How big business lost Washington

By Steven Pearlstein

"If Congress is not ready to do something, your time working on it is not going to get you much," said David Cote.
"If Congress is not ready to do something, your time working on it is not going to get you much," said David Cote.

With two months to go before the November election, there's one group that already knows it will be a loser: big business.

Indeed, one irony of the 2016 election is that populist antipathy toward corporate America seems to be peaking at precisely the moment when corporate influence on government policy is as low as anyone can remember.

After years of frustration with partisan gridlock and soured relations with both parties, chief executives of America's biggest companies have pretty much given up on Washington, where their opinions and support were once valued.

In Congress, the Republican caucus has been hijacked by tea party zealots who dismiss them as crony capitalists while the Republican presidential nominee demonizes them for shipping jobs overseas.

President Barack Obama's White House is viewed by business as hostile and unyielding, while the Democratic Party has made "corporate greed" a signature issue.

"The difficult relationship between business and government is the worst I have ever seen it," Jeffrey Immelt, the longtime chief executive of General Electric, wrote this spring in his annual letter to shareholders.

"Asked in July if corporate leaders could help end the political dysfunction, Immelt told an interviewer from LinkedIn that the idea of getting 100 CEOs to come to Washington to push some policy is now just "a laugh line."

"At this point, it is doubtful that either party wants to be involved with big business," said Vin Weber, a former member of the Republican House leadership who now lobbies for corporate clients.

"Honestly, I don't think big business matters much anymore," said William Daley, a banker who served as commerce secretary in the Clinton administration and chief of staff in the Obama White House.

"Corporate America is hunkered down, watching the wing nuts of the right and left fire over their heads," said W.J. "Billy" Tauzin, the Louisiana Democrat turned Republican who left a House chairmanship to become the top pharmaceutical industry lobbyist. "Politics has gotten so damn mean they simply don't get involved any longer."

"They deeply resent the political process and politicians of all stripes," said Sen. Michael Bennet, the centrist Democrat from Colorado, of the dwindling number of chief executives who come to see him. "There is a sense of helplessness about having any ability to correct the misbehavior they see in Washington."

For many corporate executives, Washington has simply become an unproductive distraction.

"If Congress is not ready to do something, your time working on it is not going to get you much," said David Cote, chief executive of Honeywell. Cote should know: He was a member of the bipartisan Simpson-Bowles budget-balancing commission and later recruited 130 corporate executives to a "Fix the Debt" campaign. Neither moved the political needle.

"Here's the way these guys look at it," said one government official turned executive. "Should I go to Washington and waste my time or go to China and talk to people who can actually do something?"

With the Republican takeover of the House in 1994. Photo / James A. Parcell
With the Republican takeover of the House in 1994. Photo / James A. Parcell

Don't feel too sorry for the unempowered chief executive. Their companies still spend more than $3 billion a year on Washington lobbyists and offices. And on issues of narrow interest to individual companies or industries - regulations, tax provisions, line-item appropriations - corporate lobbying efforts are as effective as ever.

Where big business has lost its political mojo is on the broad issues affecting the whole economy - the budget, immigration, trade, investments in infrastructure and basic research, tax reform, the environment and health care. It is these issues, which require trade-offs between what is good for the company and what is good for the country, which once demanded attention from executives. In their self-appointed role as stewards of the American economy they would travel to Washington regularly to attend the CEO-only meetings of the Committee on Economic Development or the Business Roundtable and the Business Council, meeting with presidents, Cabinet secretaries and congressional leaders.

"Big business was a stabilising force, a moderating influence in Washington," said Steve Odland, president of the Committee on Economic Development and a former chief executive of Office Depot and Auto Zone. "They were the adults in the room."

Starting in the 1980s, however, that role of "business statesmen" began to fade. Executives came under increasing pressure to focus ruthlessly on boosting company profits and share prices. Those who didn't risked losing their jobs or seeing their companies swallowed up in hostile takeovers. Those who did were generously rewarded with bonuses and stock options. And while some chief executives were lionised on Wall Street and on magazine covers for restoring the competitiveness of American industry, ordinary Americans began to associate them with plant closings, layoffs and extravagant pay.

In the 1990s, their reputation took another hit after the accounting scandals at Enron and WorldCom. And while it was bankers and Wall Street financiers who brought on the financial crisis and recession in 2008, the rest of corporate America got tarred with the same brush. This June, Gallup's annual survey found that, among all American institutions, only Congress is held in lower esteem than big business.

The relentless pressure from Wall Street also eroded the "enlightened self-interest" that made it possible for executives to put the country's interests first. In his book, "The Fracturing of the Corporate Elite," sociologist Mark Mizruchi of the University of Michigan argues that conflicts within the business community - between globalised companies and domestic ones, energy users and energy consumers, old economy companies and high-tech firms - have made it increasingly difficult for corporate leaders to reach consensus. As a result, big business has been largely missing in action on issues such as health care, climate change and even corporate tax reform.

Instead, executives tend to focus on more parochial company or industry-specific issues. One administration official recalled a recent lunch he had with the head of one of the country's largest corporations. "Every issue he brought up was about his own book of business," the official reported.

Political money has also altered the role of business in Washington. It has become an article of faith in the media and among liberal Democrats that the Supreme Court's decision in the case known as Citizens United unleashed a tidal wave of corporate money into the political system. Not true. The level of political spending by corporations and their political action committees has remained roughly the same. But because of Citizens United, corporate money has been swamped by the enormous sums spent by individual billionaires pushing their personal ideological agendas.

"So a company has a PAC that gives away a couple of million dollars - big deal," Chicago's Daley said. The Las Vegas casino magnate "Sheldon Adelson alone is throwing around 20 times that much."

"We could never play with shareholder money at the level being played by the Koch brothers or Tom Steyer," said one top corporate executive, referring to the hundreds of millions spent in recent years by the libertarian energy moguls and the environmentally conscious hedge-fund manager.

It was hard to resist it, being brought into the inner circle of government.

The story of how big business lost Washington would not be complete without a chapter on the ill-fated decision to abandon a long tradition of bipartisanship and align more closely with the Republican Party.

It began with the Republican takeover of the House in 1994, engineered by Newt Gingrich and Tom DeLay, leaders of the party's conservative wing. In what became known as "the K Street Project," DeLay, the new majority leader, assured business lobbyists that their interests would be protected and their access guaranteed - but only if they demonstrated loyalty to the Republican agenda.

"The breakdown in business bipartisanship begins with DeLay," said Jerry Jasinowski, who back then was president of the National Association of Manufacturers. "I can remember people being called on the carpet just for having meetings with Democrats."

"It was hard to resist it, being brought into the inner circle of government," said Weber, then a close ally of Gingrich and DeLay in the House. "When you are a Washington rep and you can say you are now in the room with the policymakers when they are dealing with the issues you are hired to care about, that's a powerful incentive."

No business group was more enthusiastic in taking up the offer than the U.S. Chamber of Commerce, which over the next 20 years increasingly aligned its rhetoric, positions and political contributions with the Republican caucuses in Congress - and, beginning in 2001, with the Bush White House. By 2014, only six Democrats were included among the 268 candidates the Chamber endorsed that election cycle, when the Chamber allocated all but $500,000 of its $35.5 million to Republican candidates. In March of that year, the Chamber's political director told the Lexington (Kentucky) Herald-Leader, "The No. 1 priority of the U.S. Chamber's political program is to make Mitch McConnell the majority leader of the U.S. Senate."

For a time it was a winning strategy, dramatically increasing the Chamber's visibility, influence and financial resources. Other business groups, jealous of its success, also drifted into the Republican orbit. And it worked. The period from 1994 to 2006 was, in many respects, a golden era for business lobbying. Taxes were cut, regulation was reduced and companies won new protections from lawsuits filed by consumers, shareholders and employees. Trade was expanded, and corporate megamergers won easy approval. New rulings made it easier for companies to beat back labor unions.

The price for this success, however, was a dramatic increase in partisanship and polarization. The anti-tax, anti-regulation, anti-government rhetoric emanating from the Republican majority grew so extreme, and the politicians spouting it so hard line, that soon there was no room for compromise.

When business groups pushed for passage of a modest gasoline tax to pay for a long-delayed highway bill, House Republicans refused to consider it. Business leaders watched in horror as Republicans closed down the government and threatened to allow the government to default on its debt. And when some of the country's biggest companies, including utilities and oil companies, formed a coalition to push for a market-based solution to climate change, Republicans pressured executives and directors to abandon the effort. Several did, and the coalition collapsed.

Instead of corporations pushing and prodding politicians, politicians were pushing and prodding corporations, a kind of reverse lobbying that sometimes gets pretty rough. In 2009, Republicans were furious when Tauzin, as head of the Pharmaceutical Research and Manufacturers Association, struck a deal with the White House to support President Obama's health reform bill in exchange for a promise not to set controls on drug prices. Tauzin recalls getting a letter from Speaker John Boehner "telling me that we were selling out." Obamacare passed without a single Republican vote but not before Tauzin had been pressured by some of his members to resign.

The Business Roundtable, representing chief executives of the largest public companies, received similar pressure from the Republican leadership.

"The message was, 'If you help this president achieve the greatest victory of his presidency, don't come running back to us for help,' " one official recalled. "They were very direct, very forceful."

After months of negotiations, a badly divided Roundtable - which had pushed for comprehensive health-care reform for two decades - declined to take a position on the legislation.

In effect, the business lobby had allowed itself to accept DeLay's logic that its first priority was to maintain Republican control of Congress. And before long, big business found itself in the uncomfortable position of supporting a Republican caucus that was increasingly hostile to its agenda while helping to defeat moderate, pro-business Democrats who had once been its legislative allies.

"The Republican Party has been free to take us for granted for many years, and the business community took the Republican Party for granted," said Jay Timmons, president of the National Association of Manufacturers (NAM). Timmons said it is bad enough that Republicans no longer support business on issues such as trade, immigration and infrastructure investment. At the same time, major corporations are scrambling to distance themselves from the Republican agenda on social issues - in particular, opposition to gay rights - which is offensive to many of their customers and employees.

"Frankly, it's a disaster," Timmons said.

"They wound up creating a Frankenstein that they couldn't control," said Mizruchi, the University of Michigan sociologist.

Over the past two years, the Chamber has tried to regain influence over the Republican caucus by opposing a few of the more radical tea party candidates in Republican primaries. Under Timmons, once a top Republican aide on Capitol Hill, NAM has helped moderate Democrats retain their seats. Still, the bitter partisanship is now so hard-wired in Washington's political culture that it will be years before big business can again cobble together the bipartisan centrist coalitions on which it traditionally relied.

"Business chose to ride with the Republicans, and now they have nowhere to go. It's a very precarious position," said Thomas Daschle, former Democratic leader in the Senate whom Republicans defeated in 2004 with strong support from business. Among Democrats, Daschle reports, "there is a lot of resentment that's built up - disgust even - with the way so much of business migrated so comfortably to the far right."

Just as big business has suffered from getting too cozy with the Republican establishment, the Republican establishment has suffered from getting too cozy with big business - at least as measured by the 13 million voters who showed up this year to vote Donald Trump as the party's presidential nominee.

In more than two dozen interviews with corporate executives and business lobbyists over the past month, I found no support for Trump's candidacy. Most of them agreed to speak only if they were not identified.

"If he won, they'd have to shelter in place for four years," joked one Republican consultant with a raft of high-tech clients.

"They are appalled by Trump," a top executive said of his colleagues. "They want to end the dysfunction, not make it worse."

Their fear is that Trump would get the United States into trade wars with Mexico and China and a real war in the Middle East, while initiating mass deportations of illegal immigrants that would disrupt labor markets and lead to social unrest.

Among executives, it certainly hasn't gone unnoticed that Trump's kitchen cabinet of economic advisers includes hedge-fund managers and real estate moguls but no prominent corporate executive. They also resent that, for many Americans, Trump is the model of the successful business executive.

Last month, a group of 50 top executives publicly endorsed Hillary Clinton. Although many were longtime Democrats, from finance and high tech, the list also included a few die-hard Republicans such as Hewlett-Packard chief executive Meg Whitman, former General Motors chief Dan Akerson and Jim Cicconi, who served in both the Reagan and Bush White Houses before becoming head of AT&T's Washington office.

Most top corporate executives, however, have remained quiet lest they become targets of Trump's personal attacks, as did Facebook's Mark Zuckerberg when he dared to challenge Trump over immigration.

"Just about every Republican I know who is in business is apoplectic about the prospect of Trump as president, but they are also afraid of him," one former chief executive said. "They don't want to put their companies in harm's way."

At the same time, many chief executives have what one called "deep, residual anxiety" about Hillary Clinton. Those anxieties have only deepened since the Democratic presidential nominee joined hands with Sens. Elizabeth Warren (Massachusetts) and Bernie Sanders (Vermont) - two anti-corporate crusaders - in her effort to consolidate support from the liberal wing of the Democratic Party.

A few business leaders are coming around to the idea that they might be able to strike deals with Clinton, much as they did with her husband in the 1990s.

"I'd say there is a great interest and willingness to reset a more constructive relationship," the head of one industry association said.

But more common was the gloomy outlook of the longtime Washington lobbyist who said of his executive-suite clients, "They don't see anyone on the horizon in either party who can drain this swamp."

- Washington Post

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter

SIGN UP NOW

© Copyright 2016, NZME. Publishing Limited

Assembled by: (static) on production bpcf05 at 11 Dec 2016 08:49:12 Processing Time: 736ms