PAID IN FULL

The alliance between Big Business and the Republican party is in shambles

Obsession
2016
Obsession
2016

In 2013, Tom Donohue, the pugnacious leader of the US Chamber of Commerce, showed not even the slightest inkling of doubt that bipartisan immigration reform was about to pass. “We’re going to get that bill,” he told an audience of adoring small business owners. After all, he personally helped broker the deal that brought the bill’s sponsors together.

That incident may have marked a high-water mark for the organization. In the end, Donohue didn’t get his bill: It was killed by the same Republicans the Chamber had spent millions to elect, who complained, in effect, that the measure didn’t pay for a big enough wall.

Over the last 19 years, Donohue, now 78, has turned the Chamber into a $250 million-a-year arm of the Republican party—one that held legendary sway over public policy.

In 2003, the Chamber led the passage of a business-backed scheme to create a prescription drug benefit for Medicare, the public health insurance for the elderly. The bill, backed by the Bush administration, was widely seen as a give-away to the insurance and pharmaceutical industries, criticized by conservatives and liberals alike.

The bill ultimately passed the House at 5:52 am after the longest recorded voted in US history, as lobbyists swarmed the floor of the chamber. There were many reports of strong-arm tactics; one retiring congressman was reportedly promised $100,000 for his son’s campaign to replace him, though an Ethics Committee investigation failed to substantiate the allegation.

What money can’t buy

In the 2014 election cycle, the Chamber spent $120 million on lobbying, more than any other group, along with $35 million on independent campaign expenditures and $450,475 in direct contributions—all on behalf of the GOP.

And what did its members get for all that money? Not much. While the Chamber’s army of lobbyists ensures that business interests are well represented in government, it no longer sets the agenda—caught flat-footed by the politics of the Obama era and the rapid shift in the Republican party it catalyzed. The organization’s decade-long, billion dollar-plus bet on Republican politicians seems today to have fizzled as today’s GOP looks skeptically at the policy priorities of US businesses.

Immigration reform seems farther away than ever, and corporate tax reform is gridlocked. Despite a strange-bedfellows alliance with the labor movement, the Chamber could not convince Congress to approve investments in US infrastructure. And the Trans-Pacific Partnership, a trade deal the Chamber backs, faces unusually high Republican opposition. The organization funneled $86 million into the battle against the Affordable Care Act—and lost. In 2010, Donohue conceded, saying “we’re not going to get rid of that bill.”

And its funders have noticed. While the sources of the Chamber’s funding are largely hidden, transparency watchdogs have uncovered some donors, including the Freedom Partners Chamber of Commerce—part of the network established by the billionaire Koch brothers—which contributed $5.5 million between 2012 and 2015.

But the Koch brothers are significantly scaling back their political operation this year, according to National Review, concerned it has reflected poorly on their businesses and isn’t generating policy results. There will be no major Koch-affiliated donations to the Chamber of Commerce this year.

“There was much more an emphasis on getting back to the policy aspect, as opposed to the electoral aspect,” an anonymous insider told National Review.

And we haven’t even gotten to Donald Trump yet.

The businessman who attacks Big Business

The presumptive presidential nominee has discarded all fealty to the free-market conservatism—based on hard money, low taxes, free trade, and minimal regulation—that has been the cornerstone of the business-Republican alliance since the Gilded Age and Nelson Aldrich.

In so far as we can attribute policy views to a pathological liar, Trump has spun Republican economic policy in an entirely different direction. He has called for higher tariffs and other protectionist trade measures. He has suggested that there should be a government role in subsidizing health care. True, he proposed a massive tax cut for the wealthy and corporations—but he has also waffled on it.

Worst of all for the Chamber, he has not hesitated to suggest the system is rigged and that big companies are behind it. He attacked Fortune 100 stalwarts like Ford, Nike and United Technologies for taking jobs out of the country, and had harsh words for Pfizer when it attempted to lower its tax bill by relocating to Ireland.

The Chamber declined to provide any executives to discuss its 2016 political plans, but a spokesperson pointedly noted in an e-mail that “politicians should think twice before bashing business.” Donohue himself has repeatedly criticized politicians who treat business as a “punching bag…to curry votes and tap into widespread voter discontent.”

That’s obviously an implicit dig at the Democrats, whether Senator Bernie Sanders’ anti-corporate campaign or likely-nominee Hillary Clinton’s more moderate take on pro-consumer rhetoric. But for the first time in a long time, it’s also a criticism of the expected Republican nominee.

“Candidate Trump needs to better understand that he is now the titular head of the GOP,” Scott Reed, a Chamber political strategist, told the New York Times. “His words and actions will have an impact on the over 6,000 GOP candidates running for office—from federal races down to the courthouse.

Woes in the time of Obama

Many of the Chamber’s recent struggles can be blamed on the Obama administration; despite its constraints, the White House remains the source of policy energy in the capital.

Obama’s signature domestic victories—health care reform, the Dodd-Frank financial overhaul, repealing the Bush tax cuts for the wealthiest Americans—came in the face of fierce opposition from the Chamber. The same is true of his plan to have the Environmental Protection Agency regulate coal emissions or the FCC’s rules on net neutrality, both currently facing court challenges

This conflict is only natural, given the policy differences between Obama and the Chamber. But there were still plenty of room for the Chamber, Obama and mainstream Republicans to find common ground, areas where public-private partnership would be seen as a win-win.

Yet the Tea Party legislators elected in reaction to Obama’s presidency, who made up nearly half of the House of representatives by 2013, were not interested in deal-making. That has pitted the Chamber against conservative legislators that it helped to put in the majority, whether over an attempt kill the US Export-Import Bank or opening diplomatic relations with Cuba.

A prime example for this narrative is the comprehensive immigration reform bill that passed the Senate in 2013 with support from both parties. Analysts of all stripes predicted that if brought to the House floor, it would pass. Democrats wanted it, businesses wanted it, and most Republicans seemed to agree that their stinging loss in 2012 was in part because they failed to appeal to Latino voters.

But the bill never made it to the floor because the Republican party was already evolving into the Party of Trump faster than conventional wisdom could catch up. The top Republican leader in the House, Speaker John Boehner, knew it would cost him his job to allow a vote over the objections of his party’s newest hardliners, a result only underscored by the shock primary defeat of Majority Leader Eric Cantor by a challenger campaigning for tougher immigration rules.

Killing immigration reform wasn’t enough. The same members ousted Boehner, the living archetype of the Chamber of Commerce Republican. The irony: In 1994, when the Chamber backed Bill Clinton’s health care reform bill, Boehner was a lieutenant in Newt Gingrich’s Republican revolution. He convinced the lobby to switch sides, saying it was “the Chamber’s duty to categorically oppose everything that Clinton was in favor of.”

It’s worth noting that the Chamber has not given direct support to the hard-line members of the Freedom Caucus who ousted Boehner. But, by boosting the GOP majority, it empowered them to control the legislative agenda in ways that go against the Chamber’s major priorities—even as it also checks the Democrats.

A year of reckoning

The Chamber and its donors have waited eight years for the opportunity to replace Obama with a Republican. But even if they succeed, they will have a Republican president who reflects the new emphasis of the GOP. There are some lobbyists, particularly those in the real estate sector, who think that Trump’s election year bluster will fade if elected, and that he will be a useful partner for business. This is a man whose career has largely consisted of being paid to put his name on things; why would he stop just because he was elected president?

But Trump’s populist impulses will make any laissez-faire regulatory agenda more difficult, and his xenophobic and protectionist campaign seems to completely rule out projects like comprehensive immigration reform or new trade deals.

The Chamber says it isn’t playing in presidential politics this year and will focus its 2016 political operations on electing business-friendly candidates to Congress; so far it has spent more than $7 million to back Republicans.

The biggest 2016 risk, from the Chamber’s point of view, is that Trump will enable the Democrats to seize the White House for another four years. While the race is tightening as the partisans coalesce around the parties’ nominees, polling suggests Clinton is likely to turn out the Obama coalition and win, with Democrats potentially winning the Senate alongside her. That would spell the the end of the Chamber’s plans to repeal the Affordable Care Act or Dodd-Frank, much less pass tax reform that’s favorable to corporations.

The Chamber has weathered many questions about its strategy in recent years; Apple publicly left the organization and Nike resigned its board chair in 2009 over the Chamber’s oil-industry driven opposition to climate change rules. So long as money can buy influence in Washington, businesses with controversial policy positions will pay the Chamber to be their voice.

But these are businesses, after all, that want to see a return on their investments. If this election cycle proves to be another multi-million dollar bust, donors may find other avenues to exert their influence, leaving the Chamber of Commerce—once a bastion of the Republican Party’s coalition—with diminished influence in an election year that has torn old alliances asunder.

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