The American Enterprise Institute (originally known as the American Enterprise Association) launched in 1938 in New York and moved to DC five years later, making it one of the oldest of today's large family of conservative think tanks. Today, AEI is a powerful hub, driving thought and action throughout the conservative world whether Republicans are in power or out of it.
AEI did not enjoy such influence in its first decades as a small policy shop dedicated exclusively to defending free enterprise in economics. By all accounts, their ascendancy began in the 1970s, after many years of recruiting people like neoconservative “godfather” Irving Kristol and early supply-side advocate Jude Wanniski. (Kristol on Wanniski's trickle-down ideas: "I was not certain of its economic merits but quickly saw its political possibilities.") The same period saw AEI's research expand to include foreign policy ideas that aligned with the original free-enterprise mission, with similarly potent impacts on the policy conversation.
The 1980s demonstrated that AEI's influence over discourse translates to real power when conservatives are ascendant, as President Ronald Reagan borrowed many of AEI's employees (and ideas) for his administration. But after those departures, the organization's "creeping centrism" (in the Washington Post's phrase) caused it to lose the support of mega-donors like the Olin Foundation. Near bankruptcy in 1986, the AEI board ousted then-president William Baroody Jr. and installed Christopher DeMuth, who restored donor confidence in part by shifting the organization permanently and sharply rightward, and by expanding the playing field on which the group operates. Once a domestic policy think tank dedicated exclusively to the preservation of free markets at home, the AEI of the past thirty years has firmly entrenched itself in every field of policy debate.
AEI's absolutist commitment to the primacy of free markets has played a role in some of the shadiest foreign policy actions of the U.S. government. For example, President Reagan drafted AEI's Jeane Kirkpatrick to his National Security Council in 1981, where she advocated for secret CIA interventions on behalf of South American dictators. Her New York Times obituary explained that "she was a crucial participant" in a 1981 meeting "that produced a $19 million covert action plan" to arm the Nicaraguan contras, and that at a similar 1984 meeting after Congress prohibited funding that group she supported the illegal policy known today as the Iran-contra scandal.
For another costlier and more modern example, AEI scholars began the drumbeat for invading Iraq two days after September 11, 2001. That effort had become an organizational priority by the next fall, when AEI launched its monthly "Post-Saddam Iraq" series. But it was hosting events in late 2001 where "the only open question" with regard to invading Iraq, as the Cato Institute's then-Chairman William Niskanen put it, "was when.” And like President Reagan before him, President George W. Bush hired numerous AEI scholars to fill out his administration.
Near the end of Bush's second term, DeMuth passed the reigns to current president Arthur Brooks. In remarks at the handover, the incoming leader declared that one of the values around which AEI organizes itself is the belief "that free enterprise is not a system to protect power and privilege, it's the best system to protect people who are vulnerable among us." Three decades after it began its push for deregulation, and a few years after the exploitative practices of the financial industry brought the world's largest economy to its knees, the "vulnerable" Americans AEI seeks to protect appear to be the titans of Wall Street. In fact, their scholars have gone on the offensive with regard to the recession's causes, using misleading statistics to pin the whole thing on the government – a lie that became a popular Republican refrain at the height of the Occupy Wall Street movement.
Since Barack Obama's election, AEI has been both government-in-exile and standing pundit army for the broader conservative movement, providing the intellectual ammunition behind conservative talking points on hot-button issues like income inequality. With progressive Democrats positioned to re-regulate Wall Street, roll back the fiscally disastrous Bush tax cuts, and adopt a diplomacy-oriented foreign policy, AEI went into combat mode. The most significant volley was launched by Brooks in the Wall Street Journal's op-ed page less than four months into the Obama presidency, under the headline "THE REAL CULTURE WAR IS OVER CAPITALISM."
In the op-ed, Brooks not-so-subtly suggested that Democratic economic policies were “socialist,” blamed the housing crisis on homeowners, and drew battle lines around free enterprise and the share of Americans without federal income tax liability. These themes have proved incredibly popular with the GOP in the Obama era.
AEI's commitment to partisan victories shows in internal events as well. When George W. Bush's speechwriter David Frum criticized Republican missteps on health care reform in early 2010, and then days later said the GOP was "discovering we work for Fox [News]," AEI fired him. Meanwhile, AEI continues to support the work of Charles Murray, co-author of the foremost book to argue that black people are genetically inferior in terms of intellect to whites, whose latest work blames cultural elitism and safety net programs for the decline of the white working class. Murray is as useful to the modern GOP's efforts at undoing government programs and vilifying liberals as Frum was counterproductive. And AEI's interests today lie more with advancing Republican goals in what its president sees as a limitless culture war over capitalism than with the non-partisan defense of laissez-faire capitalism that was once its hallmark.