Trump Is Squeezing the Koch Network Out of the GOP

Caught between surging populism on the right and the rise of democratic socialism on the left, the libertarian donor group has plenty of cash, but little popular support.

Senator Heidi Heitkamp of North Dakota
Senator Heidi Heitkamp of North Dakota, a Democrat, has had advertisements funded by Charles Koch's network. (Aaron Bernstein / Reuters)

Will the GOP be the party of Donald Trump or the party of Charles Koch?

The question comes to mind as Koch, the billionaire businessman who has for decades devoted himself to libertarian causes, rallies his expansive network of right-of-center philanthropists to fight against the Republican embrace of protectionism, restrictionism, and deficit spending, the hallmarks of the Trump presidency so far. This weekend, leading members of the Koch network gathered in Colorado Springs to assess the country’s direction, and the stance its members ought to take toward a Republican Party that they see as increasingly hostile to their small-government ideals. Having played a central role in shaping the Republican agenda in the Barack Obama years, when it briefly seemed as though the Tea Party movement would ultimately serve libertarian ends, the Koch network seems alarmed by the GOP’s populist turn, and keen to reassert itself.

In an effort to set the tone, Charles Koch recently underscored his independence from the Republican Party, making it clear that he would support candidates solely on the basis of their willingness to advance his libertarian agenda, not their partisan affiliation. The message to aspiring GOP politicians is clear: As much as you might want to mimic Trump’s populism, doing so will be costly. We the members of the Koch network are watching, and you can’t expect to take us for granted.

To that end, Koch and his allies have, for example, financed digital advertisements praising Senator Heidi Heitkamp of North Dakota, a Democrat, for her support for relaxing regulations on small banks.* In the months to come, the Koch network may well invest more resources in her reelection bid. One could argue that Heitkamp’s support for the expansion of low-wage guest-worker programs, the deregulation of the financial sector, and fiscal consolidation, and her openness to voting to confirm originalist judges considered friendly to business interests, make her the paradigmatic Koch Democrat—a designation that might prove fatal if she were running for the Democratic presidential nomination, but that shouldn’t weigh her down in the conservative Great Plains. Can we thus expect the Koch network to play an increasingly influential role in Democratic politics? The answer will depend on the Koch network’s priorities: If its commitment to cosmopolitanism comes first, and it is willing to swallow its long-standing objections to the expansion of the public sector, anything is possible.

But consider the possibility that all this talk of transcending partisanship is best understood as a bluff.

First, it is far from obvious that the Democratic Party is a more auspicious home than the GOP for candidates who favor deregulation, tax cuts for high-income households, and the retrenchment of existing social-insurance programs. Though many Republican candidates might be less enthusiastic about these decidedly unpopular causes than the Koch network would like, they are not as uniformly hostile to them as their Democratic counterparts, who tend to favor more stringent regulation, tax increases for high-income households, and the expansion of existing social-insurance programs, if not the creation of entirely new ones. For years, Democrats have denounced the Koch network, to the point where ritualized invocations of the “Koch brothers” have become an essential part of the theater of left politics, and Heitkamp and her fellow farm-state, free-trade Democrats seem more like exceptions that prove the rule. To be sure, the Koch network has been making the case for criminal-justice reform and sharp increases in low-skill immigration, causes welcomed by the center-left, but will its members prioritize these causes over, say, further cuts to the corporate income tax?

And as for the Republicans under Trump, there is no gainsaying that despite the president’s populist rhetoric, they have overall been quite solicitous of the interests of the country’s wealthiest investors and entrepreneurs. The resulting Tax Cuts and Jobs Act has already proved an enormous boon to wealthy investors, and while its longer-term consequences remain to be seen, it can hardly be criticized for not having done enough to lift the fortunes of the Koch network’s membership. When a number of Republican lawmakers proposed passing a somewhat smaller corporate tax cut so as to allow for a somewhat larger amount of tax relief for working-class households, their efforts were actively opposed by the Koch network, which, in the end, wound up carrying the day.

More recently, Republicans on the House Ways and Means Committee released a framework for what they are calling “Tax Reform 2.0,” a package of tax measures that would, among other things, make the Tax Cuts and Jobs Act’s individual income-tax provisions permanent, create new vehicles for retirement savings, and further reduce the tax burden on new business enterprises. Notably, the framework includes no references to increasing the child credit or the earned-income tax credit, two reforms that would greatly benefit working- and middle-class voters, many of whom might look more favorably upon a Republican Party that were to champion such policies. This at a time when GOP congressional candidates are facing the most unpropitious political environment in a decade. What might Republican tax legislation have looked like in a world in which the Koch network had washed its hands of the GOP, and the party had taken a more populist tack in which its investor-friendly provisions had been balanced by provisions targeted to blue-collar workers? For one, it might have been more popular.

Charles Koch wants the Republican Party to reflect his libertarian ideals, and to that end he is demanding more of its candidates. The irony is that if the Republican Party loses the House in November, as seems likely, the members who will go down to defeat will by and large be those who are more cosmopolitan in inclination, more skeptical of Trump’s brand of populism, and who represent more competitive seats, which in turn are more expensive to defend. The House Republicans who are fighting for their political lives are those who depend most on the votes of affluent suburbanites, who have been trending left, and on the campaign contributions of the Koch network and other like-minded libertarian donors. Those for whom victory is assured represent heavily Republican districts, where what matters most is being aligned with the Republican base—a base that is more nationalist than cosmopolitan and more populist than libertarian.

And so the Koch network’s declaration of independence from the GOP might wind up accelerating the Republican Party’s shift away from libertarianism at the very same time that the Democratic Party’s leading lights reconcile themselves, with varying degrees of enthusiasm, to democratic socialism. In other words, the Kochs might be trading something for nothing.

* This story originally stated that the ads praised Heitkamp's opposition to tariff hikes. We regret the error.