In the era of Donald Trump, New England’s biggest GOP donor is funding Democrats – By Annie Linsky (bostonglobe.com) / April 15 2018
Boston hedge fund billionaire Seth Klarman lavished more than $7 million on Republican candidates and political committees during the Obama administration, using his fortune to help underwrite a GOP takeover of the federal government.
But the rise of Donald Trump shocked and dismayed Klarman, as did the timid response from the Republican-controlled House and Senate, which have acquiesced rather than challenge the president’s erratic and divisive ways. So, in an astonishing flip, Klarman, at one point New England’s most generous donor to Republicans, is taking his money elsewhere: He’s heaping cash on Democrats.
He’s given roughly $222,000 since the 2016 election to 78 Democrats running for Congress, according to federal election data from 2017 and a preview of Klarman’s first-quarter donations provided to the Globe by a person familiar with his giving.
“The Republicans in Congress have failed to hold the president accountable and have abandoned their historic beliefs and values,” Klarman said in a prepared statement to the Globe, opening up for the first time about the reasons behind his change in political giving. “For the good of the country, the Democrats must take back one or both houses of Congress.”
Klarman said he’s financing his new political donations using his share of the $1.5 trillion tax cut Trump signed into law late last year.
“I received a tax cut I neither need nor want,” said Klarman, who Forbes estimates is worth $1.5 billion. “I’m choosing to invest it to fight the administration’s flawed policies and to elect Democrats to the Senate and House of Representatives.”
His money has been spread out to Democrats running for 56 House seats and 22 Senate contests, including checks to Chuck Schumer, the highest-ranking Democrat in the Senate, and Adam Schiff, the top Democrat on the House Intelligence Committee.
Klarman plans to continue writing checks, according to the person familiar with his giving.
Klarman has also donated nearly $2 million to a host of nonprofits pushing issues like gun control, protecting the environment, and bolstering the rule of law, according to the person briefed on his giving — all areas that Democrats say are under attack in the Trump era.
Many traditional Republican donors have privately expressed concern over Trump and the direction he’s taking the country, yet they’ve largely decided to keep their views quiet and their giving patterns unchanged. Some want to work with the administration on some pet issues, or they fear antagonizing the president. But as Trump has become increasingly isolated and unpredictable — even musing about overhauling the Justice Department last week to limit the criminal investigation into possible Russian meddling in the 2016 election — chatter about defection is growing.
“These guys, a lot of them, are fiscal conservatives, and the only thing they see coming out of Trump is the daily crazy tweets,” said Rick Wilson, a Florida Republican who does not support Trump. “The contempt for him is profound among the donor community.”
It will be hard to know if Klarman, in his dramatic shift, is an outlier or part of a larger trend until more federal campaign contribution data become public in coming months.
Libertarian billionaire brothers David and Charles Koch, whose millions have financed much of the rising influence of the far right in the GOP party structure, occasionally issue statements criticizing Trump on particular issues where he is not in line with their philosophy. But thus far, they have continued to financially support the Republicans who back Trump.
A spokesman for the National Republican Congressional Committee, which Klarman has funded to the tune of $200,000 since 2012, declined to comment about Klarman’s change of heart.
Klarman has never identified as a Republican, and is a registered independent. But his support for small government and bolstering the military has put his philosophy in line with Republicans in recent years.
Klarman’s money comes from investing. He’s the CEO of Boston’s Baupost Group, a hedge fund with $30 billion in assets that is run from his 17th-floor office in the Back Bay. The firm specializes in value investments — snatching up shares of underperforming companies with an expectation that they’ll do better in the long term.
That has included buying up Puerto Rican debt, which has prompted an outcry at Harvard University, including organized protests at a speech Klarman recently gave at the business school. About $2 billion of Harvard’s $37 billion endowment was invested with Baupost-controlled funds as of January of this year, according to Hedge Clippers, a New York group that scrutinizes hedge funds.
Though Klarman isn’t well known outside finance circles, in part because he almost never gives on-the-record interviews, he has a dedicated following among top investors.
The Economist has nicknamed him “the oracle of Boston,” putting him in the same elite class as investor Warren Buffett. And his currently out-of-print book, “Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor,” was selling for $873 on Amazon last week. Because of the steep price, some investment shops pass Xerox copies of the manual from staffer to staffer.
Klarman also is a part owner of the Fenway Sports Group, the Boston Red Sox parent company that is led by principal owner John Henry. Henry is also owner and publisher of The Boston Globe.
Trump was never Klarman’s candidate. Klarman wrote six-figure checks during the 2016 campaign to super PACs supporting then-New Jersey Governor Chris Christie and Florida Senator Marco Rubio. There are no federal limits restricting giving to super PACs.
Once Trump became the party’s nominee, Klarman donated $5,400, then the federal maximum, to Hillary Clinton.
After Trump prevailed in November, Klarman included a lengthy screed against the new president in his annual letter to investors.
“Personally, I’m troubled by Trump,” he wrote in a January 2017 letter to investors, that was first reported by The New York Times. “I’ve taken the view that each of us can be bystanders, or we can become upstanders. I choose to be an upstander.”
He started his larger shift in giving early in 2017, giving to support Democrat Jon Ossoff, who ran unsuccessfully in a June special election to fill a vacant House seat in Georgia. He also backed Doug Jones, the Democrat who won a special Senate election in Alabama after his Republican opponent was accused of assault by multiple women.
He also sent about $34,000 to the Democratic Congressional Campaign Committee, which is aimed at electing a majority of Democrats to the House of Representatives. For context, in 2016, Klarman gave nearly $200,000 to the Republican National Campaign Committee, which is geared toward electing Republicans, and none to the comparable Democratic committees.
His philosophy, as gleaned from his recent letters to investors, is more focused on finding ways to check Trump than a wholesale embrace of the Democratic Party.
“Democracies are fragile and cannot be taken for granted,” Klarman wrote to investors in the January 2017 letter.
“Democratic norms are crucial for the perpetuation of democracy. Political stability depends on the rule of law and adherence to precedent.”
He kept up the drumbeat this year. “Governing is not a joke or a farce, and it is certainly not a reality show,” Klarman wrote in his more recent letter wrapping up 2017, portions of which were obtained by the Globe and haven’t been previously reported.
“Tragically, Donald Trump has displayed few of the character traits required in a US president, and no aptitude for or interest in developing them.”
He is particularly concerned about Trump’s attack on institutions that are fundaments of democracy, like a free press, an independent judiciary, the legitimacy of elections, and the importance of honesty.
Some of his giving has been to nonprofits geared toward bolstering those ideals.
This includes a gift to United to Protect Democracy, a newly formed organization led by former Obama administration aides, which funds legal battles related to perceived presidential overreach. Part of that effort involved filing a brief expressing concern that Trump’s dislike for CNN is motivating his Justice Department to block a merger between AT&T and Time Warner., CNN’s parent.
“Many say reflexively that America and its institutions are strong, so strong that they will survive a Trump presidency. And they probably will,” Klarman wrote in his 2017 year-end letter. “But democracy must never be taken for granted.”
