New England’s top GOP donor isn’t a Republican
Boston billionaire Seth Klarman says most Republicans are “Neanderthals” on gay marriage. He calls Senator Tom Cotton’s letter to the Iranian leaders “divisive.” And he considers the 2010 Supreme Court ruling that ushered in an era of unlimited political donations “a terrible decision.”
Meet New England’s top campaign contributor. He gives mostly to Republicans, but he’s not much of one.
“I’m a complicated guy,” Klarman said to The Globe in a rare interview. “I’m fairly nuanced in my views. I’m trying to do what I think is the right thing for the country.” His registration: independent.
Klarman, president of the $28.5 billion private investment firm The Baupost Group, is part of a new class of political donors who have risen in prominence in the wake of the 2010 Citizens United court decision that allowed unlimited campaign giving. He is new to making mega donations, reaching the top 20 donor list for the first time after he gave more than $3 million in the 2014 federal elections.
A nod from Klarman can help fill up a super-PAC and turbo-charge a lackluster campaign. That means candidates in the Republican 2016 field are already lining up with their hands out, hoping for an audience — or better yet, a check — from Klarman.
“All the major players want to get on his dance card,” said Rob Gray, a Boston-based Republican operative. “The campaign finance laws have changed and big checks in the hundreds of thousands of dollars, or the millions of dollars, are now sought after. Klarman is one of the few people who can, and is willing to, write those big checks.”
Klarman, who just turned 58, declined to say who he would back in 2016 or how much he plans to give to candidates and their supporters. He has lavished praise on Chris Christie and held a meet-and-greet for the New Jersey governor this year. He attended an event for former Florida governor Jeb Bush. He cohosted a recent fund-raiser that was billed as a “luncheon and policy discussion” for Senator Lindsey Graham of South Carolina and has also given to Senator Marco Rubio of Florida.
Klarman said he has mostly backed GOP candidates in recent years because they tend to support two of his top issues: reducing the size of the deficit and investing in a strong national defense. He concedes that at times the politicians he backs do not hold his generally liberal views on social issues, although he tries to prod them in his direction. His views represent the zeitgeist of the classic New England Republican, a breed that has lost ground in recent years.
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.)
Only about five dozen Americans, including Klarman, wrote checks for more than $1 million for the 2014 elections, according to the Center for Responsive Politics. Some of his biggest checks for those elections were made out to Karl Rove’s American Crossroads and Ending Spending, a group trying to reduce the federal budget.
“He’s been a little bit like the five-star restaurant that only the other chefs know about,” said Michael Murphy, a Republican strategist who informally consults with Klarman about giving. “He doesn’t seek the limelight.”
Connecting candidates with other donors in the Boston area is another role Klarman plays. He has held roundtable meetings with about a dozen participants in his offices at Baupost, located in a gleaming building in the Back Bay with commanding views of the Boston Common.
Klarman expressed surprise that he was New England’s largest political giver, and even said he might dial back his largesse to avoid topping the list again. And he does not agree with the Supreme Court decision that allows him to give so much.
“This might sound contradictory to you – why am I writing these checks if I’m against this ruling?” Klarman said. He offered a reason given by donors on both sides of the aisle: Unilateral disarmament isn’t an option. “I feel like large amounts of money are coming from all kinds of places to influence the outcome,” he said.
Many of the political issues that motivate Seth Klarman are rooted in his life story. The son of a Polish immigrant who came to New York speaking no English and rose to became a Johns Hopkins University professor, Klarman says he wants others to have the opportunities that were afforded to his family. He supports a path to citizenship for illegal immigrants as part of an overhaul to the country’s immigration system.
“I love those Republicans who have been leaders in saying, ‘Let’s figure out this path, let’s figure out immigration reform,’ ” Klarman said. The current system, he said, is “crazy” and “not who we are as Americans.”
Klarman’s views on education — he supports charter schools — come from his experiences growing up in Baltimore’s Pimlico neighborhood and attending Baltimore Polytechnic Institute, a magnet school considered one of the best in the city.
After graduating from Cornell University, Klarman went to Harvard Business School. He then landed a job with Baupost, one of the original employees when it started in 1982. The company is among the country’s most successful, with just two losing years since its inception.
Klarman, who lives with his wife, Beth, in Chestnut Hill, is such a force in the investing world that his recent heart surgery merited articles in The Wall Street Journal, Business Insider, and Bloomberg News. His wealth is estimated at $1.47 billion by Forbes. (He has also shown writing chops: He authored a now out-of-print book on investing that sells on Amazon for $1,494.98.)
The family’s philanthropic giving far outstrips what he donates to politicians. A foundation that Klarman started with his wife contained nearly $450 million in 2013, making it the fifth largest in Boston. Gifts from the foundation that year included $26 million to Cornell along with a number of local charities that put him in close contact with prominent Bostonians who support the other side of the aisle.
“We keep our political conversation rather brief out of mutual respect,” said Jack Connors, a Democratic donor and philanthropist who oversees Camp Harbor View, which Klarman helps to fund. “But there is a place in the middle where we agree that things aren’t as functional as they should be.”
In Washington fund-raising circles, Klarman, who is Jewish, has a reputation for seeking out candidates who support Israel. His views are moderate, supporting a separate Palestinian state and opposing building Israeli settlements.
He also occasionally gives to Democrats, including two who tend to support Wall Street: Virginia’s Senator Mark Warner and New Jersey’s Senator Cory Booker.
But the biggest checks have gone to the American Unity PAC, founded by hedge fund operator Paul Singer to help elect gay Republicans. “The right to gay marriage is the largest remaining civil rights issue of our time,” Klarman said. “So I work one-on-one with individual Republicans to try to get them to realize they are being Neanderthals on this issue.”
To help nudge Republicans along, Klarman passes out copies of a book written by his younger brother, a professor at Harvard Law School, that spells out how same-sex marriage laws have changed in America.
One candidate who has, so far, been impervious to Klarman’s pressure is Tom Cotton, the newly minted Republican senator from Arkansas. Klarman was one of 11 contributors who pumped cash into a $2 million organization formed solely to support Cotton’s election. Klarman said he gave because he respects Cotton’s intelligence and his military experience, and believes that the senator has “a serious chance of being a leader at the national level.”
Yet, Cotton earned the ire of the gay rights community recently for setting what was seen as an absurdly low human rights bar for gays. During a CNN interview the senator said American same-sex couples who are worried about discrimination should be glad they aren’t in Iran, where gays are executed.
“I wish he would get behind gay marriage so the gays he went to school with and served with in the military would have the same rights as everyone else,” Klarman said about Cotton.
The gay rights controversy came after Cotton set of a firestorm in another area Klarman follows closely: The American nuclear talks with Iran. The senator made national headlines by persuading 46 of his Republican colleagues to sign an “open letter” to Iranian leaders aimed at undercutting US attempts to negotiate.
“His letter to the Ayatollah turned out to be a divisive idea,” Klarman said.