Position. They are challenging, but yeah. A good economy, which we are starting to see, alleviates the dangers. But it is still a challenging environment for republicans. There is no doubt about that. Steve and you now have more than 40 House Republicans who are either seeking another office or stepping down this year . Mr. Phillips right. Those are high numbers. You saw another one in from new jersey just this past week. It is a challenging environment. In some ways, having folks not tied to washington and the antid. C. Sentiment that is out there right now could be a good thing in some of these districts, actually, because they are not tied to what is happening in washington and they can run as their own person. Steve what race worries you the most in terms of the house or the senate . Which one are you keeping a close eye on . It could be the barometer for the Midterm Elections. Mr. Phillips i think when you look at some of the democrats who are up in the senate, we will find out if heitkamp and donnelly and mccaskill can be so partisan, vote against the tax cuts, and still make it. Im really interested to see what happens there, because they clearly chose a more partisan bent over legislation that was going to be more popular in their states. Im interested in those seats. Steve lets turn to Maggie Severns of politico. Maggie tim, over the weekend you laid out this figure that there are 80 seats that you all think could be in play by november, and that is a big number, bigger than a lot of republicans have guessed. And that would include some seats that people would think of as probably being pretty safe republican seats. Numberswise, can you talk about how you got to the 80 number and do you think it is possible that some other republican groups and republican lawmakers are maybe underestimating the threat to the house . Mr. Phillips i do not think they are underestimating. When you talk to speaker ryan and others they know both the history and the unique circumstances right now with the public being skeptical of washington. And by the way, i think it is a good thing to have some healthy skepticism about whatever party is in power, but i dont think they are underestimating it. The 80 number, we think right now there are 4045 seats that are absolutely in play. But we do think that number will rise. History i do not need keep going back to that if we think about 2010, i think most people in january of 2010 at have said there were 35, 40 democratheld seats in play. That number kept rising and it ended up being almost to 100 by the time you got to the fall. So i think it is a prudent thing to assume that when you look at some of the special elections, the Wisconsin State Senate race that concluded a week or so ago, it was a troubling thing. There is no way around that. But republicans would be wrong to do anything but look at that raise, look at the virginia margin on the governors race. It was not surprising to see gillaspie lose. Virginia is trending a bit blue. We all know that. But the margin, 9 points, that was significant. The left is energized right now. I think it is important to it to understand that, acknowledge it and think of ways you can work on it. Maggie and do you think some of the recent democratic victories are there missteps you have seen republicans take . We have seen democrats win several times. Where do you think or do you think there needs to be any kind of course correction or different strategy Going Forward to make sure republicans keep the house . Mr. Phillips i think it is important to extol the benefits of what happens or what the tax cuts and tax reform bill are doing for the country. And also, the positive impact of getting rid of so many of the obamaera and some bushera regulations and red tape that stifled opportunity and growth. And frankly, they led to a decade in which we never had a year with plus 3 growth, which was devastating. Steve bill allison . Bill so at the donors summit, it was announced that charles and david koch and the network they have put together will be spending 400 million in this cycle at all levels, and they have spent some money and your group has been out promoting things like the republican tax plan and some of the issues in washington. How much of that total has already been spent and how much are you going to be targeting house races in the midterms in terms of the dollar figure . Mr. Phillips you make a great point. That number includes both 2017 and 2018. You are exactly right. And it also includes policy efforts. So we announced roughly up to a 20 million, maybe more effort to explain the benefit of the tax bill that passed to the american people. So it is not just the politics, it is also involving a lot of policy. That is an important point. And we probably spent 35 , 40 of that in 2017. So it is important that is a twoyear number, and it also includes statelevel efforts as well, with the state level and gubernatorial, both electoral and policy fronts. Bill are there other agenda items you will be pushing a policy realm Going Forward . Obviously we have immigration coming up, the infrastructure bill. Are there other issues you will be promoting in addition to spending on the elections and state and local, as well as federal . Mr. Phillips we are encouraged by the president s right to Try Initiative he talked about on the healthcare front. We have supported efforts like that at the state level, and that could be one of the bipartisan approaches. Because i think that arizona, we supported efforts there that were successful to allow right to try for terminally ill americans, and there is some bipartisance. But i really hope americans and i hope democrats will look at that. It is important. It is genuinely not a partisan thing. The infrastructure you mentioned is important. We want to make sure it doesnt end up looking like the obama stimulus of 2009, which did nothing. It was not shovel ready, it it was just a bunch of giveaways. Frankly, to corporations more than anything else and other groups. We want to make sure it is not devolve into that. Steve can i take a step back and ask about the connection between americans for prosperity and charles and david koch . Mr. Phillips sure. Steve what is the connection . Mr. Phillips david is the chairman of the foundation, the americans for prosperity foundation, and charles is key leader in the Broader Network that americans for prosperity, both the c4 and c3, are part of. Absolutely. We are proud to have their support and help and everything else. Steve where do you see yourselves in terms of the rnc and other outside groups trying to help in this Midterm Election . Mr. Phillips the partys job is to get the candidates elected and reelected, and our job is to advance policies. So we look at candidates if they are not with us on most of our issues, then we do not help them with republican, democrat, we focus on the policies. So for example, in the last cycle we decided not to help out with senator kelly ayotte in new hampshire, because on our issues, she was not a champion. We stayed out of that race. She ended up losing by a couple thousand or so votes. Their job is to elect every member of their party regardless , of policy or philosophy. Our job is to advance policy, and so if candidates do not align, we do not help them. Steve and numbers wise, how many are you helping this year, roughly . Mr. Phillips we have not made any final decisions, but we are looking at the 10 democrats on the senate side who represent states that trump carried. They are not voting with the folks in their states. I mentioned earlier heitkamp, donnelly, and mccaskill on the tax cut bill. That is an example of them blatantly choosing partisanship over what is best for the states, and i think it will be held accountable in an effective way on that front. Steve have you ever supported a democrat . Mr. Phillips we have on the state level. There have been some good freemarket champions over the last decade or so. And at the federal level, we would love to. We were genuinely hoping senator manchin or senator donnelly or heitkamp, who talked a good game at the beginning of this year we were hoping, and reached out and said guys, support this tax reform, support some of the cra work, rolling back or getting rid of regulations using the congressional review act, and they have not done that and it has been disappointing. Maggie you had asked about the structure of the network, and i know you have that big 400 million plan for the midterms. Last cycle, there was some talk about and some reports of the koch Network Scaling back its reach. You talked about the spending target for the midterms but will , you have the same staff and a scope with the various groups that are part of the network that are similar to 2014 or other past elections . Mr. Phillips we announced we are spending 60 more than we have spent in the 2016 election cycles, and we will be spending more on any midterm in our networks history. We are exceedingly involved, expanding our efforts in the politics and the policy arena, and i know you were at one of our seminars. You know we are a comprehensive network. There are elements that work to alleviate poverty, joblessness in the higher red level. That is one of the misconceptions about our network. We do policy and politics but it , is more broader than that. Maggie and in terms of boots on the ground in this cycle, you are proud of having grassroots chapters across the country. Are you going to have a similar or greater number of people doing that on the groundwork, or will the money go towards television and that kind of funding . Mr. Phillips we have spent years building field staff, field offices, and volunteers. Florida for example we have 13 , field offices from the dadendle to date county county in south florida. That makes us unique on our side. We do television and radio, and have already done some of that this cycle, but what makes us the most effective operation on our side is that infrastructure. It is hundreds of staff, thousands of volunteers. Steve bill allison of Bloomberg News . Bill you said you are active in 36 states . Mr. Phillips yes, sir. Bill there are 14 states you are not covering. Are there concerns california is one where you do not have members where there are some tough house races, some incumbents who are setting down. Is it a problem not having the network and some of these areas and is it something you would like to expand to in the future . Mr. Phillips we have thought about that. We only get involved in a political situation when two criteria are met. One is the candidate align closely with us on key issues . And two, do we have an infrastructure to make a difference . Not just tv ads, but make a difference. We are not in california, we are not in new york state, we are also not in alabama, which is more of a red state. So we talked about it. , we want to make sure when we go to a state, we can move the needle. Those are states we do not feel like we are ready to move into yet. Steve one of the issues that did not come up in the state of Union Addresses the rising deficit. It will increase the debt over the next decade. The president is calling for 1. 5 trillion in infrastructure spending. Is that an issue your organization has or will address . Mr. Phillips absolutely. We are concerned about spending, and we were deeply disappointed during the years the republicans had the congress, even though it was president obama, who did not care about deficit. They blew through the spending caps. We held republicans accountable and called them on it. It was disappointing. The years we had sequestration held the spending in place. It was not perfect, but it did that. Republicans have failed on spending, and they are still failing on spending. They should get to a regular quarter budget. Regular order budget. They absolutely should. There is no excuse to have the house and the senate, for several years, and not have a regular order budget. We criticize harry reid, and rightly so, when he and nancy pelosi failed to have the budget all the years they were in power. But republicans did the same thing. It is a failure of both parties. You are exactly right. When we look at history, we believe that tax cuts and lowering rates stimulates Economic Activity and increases revenues despite lower rates. We saw that with the kennedy cuts, the reagan cuts, and in the bush cuts in 2001 and 2003, in a time of war. We saw revenues to government go up. So both parties have failed miserably on spending. You are exactly right. Steve we saw it with george w. Bush and the republicans controlling the house, senate, and the white house, and the gop is not addressing it. Mr. Phillips and they need to. We have urged them. You are saying Social Security and medicare is off the table. At least address medicaid, which is a third key entitlement, although technically it is not. There are over 70 million americans on medicaid, which we believe is a failure of obamacare. It is substandard care. At least address medicaid, and we have urge them even now, this year, lets take some reforms and try to provide a Better Service to americans on medicaid, and get a handle on spending. Both parties have failed. I agree with you on that. Maggie lets stick with that idea because i have heard some rumblings about different areas where you think there could be an opportunity for entitlement reform this year, which is obviously a hot button issue and one i think a lot of republicans are nervous to address heading into an election. Can you talk to me about the different areas of entitlement reform you be urging lawmakers to take up . Mr. Phillips medicaid. I will give paul ryan credit. When he was budget chair back in 2011, 2012, when they had the house. They did the ryan budget. You are member those budgets. To their credit, they addressed medicare and medicaid, reformed both, and they were good plans. They were not perfect, no budget is. It was gutsy. They did it, they passed it through the house, everyone knew it would die in the senate with harry reid. It was important that they did that document. It was real. When paul ryan gets picked as vp, the left jumped all over that. It did not work. The share of the vote that romney and brian got on safety five and older went up. The American Public is willing to listen at this point on entitlement reform and spending reform. At a minimum, medicaid. Block granting it to the states, letting them experiment will provide Better Services and save dollars. Maggie and you think it is a feasible policy for republicans to tackle this year . Mr. Phillips i wish they would. I do not see evidence of them doing it yet, but we urge them to do that. And again, the ryan budget in 2011 and 2012, generally reformed medicaid and medicare, and the share of the vote went up with 65 plus voters. Maggie and you are waiting into immigration, as that conversation gets started. I understand it is the first time that the koch network has looked at immigration policy federally. You are different from republicans who are hoping to severely curtail future immigration. Can you talk about how you are approaching that, specifically when it comes to the trumpet Trump Administration and the markers they are laying down. Do you see space to work with them . How are you going to approach this question of whether they will curtail immigration in the future . Mr. Phillips we applauded the president s proposal and on immigration when he cannot after we studied it last week. It was thoughtful and it provides a path for dreamers to have some certainty in their lives, which they deserve and need. We dont think there should be arbitrary cuts to the number of individuals allowed to come here. You can have a reasonable discussion, which our nation should. We would hope it with that meant it would segment out the dreamers, which is a different area. There is a timeframe, march, that is there. We would urge get that done. On the other side, between allowing reasonable approaches to familybased immigration versus the very Real Security and job fields, those are only reasonable debates to have, but hold them separately. Because there is a time, and deadline, timeframe for the dreamers. We have said that. Those who are just in an ad hominem fashion attacking the president on immigration, certainly from the left, it was a nuanced, thoughtful program and deserves better than nancy pelosi and the others have called it. Bill in meetings with reporters, the president said by putting that 1. 8 million number out there, they essentially boxed in the democrats. They were surprised that the number was so high. Did you sense the same thing . Mr. Phillips i think the president put them in a box by providing a pathway for dreamers. It is like the democrats do not want to accept yes for an answer. They are so afraid of their own hard left base, the indivisible folks, the resistance folks. Democrats are horrified of their base and are scared of their own shadow when it comes to the hard left that hates the president. They do not want to take yes for an answer, even on Something Like the president s approach to dreamers. Bill switching back to electoral politics. You talk about getting the right kind of candidates in, and we know that early we had the situation in alabama, with luther strange, and an insurgency. Are there candidates like in like Chris Mcdaniel in mississippi or other challengers to incumbent republicans that are backing over a sitting senator in the Republican Party . Mr. Phillips over the years, we have stayed out of the primaries almost completely. I think there was one or two exceptions, a North Carolina house race. We had an egregious house member there in the last cycle. We stayed out for the most part. There are other groups do that, and that is not really the comparative advantage we bring to the table. Bill and you mentioned some of the senate races, that you were focusing on. Are there incumbent republicans, like in nevada, where you are also thinking of supporting candidates . Mr. Phillips we have not yet ruled out or ruled in individual republicans. We were deeply disappointed with senator heller last year on the health care legislation. Especially on health care here. His effort on tax reform on the committee it was on the finance he played a crucial role in both helping craft the legislation and then standing tall on it. We held a meeting with him this saturday afternoon after the final big vote on the senate side. So that was important for us with re