American Enterprise Institute

Based on Wikipedia: American Enterprise Institute

In February 2003, President George W. Bush stood before a dinner audience at the American Enterprise Institute and made the case for invading Iraq. A democratized Iraq, he argued, would inspire democratic transformation across the Middle East. The think tank hosting him had already provided much of the intellectual architecture for the war—and would soon provide the blueprint for the surge that attempted to salvage it.

This wasn't the first time AEI had shaped a presidency, and it wouldn't be the last. But that moment captured something essential about what think tanks actually do in Washington: they don't just publish papers and hold conferences. At their most influential, they incubate the ideas that become government policy, and they house the people who will implement those ideas when their party takes power.

From Trade Association to Idea Factory

The American Enterprise Institute began life in 1938 as something far more modest: the American Enterprise Association, founded by a group of New York businessmen led by Lewis H. Brown. The founding members included executives from Bristol-Myers, Chemical Bank, Chrysler, Eli Lilly, General Mills, and Paine Webber—names that read like a roster of mid-century American capitalism.

The original mission was almost bureaucratic. The association commissioned and distributed legislative analyses to Congress, building relationships with legislators like Melvin Laird and Gerald Ford. Think of it as a sophisticated research service for lawmakers, helping them understand proposed legislation from a business-friendly perspective.

When Brown died in 1951, the organization nearly died with him. But a year later, a group of young policymakers and public intellectuals—including Laird, William J. Baroody Sr., Paul McCracken, and Murray Weidenbaum—met to discuss resurrection.

Baroody would become the architect of AEI's transformation. He served as executive vice president from 1954 to 1962, then as president until 1978. Under his leadership, the organization stopped being a simple legislative analysis shop and became something new in American politics: an intellectual home for conservative ideas at a time when conservatism was decidedly out of fashion.

The Name Change That Revealed a Strategy

In 1962, the American Enterprise Association became the American Enterprise Institute for Public Policy Research. The reason for the change was telling: the organization wanted to avoid confusion with trade associations—groups that represent business interests and lobby politicians directly.

This distinction matters enormously in Washington. Trade associations are seen as self-interested advocates. Think tanks, by contrast, position themselves as disinterested scholars pursuing truth. The reality is more complex, but the perception shapes everything from tax status to media coverage to intellectual credibility.

The new name announced a new ambition: AEI would be an institute, suggesting academic rigor; it would focus on public policy research, suggesting neutral expertise rather than advocacy. The "American Enterprise" part remained, preserving the ideological commitment to free markets and capitalism.

Getting Too Close to Goldwater

Two years after the name change came a near-disaster that would shape AEI's behavior for decades.

In 1964, Baroody and several top AEI staff, including speechwriter Karl Hess, moonlighted as policy advisers for Republican presidential nominee Barry Goldwater. They tried to do this on their own time, without using institutional resources. It didn't matter.

Representative Wright Patman subpoenaed AEI's tax papers. The Internal Revenue Service launched a two-year investigation. The message was clear: tax-exempt organizations that looked too much like political operations would face consequences.

After this brush with the IRS, AEI's officers became extremely careful about the appearance of partisan political advocacy. They would influence policy and politics profoundly—but through ideas, not campaigns. Through scholars, not candidates. Through white papers, not yard signs.

The Ford Administration Pipeline

By the 1970s, AEI had developed a new model that would define modern think tanks: the revolving door.

Harvard economist Gottfried Haberler became the first scholar Baroody recruited to join a resident research faculty in 1972. But the real transformation came in 1977, when former President Gerald Ford joined AEI as a "distinguished fellow."

Ford didn't come alone. He brought Robert Bork, the legal scholar who would later become famous for his rejected Supreme Court nomination. He brought Arthur Burns, former Federal Reserve chairman. He brought David Gergen, who would become a fixture on cable news. He brought Laurence Silberman and Antonin Scalia, both future federal judges. Scalia, of course, would transform American jurisprudence from the Supreme Court.

Ford also founded the AEI World Forum, an annual gathering he hosted until 2005 that became a regular stop for pro-Brexit British Conservative politicians like Boris Johnson, Michael Gove, Liz Truss, and Sajid Javid decades later.

This wasn't just prestige accumulation. It was infrastructure building. When conservatives returned to power, they would need people ready to govern. AEI would house them, feed them intellectually, and keep their policy muscles exercised.

The Neoconservative Turn

Baroody made a strategic recruitment decision that would shape American politics for half a century: he went after the neoconservatives.

The term "neoconservative" originally described people who had supported Franklin Roosevelt's New Deal and Lyndon Johnson's Great Society but became disillusioned with what they saw as the failures of welfare state liberalism. Many were also Cold War hawks who rejected the antiwar direction of the Democratic Party, particularly the 1972 presidential campaign of George McGovern.

Baroody brought Jeane Kirkpatrick to AEI. While there, she wrote "Dictatorships and Double Standards," an essay arguing that authoritarian anticommunist governments were more amenable to reform than totalitarian communist ones. The piece caught the attention of Ronald Reagan, and Kirkpatrick became his ambassador to the United Nations.

Baroody also recruited Irving Kristol, widely considered one of the founding fathers of neoconservatism. He brought in Michael Novak and Ben Wattenberg. AEI became a home for supply-side economists who argued that tax cuts would stimulate enough economic growth to pay for themselves.

By 1980, AEI had grown from a budget of one million dollars and a staff of ten to a budget of eight million dollars and a staff of 125. The expansion tracked exactly with conservatism's journey from intellectual backwater to governing philosophy.

The Reagan Brain Drain

When Ronald Reagan won the presidency in 1980, AEI faced an unexpected problem: success.

The Reagan administration hired so many AEI staff that the think tank was depleted. Combined with rapid growth, diffusion of research activities, and managerial problems, the talent drain proved costly. The elder Baroody had retired in 1978, replaced by his son William J. Baroody Jr. When the father died in 1980, shortly before Reagan's inauguration, the organization entered a difficult period.

Politico would later write that AEI "rose to prominence" during this era "as the primary intellectual home of supply-side economics and neoconservatism." But prominence and stability are different things. By the mid-1980s, AEI had severe financial problems.

The DeMuth Era and the Right Turn

In December 1986, Christopher DeMuth became AEI's president and would hold the position for twenty-two years.

DeMuth inherited an organization in financial crisis. He solved the money problem, growing revenues from ten million dollars during the George H. W. Bush years to eighteen point nine million during the Clinton administration. Academic David M. Lampton writes that DeMuth was responsive to the financial power of "America's hard right."

Under DeMuth, AEI turned further to the political right. One telling hire came in 1990: Charles Murray, author of "Losing Ground," a 1984 book arguing that welfare programs hurt the poor. The Manhattan Institute had dropped Murray; AEI picked him up and received Bradley Foundation support for his next book, "The Bell Curve," a controversial 1994 work about intelligence and social outcomes that ignited fierce debate over its treatment of race.

The George W. Bush Years

If the Reagan administration marked AEI's emergence as a power center, the George W. Bush administration marked its zenith.

More than twenty AEI staff members served either in Bush administration policy posts or on government panels and commissions. Dick Cheney had been an AEI scholar. John Bolton had been at AEI before becoming Undersecretary of State and later Ambassador to the United Nations.

In an address to the institute, Bush made the relationship explicit. "I admire AEI a lot—I'm sure you know that," he said. "After all, I have been consistently borrowing some of your best people."

The Iraq War became inextricably linked to AEI. Staff members including Michael Ledeen and Richard Perle were associated with the case for invasion. In 2002, Danielle Pletka joined to expand the foreign policy department. When the war went badly, AEI staff including Frederick W. Kagan provided the strategic framework for the 2007 troop surge.

The relationship extended beyond foreign policy. Leon Kass, an AEI scholar, became the first chairman of the President's Council on Bioethics. Norman Ornstein headed a campaign finance reform working group that helped draft the Bipartisan Campaign Reform Act, better known as McCain-Feingold.

The Odd Partnership with Brookings

AEI is often described as the right-leaning counterpart to the Brookings Institution, which leans left. What's less often noted is that the two organizations have frequently collaborated.

From 1998 to 2008, they co-sponsored the AEI-Brookings Joint Center for Regulatory Studies. In 2006, they launched the AEI-Brookings Election Reform Project. In 2015, a working group from both institutions produced a report called "Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring the American Dream."

This kind of cross-ideological cooperation is both more common and more strained than public perception suggests. Think tanks need to demonstrate intellectual seriousness, which bipartisan projects provide. But they also need to satisfy donors, who often want ideological purity. The tension is permanent.

The Frum Affair

On March 25, 2010, David Frum announced that his position at AEI had been "terminated."

Frum was a former George W. Bush speechwriter—he'd helped coin the phrase "axis of evil." But he'd written a blog post called "Waterloo" criticizing the Republican Party's unwillingness to negotiate with Democrats on the Affordable Care Act. "This failure," he wrote, "led us to abject and irreversible defeat."

Media speculation immediately concluded that Frum had been forced out for ideological heresy. The reality was more complicated. Frum said AEI president Arthur Brooks had "welcomed and celebrated" the article. Brooks said Frum was let go because "these are hard times" and offered him an unpaid writing position, which Frum declined.

But in a later conversation with journalist Mike Allen, Frum expressed his belief that the termination resulted from donor pressure. "AEI represents the best of the conservative world," he said. "But the elite isn't leading any more... I think Arthur took no pleasure in this. I think he was embarrassed."

The incident revealed the constant tension think tanks face between intellectual independence and donor satisfaction. Ideas are their product, but money is their oxygen.

The Brooks Years and the Happiness Pivot

Arthur Brooks became AEI president at the start of 2009, just as the financial crisis was reshaping American politics. In a Wall Street Journal op-ed, he positioned AEI to be "much more aggressive" in responding to the Obama administration's policies.

Under Brooks, AEI identified with "compassionate conservatism" and, intriguingly, the maximization of happiness. Politico said Brooks "helped elevate the institution into a bastion of free-market orthodoxy and center-right policy wonkery during the Obama years."

Brooks announced in 2018 that he would step down effective July 1, 2019. He left to become what Politico called "a happiness expert" and self-help guru—an unusual career path for a think tank president, but consistent with his intellectual interests in human flourishing.

How Think Tanks Actually Work

Understanding AEI requires understanding the think tank business model.

AEI is an independent nonprofit supported primarily by contributions from foundations, corporations, and individuals. It doesn't charge for its research. It doesn't sell products. It produces ideas and houses intellectuals.

The real products are several. First, research that shapes policy debates—white papers, op-eds, Congressional testimony. Second, a talent pipeline: think tanks house people between government jobs and prepare them for the next administration of their party. Third, convening power: the ability to bring together policymakers, journalists, academics, and donors in the same room.

AEI's board of trustees reads like a roster of American business leadership. As of 2025, it includes Daniel A. D'Aniello as chairman, along with Cliff Asness (co-founder of hedge fund AQR Capital Management), Harlan Crow (chairman of the Crow Holdings investment company), Dick DeVos (of the Amway fortune), and numerous other executives from finance, energy, and industry.

These aren't honorary positions. Board members provide financial support and strategic direction. They also represent the business interests that align with AEI's free-market philosophy—and that expect intellectual ammunition for their policy preferences.

The Network Effect

AEI doesn't operate alone. It's a member of the Atlas Network, an international network of free-market think tanks. It's also an associate member of the State Policy Network, which connects conservative and libertarian think tanks focused on state-level policy.

These networks matter. Ideas developed at one think tank spread to others. Policy proposals tested in one state get replicated elsewhere. Scholars move between institutions, cross-pollinating approaches. The result is something like an intellectual infrastructure for conservatism—not a conspiracy, but a system.

According to the 2011 Global Go To Think Tank Index from the University of Pennsylvania, AEI ranked seventeenth among worldwide think tanks and tenth among United States think tanks. By 2019, it led all free-market groups in YouTube subscribers, showing adaptation to new media.

What They Actually Study

AEI divides its research into seven categories: economic policy studies, foreign and defense policy studies, health care policy studies, political and public opinion studies, social and cultural studies, education, and poverty studies.

Economic policy was the original focus and remains central. According to AEI's own description, "The principal goal is to better understand free economies—how they function, how to capitalize on their strengths, how to keep private enterprise robust, and how to address problems when they arise."

This framing is instructive. It assumes free markets are fundamentally good, with problems to be addressed rather than fundamental flaws to be corrected. The research questions flow from that assumption. How do we make markets work better? How do we limit government intervention? How do we unleash entrepreneurship?

Throughout the early twenty-first century, AEI scholars pushed for conservative approaches to economic policy, particularly tax cuts. In 2002, resident scholar John Makin published a report supporting Bush's tax cuts, arguing they "played a large role in helping to save the economy from a recession."

The Housing Crisis Prediction

One of AEI's most significant moments came before the 2008 financial crisis.

In the late 1990s and early 2000s, AEI scholar Peter Wallison repeatedly warned about Fannie Mae and Freddie Mac, the government-sponsored enterprises that bought and guaranteed mortgages. He argued that their hybrid public-private status put taxpayers at risk.

"Because of the agencies' dual public and private form, various efforts to force Fannie Mae and Freddie Mac to fulfill their public mission at the cost of their profitability have failed—and will likely continue to fail," he wrote in 2001. "The only viable solution would seem to be full privatization or the adoption of policies that would force the agencies to adopt this course themselves."

When Fannie and Freddie collapsed and required massive government bailouts, the Wall Street Journal noted that AEI's predictions had come true. This became an important piece of the conservative narrative about the financial crisis: that government intervention in housing markets, not deregulation of Wall Street, caused the meltdown.

Economists continue to debate this interpretation. But the episode illustrates how think tanks function: they develop interpretive frameworks that explain events in ways consistent with their ideology, providing ready-made analysis when crises hit.

The Current Moment

In January 2019, Robert Doar became AEI's twelfth president. Under his leadership, the organization has maintained its position as a leading center-right think tank while navigating the turbulent waters of post-Trump conservatism.

In October 2023, Doar led an AEI delegation to Taiwan to meet with President Tsai Ing-wen, reflecting the organization's continued focus on foreign policy and its concern about China. The delegation included Kori Schake, Dan Blumenthal, Zack Cooper, and Nicholas Eberstadt—specialists in defense policy, China, and demographics.

As of 2025, AEI's officers include Doar as president, along with Kori Schake (director of foreign and defense policy studies), Yuval Levin (director of social, cultural, and constitutional studies), Michael R. Strain (director of economic policy studies), and Matthew Continetti (a historian of the American right).

The organization continues to house roughly 185 authors and maintains its position as what Representative Paul Ryan once called "one of the beachheads of the modern conservative movement."

What Think Tanks Tell Us About Democracy

The American Enterprise Institute's eighty-plus year history reveals something important about how American democracy actually works.

Elected officials make decisions, but they don't generate the ideas behind those decisions. They don't have time. Governing is reactive—responding to crises, managing bureaucracies, raising money, running for reelection. The intellectual work happens elsewhere.

Think tanks fill that gap. They develop policy proposals in detail, test arguments, train future officials, and provide ready-made agendas for incoming administrations. When a party wins power, it can reach into its affiliated think tanks and pull out both people and policies.

This system has advantages. It ensures continuity of ideas across administrations. It provides expertise that generalist politicians lack. It creates space for long-term thinking that electoral cycles discourage.

But it also concentrates influence. The people who fund think tanks—wealthy donors, foundations, corporations—shape the menu of options that politicians choose from. Ideas that don't attract funding don't get developed. Scholars who challenge donor preferences, as David Frum discovered, face pressure.

AEI's evolution from a business trade group to an intellectual powerhouse to a neoconservative headquarters to a center-right policy shop tracks with the evolution of conservatism itself. Understanding one illuminates the other. The think tank is the movement in institutional form—and the movement is, in part, what its think tanks make it.