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 January 30, 2017
Koch network could serve as potent resistance in Trump era

 The weekend gathering of wealthy donors who help finance the conservative Koch network was supposed to serve as a celebration of the policy victories within reach now that Republicans control Washington: a repeal of the Affordable Care Act, a rollback of environmental regulations, perhaps even a corporate tax overhaul.

But with President Trump already embroiled in chaos and controversy, the conservative financiers assembled at a desert resort here were also forced to contend with a new uncertainty: whether the new president will be an ally or an obstacle.

In their first formal break with the administration, top network officials on Sunday condemned Trump's travel ban on some refugees and immigrants, calling it "the wrong approach." Some here expressed alarm that Trump has staked out positions anathema to the network's libertarian principles, targeting individual companies that produce goods abroad and indicating possible support for a border tax on imports. And the network's chief patron, billionaire industrialist Charles Koch, who pointedly declined to back Trump in the presidential campaign, warned in stark terms of the potential perils of the anti-establishment mood that gave rise to Trump.

"We have a tremendous danger because we can go the authoritarian route or we can move toward a free and open society," he told a packed ballroom Sunday afternoon.

The mixed emotions on display here reflect a provocative role for the Koch network in the age of Trump --- as a potent resistance movement within the GOP, well-positioned to fight the president and his allies on Capitol Hill when they push policies that run counter to the group's libertarian credo.

Network officials were optimistic that they finally have a wide opening to push their policy agenda at a federal level. But they also made it clear throughout the weekend that their allegiance is not to the GOP. They have already criticized House leaders, including House Speaker Paul D. Ryan (R-Wis.), for backing the idea of a border adjustment tax and are contemplating intensifying the pressure through digital ads and grass-roots lobbying.

"We're not limiting ourselves on our ability to go out and fight on this," said James Davis, a spokesman for the network.

The network could present a political dilemma for many GOP lawmakers ahead of the 2018 midterm elections as they choose between two influential forces within the party, a populist wing buoyed by Trump's "America First" call and the well-organized, well-funded Koch-aligned activists who embrace open trade.

In the next two years, the network aims to spend $300 million to $400 million on policy and political campaigns, officials said --- up from $250 million during the 2016 elections.

The Koch operation counts several highly placed allies within the Trump administration, including Vice President Pence; Scott Pruitt, the nominee to lead the Environmental Protection Agency; and Marc Short, a former top Koch official who is now serving as the White House legislative liaison.

Nonetheless, network officials made it clear that they intend to deal with Trump and congressional Republicans as they have every other administration --- which could mean an impending confrontation with GOP leaders.

"Our secret sauce, so to speak, is the accountability play," said Mark Holden, general counsel of Koch Industries and co-chairman of the weekend conference. "We're principled, and if we can't get comfortable with the policies that are in place, then we're not going to support them."

White House officials did not respond to requests for comment.

Ryan spokeswoman AshLee Strong said the speaker welcomes "all constructive dialogue on tax reform so that we can create jobs here at home and leapfrog the rest of the world."

After spending its early years trying to maintain a low public profile, the Koch network has adopted a much more public posture recently, a move that has coincided with its increased financial and grass-roots reach. More than 550 donors who give the Koch operation at least $100,000 a year flocked to the Palm Springs, Calif., area for the weekend's conclave --- the largest turnout since Charles Koch began the twice-a-year seminars with like-minded donors in 2003. Among the attendees were some of the wealthiest figures on the right, such as Boston-based investor John W. Childs and retail executive Art Pope of North Carolina.

Over the past decade, Koch and his fellow donors have channeled hundreds of millions of dollars into an unparalleled political and policy operation, which now counts 1,600 staffers and thousands of activists spread across 36 states. The network's main political advocacy arm, Americans for Prosperity, relentlessly led the charge against the Affordable Care Act, mobilizing its volunteers nationwide in door-knocking and phone-bank efforts during the past three elections.

The Koch operation also has its own for-profit data company and recently started a stand-alone communications firm.

No one from the Trump administration attended the weekend's conclave. However, five Republican senators made appearances: Patrick J. Toomey (Pa.), David Perdue (Ga.), Ben Sasse (Neb.), Mike Lee (Utah) and James Lankford (Okla.), along with two House members, Jason Chaffetz (Utah) and Marsha Blackburn (Tenn.). And three governors flew in: Scott Walker of Wisconsin, Doug Ducey of Arizona and Bruce Rauner of Illinois.

Toomey used his time on stage to thank the network for helping him prevail in the most expensive Senate race in U.S. history.

"It wouldn't have happened without this network and the people in this room," he said during a Saturday dinner.

For all the gratitude on display, the Koch network has a history of challenging the GOP that dates backs to its founding during the George W. Bush administration. Charles Koch initially convened a small group of like-minded conservatives and libertarians alarmed about Republican policies like steel tariffs and No Child Left Behind, which gave the federal government a greater role in education.

On Sunday, Brian Hooks, the president of the Charles Koch Foundation, who is co-chairing the weekend seminar, reminded the audience how much the federal government grew under Bush.

"We're going to support this administration and Congress when they support principled public policy, and we're going to have the courage to oppose bad policies regardless of who proposes them," he said, drawing muted applause.

Officials acknowledge that not all donors will support the network if it takes a stance against the Trump administration. Some of its biggest past benefactors, such as Wisconsin roofing billionaire Diane Hendricks, Oklahoma oilman Harold Hamm and New York hedge-fund magnate Robert Mercer, are staunch backers of the president and did not attend the Indian Wells gathering.

Those on hand offered mixed assessments of the new administration --- and the posture they believe the network should take toward Trump.

Indiana donor Fred Klipsch, a longtime Pence ally, said he has been "overwhelmingly impressed" by the actions of the Trump White House. He said he is confident that "when it comes time to get the work done," the network and the administration will be "working for the same direction and the same goals."

David Kellogg, a defense contractor based in Arlington, said he considers Trump as "a hothead, but I'm taking a wait-and-see approach."

"You've got to at least give the guy a chance," he added.

Dennis Patrick, a movie producer who served as chairman of the Federal Communications Commission during the Reagan administration, said he was impressed by the network's willingness "to let the chips fall where they may."

"It's been very clear to me in all the conversations I've had with senior members of the organization that this organization is about policies --- whether you agree with them or disagree with them," said Patrick, who was attending the donor conclave for the first time. "What I have heard is this outfit is willing to hold this president accountable where he varies from those principles."

Wariness about the new era of GOP dominance repeatedly surfaced among the network's top officials and invited speakers throughout the weekend.

Lee pleaded with the network to keep pressure on his own Republican colleagues not to give too much during negotiations about what a replacement of the Affordable Care Act should look like.

"Keep the heat on us, because we need that heat," said the senator from Utah, who just won a second term last fall. "We need to continue to be reminded of the fact that you elected us to not just repeal Obamacare, but to keep it repealed."

Charles Murray, a political scientist most famous for his 1996 book "The Bell Curve," told the group that he was worried that the United States was turning away from "the basics of individualism and freedom and opportunity."

"Completely apart from the individual person of the president, I think we see an environment that is fertile for authoritarianism in the United States now," he warned.

Koch later echoed Murray's worry and quoted abolitionist Frederick Douglass, telling donors that they should "unite with anybody to do right and with nobody to do wrong."

"And that needs to be our attitude," he said. "We cannot be partisan. We cannot say, 'Okay, this is our party, right or wrong. We support them when we believe they're doing right, and we try to oppose them and change them when we believe they're doing wrong."

As donors sipped wine Saturday evening in a courtyard under the starry desert night sky, Koch tempered the buoyant atmosphere with a warning.

"This isn't going to happen if we rest on our laurels, if we say, 'Okay, now we've got it made,' he told the group. "We haven't got it made. We now have a chance."