Koch Industries Distances Itself From Obamacare Fight

Photographer: Win McNamee/Getty Images

The letter comes after U.S. Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday on the Senate floor that the Koch brothers “have been raising and spending hundreds of millions of dollars to get us where we are right now” and posted similar comments to his Twitter account. Close

The letter comes after U.S. Senate Majority Leader Harry Reid, a Nevada Democrat, said... Read More

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Photographer: Win McNamee/Getty Images

The letter comes after U.S. Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday on the Senate floor that the Koch brothers “have been raising and spending hundreds of millions of dollars to get us where we are right now” and posted similar comments to his Twitter account.

Koch Industries Inc., a holding company led by two billionaire brothers who help finance Republican-aligned public policy groups, sent a letter to U.S. senators yesterday saying the company hasn’t advocated using Obamacare as leverage in the debate about government spending.

Congress should focus on “balancing the budget, tightening and cutting government spending, curbing cronyism, and eliminating market-distorting subsidies and mandates,” the letter said.

The correspondence was a response to criticism of the Koch brothers by Senate Majority Leader Harry Reid and it came as two distinct Republican strategies on addressing a partial government shutdown, entering its 10th day, are becoming clear.

Some companies, business groups and Republican lawmakers are stepping up their calls to end the shutdown -- precipitated by the party’s push to derail Obamacare -- and to shift the debate to government spending cuts. Others, including small-government Tea Party supporters, are urging lawmakers to hold firm against funding President Barack Obama’s Patient Protection and Affordable Care Act of 2010.

The potential schism between groups that typically rally around Republicans could prompt fractures among lawmakers and muddy the party’s messaging in what could become high-stakes negotiations with the White House and congressional Democrats.

Quoting Lincoln

Tea Party Patriots national coordinator Jenny Beth Martin warned of such an outcome in a statement yesterday.

“We must remember the reason we are fighting and remain united in our opposition to Obamacare,” she said. “To quote President Lincoln, ‘A house divided against itself cannot stand.’”

The shutdown began Oct. 1 after House Republicans insisted that any stopgap funding bill to keep the government running, known as a continuing resolution, defund Obamacare. The Democrat-led Senate refused.

Reid, a Nevada Democrat, said on the Senate floor Oct. 8 that the Kochs “have been raising and spending hundreds of millions of dollars to get us where we are right now,” and posted similar comments to his Twitter account.

Charles and David Koch -- the world’s sixth and seventh richest people, worth a combined $88.6 billion, according to the Bloomberg Billionaires Index -- are active in promoting small-government policies.

Pairing Spending

Americans for Prosperity, which the Kochs co-founded and David Koch said last year he continues to finance, in a news release on Oct. 8 urged Congress to “pair critically needed spending reforms with an increase in the nation’s debt ceiling.” Separately, the group is calling for a full repeal of Obamacare.

“We just see our role here as going directly to Americans and talking to them about the impact of the law, rather than making it a Capitol Hill fight,” Americans for Prosperity spokesman Levi Russell said in a statement yesterday.

That stance echoes the Koch Industries letter.

Reid gave “false information,” wrote Philip Ellender, president of government and public affairs of the Koch Companies Public Sector LLC. Koch Industries is a closely held company based in Wichita, Kansas, whose ventures include biofuel and fertilizer makers and commodity-trading services.

“Koch believes that Obamacare will increase deficits, lead to an overall lowering of the standard of health care in America, and raise taxes,” Ellender wrote. “However, Koch has not taken a position on the legislative tactic of tying the continuing resolution to defunding Obamacare nor have we lobbied on legislative provisions defunding Obamacare.”

Ryan Omission

House Budget Chairman Paul Ryan, a Wisconsin Republican, wrote in an editorial in yesterday’s Wall Street Journal that shutdown negotiations should center on reducing government spending and revising the tax code. The editorial didn’t reference the health-care law.

Some lawmakers are saying they need businesses to speak up about the importance of ending the stalemate, especially because the government could exhaust its borrowing authority as soon as Oct. 17.

“Where is everybody?” asked Senator Michael Bennet about the business community. “Part of it is people averting their eyes from a mess they don’t want to associate with,” the Colorado Democrat said yesterday at a Bloomberg Government breakfast.

He added: “We need them on this issue.”

Retailers’ Appeal

The National Retail Federation, the trade group for an industry whose employees this year have given 60 percent of their donations to Republicans, yesterday called on lawmakers to pass legislation funding the government and raising the debt ceiling. The group made no mention of the health-care issue.

Some small-government advocacy groups don’t want to give up the health-care fight.

The Tea Party Patriots, which says it has 3,400 chapters across the country, in a statement criticized Ryan’s editorial for “failing to address the concerns the American people have over Obamacare.”

“Not once did Mr. Ryan mention the program that is hurting hard-working Americans,” Martin said.

Heritage Action for America, a Washington-based group that advocates for smaller government, said health care shouldn’t be exorcised from the budget debate. Heritage led the “defund Obamacare” effort by holding a nine-city town-hall tour in August to rally opposition to the law.

‘Core Fight’

“Anything that comes out of this has to address the core fight, which is Obamacare,” Michael Needham, chief executive officer of Heritage Action, said yesterday at a breakfast in Washington sponsored by the Christian Science Monitor.

Heritage is a nonprofit that doesn’t disclose its donors. Needham said the Kochs gave $500,000 to the group, adding that they weren’t the largest single contributors. He declined to name other donors.

Rob Tappan, a spokesman for Koch, said in an e-mail that “neither Charles Koch nor David Koch has ever given personally to Heritage Action.”

Rather, the Heritage money from the Kochs could have come through a conduit. Freedom Partners, an Arlington, Virginia-based nonprofit that is run by a former Washington liaison of the Kochs and which includes as board members several Koch executives, gave Heritage $500,000, according to Internal Revenue Service documents.

To contact the reporter on this story: Julie Bykowicz in Washington at jbykowicz@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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