For much of recent history, the Republicans presented themselves as the party of business. Pro-low taxes and anti-regulations, the business community regularly and enthusiastically supported Republican candidates over Democrats. According to Demos, for-profit businesses were responsible for $71.8 million in disclosed Super PAC funding in the 2012 elections.
However, in the era following the U.S. Supreme Court’s ruling in Federal Elections Commission v. Citizens United — which declared political contributions a form of free speech — the game has changed. The business community is learning that the relationship it has cultivated with the Republicans since the Eisenhower administration has waned in light of an anti-big business Tea Party and easier sources of funding. In the light of legislators like Sen. Ted Cruz (R-Texas) and the Tea Party Caucus in the House — who advocated for default on the national debt, which would have devastated the business community first and foremost — the business community is finding itself increasingly desperate to be re-included in the national political conversation.
Among known Super PAC contributors, just 132 donors who contributed $1 million or more were responsible for 60.4 percent of all Super PAC contributions during the 2012 election cycle — $396,307,909 in total. Including undisclosed 501(c)(4) contributions and other “dark money” sources, less than 2,800 donors were responsible for 98 percent of Super PAC spending, which constituted nearly half of the $1.28 billion in outside political spending reported in 2012.
“The Senate Conservatives Fund, Heritage Action and FreedomWorks are really just eating the lunch of some of the normal business groups,” said Dan Mattoon, former executive director of the National Republican Congressional Committee.
“Fundamentally, if the business community wants to be more engaged in the grass-roots politics, they have to have a permanent presence there,” Dan Holler of Heritage Action said to Politico. “Arguably, there are local businesses at every level. They could be the conduit for that message. The problem is the policies big business groups are trying to sell don’t resonate outside of Washington.”
Big business’s frustration
The divide between mainstream, big business-friendly Republicans and the anti-establishment Tea Party has constituted a civil war within the Republican Party. The business community has moved toward taking a side in this fight. “While the elections game has changed and the political world has changed, business has not yet adapted to the new realities,” said Bruce Mehlman of Mehlman Vogel Castagnetti to Politico. “The GOP is witnessing a civil war for its soul between Jacksonian populists skeptical of business and Reagan Republicans looking to partner in pursuit of principled progress. If business does not engage in an aggressive new way in support of the Reaganites in GOP primaries, it will soon find itself without educated allies or reliable champions.”
“There is an element of the more independent, tea party coalition Republicans that, frankly, don’t listen to very many people,” said John Engler, former Republican governor of Michigan and president of the Business Roundtable, one of the groups that signed the U.S. Chamber of Commerce letter to Congress, calling for an end to the default standoff. “They are on a mission, often defined on the basis of their view of the world, and they aren’t paying very much attention to what this means beyond maybe their own districts.”
The U.S. Chamber of Commerce has declared its intentions to challenge Tea Party-leaning House members in the Republican primaries, hoping that the inherent fear of being “primaried” may motivate weaker representatives back to the pro-business caucus. “We are going to get engaged,” said Scott Hall, senior political strategist for the U.S. Chamber of Commerce. “The need is now more than ever to elect people who understand the free market and not silliness.” The Chamber of Commerce contributed $35.7 million to 2012 federal elections.
The National Retail Foundation has also indicated that it is interested in “taking a closer look at multi-field primaries” and trying to determine which candidates “may not be the best pro-business candidate.” “I think there are folks who are active with the tea party who are not concerned about the consequences of certain tactical choices and that’s frustrating because there are some tactical choices that have been made that have consequences and we all have to live with them,” said David French, the foundation’s senior vice president for government relations.
Tea Party isolation and big business
Many, however, feel these efforts will ultimately prove futile. First, many business groups — such as the U.S. Chamber of Commerce — have bylaws that prohibit supporting non-incumbents. While the Chamber supported Jim DeMint and John Sununu in the past in their runs against incumbents, these were exceptions from the rule. It is unclear what the Chamber’s primary strategy will be, as it will be determined in their public affairs committee meetings early next year.
Second, from a local perspective, the Tea Party and Wall Street doesn’t intersect. When looking at what the New York Times calls the “Tea Party Core” — the 42 congressional districts that are represented by “[a] determined group of conservatives, many from rural or Southern districts that voted heavily against Mr. Obama [and] drove the House’s confrontational strategy” — no member of the Fortune 100 is located in a “Tea Party Core”-controlled area. When this is expanded to include all Tea Party-affiliated Republican representatives, only four districts represent Fortune-listed companies. In all, House Republicans represent only 27 of the Fortune 100 companies.
As the Tea Party is a locally energized political entity, there seems to be little ideological motivation for it to make excessive outreaches to big business, especially if the accommodation would appear to be against the base’s perceived interests and considering that the Tea Party can obtain campaign funding without having to go the “establishment route.”
“I guess they have their connections, but we’re not hearing directly from them at all,” said Rep. Tim Huelskamp (R-Kan.) during the federal shutdown, in regards to the business community calling for a debt ceiling deal. “Maybe it’s the big difference between corporate CEOs who worry about quarterly reports and my folks at small businesses who worry whether they’re going to hire employee number 51. They’re not worried about the debt ceiling issue.”
Of the CEOs publicly warning about the consequences of a debt default, Huelskamp said, “I’ll admit I have no idea who these folks are. They have nothing to do with my district. They aren’t active and engaged in the political process other than when things like this come up, and they essentially love the status quo.”
This rule of geography, however, is not hard and fast. For example, Cruz, who represents Texas, has 10 of the nation’s largest corporation in his Senate district.
Repercussions to the mainstream
All of this places the mainstream Republicans in a hard place that can ultimately hurt the party in the long run. For example, House Speaker John Boehner (R-Ohio) has largely been big business’s “man in the House.” Since 1989, the business community has given Boehner $52.8 million in campaign contributions, and has donated hundreds of millions more in fundraisers the speaker arranges for fellow Republicans. This has placed Boehner on very shaky ground. Initially, the Tea Party didn’t trust Boehner, feeling he was an establishment figure more interested in maintaining the “status quo” instead of “conservative values.” Now that Boehner has supported the Tea Party in shutting down the government, he now has the Tea Party’s support, but his business community support is waning.
“I don’t think [lobbyists] are going to push John to commit suicide as a political leader,” said John Motley, a longtime lobbyist and former vice president of legislative affairs at the National Federation of Independent Business, to the Washington Post. “It’s more important to have him there than to not have him there.”
Boehner’s power lies in his business connections. In 1998, Boehner was ousted as chairman of the House Republican Conference over the massive loss of Republican seats. Boehner was able to win back the party’s trust by raising record amounts of money from his business connections. Boehner’s flirting with the Tea Party threatens to undermine the primary pillar that made him speaker in the first place.
“He’s been able to raise an incredible amount of money, because people want to invest in John as a reasonable leader and as a guy who gets how the world works in a broader sense, understands business and makes them successful,” said a Republican lobbyist who is close to Boehner. “I don’t think there’s any sense of regret in investing in John or investing in Republicans.”
Shifting business allegiances may ultimately be costly for the Republicans. First, all indications suggest that if and when the Democrats retake Congress, one of the first issues the unified legislature will take up will be campaign financing and finding a way to mitigate Citizens United. If this is the case, this era of nearly unlimited Super PAC money may be a short one.
Second, the Democrats are already attempting to move in on the Republicans and form new alliances with the business community. On Monday, leaders from the Democratic Congressional Campaign Committee wrote a letter to business leaders urging a reconsideration in light of the fact that the Democrats pushed to avoid default.
“If you are as frustrated as we are, we hope you will remember that it is House Democrats who stood with you,” said the letter, cosigned by Rep. Steve Israel(D.-N.Y.), chairman of the DCCC, and Rep. Jim Himes (D.-Conn.), the committee’s finance chairman. “There is currently only one party in the House that is working to create an environment where our economy can grow and thriving businesses can create jobs.”
While the Affordable Care Act remains a wedge between the business community and the Democrats, ultimately, if the Republicans continue to move farther to the extreme right, big business may have no recourse but to head to the left. If that’s the case, the Republican Party — once the party of big business — may be desperate to find a new definition for itself.