety regulations, except in cases where the free market has clearly failed, and has supported the implementation of a mandate requiring that all health and safety regulations pass a cost-benefit analysis test before being implemented. 20

The Institute is especially active in promoting free trade, arguing that tariffs and other trade barriers are regressive taxes on American citizens and increase the costs of production for American businesses. The Cato Institute has argued for the repeal of trade restrictions, transportation restrictions such as the Jones Act, and tariffs on intermediate goods. The Institute has also supported efforts to build and ratify trade liberalization agreements, such as the Trans-Pacific Partnership. 21

The Cato Institute has drawn criticism for supporting a free market approach to the tobacco industry, arguing against increased tobacco regulations after previously receiving donations from tobacco manufacturers. 22

Environmentalism

The Cato Institute has rejected left-of-center narratives around climate change, formerly hosting Patrick Michaels as a fellow and speaker on environmental science. Michaels has rejected typical narratives around climate change, denying that man-made climate change will result in an environmental disaster. The Institute parted with Michaels and closed its Center for the Study of Science in May 2019. 23

Despite being generally opposed to environmentalist regulations and calling for the widespread repeal of environmental regulations on businesses, the Cato Institute has supported placing a federal price on emissions, then directing proceeds from the tax to those exposed to pollutants. 24

Tax and Fiscal Policy

The Cato Institute supports sharp reductions in federal taxes. As of 2021, the Institute has endorsed cutting the corporate income tax rate to 15%, repealing the estate tax, repealing nearly all tax deductions and credits to simplify the tax system, cutting the capital gains tax to 15%, and replacing the current individual income tax system with a two-tier system of 15% and 25% rates based on income. 25 The Cato Institute has also supported initiatives to replace the tiered income tax system entirely with a consumption-based flat tax. 26

The Cato Institute’s tax policy is motivated by its right-of-center fiscal policy, which calls for mass reductions in government spending. The Institute has called for a three-percent cut in federal spending, including measures to cut corporate subsidies; privatize services like the postal service, passenger rail, and utilities; cut Social Security benefits; phase out state aid programs; and cap spending on Medicaid and Medicare programs. 27 The Institute has also called for the full repeal of the Affordable Care Act (Obamacare). 28

Drug Policy

The Cato Institute has become well-known for its radical stance on drug policy, arguing for the decriminalization of all drugs and claiming that all drug policy issues should be left to the states to decide. The Institute has called on the federal government to repeal the Controlled Substances Act of 1970, refuse to interfere with states on questions of marijuana legalization, repeal mandatory minimum sentences for drug crimes, and completely abolish the Drug Enforcement Administration (DEA). The Cato Institute has argued that the continued prohibition of drugs has been ineffective in preventing their proliferation, claiming that banning illegal drugs has exacerbated racial injustices and funneled money towards black markets. 29

The Cato Institute in recent years has gone beyond decriminalization and has instead argued for the total legalization of all drugs on economic grounds. The Institute has claimed that the full legalization of all drugs would bring an additional $106 billion in government revenues by reducing money spent on drug enforcement and implementing a legal, taxed drug trade. 30

In an essay written by Cato Institute fellow Trevor Burrus, the Institute encourages the decriminalization of all illegal drugs as the antidote to fatal drug overdoses, citing the example of Portugal, a country that decriminalized all drugs and saw subsequent decreases in drug overdoses and drug use. 31 The essay pushes beyond decriminalization, arguing for full-scale legalization and sale of illicit drugs, including heroin, on the claim that such legalization will make drug use safer and less potent, resulting in a decrease in “problematic” drug use or dependency. 32

Policing and Civil Rights

Alongside its drug policy agenda, the Cato Institute frequently publishes research and left-of-center policy recommendations on criminal justice and policing. Cato Institute researchers have claimed that police “embrace deceit” in interrogation processes to coerce confessions. 33 The Institute has also pushed for changes to policing policy that reduce the power of police officers, including ending qualified immunity and allowing police officers to be held personally liable for errors on the job. 34  In November 2020, the Cato Institute filed an amicus brief in support of a Supreme Court case aimed at ending the practice of qualified immunity, joining both left-of-center and right-of-center organizations including the social-conservative Alliance Defending Freedom, the social-liberal American Civil Liberties Union (ACLU), the left-of-center civil rights group National Association for the Advancement of Colored People (NAACP), and the Second Amendment Foundation, a gun rights litigation group. 35

Since the summer of 2020, the Cato Institute has been increasingly active in policing policy, embracing left-of-center positions. The Institute has advocated for “de-militarizing” the police by prohibiting local law enforcement from accessing military equipment, implementing “transparency requirements” that require police officers to report their use of all “dangerous equipment,” and making all police raids against nonviolent offenders “presumptively unlawful.” 36

The Cato Institute has also embraced some left-of-center positions on incarceration, calling incarceration “unjustifiably harsh” and blaming a “carceral-industrial complex” for keeping people in prison. 37 38 The Institute has frequently advocated for decreasing prison populations and moving away from the model of incarceration as punishment for nonviolent crimes, especially drug offenses. 39

The Cato Institute has taken strong stances against civil asset forfeiture, the process by which law enforcement officials can seize property from individuals if they merely suspect that the property has been used in a crime. The Institute has called on the federal government to regulate asset forfeiture to require a criminal conviction against an individual before seizing assets, require that all seized property become property of the treasury instead of law enforcement agencies, and require the government to establish clear and convincing proof for why they are seizing any individual property. 40

The Cato Institute has supported efforts to end civil asset forfeiture, while also supporting legislation that would require law enforcement agencies to pay an individual punitive damages in addition to returning their property if it turns out that no criminal activity was connected to the property. 41

Foreign Policy and Security

The Cato Institute supports a libertarian approach to foreign policy, including decreased military spending, limited foreign intervention, and decreased foreign aid programs. The Institute has called for decreasing the size of all branches of the United States military and implementing caps to reduce defense spending. 42 The Institute has also called for an end to United States involvement in wars in the Middle East, including withdrawal from Afghanistan and suspending targeted killings as counterterrorism measures. 43 44 The Cato Institute heavily criticized the 2020 killing of Iranian military leader Qasem Soleimani by U.S. military forces, accusing the Trump administration of “stoking an endless war.” 45

The Cato Institute has embraced a number of left-of-center proposals on diplomacy, including supporting the controversial Iran nuclear agreement, opposing expansion of NATO, and abandoning military efforts focused on containing the power of China. 46 47 Nonetheless, the Cato Institute has also embraced right-of-center foreign policy initiatives, including abolishing U.S. Agency for International Development (USAID), withdrawing from global development banks, and privatizing international banks and investment organizations. 48

The Cato Institute has become known for its opposition to government surveillance programs, criticizing federal agencies including the Federal Bureau of Investigation (FBI) and the National Security Agency (NSA) for surveilling American citizens without court orders. 49 In January of 2020, the Cato Institute called on Congress to investigate whether the FBI was surveilling American political organizations after the FBI failed to response to several Freedom of Information Act (FOIA) requests filed by the Cato Institute. 50 Institute officials have called surveillance activities without evidence or genuine suspicion of criminal activities “inimical” to free speech and have claimed that such surveillance should be “expressly prohibited.” 51

The Institute has taken particular opposition to the NSA, calling for a repeal of the National Security Agency (NSA) Act that allows for all NSA data to be kept secret from the public. The Institute has alleged that the bill allows the NSA to hide even “criminal” conduct and has called on Congress to repeal the provision, while enacting a statutory bar on using any law to conceal criminal misconduct or mismanagement by an executive department or agency. The Institute has also called for criminal charges to be dismissed against former NSA contractor Edward Snowden. 52

Entitlement Programs

The Cato Institute has supported efforts to partially privatize or abolish Social Security, including transferring Social Security payroll taxes to individual retirement accounts for young workers. 53 The Institute also supports moving welfare programs to state-level from federal-level control. 54

The Institute is generally opposed to all large-scale entitlement programs run by the federal government, arguing that they should be abolished or consolidated. 55 Several Cato Institute affiliates have further advocated in favor of efforts to completely eliminate the existing entitlement system and replace it with a universal basic income, a system consisting of monthly cash payments directly to individuals, arguing that such a change would increase accountability, decrease state paternalism, and provide incentives to work. 56

Education

The Cato Institute is a proponent of school-choice programs, supporting efforts to increase charter schools, voucher programs, and tuition tax credit programs. The Institute has argued that allowing the free market to influence education and shut down failing schools will result in better educational outcomes for children after years of stagnation in the American public school system. 57 The Institute has further argued that public schools spend taxpayer money ineffectively, publishing a 2010 report demonstrating that public schools spend 93% more per student than private schools subject to market forces that promote accountability. 58

In February of 2002, the Cato Institute launched the Center for Educational Freedom to work specifically on promoting school choice. 59 As of January 2021, the Center has shifted its focus to advocating directly for scholarship tax credit programs that provide individual families or corporations with tax credits for giving to nonprofit scholarship organizations that then assist low- and middle-income families in enrolling their children in private schools of each family’s choosing. 60 The Cato Institute has also criticized the outsized influence of teachers’ unions in American politics, arguing that they do not represent the interests of families served by public schools. 61

Aside from supporting school choice programs, the Cato Institute has also argued against the use of affirmative action in hiring or admissions decisions by institutions that receive public funding. 62

Gun Control

Despite adopting left-of-center positions on most social issues, the Cato Institute has been a long-time opponent of gun control regulations, working in 2007 to overturn Washington, D.C.’s strict gun control statutes. 63 The Institute has argued that gun control measures typically viewed as center-left, such as universal background checks and bans on magazines of certain sizes, are ineffective at saving lives while often violating the Second Amendment and criminalizing legal gun owners. 64

The Cato Institute has called on the Supreme Court to take on more Second Amendment cases and overturn several gun-control laws, including those that bar formerly convicted criminals from owning firearms. 65 The Institute has filed several amicus briefs in cases arguing to overturn gun control measures. 66

Immigration

The Cato Institute has adopted several liberal expansionist policies on immigration, encouraging expanded guest worker visa programs for low-skilled migrant workers, approving more foreign workers and eliminating caps on foreign worker programs, and expanding employment-based green card programs. 67 The Cato Institute has also supported the Deferred Action for Childhood Arrivals program, a controversial program to grant de facto legal status to certain illegal immigrants who arrived as children enacted by an executive order during the Obama administration. The Institute has argued that ending the program will cause a $280 billion shrink in the economy over the next decade. 68

The Cato Institute has also advocated against several right-of-center immigration policies, especially those enacted by the Trump administration. In January 2021, Cato Institute officials called on President Joe Biden to lift the travel ban implemented against several predominantly Muslim countries by the Trump administration. 69 Other Cato officials have called on the Biden administration to work to “get the [immigration] system back to where it was in 2016,” removing all restrictionist policies introduced during the Trump administration. 70

The Institute has, however, opposed left-of-center efforts to allow immigrants to access social welfare programs, arguing for the implementation of restrictions on access to means-tested welfare programs for all noncitizens. 71

Controversies

Role of the Koch Family

In October 2011, Cato Institute co-founder William Niskanen died, leaving 25% of the Cato Institute’s private stock unclaimed. Just weeks later, Cato co-founder Charles Koch and his brother, business partner, and fellow libertarian political activist David Koch filed a lawsuit to gain control of the shares, sparking renewed tension between Cato CEO Ed Crane and Koch after an earlier split regarding the direction of the Cato Institute. Control of the former Niskanen shares would have allowed the Kochs to gain majority control over the Cato Institute. 72

After the lawsuit became public, Crane released a scathing criticism of the move, claiming that Charles Koch had “exercised no significant influence over the direction or management of the Cato Institute,” despite supporting it financially. Crane’s official statement accused Koch of trying “to transform Cato from an independent, nonpartisan research organization into a political entity that might better support his partisan agenda.” Crane went so far as to call the move a “hostile takeover.” 73 The move prompted Crane to expand the Cato Institute board of directors so as to prevent those associated with the Koch family from acting in its favor, with Crane calling them “conservative, Koch Industries supplicants.” 74

The Kochs responded to Crane’s accusations by claiming that he would “partner with anyone…to further his political agenda at the expense of others working to advance a free society.” 75 In June 2012, Charles and David Koch agreed to cease their lawsuit over the shares in exchange for Crane retiring from his position as president and CEO of the Cato Institute. The settlement also restructured the Cato Institute, implementing a 12-member board of directors, only four of whom would be individuals named by the Kochs. 76

Crane Harassment Scandal

In February of 2018, three Cato Institute employees accused former CEO Crane of sexual harassment, claiming that Crane had made sexually charged comments and sent inappropriate emails to them during his time as CEO. Politico reported that Crane settled an additional suit with an employee in 2012. 77

Cato employees alleged that Crane had attempted to remove the clothing of a female employee at an office event, drank alcohol in his office throughout the day, and watched pornography in the workplace, in addition to making frequent comments on the appearance of women at Cato. Cato employees further claimed that Crane created a culture of harassment at the Cato Institute, distributing “menus” of headshots and bios of young interns to staff. 78 Crane has denied all allegations, and no further legal or internal action has been taken. 79

Fellow’s Defense of Capitol Riot

In January 2021, the Cato Institute came under fire for a blog post published by senior fellow Andrei Illarionov that defended rioters who stormed the United States Capitol building claiming that the 2020 presidential election results were fraudulent. 80 Illarionov, a former adviser to Russian President Vladimir Putin, wrote in the post that police officers had set a “trap” for those who stormed the Capitol building that had been deliberately provoked by left-of-center Black Lives Matter activists and Democrats. 81

Illarionov also claimed that left-wing extremist organization Antifa had infiltrated the protests, supported the idea that the winner of the 2020 Presidential election was “still unknown” even after outgoing Vice President Mike Pence certified the results, and defended rioters by claiming that they were “definitely” not in violation of the U.S. Constitution when they stormed the Capitol. A week earlier, Cato Institute president Peter Goettler condemned the attack on the Capitol as “a direct attack on the Constitution…the rule of law, and our constitutional republic.” 82

The Cato Institute launched an internal investigation into the matter that has not resolved as of January 20, 2020. 83 As of January 25, 2021, Illarionov’s profile on the Cato website referred to his position as a senior fellow in the past tense. 84

People and Funding

Peter Goettler is the president and CEO of the Cato Institute. Prior to joining the Cato Institute, Goettler worked as an executive at Barclays Capital. 85

In 2019, the Cato Institute reported $30,261,118 in revenue, over $28 million of which came from grants and contributions, and $81,421,939 in net assets. 86 The Cato Institute has received funding from a range of individuals and foundations across the political spectrum. In its early years, nearly all of the Cato Institute’s funding came from the Koch family, with the Koch family and its related institutions providing more than $30 million to the Cato Institute since its founding in 1977. 87

The Institute has received funding from a number of right-of-center organizations, including the Donors Capital Fund, the Center for Independent Thought, the Dunn Foundation, the Joyce and Donald Rumsfeld Foundation, the Claude R. Lambe Charitable Foundation, the Lynde and Harry Bradley Foundation, and the Charles G. Koch Foundation. 88

The Cato Institute has also received funding from traditionally left-leaning foundations and organizations, including the Gilder Foundation, the Walton Family Foundation, Google, and Facebook. 89 90

References

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    Period Form Type Total revenue Total functional expenses Total assets (EOY) Total liabilities (EOY) Unrelated business income? Total contributions Program service revenue Investment income Comp. of current officers, directors, etc. Form 990
    2018 Mar Form 990 $36,679,802 $30,381,673 $84,854,531 $3,434,041 Y $34,961,513 $638,963 $647,270 $1,200,462 PDF
    2017 Mar Form 990 $36,889,645 $30,150,105 $78,534,414 $2,819,813 N $35,507,748 $586,846 $375,223 $1,130,038 PDF
    2016 Mar Form 990 $27,869,293 $29,162,114 $71,182,786 $2,208,095 N $26,698,458 $704,032 $266,607 $1,192,590
    2015 Mar Form 990 $36,069,847 $28,246,157 $72,934,328 $2,664,359 N $34,969,047 $775,021 $83,825 $1,196,429 PDF
    2014 Mar Form 990 $28,350,110 $24,538,565 $64,520,251 $2,065,271 N $27,386,455 $661,801 $89,116 $1,349,984 PDF
    2013 Mar Form 990 $22,006,365 $26,028,845 $60,639,117 $1,907,422 N $20,782,297 $789,744 $75,050 $1,995,158 PDF
    2012 Mar Form 990 $33,097,063 $22,344,728 $67,083,178 $4,364,662 N $31,736,230 $547,548 $80,804 $1,397,127 PDF

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