Politics & Policy

Koch World Faces Year Two of the Trump Era — and the 2018 Midterms

Charles Koch delivers welcoming remarks to the Koch Seminar Network meeting. (Seminar Network)
The administration has proven to be a better ally than they might have expected.

Indian Wells, Calif. — If you’re the Koch network, the world looks pretty good right now: Sweeping tax reform has been passed, Obamacare’s individual mandate is repealed, Republicans control the House and Senate, like-minded governors and state legislators control a majority of states, and after one year in office, President Trump has proven to be a more conventional free-market Republican than many expected — at least in the realm of policy.

“This network has accomplished more in the past five years than I have in the previous 50 I’ve been at this,” Charles Koch told an audience of more than 500 well-heeled donors to the Koch Seminar Network at a luxury resort outside Palm Springs.

But Charles and his brother David Koch, billionaire philanthropists and political donors, are doing the opposite of resting on their laurels. They want their network to increase its actions and impact tenfold. The term “ten-X” — to increase tenfold — was the buzzword-y verb of the weekend.

A Democratic “blue wave” in the 2018 midterms could jeopardize much of what the network has accomplished in recent years. Some of the network’s favorite politicians and allies, such as Wisconsin governor Scott Walker, Arizona governor Doug Ducey, and Illinois governor Bruce Rauner, could be at risk if the Democratic surge lives up to the hype. The Republican majority in the Senate could disappear if the party loses just two seats, and continued Republican control of the House doesn’t look like a safe bet, either.

“These elections are going to be brutally tough,” says Emily Seidel, CEO of Americans for Prosperity. “We’ve never faced a challenge like this one.”

Tim Phillips, president of Americans for Prosperity, notes with concern that Democrats won a special state-senate election in Wisconsin with an impressive 37 percent of the turnout that Hillary Clinton had had in 2016 — in the middle of January, when the temperature was “literally zero degrees.”

“There’s absolutely no doubt that the Democrats are motivated,” says Art Pope, owner and CEO of Variety Wholesalers and a member of the Koch network. But he contends that “there is a large part of the electorate that is undecided,” and that there is opportunity for free-market conservatives to hold off the wave if they “persuade people that they have benefited from Republican policies.” The network intends to spend $20 million in the coming months to tout the benefits of the tax cuts.

That sum is part of a $300–400 million fortune that the Koch network was projected to spend on political operations in this cycle last year; it now says it will be on “the high end” of that range. For perspective: The network spent $250 million in the 2016 cycle and effectively sat out the presidential race, as Koch summarized the choice between Hillary Clinton and Donald Trump as the choice between “cancer or a heart attack.”

“We’re all in,” said Phillips.

The Koch network can accurately boast that it has become one of the most consequential forces in American politics, with what it calls a “permanent grassroots infrastructure in 36 states.” Americans for Prosperity is the most visible arm of the network, but in recent years others have sprung up: the Libre Initiative, aimed at America’s Latino communities; Generation Opportunity, which focuses on Millennials; Concerned Veterans for America, which addresses veterans’ issues; and Stand Together, which endeavors to build social capital.

The Trump administration has proven to be a better ally than Koch world might have expected. The group certainly had enough old friends in the administration’s ranks; Mike Pence was always a favorite of the Kochs; Mark Short, Trump’s chief liaison to Congress, previously led Freedom Partners Chamber of Commerce; and Don McGahn, the White House counsel, did legal work for Koch groups.

But the Koch brothers’ maximize-freedom-and-break-barriers philosophy is antithetical to a lot of candidate Trump’s vision of border walls, protectionism, and populism.

During the last winter meeting, the nascent Trump administration suddenly unveiled its so-called “Muslim ban” of immigration and entry restrictions, generating chaos at the nation’s airports and quick legal challenges, and the Koch network issued a statement opposing the move. Political scientist Charles Murray darkly warned the assembled donors that “the proportion of the electorate on the right that is still devoted to those principles of the American creed is way smaller than I thought it was. . . . I think we see an environment that is fertile for authoritarianism in the United States now.”

This year, the networks’ leaders are quick to emphasize that they’re largely in agreement with the Trump administration, with some caveats. They’re in the same position as a lot of other right-leaning groups, finding Trump’s policies better than they expected but his behavior worse — and knowing that any public criticism could generate a volcanic reaction from the volatile president, breaking off a working relationship that has been productive so far.

On immigration, the group sees room for cooperation.

“The proposal from the White House is a good proposal and we want to applaud them for it,” said Brian Hooks, president of the Charles Koch Foundation and Charles Koch Institute, emphasizing that his nuanced perspective of the White House’s policy can’t be summarized briefly. “It is thoughtful to provide legal certainty for Dreamers, and a path to citizenship is enormous incentive to continue to contribute to this country.” But he also emphasizes that the network will not support “arbitrary reduction to future immigration levels” or “ending family migration in the absence of an alternative.” But they leave the door open to making changes to family-based immigration policies. “If they want to have a conversation about whether family status is the best standard to judge eligibility” for immigration, “that is a conversation that we think is appropriate to have.”

A significant portion of the Koch network’s political efforts escape much national attention in state legislatures.

The Senate races and federal legislation get most of the controversy, but a significant portion of the Koch network’s political efforts escape much national attention in state legislatures. One of their 2017 achievements is helping to push through a dramatic expansion of Arizona’s school-choice program, one that allows parents to receive 90 percent of what the state would have spent on their child in a public school — typically around $5,300 for a student — and apply that to any education-related service, including private-school tuition.

The network helped get Mississippi’s legislature to pass a sweeping reform to curb the power of occupational-licensing boards, and Utah eased the licensing and training requirements for some specialty contractors and apprentices in plumbing and electricity. Both Kentucky and Utah’s state governments chose to “ban the box,” removing the conviction-history question on the job application for state-government jobs and delaying the background-check inquiry until later in the hiring.

This year’s winter meeting heavily focused on promoting criminal-justice reform and anti-recidivism programs. “We have continued to warehouse people [in the criminal justice system], and it does not make society better or safer,” said Kentucky governor Matt Bevin, who attended the network conference. “There is human dignity that everybody wants but that our system does not provide.”

Koch Industries general counsel Mark Holden describes himself as “irrationally passionate” about it. He grew up in a working-class family in Worcester, Mass. He once worked as a prison guard and found himself guarding his old classmates.

“They committed crimes, mostly drug crimes, and made a lot of dumb decisions,” Holden recalls. “They got caught. Their lives were ruined by the time they were 18 or 19. They weren’t violent people, they were knuckleheads. I was king of the knuckleheads, but I never got caught. None of us are as bad as our worst day and the worst thing we’ve ever done, but our system drives to that conclusion about people.”

He notes that the prison-reform movement is picking up the most ground in red states like Georgia and Texas. The network is encouraging states to follow Texas’s model of expanding substance-abuse programs and halfway houses while creating financial incentives for local probation departments to reduce by 10 percent the number of probationers returning to prison. Texas found itself shutting down prisons and juvenile-detention centers and saving $2 billion from its budget. Holden knows that some of these ideas used to be criticized in campaign seasons as being “soft on crime”; he says it’s better characterized as “smart on crime, soft on taxpayers.”

Holden and Doug Deason, a donor and longtime advocate for criminal-justice reform, have met at the White House with Jared Kushner and Attorney General Jeff Sessions about once a month for several months. While Sessions has been skeptical of some criminal-justice-reform proposals, he’s “totally on board” for the anti-recidivism reforms, Holden said.

“It is not about turning a blind eye to criminal behavior,” emphasizes Georgia supreme-court justice Michael Boggs, one of the guest speakers at the winter meeting. Over the past six years, the state has put more drug cases in drug courts and promoted efforts to help the incarcerated earn high-school diplomas and GEDs, and the state now has 4,000 fewer felons behind bars and has saved $264 million. Crime is down 6 percent. “We have turned tax burdens into taxpayers, and we have made the public safer,” Boggs said.

The Koch network also gave $600,000 last year to the Foundation for Individual Rights in Education, and touts that it helped stop or rescind speech codes on more than 30 college campuses last year, schools with a collective 750,000 students. In one vivid example, FIRE is helping a Joliet Junior College student file a lawsuit; she was detained by campus police after handing out flyers. The school’s policy declares one small, indoor area of campus to be the “Free Speech Area,” and students must request its use five days in advance.

The Koch network thinks it has an advantage in the coming election cycle because it’s effectively a permanent advocacy organization, not a campaign-focused one.

The Koch network thinks it has an advantage in the coming election cycle because it’s effectively a permanent advocacy organization, not a campaign-focused one. “We’re no longer outsiders in these states,” Phillips said. “We’re part of the culture of these neighbors. No other groups on our side have these capabilities.”

This month, activists with the Libre Initiative and Concerned Veterans for America were out going door to door, discussing the recently passed tax cuts.

“It’s late January, what the heck are they doing out there?” Phillips asks with a chuckle. “Because we want as many Floridians as possible to know that their Republicans in the [U.S.] House did the right thing and voted for a big bold tax-reform plan. And we also want to make sure we’re holding [Democratic senator] Bill Nelson accountable for his no vote.”

The group plans on using paid advertising from now through summer — when television rates are cheapest and the candidates are least defined — and then switching to grassroots phone banks, door-to-door, and town-hall efforts in the fall. They’re particularly bullish about their ability to influence the elections in Florida in 2018, as that state houses Americans for Prosperity’s largest presence: 13 field offices, 33 paid staff, and 200,000 activists.

“We’ve spent about nine years building up this network,” Phillips said. “You can’t build something like this over a few weeks when an important issue pops up.”

Asked what keeps him up at night, Chase Downham, vice president of state operations for Americans for Prosperity, says he notices that groups on the left are starting to emulate the network’s year-round permanent infrastructure, meaning they could someday be battling a left-wing version of themselves.

“They’re taking notes,” Downham says. “It’s flattering.”


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