Kock memo

Secret Kock memo outlines plans for 2016

Documents detail plans to beef up the network’s state-of-the-art data system and pay hundreds of staff embedded in local communities across the country.

By Kenneth P. Vogel

The Kock brothers’ political machine is expanding into new states and recruiting new donors as it seeks to shape the Republican Party — and its presidential field — headed into 2016, according to interviews with multiple sources, as well as confidential donor briefing documents obtained by POLITICO.

The documents detail plans to beef up the network’s state-of-the-art data system, and pay hundreds of staff embedded in local communities across the country in preparation for get-out-the-vote efforts that are unprecedented from a third-party group.

The plan comes with a $125 million 2015 budget for Americans for Prosperity, the most robust arm in the network of small-government advocacy groups helmed by the billionaire industrialist brothers Charles and David Kock. That’s the most the group has ever spent in a non-election year and the documents call the plan “beyond the biggest, boldest, broadest effort AFP has ever undertaken.” It calls for the creation of new chapters in Alabama, Idaho, North Dakota and Utah — continuing a move by the group to invest in deep red states where it can focus on pushing aggressive reforms to scale back union power and government regulation, rather than winning or protecting GOP majorities.

That mission sets AFP and the Kock network apart from the GOP — a distinction to which the briefing documents allude, noting “foes of economic liberty still sit on both sides of the aisle.” In fact, there’s been rising competition between the two as they have jockeyed for major donors this year, according to sources in conservative finance circles. (The Republican National Committee rejected any suggestion of tension with the Kock network, with RNC chief of staff Katie Walsh saying “Both organizations are receiving tremendous support from the Republican donor base as we all prepare to do everything we can do ensure we take back the White House in 2016.”)

The relationship between the GOP and the Kock network – which fluctuates between faintly adversarial in off years and mostly supportive in election years – was thrust into the spotlight this week amidst confusing signals about the brothers’ 2016 leanings.

David Kock attended a Manhattan fundraiser on Sunday for a super PAC supporting Wisconsin Gov. Scott Walker’s expected campaign for the GOP presidential nomination, sources tell POLITICO. The next day, during a fundraiser in Manhattan for the New York State Republican Party, Kock said that Walker “should be” the GOP presidential nominee. But soon after The New York Times reported the comment, Kock’s office issued a statement saying: “While I think Gov. Walker is terrific, let me be clear, I am not endorsing or supporting any candidate for president at this point in time.”

Then, on Tuesday, Charles Kock, in a rare interview, told USA Today that he and his brother and their team are considering donating to five GOP presidential prospects — Walker, former Florida Gov. Jeb Bush and Sens. Ted Cruz of Texas, Rand Paul of Kentucky and Marco Rubio of Florida. The Kocks would only “select one over the others,” Charles Kock said, “if somebody really stands out from the standpoint of their message and what they would actually do to benefit America and has a chance a decent chance of being elected.” The Kocks, he said, “expect them … to compete on who has a more positive message for America.”

Sources familiar with the thinking in the Kock network say it will turn later this year toward issue-based attacks on Hillary Clinton and other Democrats, then will decide early next year whether to intervene in the Republican presidential primary. But they caution that such intervention likely would only happen if the final field pitted a candidate seen as aligned with the Kock’s small-government ideology – such as Walker or Paul — against one considered anathema to it — such as South Carolina Sen. Lindsey Graham.

It’s a delicate balance for an operation created out of frustration with what its donors view as reckless spending and government expansion unchecked by either party. While the groups in the Kocks’ network have increasingly waded into electoral politics in support of Republicans, they have almost entirely avoided GOP primary battles.

Part of that is because the Kocks value their political independence and view their political activity as a means to advance free enterprise policy rather than to elect Republicans. But part of it stems from concerns that picking any given candidate could alienate supporters of other candidates who are major donors to outfits in the Kock network, including AFP and Freedom Partners Chamber of Commerce, which oversees the whole network.

Those groups’ leaders, in recent briefings with major donors, have left the impression that they plan to pivot after Labor Day towards ads and outreach that critique Democrats, including leading presidential hopeful Clinton, but that they will refrain from picking a side in the GOP nominating contest.

“They have said very clearly they are not going to get into the primary process, period,” said billionaire Minnesota media mogul Stan Hubbard, a major donor to AFP. “I see their end game as to elect a Republican president and to let the American people know what they believe Hillary Clinton to be and what she stands for.” At a briefing late last month in Florida with AFP president Tim Phillips and Freedom Partners official Michael Lanzara, Hubbard said the message was: “There are at least five really good candidates. Any one of them would be acceptable, and that they plan to get behind whoever gets the nomination.”

He added, though, “if some really bad person who they felt was really dangerous for the country was still involved, I’m sure they would get involved, just like all of us would. But I think they’re going they’re going to be pretty much hands off as an organization.”

That leaves open the possibility, though, that the brothers themselves, in their personal capacities, might express a preference for a given candidate, which would be a huge boon to the chosen figure. Not only could they donate millions to that candidate’s supportive super PAC, but they also serve as bellwethers for other donors in their network.

“If they came out and said they were for somebody – man, what a boost,” said Hubbard, a Walker supporter. “In some circles, a boost. In other circles, the opposite,” he added, referring to Democratic efforts to brand Republicans as beholden to the Kocks. Hubbard said he’s already donated “quite a bit” to the Walker super PAC and plans to give more — “a lot, by my standards. But my standards are different than David Kock’s.”

However, AFP board member Frayda Levin, a major GOP donor and “proud Kock insider” who’s backing Paul, rejected the suggestion that David Kock might be trying to steer other donors in the network to Walker.

“There is just no way,” she said, pointing out that major donors in the network also support Paul, Marco Rubio and other candidates. “This is so far from settled.”

Freedom Partners spokesman James Davis didn’t comment on specific presidential hopefuls or 2016 plans, but said his group’s efforts are intended “to advance a free society where everyone has an equal chance to succeed and opportunity is not limited to those with political connections. We will look to support candidates with a positive vision for addressing these pressing issues with free market solutions. We’re not interested in seeing any petty, personal attacks.”

The group hosted Cruz, Rubio, Paul and Walker at its winter meeting, where Rubio shined and Paul bombed. It’s expected to extend invitations to its upcoming summer meeting to Bush and possibly Louisiana Gov. Bobby Jindal and former Texas Gov. Rick Perry.

In the meantime, the network has spent the last few months pressuring the GOP’s presidential prospects – including Walker – and its other politicians to embrace hard-line stances on its animating fiscal issues.

When Walker gave a somewhat meandering response when asked his position on reauthorizing the Export-Import Bank — a key issue for the network — Freedom Partners conspicuously omitted his name from a press release last month praising his prospective rivals for opposing reauthorization. Walker subsequently came out more forcefully against the bank, but Freedom Partners is signaling it won’t let the issue die, blasting Graham over his support for reauthorization and launching a web ad last week hitting Clinton for her stance on the bank.

And after Walker this week called for additional restrictions on legal immigration, the Kock-backed LIBRE Initiative, which focuses on Hispanic voter outreach, took a swipe at him for catering to “a very narrow slice” of the electorate.

AFP has taken on Republicans at the state level — including prospective presidential candidate Mike Pence, the governor of Indiana— for supporting Medicaid expansions as part of Obamacare.

The presidential race is not AFP’s focus, said Phillips, the group’s president. “We’re focused on advancing a long-term shift at every level of government towards a culture of freedom. And we’re not just fighting for the fun of it – we intend to win.”

In a letter to major donors accompanying the briefing document, Phillips boasted that “no group is as effective at organizing, educating, mobilizing, and rallying citizens as Americans for Prosperity.”

Also included in the donor pitch was a personal appeal from David Kock, who reflected on how his father Fred Kock, who started the company that is the source of the brothers’ wealth, “made sure his boys understood the value of hard work. He also made sure that we understood the dangers of excessive government intervention into people’s lives.” Fred Kock “would be pleased at what [Americans for Prosperity] has been able to accomplish,” David Kock wrote, asserting “I think that what AFP is doing will ultimately save America.”

The briefing document, which is called a “Partner Prospectus” is glossy, bound and marked “confidential” and “privileged” on its cover. “Please do not disclose, discuss, or disseminate the contents herewith.”

Sent to major donors and prospects last month, it includes previously unknown statistics about AFP’s staffing (539 field staffers in key states in 2014), advertising spending ($60 million on TV, radio and online ads in 2014) and canvassing (2.4 million doors knocked and 7.5 million calls made). It outlines the development and testing of a “closed-loop data system,” online predictive dialing system and mobile canvassing app “that integrates household data, GPS mapping, and survey software.”

The prospectus also makes the moral case for slashing government, asserting that free-market conservatives need to do a better job debunking the notion that they’re out for themselves. “We must demonstrate our commitment to helping people improve their lives and economic fortunes,” it says, while demonstrating how social welfare programs “are hurting the very people the Left purports to help.”

That mission undergirds the efforts of the entire Kock network, which is planning an ambitious $889-million spending plan in the run-up to the 2016 election. That will go toward a wide variety of groups that are not engaged in electoral politics — from universities to think tanks to public policy advocacy outfits — as well as super PACs and other political groups. It’s all part of a long-term plan to fundamentally shift American politics and government to the right on fiscal issues

As the AFP briefing put it “While most organizations focus only on short bursts of activity around elections or legislative sessions, AFP is investing in creating a continuous culture of freedom, year-after-year.”