Armey in Exile

The 2012 election was supposed to be the culmination of Dick Armey’s life’s work—his chance to harness tea party fervor and bring about sweeping reform. So when it all fell apart amid a feud with his comrade-in-arms, not even an $8-million payout could console him.

By: Luke Mullins

By the time CNBC’s election-night anchors welcomed Dick Armey on the air, the networks had already called it. CNBC rolled footage of Barack Obama supporters waving American flags and cheering, above the breaking-news banner: PRES. OBAMA WINS RE-ELECTION. The only thing left was for Mitt Romney to concede.

But Armey, the former House majority leader, saw no reason to surrender. “I don’t blame the Romney folks for refusing any concession speech on the basis of this premature call,” Armey told viewers. “You got Florida running, seems to me, headlong into a recount, and Ohio I don’t think is settled by any means.”

Driving to his home outside Dallas after the TV appearance, Armey heard Karl Rove on the radio insisting that Ohio was still up for grabs. Armey planted himself on the couch and flipped 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, an influential conservative organization, and slipped out of Washington for good. Even an $8-million payout couldn’t assuage his bitterness. The fall of 2012 should have been an auspicious time at FreedomWorks headquarters.

Throughout the mid-aughts, the organization had tried—and repeatedly failed—to ignite a modern-day Tea Party movement. So when populist anger over out-of-control federal spending gripped the nation in 2009, no group in Washington was better positioned to capitalize on it. FreedomWorks organized Tea Party protests, supported hardened conservative candidates, and helped the GOP take back the House in the 2010 midterms. In the run-up to the November 2012 elections, FreedomWorks rallied 2.1 million activists and spent nearly $20 million in an effort to drag Washington to the right.

Almost overnight, the organization had transformed itself 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 ten-gallon hat and 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, dividing the FreedomWorks staff into opposing factions just weeks before the most important election of their lives. Employees scrambled to keep the infighting out of the press, fearing that the embarrassment would hurt Republicans at the ballot box, and they struggled to make sense of the rift.

What could have caused the nasty, personal feud between these two former allies that now threatened to destroy their life’s work?

• • •

It was 1983, and Dick Armey needed a new job. He had once been happy at North Texas State University, whose faculty he had joined in 1972. He began economics classes by reciting: “Armey’s Axiom Number One: The market’s rational; the government’s dumb.” He spun dry academic concepts into engaging lessons—using, for example, Al Capone’s crime syndicate to explain market-sharing cartels. Students voted Armey their favorite professor.

By the early 1980s, though, North Texas State’s campus in Denton was growing increasingly liberal and politically correct, and Armey felt out of place. “I had to get out of there,” he says.

Armey spent evenings watching live coverage of roll-call votes and markup hearings on C-SPAN. “Hell, obviously anybody can do that job,” he thought. He declared his candidacy for the House in 1983 and was elected the following year.

In his Stetson hat and cowboy boots, Armey cut an improbable figure in Congress. He sneaked out to the Potomac for early-morning fishing, and to save money he slept in the House gym. When the House speaker kicked him out, he crashed in his office.

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 the so-called 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 was a Mr. Magoo type of character,” says a former GOP leadership aide. “Everyone knew that he didn’t know what was going on.”

Armey 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.)

Heading into a press conference after the 1998 Monica Lewinsky scandal broke, Armey was advised by a press aide not to comment on the affair. But when a reporter asked, he couldn’t help himself. “If I had been [in the President’s place], I would be looking up from a pool of blood and hearing [my wife] say, ‘How do I reload this thing?’ ”

Armey retired from Congress in 2003 but hoped to remain active in the small-government movement. “It isn’t impossible that you could be more effective out of Congress than you are in Congress,” his wife, Susan, said.

Yes, Armey agreed. But only if he joined the right organization.

On April 15, 2010, Armey rallied a crowd of Tea Party protesters at a “People’s Tax Revolt” on DC’s Freedom Plaza. Photograph by Bill O’Leary/Getty Images.

It was 2001, and Matt Kibbe was going to die. The tumor in his stomach had swelled to the size of a football, crushing his kidney. Doctors diagnosed him with Stage IV cancer.

Facing death, Kibbe reflected on his life. His years in Washington had failed to bring about the small-government reforms he’d worked so hard for. “There was no mark left behind—he didn’t change anything,” a friend says. “That really haunted him.”

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.

In graduate school at George Mason University, he studied Austrian economics—the staunchly free-market discipline that rejects government regulation and safety nets. By the time he entered the workforce, Kibbe’s small-government principals 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 US 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), which was 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 he underwent surgery to remove his stomach tumor. 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. “I returned to work with an understanding that I didn’t have all the time in the world, so I wanted to get something done.”

• • •

In 2002, CSE launched the website USTeaParty.com, with a video game that encouraged users to toss crates of tea off a ship in Boston Harbor while then-Democratic Senate majority leader Tom Daschle stood on the dock, wearing a British redcoat and taunting: “Just pay me and shut up.”

Armey joined CSE as co-chairman the next year, 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 his 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 organized activists to support small-government initiatives throughout the country. But without the Kochs’ financial backing, FreedomWorks struggled to make payroll.

Kibbe and Armey organized anti-tax protests each April 15 at post offices around the country—rarely drawing more than two dozen people. They penned an op-ed submission in 2007 advocating the Boston Tea Party approach to citizen revolt. “[Samuel] Adams was the first American to recognize that ‘it does not require a majority to prevail, but rather, an irate, tireless minority keen to set brush fires in people’s minds,’ ” they wrote, according to Kate Zernike’s book Boiling Mad: Inside Tea Party America.

Editors yawned; the op-ed was never published.

No matter what they tried, Kibbe and Armey couldn’t seem to ignite their modern-day Tea Party movement.

• • •

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 surrounding him 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?” Santelli continued. “We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m gonna start organizing.”

As Santelli’s red face blasted across the Internet, FreedomWorks’ staff saw an opening. The moment encapsulated the populist anger over federal spending that they’d begun to sense months earlier, when President George W. Bush announced a $700-billion Wall Street bailout.

The staff had to answer Santelli’s call. But how?

Within hours, FreedomWorks created the website IAmWithRick.com, rallying the public to oppose federal bailouts. Soon FreedomWorks was flooded with calls. “It was like an organizer’s dream come true,” says a former staffer.

In the weeks that followed, FreedomWorks and other DC-based groups helped organize Tea Party rallies from Philadelphia to Sacramento. On April 15, 2009—tax day—some 750 Tea Party protests took place around the country. That summer, FreedomWorks urged people to oppose health-care reform at town-hall meetings, turning those normally lifeless events into news stories about angry constituents shouting down members of Congress. The group spent $500,000 to sponsor September 2009’s Taxpayer March on Washington, which—in conjunction with Glenn Beck of Fox News—packed thousands of fuming Tea Partyers onto the Capitol’s west lawn. Protesters waved signs reading I’M NOT YOUR ATM and held posters depicting President Obama with a Hitler mustache.

Obama “pledged a commitment of fidelity to the United States Constitution,’’ Armey told the crowd.

“Liar! Liar! Liar! Liar!’’ they chanted.

Reporters struggling to understand the leaderless Tea Party movement found in Armey a quotable spokesman who never turned down an interview. 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 for FreedomWorks 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. FreedomWorks fired up a long-dormant political-action committee and supported hard-line conservatives—such as Republicans Marco Rubio in Florida and Mike Lee in Utah—in Senate primary campaigns against more moderate GOP opponents for the 2010 midterms.

Fueled by Tea Party enthusiasm, the GOP picked up 63 seats in the House—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 bestselling book, Give Us Liberty: A Tea Party Manifesto, and appeared on NBC’s Today show. Driving to Tea Party rallies around the country, Kibbe played his Grateful Dead tapes for Armey, hoping to convert the country-music lover.

“We had a great working relationship,” Armey says, “and we were really making a difference.”

Matt Kibbe’s image evolved from right-wing wonk to hipster economist, and he developed a following among young staffers at FreedomWorks. Photograph by Timothy Devine.

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. During a 2009 interview on MSNBC’s Hardball With Chris Matthews, Armey told Salon’s Joan Walsh: “I’m so damn glad you can never be my wife because I surely wouldn’t have to listen to that prattle from you every day.” 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: “Uh, with uh, help me out, uh, the great prime minister, English prime minister,” the Post reported.

To FreedomWorks executives, Armey was becoming a liability. “In this media cycle,” says a FreedomWorks executive, “one camera phone watching you say something [offensive] at a rally could destroy the entire institution.”

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 opposition to the legislation at FreedomWorks. 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 had an unusual role at FreedomWorks. In 2011, she earned $67,000 from the group as a management consultant and adviser and had an office at headquarters. “She kind of functioned like she was co-president,” says another former staffer. “She would send e-mails from Matt’s account and not let anybody know it was her.”

Terry Kibbe was more ambitious than her husband and treated Susan Armey as a rival, the first former staffer says, noting that Terry, a die-hard libertarian, once poked fun at Susan, a devout Christian, for praying before a meal. He adds 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.

Armey and Kibbe worked together on Give Us Liberty, but Kibbe struck out on his own for Hostile Takeover.

In early 2010, Brandon showed Armey pictures of Kibbe’s sideburns—which had previously been cut short—styled into muttonchops, Armey says. 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. FreedomWorks distributed T-shirts featuring an image of Kibbe’s muttonchops with the phrase chops you can believe in.

As his public image evolved from conservative wonk to hipster economist, Kibbe hit the cable-news circuit. He appeared alongside Representative Michele Bachmann on Glenn Beck’s Fox News program, opposite Chris Matthews on MSNBC’s Hardball, and with Maria Bartiromo on CNBC. 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.”

With Armey marginalized and Kibbe distracted, FreedomWorks’ headquarters became like a college dorm without a resident assistant. After work, staff drank beer from kegs in the office kitchen and knocked around ideas, some of them juvenile. Brandon—then the organization’s number-two executive—produced a video in which a female intern, wearing a panda suit, pretended to perform oral sex on another female intern wearing a Hillary Clinton mask, Mother Jones reported. The video was intended as a comedy to be shown during a July 2012 FreedomWorks conference in Dallas. When other staffers objected, the video was scrapped.

• • •

Larry Kudlow’s producer was on the phone, and she was steamed. If Armey was going to break his commitment to appear as a guest on CNBC’s The Kudlow Report, that was one thing. “But there is no way we are going to book Matt Kibbe in his place,” the producer told Armey’s assistant, Jean Campbell.

Earlier that morning, in August 2012, FreedomWorks’ press secretary had told Campbell to cancel his previously scheduled Kudlow appearance 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 Armey 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.”

Over the previous year, Armey had sensed that Kibbe was growing distant. And he couldn’t figure out why reporters had stopped calling. After the Kudlow incident, Armey says, others in the media told him they’d had interview requests rerouted to Kibbe as well.

Armey resolved to confront Kibbe, man to man, as soon as possible.

(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.)

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 2½-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, along with rank-and-file staffers, and that when he was scheduled to introduce a speaker, Terry Kibbe took his spot onstage. “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 an envelope with a document inside. “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 about this. And because many employees had helped produce the book he wrote with Kibbe, Give Us Liberty, 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. Kibbe 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” to produce his book, 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 and his wife 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 DC 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.

• • •

Armey worried that Kibbe might instruct his allies to destroy documents related to the book deal, so he telephoned Jean Campbell, who was waiting outside FreedomWorks’ Capitol Hill headquarters.

“Go ahead,” Armey told her.

She secured the office, marshaling employees away from their computers and into the conference room. An armed former Capitol Police officer accompanied her—in case there was any trouble.

“Dick Armey will be here soon with an announcement,” Campbell told the staff.

Some 30 anxious staffers surrounded the rectangular table 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 went on television and hosted parties at his home. Younger staffers developed a “cultish admiration” for Kibbe, a former official says. Some even wore their chops you can believe in T-shirt at the office.

To the young staffers, Armey seemed ill suited to run the organization. He put three additional FreedomWorks employees on administrative leave but—when they broke down in tears—immediately reinstated them. Staffers say he referred to a Japanese employee with a ponytail as “that Indian fella.” (Armey denies this.) And when Armey kicked his cowboy boots up on a table in Kibbe’s office, that was it. “It was kind of like, ‘Well, I’ll be damned if this is going to happen,’ ” a young employee says.

Kibbe and Brandon had retreated to Kibbe’s Capitol Hill home, where they contacted FreedomWorks donors, activists, and board directors to establish support outside of headquarters. Directors were angry that Armey hadn’t consulted them before taking action. Glenn Beck and members of Congress called Kibbe to offer encouragement.

Soon after Armey’s takeover, a group of young Kibbe loyalists arrived at Kibbe’s house for pizza and wine. They told Kibbe about Armey’s office management. Among Armey’s first moves was ordering the removal of all references to Kibbe from the FreedomWorks website. (Armey says he only asked for the removal of references to Kibbe’s book.)

“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.”

The younger staffers used their cell phones to record conversations with Armey or Campbell. They disregarded Armey’s instructions, refusing, for example, to provide him with Kibbe’s schedule of upcoming donor meetings. Says Armey: “They started trying to sabotage things right from day one.”

• • •

On the day after the takeover, Armey flew to Colorado for a donor event, leaving behind Campbell to monitor the employees. She took attendance, read staff members’ computer screens over their shoulders, and scribbled observations in a notebook. “She was like a drone,” says one.

Armey still hadn’t told the staff why Kibbe and Brandon had been put on leave. So when he arranged for an all-staff conference call, employees piled back into the conference room expecting they’d finally get details. Instead, Armey wanted to discuss the organization’s “bandwidth.”

“All of a sudden I just realized that we got a lot of bandwidth, but we got limitations on them,” Armey told the staff, according to a recording of the call. “My guess is that we, we can do some reallocation of that. . . . I wonder if the techie guys can get me, like when I get back in town tomorrow, some kind of a summary on what bandwidth we have, what the limitations are, what our usage has been, and what reallocations we can do?”

SENIOR STAFFER: “Hey boss, when you said ‘bandwidth,’ what did you mean?”

ARMEY: “Well there’s a technical, uh, limit on the bandwidth, uh, isn’t there? For sending out e-mails?”

SENIOR STAFFER: “Oh. . . you mean the e-mail . . . the system of . . . sending out e-mails?”

ARMEY: “Right, right.”

Employees snicker.

ARMEY: “I think that is . . . there’s some kind of quota or limit on how many we can send at a time, or in a given period of time. That they freeze up.”

SENIOR STAFFER: “We don’t necessarily have a restriction on the number of e-mails we can send out at any one given time. We do try to temper it so as to not exhaust the e-mail list a bit. But that’s more of a self-imposed limitation.”

ARMEY: “I’ve betrayed my techiness backwardness already.”

The call lasted 15 minutes.

“Did I miss something?” an employee asked afterward.

Armey and his wife stopped at the Chicago home of Richard Stephenson on their way back to Washington. A reclusive millionaire who had founded the for-profit Cancer Treatment Centers of America, 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 tortuous interference. He calculated damages at $8 million—the potential earnings Armey felt he’d sacrificed by staying at FredeeomWorks. (The figure is based mostly on Armey’s $750,000 annual contract with DLA Piper, which his position at FreedomWorks forced him to give up.)

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 sitting 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 starts each day with a series of finger exercises to help him recover from a hand condition that required minor surgery. Then it’s on to the Wii Fit for a workout. The rest of the day is open. He might visit his grandchildren, look after his horses, or do chores. Occasionally, a reporter calls for his thoughts on the political issue of the moment.

Armey says he spends a lot of time thinking about the book he plans to write. It’s part autobiography, part economic-policy treatise. “If you’re going to write a book that really seriously deals with substantive ideas,” he says, “you got to spend probably five, six hours a day daydreaming about that before committing words to paper.”

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.”

When he thinks about his $8-million payout, he can’t resist laughing: “I got an offer I couldn’t refuse.”

Meanwhile, FreedomWorks is struggling. Key staffers and board members have fled, and first-quarter fundraising has slipped. Things may get even 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.

This article appears in the July 2013 issue of The Washingtonian.