When Trump delivered his inaugural address, he made it clear that he was upending the political order. His voice was booming and severe.
“Today we are not merely transferring power from one administration to another, or from one party to another—but we are transferring power from Washington, DC, and giving it back to you, the American people,” Trump said. His vision was near-apocalyptic, and he talked about “American carnage” that only his administration could stop. He managed to offend and alienate virtually every politician and former president sitting in the gallery behind him.
“For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost,” he said. “Washington flourished—but the people did not share in its wealth. Politicians prospered—but the jobs left, and the factories closed. The establishment protected itself, but not the citizens of our country.”
Charles Koch was considered part of this establishment. And everything Trump stood for was a threat to Charles Koch’s entire political project. Donald Trump’s presidency had the potential to destroy everything Charles Koch had built. Charles Koch’s political blueprints called for the federal government to retreat from virtually any intervention in the marketplace. But if Donald Trump had an underlying political philosophy, it was that the tools of government should be used aggressively to steer economic activity toward the benefit of the people who voted for him. Trump promised to tear up trade deals and impose tariffs to protect the white, working-class, and affluent voters who put him in office. Trump spoke in favor of punitive taxation on companies that thwarted this vision, and spoke favorably of entitlement programs that were funded by taxes on the rich. Alarmingly, Trump also lashed out in personal ways, at business leaders who antagonized him, using Twitter as his weapon of choice. Trump singled out as targets Jeff Bezos, CEO of Amazon, and the Carrier air-conditioning company, claiming that their economic decisions harmed America. It was clear that this same vindictive power could be used against Charles Koch. Based on Trump’s campaign rhetoric, it seemed entirely plausible that Trump would be willing to squeeze Koch Industries with all the available levers of government power, from the IRS to the EPA to the simple use of the White House Twitter account.
Charles Koch responded to this threat with a strategy that bore his hallmarks: patience, persistence, and a reliance on his competitive advantages. To counter Trumpism, the Koch political machine employed a strategy that could be called “block-and-tackle.” Charles Koch would “block” Trump when Trump deviated from Koch’s wishes—when he imposed tariffs, raised taxes, or supported entitlement programs, for example. But Koch Industries would help Trump “tackle” the things that Charles Koch wanted to see demolished, helping the Trump administration when they did such things as dismantle regulatory agencies, cut taxes, or nominate economically conservative judges to the federal bench and the Supreme Court.
For this strategy to work, however, Charles Koch needed to prove that his political machine was still relevant and still powerful within Donald Trump’s Washington. As luck would have it, Koch got the opportunity to do this very early in Trump’s tenure, just two months into the life of the Trump administration.
In March of 2017, Donald Trump had no choice but to venture into territory where Koch Industries had the upper hand. It was time for Trump to turn his campaign promises into reality and to show that he really was the deal maker who could solve Washington’s dysfunction. This appeared entirely feasible—Republicans controlled the House, the Senate, and the White House. There was nothing standing in the way of Trump’s agenda. But to pass the agenda, Trump had no choice but to work through Congress. He had to engage in the complicated, maddening process of writing and passing laws. This is the terrain where Koch Industries was waiting for him.
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The first fight was to repeal Obamacare. Republicans had been trying to do this for more than six years and now they had their chance. This seemed like the ideal project for Charles Koch to support. Obamacare, just as Charles Koch had feared, had become a massive government program that redistributed wealth from the very rich to the working class and the poor. The government estimated that Obamacare raised the tax bill of the top 1 percent of American earners by about $21,000, steering about $16 billion from the richest Americans to the poorest, largely in the form of health insurance subsidies.
Throughout his campaign, Trump promised to both repeal the hypercomplex law and replace it with something else. And this is where the problem lay. In Charles Koch’s eyes, Donald Trump did not seem sufficiently dedicated to the job of tearing this system out, root and branch, and replacing it with nothing. Trump seemed open to compromise.
Trump made statements along these lines that were particularly worrisome to libertarians, showing that his allegiance to free markets was questionable. After taking office, Trump made promises that were too large to fill without significant government intervention, promises more grandiose than even Barack Obama would have dared to make.
“We’re going to have insurance for everybody,” Trump told the Washington Post during an interview in January. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”
While potentially offensive to Charles Koch, Trump’s statements were firmly grounded in political reality. Millions of people depended on Obamacare. The Congressional Budget Committee estimated that even a limited repeal of the law would take health insurance away from fourteen million people the first year, and twenty-four million more people the following decade. Trump and other Republicans sought to avoid such a political calamity. They planned to seek a middle ground that would retain some benefits and subsidies for the working class and the poor.
There was another reason for Trump to compromise. It would help the Obamacare repeal effort move quickly. Trump wanted to achieve a legislative storm of greatness during his first hundred days in office that would rival FDR’s. He would repeal Obamacare, then pass tax reform, then pass an infrastructure bill, then pass an immigration law that included construction of a wall along the border with Mexico. With these accomplishments behind him, Trump would emerge as the most effective president of modern times.
Charles Koch helped ensure that this agenda was derailed. The Koch political network would attack the effort to repeal Obamacare, and in doing so it would win a second victory by proving its power and ensuring a place at the bargaining table for Charles Koch.
On March 6, the House of Representatives unveiled a plan to repeal and replace Obamacare with a bill called the American Health Care Act. The next day, Americans for Prosperity mobilized against the plan, just as it had mobilized against Obama. Large tour buses, chartered and paid for by Americans for Prosperity, arrived in Washington, DC, on March 7, unloading hundreds of passengers at an intersection near Union Station, within view of the Capitol dome. The crowd looked like tourists at Disney World. Most of them were older, congenial, and clearly enjoying the free trip to the nation’s capital. They were directed down the sidewalk by helpful employees in AFP windbreakers, who led them into the quiet, marble-tiled lobby of an upscale office building. The volunteers were ushered into elevators and sent to the building’s rooftop, where they walked into a lavish event space, covered by a party tent, with a beautiful view of the city. As they entered, the volunteers were given glossy placards with a sleek logo for the day’s event, reading “You Promised.” The message of the day was that these voters had been let down by Congress members who were balking on their years-long promise to repeal the health care law.