the BAT. He began to say that he wouldn’t support it. But his opposition was still tepid. “Let’s go ahead and pass [a tax bill] without border adjustment, assuming that we can lower corporate [taxes] to twenty percent, flatten the rate out for individuals,” Meadows told the media outlet Axios.
Paul Ryan was unbending. He stubbornly insisted that the BAT was a necessary part of tax reform, even though his support meant that he was now fighting one of the Republican Party’s largest donor groups. “I obviously think border adjustment is the smart way to go,” Ryan said during a news conference in May. “I think it makes the tax code the most internationally competitive of any other version we’re looking at. And I think it removes all tax incentives for a firm to move . . . their production overseas.”
Americans for Prosperity brought its volunteers and employees to Washington, DC, to lobby against the BAT. They met with lawmakers from Ohio, North Carolina, Florida, and Virginia. The group ran ads attacking the BAT. “It’s safe to say it’s been a seven-figure effort in total, so far,” Tim Phillips told Congressional Quarterly.
If Ryan was fighting for the BAT, it was in part because of the issue of deficits. He had campaigned, for years, on the promise of reducing deficits. Now the Koch network was pushing Ryan to advocate a tax plan that would make the debt balloon. This was not hypocritical on the part of Koch’s network. It revealed, in fact, the network’s long-term goals and values. It revealed Charles Koch’s real thinking about government financing and the role that tax cuts should play.
This thinking was reflected in the political strategy articulated in 1977 by Murray Rothbard, Charles Koch’s partner in funding the libertarian Cato Institute.
In a confidential memo entitled “Toward a Strategy for Libertarian Social Change,” Rothbard said that the goal of cutting taxes was not to just stimulate economic growth. The goal was to fight oppression in the form of state-sanctioned robbery. Libertarians, Rothbard wrote, should not be concerned about creating budget deficits by cutting taxes. The deficits weakened “the enemy,” as Rothbard referred to the state, and strengthened the libertarian’s power to demand that the state reduce its spending and shrink its role in society. Deficits and debt were useful, in other words, because they weakened the state.
Both Republicans and Democrats squabbled about the level of taxation, Rothbard wrote. He continued:
The libertarian, in contrast, should always and everywhere support a tax cut as a reduction in State robbery. Then, when the budget is discussed, the libertarian should also support a reduction in government expenditures to eliminate a deficit. The point is that the State must be opposed and whittled down in every respect and at every point: e.g., in cutting taxes, or in cutting government expenditures. To advocate for raising taxes or to oppose cutting them in order to balance the budget is to oppose and undercut the libertarian goal.
If Paul Ryan felt that Koch’s political network turned a deaf ear to his pleas for fiscal responsibility in the form of a Border Adjustment Tax, he was correct. The effect of the Koch network’s efforts was not to balance the budget but to attack the state itself.
* * *
As Americans for Prosperity was pressing its case publicly, the group was holding private meetings with the Trump administration to help shape the tax bill. One of the most important points of contact between the Koch network and the White House was a forty-seven-year-old official named Marc Short. He had a long history with Koch and a close working relationship with AFP president Tim Phillips. Short joined the Koch network in 2011, where he helped fund Freedom Partners, a nonprofit institution that acted like a clearinghouse for Koch’s donor network. Freedom Partners collected donations and disbursed them to Koch-funded groups. Few people knew the inner workings of the Koch political network better than Short.
Short was the White House director of legislative affairs, the key liaison between Trump and Capitol Hill. He saw firsthand how Americans for Prosperity hindered the Obamacare repeal. He said the administration had learned its lesson by the time the tax bill came around—Short would bring aboard third-party groups like AFP early. He met several times with Tim Phillips in the Executive Office Building, next door to the White House.
Short had worked closely with Phillips over the years. They had a warm rapport. During their meetings, Phillips said that AFP had a handful of key goals with