Analyzes the Republicans' contract with business
Polsky, Andrew J.
After the 1994 election, two kinds of stories began to appear describing relations between the new Republican congressional majority and business groups. One kind depicted business leaders...
...Instead, they found themselves blocked by congressional Democrats...
...2) Please don't write to ask whether we're interested in such and such an article—it makes for useless correspondence...
...Large corporations, caught on the wrong foot, quickly began to play "catching the late train," a familiar Washington political game that finds lobbyists who had backed losing incumbents helping successful challengers retire their campaign debt...
...Even so, businesses report that government regulators have gotten the message and started to back off threats to impose fines for violations or initiate litigation...
...The Republican triumph in the 1994 congressional elections left small businesses delighted and firms linked to the old Democratic establishment scrambling to catch up...
...Their approach is designed to drive a wedge between business and the Democrats and to incorporate autonomous business elements into the dominant GOP coalition...
...Progressive critics of the Coelho strategy of courting business dollars warned during the 1980s that the appeal to business would alienate the Democrats's core liberal, labor, and minority constituencies and leave the party dependent upon unreliable corporate donors...
...In spirit, the Republican House majority evokes the nineteenth-century Jacksonian opposition to any special privileges created by the state...
...For these companies, inside political access was not the issue...
...At stake for the Republicans is nothing less than the final consolidation of the political regime Ronald Reagan began to construct in 1980...
...To borrow a term coined by Theda Skocpol, we might speak of these firms as "state-broken"—they accept that their market environment is constructed in Washington and take prudent political steps to secure their future...
...Here, though, the story gets more interesting, for incoming Speaker Gingrich and his allies made it clear that they intended to rewrite the rules...
...For their part, the new Republican leaders have made it clear they intend to alter the political terrain in such a way as to force corporate leaders to rethink their political habits...
...Many of the public subsidies and tax benefits that tied major corporations to the previous political order are anathema to the new generation of GOP leaders...
...It portrayed business leaders and lobbyists as anxious about the new political order created by the election...
...To its dismay, corporate leaders remained silent, fearful of Republican retaliation and content with the gains from other parts of the Republican package...
...Continued Democratic control of Congress also paid dividends for the party in the form of increased "soft money" corporate contributions...
...Shortly before the 1994 election, the New York Times reported that many large firms that had given heavily to the Republican congressional campaign committees in 1992 had reversed their pattern of political contributions to favor the Democrats...
...This change and others like a reduced capital-gains tax, moreover, have done much to please the Republican populists' small-business constituency...
...As the GOP majority assumed power early in 1995, accounts in this vein told of business representatives moving at will within the corridors of power, brazenly rewriting statutes in their favor...
...One kind depicted business leaders licking their chops, anticipating tax relief and relaxed regulation...
...But if some business sectors made their peace with Democratic power holders, others became ever more alienated...
...They were sensitive in particular to the need to maintain good access to Democratic leaders and committee chairs...
...6) Please bear with us—we have accumulated quite a backlog of material, and you may have to wait for a few issues before you see your article in print...
...They also have faced the task of winning over older Republican lawmakers, very influential in the Senate, who prospered within that order by behaving like their Democratic counterparts—targeting benefits to friendly firms and industries...
...It is too soon to know how well intimidation and inducement will pay off politically for the Gingrich Republicans...
...By the late 1980s, American politics had reached a stalemate, and business firms split over how to respond...
...They propose to choke off a key source of funds for the Democrats, leaving them far behind in a campaign arena dominated by expensive media...
...Although some business sectors remained eager proponents of the Republican agenda, others lost enthusiasm for it...
...Shrewdly, the House GOP leaders moved fast to pass the elements of the "Contract With America" that appealed to small business and large firms alike...
...Most business firms, of course, could not count on special congressional or executive dispensations...
...Policies like tort liability reform, protection against shareholder suits, an end to the alternative minimum tax, and generous "neutral cost recovery" depreciation rules promise more to large firms than they would give up with the elimination of "corporate welfare...
...But the emerging business leadership has risen through the corporate ranks over the past twenty years, a time of mounting skepticism about government in all business circles...
...Confident that their own corporate money supply was endless, the Democrats frittered away the opportunity...
...Use WordPerfect 5.1 if possible, and send us the disk...
...Concerns were also expressed, usually anonymously, over the political tactics employed by Republican leaders...
...To Our Contributors A few suggestions: (1) Be sure to keep a copy of your manuscript...
...Most strikingly, lobbyists were told that the old practice of contributing to both parties had to stop: the new GOP leadership insisted on being the sole beneficiary of PAC largess...
...For example, although automakers had been the direct recipients of a $100 million subsidy to develop next-generation technology, they stood by as this program was slashed because they would gain far more from tort liability reform...
...More important, business interests in public policies are contingent upon the choices that lawmakers frame for the private sector...
...The Republicans pursued this approach with vigor during the first half of 1995...
...As we're not an academic journal, we prefer that they, wherever possible, be dropped altogether or worked into the text...
...Apart from a few brief intervals, American business has always been divided in its politics...
...Business leaders voiced fears that Republican plans, especially those designed to reduce the deficit, cut taxes, and slash corporate subsidies, put the long-term health of the economy at risk...
...Now a cadre of young Republican congressional leaders believe they have been presented with the chance to place the GOP coalition in an unassailable position...
...The group of Republicans that seized center stage after the 1994 election consists of self-styled allies of Main Street rather than Wall Street...
...But the Republican House leaders and freshmen recognize that they can redefine the agenda to present to big business another set of choices...
...They were steadfast supporters of lower taxes, reduced regulation, and increased respect for entrepreneurship...
...Once in office Clinton pursued several policies designed to woo major corporate and financial actors—a conservative plan to close the deficit, the North American Free Trade Agreement, subsidies for new technology under the auspices of the Commerce and Defense Departments, and aggressive promotion of exports...
...Please use inclusive language so that we don't have to make adjustments during editing...
...Leaders of major corporations differed with the Reagan administration over mounting budget deficits, trade policies, tax simplification, and a host of other matters...
...This has presented a challenge for the GOP: although the Gingrich conservatives desire broad corporate support, their natural base lies with small business...
...Executives from smaller businesses condemned government as an overweening presence that imposes excessive tax burdens and unwelcome additional costs (affirmative action compliance rules, baffling environmental standards, excessive occupational safety regulations, and the like...
...Although the two kinds of stories seem at odds, both capture facets of how business has responded to the Republican triumph...
...If there's a delay, it's because a few editors are reading your article...
...The contrasts reflect the complexities of the political position of American business and the strategic moves of the new Republican leadership...
...Disenchanted with the reigning political system, smaller firms threw their weight behind Republican populist-conservative candidates, and a growing number of entrepreneurs decided to enter politics themselves...
...Matters became more dicey when House Republicans, needing savings to offset their tax cut, found it necessary to attack the Commerce Department and corporate subsidies...
...And please remember that we can't return articles unless they're accompanied by a stamped, self-addressed envelope...
...Political scientist Cathie Jo Martin has noted that divided government encouraged divided business...
...THE EDITORS 0 36 • DISSENT...
...On the other hand, Republican populist-conservatives can count on certain advantages as they seek to win over big business...
...These business elements forged close ties to the vocal minority of conservative House Republicans led by Newt Gingrich...
...By contrast, entrepreneurs and smaller businesses remained hostile to the state and to the politicians who defended it...
...Once the Democrats reestablished their control over the Senate, the heads of major corporations and lobbyists for large firms came to appreciate that they would have to conduct their political business with both parties...
...Many younger corporate leaders are very sympathetic to the Republican program...
...This new corporate leadership has begun to discover its public voice in organizations like the Business Leadership Council...
...In short order, though, the effects of Reaganite policies and political circumstances combined to fracture the business community's united front...
...Some corporate sectors have accustomed themselves to close working relations with the state, and have often found it prudent to support the Democratic party...
...Look at our last few issues to see if your idea fits in...
...This was especially true of energy, telecommunications, agriculture, and banking and finance interests...
...The second type of article painted a different picture...
...Soon after the GOP majority assumed power, corporate lobbyists started to report finding Republican members' doors closed if their group had contributed to Democratic losers or had too many former Democratic officials on the payroll...
...Nearly half the newly elected Republicans in Congress have owned or operated their own businesses before coming to Capitol Hill...
...Whether the policy changes survive negotiations with the Senate and a possible presidential veto remains to be seen...
...The Clinton administration expected its corporate backers to rally behind technology and export support programs...
...Speaker Newt Gingrich, minority whip Tom DeLay, and others played hardball, bullying business representatives and demanding that they sever all ties to the Democrats...
...The Republicans have had to offer positive inducements to secure the support of large corporations...
...Small business, by contrast, continued to support such conservative themes as opposition to all tax increases and hostility to regulation...
...Indeed, Gingrich had warned business PACs before the election that their support for the Democrats would leave them frozen out of the picture...
...We will not consider manuscripts submitted simultaneously to several publications...
...5) We're usually quick in giving editorial decisions...
...Or take a chance and send us your article...
...In the past large firms were "statist" because the political order offered direct government subsidies and WINTER • 1996 • 35 American Questions regulations that favored them over their competitors...
...One period when American business displayed striking political unity came in the late 1970s and early 1980s, during the years before Ronald Reagan's first presidential victory and for a short time thereafter...
...Their predecessors rose to influence amid a corporate culture that at least tolerated state economic management...
...Now Newt Gingrich and friends seem likely to make sure the Democrats won't get another chance anytime soon...
...No dot matrix submissions, please...
...Early predictions of a clash between Main Street business and corporate America over issues like export subsidies and affirmative action have proven to be overblown...
...Senate in the 1980 elections, giving Reagan a vital legislative base of support...
...Many of them are free-enterprise zealots who mistrust big business as much as big government (and, in fact, see little difference between the two...
...Guided by House majority whip Tony Coelho, the Democrats also made a strong bid for business support, and centrist and conservative elements in the party worked diligently to refashion the party image and reinforce ties to business...
...Large companies thus made regular campaign contributions through political action committees (PACs) to Democratic and Republican incumbents alike...
...As for the Democrats, they face the depressing prospect that they will be marginalized as the minority party by an increasingly powerful Republican regime...
...During the 1992 campaign he secured the support of a number of corporate heads in high technology fields...
...Intimidation alone, as the Democrats cheerfully predicted, would backfire on their opponents...
...More than that, the Republicans seek to bring into their ruling coalition important corporate elites that had found it advantageous to balance between the two parties throughout the late 1980s and early 1990s...
...However heavy-handed it may be, this approach suggests that House Republicans recognize that their 1994 gains give them the opportunity to complete unfinished political business dating back to the 1980 election...
...It takes more than arm-twisting to draw such elites into a regime...
...By the old rules of the game, this should have sufficed to mend fences and assure corporate representatives of open access to the new congressional power brokers...
...Check all your figures, dates, names, etc.— they're the author's responsibility...
...In 1994 the Democratic congressional majority debated campaign finance reforms that might have checked the dominance of corporafél PACs in congressional elections...
...Meanwhile, the Reaganite triumph remained incomplete in political terms, with the Democrats retaining control of the House and regaining a Senate majority after 1986...
...As other analysts have noted, the increase in consumer, environmental, and workplace regulation during the early and mid1970s provoked a strong reaction on the part of all business sectors, and both large and small businesses mobilized their financial wherewithal to support candidates dedicated to rolling back the regulatory state...
...The cash helped enormously WINTER • 1996 • 33 American Questions in securing a Republican majority in the U.S...
...4) Notes and footnotes should also be typed double-spaced, on a separate sheet...
...3) Type your ms double-spaced, with wide margins...
...If historical patterns had held true then, the Republicans would have emerged as the undisputed majority party, ready to establish a new political regime that would dominate American politics...
...Certain features of the Republican "Contract WithAmerica" were designed to appeal to entrepreneurs and smaller companies—reduced regulatory burdens, a small-business deduction for equipment and 34 • DISSENT American Questions inventory, and an increased estate-tax exemption, to name just a few...
...The divisions within the ranks of business became more pronounced after Bill Clinton's victory in 1992...
Vol. 43 • January 1996 • No. 1
