If the GOP is suffering an identity crisis, so are the Koch brothers

When Republicans were out of power in the Obama era, the Republican National Committee often clashed with outside conservative groups who wanted to influence elections or legislation.

Some of the RNC’s biggest fights were with the political operation run by Charles and David Koch, whose independent database of Republican voters was seen as a potential threat by party officials, as Yahoo News exclusively reported two years ago. The RNC believed the Kochs were trying to take over the party. Koch officials denied that forcefully.

And yet in the 2016 election, the Kochs acted at times more like a political party than the RNC. They withheld voter data from Donald Trump’s presidential campaign during the Republican primary, and excluded him from events. The RNC, meanwhile, was not able to consolidate the field of Republicans around an alternative to Trump, and a man who was not the first choice of most Republicans ended up the party’s nominee, and then the president.

Now, Trump is the leader of the Republican Party. The GOP is unsure of what it has become.

“Washington Republicans today find themselves at a strange moment in history: enjoying overwhelming political power, yet beset by strategic confusion,” Sen. Mike Lee, R-Utah, said in a speech this week at the Heritage Foundation.

Trump, Lee noted, “trashed Republican orthodoxy on issues once thought beyond debate.”

The GOP, in other words, is in the midst of an identity crisis, after a hostile takeover by a president who campaigned against trade deals, against reducing the national debt, against much in the way of restraints on the presidency, and in favor of big government.

But the Koch operation is also facing questions of purpose and identity. The brothers built a massive political operation over the last decade to fight President Barack Obama’s agenda. What will they do with it now that the White House and Congress are controlled by Republicans?

There is no love lost between the Kochs and the Trump administration, where former RNC Chairman Reince Priebus is now White House chief of staff. Priebus’ top deputy at the RNC, Katie Walsh, is a central player in the West Wing as deputy White House chief of staff. Walsh led the RNC’s charge in 2015 against the Kochs, calling their actions “dangerous and wrong.” Trump himself has criticized the Kochs a handful of times for treating politicians as “puppets.”

There’s potential for the Kochs to become a shadow conservative party during the Trump presidency, as the biggest political institution in American politics focused on promoting and preserving conservative ideas and policies. They plan to spend between $300 and $400 million on political advocacy and advertising and grassroots organizing between now and the 2018 midterm elections.

The money will be spread, as is typical of the Kochs’ usual mode of operation, across a network of such groups as Generation Opportunity, Americans for Prosperity, the LIBRE Initiative and Freedom Partners Action Fund.

The Kochs’ general counsel, Mark Holden, and others in the Koch world continue to insist that they have no interest in performing the functions of a political party, which Holden described with mild disdain.

“The political parties, by their nature, are partisan and political. They’re going to support their candidates, pretty much regardless of their policies,” he said.

“We definitely don’t see ourselves as Republican or Democrat. We just want to do commonsense reforms,” Holden said in an interview. “We think, with all due humility, that we have a profile and the policy plans and the type of ideas that will drive that change that people need in this country.”

Holden was as critical of gridlock in Washington as anything else. His view is that the Koch operation is a “social change agent,” and he spoke dismissively of partisanship. But he was not familiar with the argument — best expressed by the journalist Jonathan Rauch in a cover story in the Atlantic last summer — that partisanship is not the problem, but rather the fact that political parties have lost the ability to function.

Campaign finance law has pushed money to groups outside of parties, and well-intended good governance reforms have further limited the ability of parties to constrain their more self-promoting or radical members. The parties’ ability to form coalitions for collective action has been greatly reduced.

But the idea of strengthening the very party that they have so often clashed with is probably too alien to the Koch’s DNA.

So the Kochs will operate issue by issue. And while Freedom Partners has supported Trump’s Supreme Court nominee, Neil Gorsuch, much of the group’s energy in the first weeks of Trump’s presidency has been to oppose House Speaker Paul Ryan’s proposal to pass a tax reform package that includes a border-trade adjustment (BTA). The Kochs see the border-trade adjustment measure as “a huge regressive tax increase on working-class and middle-class Americans,” Holden said.

The provision would amount to a 20% tax on imports and incentivize domestic manufacturing. Koch Industries, which employs 100,000 people and has annual revenue of over $100 billion, said they would benefit financially from BTA.

“While companies like Koch, who manufacture and produce many products domestically, would greatly benefit in the short term, the long-term consequences to the economy and the American consumer could be devastating,” said Koch Industries spokesman David Dziok.

But the Kochs are a significant importer of tar sands oil from Canada. A 2012 report on their business holdings found that their Pine Bend Refinery in Rosemount, Minn., “receives up to 320,000 barrels a day of heavy oil from western Canada … an estimated 25 percent of the 1.2 million barrels of oil the U.S. imports each day from Canada’s tar sands territories.”

A tax on those oil imports would be a big hit to the Koch’s bottom line.

The political calculus behind the push for BTA is that it is a simpler way to pass tax reform than the traditional approach, which paired reduced rates with closing most loopholes. The loophole approach had a multitude of opponents with deep pockets, because so many loopholes exist. The BTA has only two formidable enemies: the Kochs and the big retailers like Walmart, whose business model is built on selling cheap imported goods.

Tax reform is something that Speaker Ryan wants to do very badly, and has for some time. Trump has not definitively declared whether he’ll push for BTA, but if he does, the Kochs will be thrust into a brutal political fight with the Republican administration that would inevitably raise questions about their motives.

Such a fight would put a harsh spotlight on the Kochs’ claim that their political activity is guided by conservative principles and not by financial self-interest. It would go to the core of who they say they are.

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