ANALYSIS — Some of America’s most prominent corporations infuriated Republicans in Congress earlier this month when they protested a Georgia law setting state voting rules. The longtime alliance between the GOP and business seemed on the verge of cracking up. But when it comes to Democrats’ priority bills in Congress, the old allies are still on the same side.
Indeed, corporate America is joining Republicans in opposing both the House-passed voting rights measure, or HR 1, that is Democrats’ answer to the Georgia law, as well as President Joe Biden’s pending infrastructure bill.
While the spat over the Georgia law embarrassed Republicans, business has not joined Democrats in their proposed solution to that law’s election strictures — the voting rights, campaign finance and ethics bill, known as S 1 in the Senate, that Majority Leader Charles E. Schumer called a “must do” on April 13.
The same day, the U.S. Chamber of Commerce, business’s most prominent advocate in Washington, announced that it “strongly opposes” the Democrats’ bill and that it was considering counting votes in favor of it against lawmakers in the group’s annual scorecard. Specifically, Jack Howard, the chamber’s senior vice president of government affairs, in a letter to senators said the bill would impose unacceptable new regulations on companies engaging in electioneering and even lobbying.
Howard echoed Senate Minority Leader Mitch McConnell’s complaints that the bill would turn the bipartisan Federal Election Commission into a body run by the party of the president, and about a provision that would match small-dollar contributions sixfold with public funds.
Two weeks ago, the harsh words of corporate CEOs from Delta Air Lines to Coca-Cola for the Georgia elections law, buttressing Democrats’ case that the law aims to make it harder for minorities to vote, raised the prospect of a new alliance between corporate America and the Democratic Party. But Big Business’ GOP ties run deep. Howard, for one, was a legislative affairs aide to former President George W. Bush and previously for Bush’s father.
Ties run deep
A review of the top officials guiding corporate America’s major trade associations in Washington finds that Howard has plenty of company. Almost all of the trade groups that spent the most on lobbying in 2020 are led by Republicans, or have top lobbyists who are, such as Joshua Bolten, the former George W. Bush chief of staff, who runs the Business Roundtable, and Jay Timmons, the president of the National Association of Manufacturers and former executive director of the National Republican Senatorial Committee.
If companies have gone “woke,” they haven’t yet told their lobbyists. The Business Roundtable, which represents Fortune 500 chief executives, has recently blasted progressives’ push to weaken or eliminate the Senate filibuster. In a statement, the group said that would be “a major shift in the wrong direction” because it would reduce the need for bipartisan legislation and “could lead to unpredictable and unnecessarily erratic fluctuations in major policy.”
The roundtable also opposed Biden and Treasury Secretary Janet L. Yellen’s bid to establish a global minimum tax on corporations to combat competition among nations to lure businesses with low rates, and last month said it was against Biden’s infrastructure plan because its increase in the corporate tax rate would be “counterproductive to the goal of increasing economic growth and job creation.”
The roundtable said it was nonetheless hopeful an infrastructure package would move through Congress, given its support for such investment. By contrast, the National Federation of Independent Business made no such concession. Its president, Brad Close, said simply that it opposed Biden’s plan to raise taxes. Small firms “have been severely harmed by the pandemic and government shutdowns,” Close said, adding that the federation would “remain steadfast in opposing any tax hikes.”
The National Association of Manufacturers put a number on the damage it said Biden’s planned tax increases would cause. “One million jobs would be lost in the first two years, to be exact,” said Timmons, citing a study he commissioned by Rice University economists John W. Diamond and George R. Zodrow.
A Trump truce
Corporate leaders disliked former President Donald Trump. His policies on trade and immigration hurt their bottom lines. They feared he would call them out on Twitter, and they felt pressure from customers to break with him. Even before Trump supporters invaded the Capitol on Jan. 6 after listening to an incendiary speech by the then-president, many companies and corporate executives had shifted campaign contributions to Democrats. After the riot, some said they’d halt political contributions to the GOP, or to politicians altogether.
But those shifts look temporary. Already, progressive activists are raging at airline JetBlue, carmaker Toyota and health insurer Cigna for giving contributions to Republicans after announcing they would reconsider their politicking after the riot.
Sheila Krumholz, executive director of the Center for Responsive Politics, which tracks corporate giving and advocates curtailing it, expects more companies will follow.
“Corporations are pragmatic. They’re not in this out of altruism or patriotism. They have a fiduciary responsibility to return a profit to their shareholders,” she said on the CQ Future podcast.
With Republicans still holding 212 seats in the House and 50 in the Senate, they retain some power and are well positioned to gain more in 2023. Companies will fear a competitive disadvantage if they “stand down and simply cease donations,” Krumholz explained. “If they cease to participate in the same way, that doesn’t mean that their competitors will likewise stand down.”
And the reality is that whatever corporate executives’ dismay over Trump’s vitriolic politics, they very much liked his 2017 tax law.
That law reduced the corporate rate from 35 percent, the highest in the developed world, to 21 percent, and cut tax rates on U.S. companies’ overseas earnings. The Biden plan would raise them significantly.
Meanwhile, reductions in personal income tax rates benefited small firms whose owners pay taxes on their profits at the individual rate. The Biden plan would raise the current top rate of 37 percent, paid this year by individuals with more than $518,400 in income, and couples earning more than $622,050, to 39.6 percent. His plan to eliminate the “stepped up basis” that in many cases reduces to zero taxes on an inherited small business, and to raise the threshold for exemption from the estate tax, would make it harder for small business owners to pass them on.
On April 6, an angry McConnell warned corporations to “stay out of politics” after their protests of the Georgia law. A day later, though, he backtracked, saying he’d spoken inartfully. And on April 13, his comments on taxes were surely music to business owners’ ears. He opposed family farms and small businesses from “being confiscated by the federal tax structure” and echoed the trade association executives in arguing that repeal of the 2017 tax law “would create an extensive loss of jobs in our country, do exactly the wrong thing and move us in the wrong direction.”