Are the Republicans finally losing big business?
On Wednesday, a group of Wall Street chief executive officers came to Washington to meet at the White House. At the end of the meeting, Goldman Sachs CEO Lloyd Blankfein obliquely took Republicans to task. “Individual members of our group represent every point on the political spectrum,” Blankfein said. “But the one thing they have in common is: You can litigate these policy issues, you can relitigate these policy issues in a public forum, but they shouldn’t use the threat of causing the U.S. to fail on its obligation to repay debt as a cudgel.”
Wall Street, which has generally been unruffled by the shutdown, is really freaked out about the prospect of a hint of a whiff of an inkling of a debt default. If U.S. government bonds fall sharply in value, institutions like Goldman Sachs would suffer greatly.
In the Washington Post this morning, Zachary Goldfarb wrote that corporate America may be souring on congressional Republicans’ constant brinkmanship and inability to conduct business as usual. In a world where government spending is about 22 percent of gross domestic product, a government shutdown is bad for all sorts of business. As Goldfarb noted, the Washington, D.C.–based U.S. Chamber of Commerce on Monday put out a letter decrying “a government shutdown that will be economically disruptive and create even more uncertainties for the U.S. economy.”
The response of the Senate and House GOP to such urgings has essentially been: whatever, dudes. The mindless shutdown, the refusal to negotiate a budget, the obsession with Obamacare, and the willingness to storm into a debt crisis is making corporate CEOs annoyed, angered, and even anxious. But it’s nowhere near enough for them to come out and do what would be necessary to change the dynamic in Washington.
This has been going on for years. Big business—including the Chamber of Commerce and many major infrastructure companies—has been arguing for the need for more spending and private-public partnerships to improve America’s ailing infrastructure. The congressional GOP has responded with the sequester and budget cuts. Big business has been begging for comprehensive tax reform that will simplify their lives. The congressional GOP won’t countenance any such reform that involves raising net revenues. And so there hasn’t been any action. Big business desperately wants immigration reform, so it can have access to skilled workers (at the high end) and not have to worry about being busted for employing undocumented workers (at the low end). The House GOP says no. And so on. And so on. Most large corporations have either made their peace with—or actively lobbied for—greater protections and respect for the rights of gay Americans. The congressional GOP is anti. Business claims that uncertainty in fiscal policy hinders its ability to make plans and invest. For the past two years, since August 2011, the congressional GOP has actively and vocally embraced a strategy of hostage-taking and brinksmanship.
But all that hasn’t been enough to form a rupture. The Chamber of Commerce spent tens of millions of dollars on congressional races in the past two cycles, mostly to elect Republicans. And its spending in 2014 will likely go overwhelmingly to support Republican candidates.
Why? Part of it has to do with norms. While there are plenty of Democrats in high places in the corporate world, the CEO class remains overwhelmingly Republican. Big-shot executives have no problem saying nasty things in public about President Obama and the Obama administration (see under: Trump, Donald; Welch, Jack; and Schwarzman, Stephen). And they suffer no social or business sanction as a result. But it’s extremely rare to hear CEOs publicly complain about Republican national figures. Even as President Bush presided over a series of executive debacles (9/11, Iraq, Katrina, the financial crisis), it was extremely rare to hear a CEO publicly question his capabilities or capacity.
But a lot of it has to do with policy. Sure, describing what the House and Senate GOP are doing these days as “policy,” is a lot like describing what early-stage American Idol contestants do as “singing.” But large corporations are concerned with a bunch of large issues. Energy companies want to ward off greater regulation of emissions. Most companies want the government to be hostile to unions. Financial firms want less regulation and defanged or compliant regulators. Industrial firms want fewer environment regulations. Most companies want expanded free-trade deals and tort reform. Above all, they want lower taxes: lower taxes on the income, capital gains, and dividends that CEOs receive, and lower taxes on the income that corporations make. They’d love to bring all the cash they’re holding hostage offshore home without having to pay any taxes. And on each of these issues, the Republicans have their back—and the Democrats don’t. Even on his worst day, the median Republican is far more sympatico to most corporations’ worldview than the median Democrat is on her best day.
There’s no doubt that the congressional Republican Party has changed markedly in the past generation. It’s more Southern, more rural, more socially conservative, and less coastal, less cosmopolitan, and less interested in dealmaking. All of those attributes put it at odds with today’s class of urbanized, coastal, socially progressive, pragmatic, and globalist CEOs. But the differences aren’t yet enough to cause a fundamental change in behavior.
I’ll believe things have changed when JPMorgan Chase CEO Jamie Dimon steps before a microphone and delivers a Krugman-style rant against congressional Republicans.