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Charles Koch
Charles Koch, head of Koch Industries, on Feb 27, 2007.  Bo Rader—Wichita Eagle/MCT via Getty Images

Charles Koch Urges Conservatives to Skip 'Corporate Welfare'

Conservative billionaire Charles Koch told his ultra-rich friends that they face a “life and death” decision whether to keep lobbying for tax breaks and government subsidies.

“Business leaders (must) recognize that their behavior is suicide, that it is suicide long term. To survive, long-term, they have to start opposing, rather than promoting, corporate welfare,” Koch told about 450 allies at an Orange County, Calif., summit that began Saturday.

With the Pacific Ocean behind him and friendly CEOs sipping wine nearby, one of the biggest political donors in the country said it is time for conservatives to start eschewing tax breaks.

“Obviously, this prescription will not be an easy pill for many business people to swallow. Because short term, taking the principled path is going to cost some companies some profits, as it will for Koch Industries,” the 79-year-old Koch said. “But long term, it will allow business people to continue to own and run their businesses, which none of us will be able to do, in my view, in the future otherwise.”

He pointed to big banks that took “virtually free money from the Fed” and bailouts in exchange for regulations. “Now, the chickens are coming home to roost,” Koch said. “The Fed is taking control of these banks. The Fed now decides what businesses they can be in and how they run those businesses.” Koch said “regulators, auditors, controllers” are implanted at the banks to keep tabs. The banks, Koch argued, end up making political donations to avoid too much oversight.

Koch warned that other businesses would be next if their leaders continue taking government subsidies. “This means stopping the subsidies, mandates and special privileges for business that enriches the haves at the expense of the have-nots,” Koch said.

It’s that class distinction that Koch has made the focus of seminars at the luxurious resort. “In my view, we’re heading toward a two-tiered society, a society that is destroying opportunities for the disadvantaged and creating welfare for the rich,” Koch said. “Misguided policies are a creating a permanent underclass, crippling our economy and corrupting the business community—present company excepted, of course. But what this is doing, then, is turning more and more Americans against what they mistakenly believe is free enterprise.”

With his brother David, Koch is among the most powerful players in Republican politics by virtue of their wealth. Forbes estimates he and his brother is each worth $40 billion. They are tied for the No. 4 spot on Forbes’ rankings of the richest Americans.

Koch’s opinions shape opinions among rank-and-file conservatives and congressional leaders alike. In fact, five White House hopefuls planned to cycle through the three-day summit in Dana Point, Calif. At least 14 members of Congress or Governors were on-hand, as well, and former Indiana Gov. Mitch Daniels was set to hold a private salon about campus speech later Saturday.

Koch’s stinging words came as the allies who support the Koch-backed network of social and political groups mingled with like-minded leaders. The Koch-backed network plans to spend $889 million ahead of the 2016 elections, although officials are quick to point out that not all of that is explicitly political.

Some of it, advisers say, will be spent pushing against what Koch sees as unjustifiable corporate welfare.

LIFE's Best Convention Photos: The GOP

Scene at the 1968 Republican National Convention, Miami Beach, Florida.
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Scene at the 1968 Republican National Convention, Miami Beach, Florida.Ralph Crane—Time & Life Pictures/Getty Images
Scene at the 1968 Republican National Convention, Miami Beach, Florida.
Scene at the 1968 Republican National Convention, Miami Beach, Florida.
Go-go girl and delegates during the 1968 Republican National Convention, Miami Beach, Florida.
Arizona politician and future U.S. Attorney General Richard Kleindienst (left) confers with Nebraska's Richard Herman during the 1964 GOP National Convention in San Francisco.
Ronald Reagan at the 1964 Republican National Convention in San Francisco.
Scene during the 1960 Republican National Convention in Chicago.
Not originally published in LIFE. During the 1960 Republican National Convention in Chicago, Martin Luther King Jr. leads a demonstration calling for a strong Civil Rights plank in the GOP campaign platform.
Scene during the 1960 Republican National Convention in Chicago.
Scene during the 1960 Republican National Convention in Chicago.
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Left to right: President Dwight D. Eisenhower, his wife Mamie, Richard M. Nixon and his wife, Pat, at the 1956 GOP National Convention, San Francisco, California.
Scene at the 1956 Republican National Convention, San Francisco.
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Control booth, 1952 GOP National Convention in Chicago.
Bertha Baur, a prominent figure at conventions for decades and a long-time member of the Republican National Committee, in an elephant hat at the 1952 GOP National Convention in Chicago.
Pennsylvania Governor John Fine (left) and Arthur Summerfield chat in private during the 1952 Republican National Convention in Chicago.
Republicans hold an informal conference in a kitchen during the 1952 GOP National Convention in Chicago.
Vice-presidential nominee Richard Nixon and his wife Pat talk with photographers during the 1952 GOP National Convention in Chicago.
Scene at the 1952 GOP National Convention in Chicago.
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Scene at the 1948 GOP National Convention in Philadelphia.
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Delegates listen to Herbert Hoover during the 1944 Republican National Convention in Chicago.
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A young Republican rests on a sofa in the Hotel Adelphi during the 1940 GOP National Convention in Philadelphia. ("Van" is Sen. Arthur Vandenberg of Michigan, long considered a front-runner for the GOP nomination; instead, the Republicans nominated Indiana's Wendell Willkie, who lost the election to the Democratic incumbent, FDR.)
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