American Politics, American Business
ON JANUARY 21, 2010, the U.S. Supreme Court handed down a 5–4 decision in the case of Citizens United v. Federal Election Commission, in-flaming anew a classic debate over the place of business in American politics. The five justices in the majority, all conservatives appointed by Republican presidents, held that the First Amendment’s protection of free speech prohibited Congress from limiting political campaign advertising, or “electioneering communication,” by incorporated for-profit or not-for-profit organizations. At a stroke, the ruling appeared to undercut a century’s worth of legislation, from the 1907 Tillman Act to the 2002 Bipartisan Campaign Finance (McCain-Feingold) Act, the specific law it addressed. And while the majority’s language and logic applied to campaign spending by labor unions as well as by business firms, the partisan nature of the decision and the notably muted role of labor in national politics left no doubt that Citizens United paved the way for tremendous campaign spending by powerful, wealthy, and presumably right-leaning corporations. Many conservatives—from elected officials to intellectuals at think tanks and universities to organized activists—hailed the ruling as both a victory for free speech and a clear boon to their political influence. Liberals, on the other hand, howled that the Court had opened what President Barack Obama called “the floodgates for an unlimited amount of special interest money” through “unbridled corporate spending.” For many such detractors, Citizens United seemed to mark the climax of the very process described in this book: the self-conscious campaign by the leaders of major corporations to seize and wield tremendous, self-interested power over American public life.1
The long-term effects of Citizens United remain to be seen. (As of this writing, the issues and candidates promoted by self-described “business conservatives” have seen mixed results; they performed quite well in the 2010 midterms and subsequent state-level battles over union rights but came up notably short in the 2012 presidential and congressional elections.) Nonetheless, the vehement reaction by its critics, capped famously when Obama took the unusual step of rebuking the conservative members of the Court directly to their faces during his State of the Union address, illustrates that battles over the role of business in politics have only grown more heated in the years since the story told in this book came to a conclusion. In the aftermath of the 2008 financial disaster, both the right and the left exploded in populist indignation at the excesses of corporate influence. From the Tea Party Movement’s rants against government bailouts to Occupy Wall Street’s denunciation of the injustices of finance, American politics remained as wrapped up as ever in debates over the power of corporations.
Yet one of this book’s principal arguments is that business’s influence on politics is historically contingent. It is thus vital to recognize that neither “business” nor “politics” in the second decade of the twenty-first century operates in the same way as it did during the 1970s and 1980s. Indeed, the very notion of the “corporation,” both politically and economically, has changed dramatically. For some business theorists, the old concept of the corporation as a social institution is a relic of a bygone era; in an age of high finance, instantaneous communication, just-in-time production, cheap global outsourcing, and overhyped IPOs, the modern corporation often appears as little more than a convenient legal construct. If a corporation merely exists as a “nexus of contracts,” any larger sense of identity disappears as atomized individual economic actors seek immediate material gains for themselves. Indeed, much of modern “corporate America” (a term whose use has skyrocketed since the late 1980s) would appear quite unrecognizable to the men who formed the Business Roundtable in 1972. To be sure, large industrial corporations still contribute mightily to the American economy. The ranks of the nation’s largest firms still include DuPont, General Electric, and, thanks to a timely bailout from the federal government in 2009 that would have made former CEO Thomas Murphy livid, General Motors. Yet those firms’ cultural and political status as “Big Business” has been usurped by newcomers, particularly in the technology, retail, and financial services industries.2
Of these new sectors, finance is by far the most historically significant. As millions of Americans—indeed, global citizens the world over—learned during the financial crisis of 2008 and 2009, the financial services industry wields nearly unfathomable economic power in modern capitalism. Infinitely complex systems of lending and borrowing at lightning speeds among massively leveraged institutions shape every aspect of today’s world, linking a home mortgage in California to a bond issue in Iceland to a pension plan in Greece. Financial interests, from household names like JPMorgan to anonymous but immensely wealthy hedge funds, have largely replaced the titans of the industrial age, both in political influence and in the popular imagination. Indeed, between 1998 and 2009, financial, insurance, and real estate firms spent close to $4 billion on lobbying, dwarfing the political expenditures of all other sectors.3
Consider the following: In 1968, a moderate Republican and governor of a northern industrial state unsuccessfully sought his party’s nomination for president on the strength of his private sector experience. A generation later, his son—also a moderate Republican and former governor of a northern state—ran for president on much the same grounds, finally winning the GOP nomination before losing the general election in 2012. The differences between these two “business” candidates tell a powerful story about the changes in the politics of American business. The candidate from the 1960s, George Romney, never earned a college degree, began his career at Alcoa, and eventually became CEO of the American Motors Corporation; his son Mitt, holder of an MBA from Harvard, touted his “business experience” based on the millions of dollars he had made as a founder of and investor with an “alternative asset management firm,” Bain Capital.4
Yet while the corporate world itself has changed profoundly since the period of business’s mobilization in the 1970s, the organizations that proved so influential to that story remain intact, well-funded, and active. In 2012, the U.S. Chamber of Commerce spent more money on lobbying (some $95 million) than any other single entity and continued to promote itself as the voice of the entire business community. Although Richard Lesher stepped down as president in 1997, his successor, Thomas Donohue—like Lesher a veteran of the ideological battles of the 1970s and 1980s—imbued the organization with the same commitment to small-government conservative principles. Similarly, the National Association of Manufacturers continues to lobby on regulatory, trade, and tax policy, combining the interests of small and large manufacturers, though it largely remains overshadowed in size, clout, and renown by the Chamber. Finally, the Business Roundtable also maintains an active voice in domestic and international economic affairs, providing a forum in which big-business executives can engage government officials. Founding corporations like DuPont, Alcoa, and Campbell’s (but not U.S. Steel) remain, but the group has expanded to include technology firms like Microsoft, Intel, and Yahoo (not Google), as well as retailers like Wal-Mart and Target.5 (See appendix at the end of the epilogue.)
The fragmentation and fracture that characterized the once-unified business lobbying community by the early 1990s largely persisted in the twenty years that followed, punctuated by occasional moments of cohesion on particular issues. During the acute crisis of late 2008 and early 2009, most prominent voices within the business community favored massive government economic intervention, including the Troubled Asset Relief Program (TARP), the Obama administration’s stimulus plan (the American Recovery and Reinvestment Act of 2009), and bailouts of Chrysler and General Motors. Much as they did during the deficit debates of the Reagan years, major employers’ associations put their traditional rhetoric about “free markets” aside in the interest of salvaging the economy, much to the consternation of some of their more ideologically libertarian members. Moreover, the political and economic fallout from the financial crisis placed further strains on these conservative business groups. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which aimed to rectify the regulatory lapses that led to the financial crisis, became law in 2010 despite a fevered conservative opposition that included the most powerful voices within the business community, none more so than financial firms.6
Finally, the Patient Protection and Affordable Care Act of 2010—the most bitterly divisive social legislation since the 1960s—exposed organized business’s persistent limitations. Although the Chamber of Commerce lobbied hard, and successfully, to kill plans for a government-sponsored insurance program known as the “public option,” business as a whole remained ambivalent about health care reform, despite widespread conservative and libertarian opposition. In fact, many pharmaceutical companies and hospitals strongly supported certain reform provisions, and the Business Roundtable endorsed placing “an obligation on all Americans to have health insurance coverage.” Although organized conservatives, from the Republican Party leadership to the local and national organizations who financed the Tea Party, screamed themselves red in the face over “Obamacare,” the business community largely stayed on the sidelines.7
The legacy of business’s political mobilization in the 1970s extends beyond the institutional players and their often ambivalent policy positions. Just as important, the struggles chronicled in this book profoundly shaped the political debates that the United States continues to confront in the second decade of the twenty-first century. While the business world itself has evolved mightily, many of today’s hottest political issues would feel eerily familiar to the corporate leaders whose stories populate this book. Seminal problems that have shaped the American political economy for hundreds of years acquired their modern dynamics precisely during the period of business’s mobilization in the 1970s. The social and economic categories, the political language, and the underlying anxieties that prompted Lewis Powell to pen his famous memorandum and pushed Roger Blough to assemble his Roundtable continue to animate the politics of business. From regulation to taxes, trade to organized labor, our world is their world, and the powerful critique of New Deal–style liberalism that organized business leaders helped promote and perpetuate remains a steadfast part of American political life.
As we have seen, the century-long struggle between management and labor came to a head in the late twentieth century as the triumph of corporate lobbying collided with the rapid decline in union membership and the consequent waning of organized labor’s political clout. Although many of the industrial giants who spearheaded the creation of the Business Roundtable represented large, stable firms that had forged relatively functional labor relations in the post–World War II decades, they also absorbed the strident antilabor views common among smaller manufacturers. And in the end, business’s coordinated assault on union power during the stagflation crisis of the 1970s, both in Congress and in public debate, proved too powerful for labor-liberalism to rebuff. Antilabor practices played out in the operational decisions of individual firms, including plant relocations and offshoring of production, as well as in local and state politics. At the same time, national business groups’ pivotal role at the federal level impeded efforts to expand unionization to new regions or new industries, further weakening the labor movement’s ability to confront the swiftly changing landscape of global capitalism. As manufacturing moved abroad, union jobs went with it; as service industries replaced heavy industry, organized labor failed to gain a foothold in those new growth sectors. Indeed, in the late twentieth century, the only area in which union membership increased was in public employment.8
In addition to losing members, unions also declined as a cultural and political force, in large part because business lobbyists and other conservatives successfully defined labor in the public discourse as a “special interest.” One of the most pivotal moments came in the summer of 1981, when Ronald Reagan angrily confronted 13,000 members of the Professional Air Traffic Controllers Organization (PATCO). Despite laws prohibiting strikes by public employees (they worked for the Federal Aviation Administration), PATCO workers had walked off the job to demand higher pay, a shorter work week, and other reforms. Although public sector strikes had succeeded in years past, Reagan—the only U.S. president to have been the head of a labor union (he ran the Screen Actors Guild in the 1940s)—engaged PATCO in a standoff, ordering the air traffic controllers to return to work or face dismissal and possible arrest. When only 1,300 did so, Reagan summarily fired more than 11,500 and later decertified the union. While historians rightly attribute Reagan’s ability to stare down and break PATCO to his particular anti-union resolve and personal popularity, the gambit only succeeded politically because a growing segment of the public had come to accept conservative arguments that unions had grown overly powerful and self-interested. Thirty years after the PATCO incident, labor-liberals remain thwarted at both the state and federal levels. Conservatives in midwestern states like Michigan and Wisconsin have battled to invoke the Taft-Hartley Act and adopt “right-to-work” anti-unionization laws, while congressional Democrats fail to make any headway on significant pro-union issues, particularly the Employee Free Choice, or card-check, legislation that would facilitate the formation of unions. Such struggles, even with an overwhelmingly Democratic Congress during the first two years of Obama’s presidency, testify to the long-term legacy of business’s antilabor efforts.9
In addition to their campaign against organized labor, business conservatives in the 1970s and 1980s also helped change the national conversation on regulation. In both spirit and policy, the antiregulatory mantra of organized business groups gathered steam in the 1980s and 1990s. Although the social regulation regime that galvanized business leaders in the 1960s, particularly consumer, workplace, and environmental protections, remained largely intact, a growing philosophical resistance to new regulations blocked efforts to respond to new economic realities, particularly concerning financial services. In 2007, legal scholar (and future U.S. senator) Elizabeth Warren, riffing on Ralph Nader’s career-making book, published an article called “Unsafe at Any Rate,” explaining that while consumer products benefited from stringent regulations, financial products left Americans susceptible to fraud, hardship, and injury. On a larger level, antiregulatory policymakers (including many Democrats in the Clinton administration) blocked efforts to subject the financial instruments known as derivatives to regulatory oversight. The disastrous economic crisis of 2008 laid bare the consequences of weak financial regulation, which the Dodd-Frank Act of 2010 sought to redress. Only the future shall tell, however, whether the financial crisis and the ensuing Great Recession will ultimately mark a turn away from the antiregulatory ethos that business leaders in the 1970s did so much to nurture. Yet as skeptics of Dodd-Frank point out, its regulations rely to a significant degree on the participation of financial firms themselves, generating precisely the problem of regulatory capture that contributed to skepticism of the regulatory project a generation ago.10
Finally, the debates over taxes and deficits that helped unravel the unity of purpose among national employers’ associations in the 1980s remain constant fixtures in national politics. Although negotiations between Congress and the Clinton administration yielded three years of budget surplus in the late 1990s, a series of circumstances—themselves the legacy of the battles fought among organized business groups—conspired to undo that solvency in the first decade of the twentieth century. In 2001 and 2003, a divided and partisan Congress, persuaded by supply-side arguments from the George W. Bush White House, dramatically lowered marginal tax rates, quickly turning budget surpluses into shortfalls. Dramatic increases in military spending due to extended operations in Iraq and Afghanistan further inflated the deficits; Ronald Reagan may have told OMB director David Stockman that “defense is not a budget issue,” but it is. Beginning in 2009, the disastrous effects of the economic crisis placed enormous strains on the federal budget, driving up social service spending even as sustained unemployment, which reached 10 percent in 2009, decreased tax revenues. America in the Obama years faces protracted and deeply partisan battles over the future of the nation’s tax code, social welfare programs, and long-term fiscal health, with no end in sight. The contentious politics of taxes and budgets prove as divisive, not least to business-minded conservatives, as ever.11
These issues and myriad others define the landscape of American politics in an evolving, expanding world. As the global economy changes and as American policymakers wrestle with hard choices about how and where to compete, how to encourage innovation, and how to treat and care for their citizens, the leaders of major business enterprises and their representative organizations will remain a permanent fixture in our politics. Their policy preferences and degree of effectiveness, however, will remain as contingent in the future as they were in the past. Corporations are not people, my friend, but people do run corporations. The decisions made and the goals pursued by the people who make up the nation’s business leadership resonate across all levels of society. Tomorrow, like yesterday, the women and men who manage private enterprises hold great promise to lead, innovate, and serve the public. At the same time, history teaches us that they also may follow the path of inaction, bogged down in narrow self-interest and overcome by the weight of ideology. How business leaders choose to navigate the world of politics will have just as tremendous an effect on the rest of us in the new century as it did in the last. The history of the politics of business in America is storied; its future remains to be written.
APPENDIX: List of Member Corporations of the Business Roundtable, 2013
Source: www.businessroundtable.org, accessed February 16, 2013.
A. O. Smith
ABB Inc., USA
Abbott
Accenture PLC
ACE Limited
AES Corporation
Aetna, Inc.
AGCO Corporation
AK Steel Corporation
Alcoa, Inc.
Altec, Inc.
American Electric Power Company, Inc.
American Express Company
Ameriprise Financial
Amgen, Inc.
Anadarko Petroleum Corporation
Apache Corporation
Arch Coal, Inc.
AT&T, Inc.
Automatic Data Processing, Inc.
Avery Dennison Corporation
Avis Budget Group, Inc.
Ball Corporation
Bank of America
Barclays PLC
Bayer AG
Bechtel Group, Inc.
BlackRock, Inc.
Blackstone Group
BNSF Railway Company
Boeing Company
BorgWarner, Inc.
Brink’s Company
C. V. Starr & Co., Inc.
CA Technologies
Caesars Entertainment Corporation
Campbell Soup Company
Cardinal Health, Inc.
Case New Holland, Inc.
Caterpillar Inc.
CBRE Group, Inc.
CF Industries Holdings Inc.
CH2M HILL, Ltd.
Charles Schwab Corporation
Chesapeake Energy Corporation
Chevron Corporation
Chrysler Group LLC
Cigna Corporation
Cisco Systems, Inc.
Citigroup, Inc.
Coca-Cola Company
Cognizant Technology Solutions Corporation
Comcast Corporation
Computer Sciences Corporation
Conoco Phillips
Convergys Corporation
Corning, Inc.
Covidien PLC
Crane Co.
CSX
Cummins, Inc.
CVS Caremark Corporation
Danaher Corporation
Darden Restaurants, Inc.
DaVita, Inc.
Deere & Company
Dell, Inc.
Deloitte LLP
DIRECTV Group, Inc.
Dominion Resources, Inc.
Dow Chemical Company
Duke Energy Corporation
DuPont
Eastman Chemical Company
Eaton
Edison International
Eli Lilly and Company
EMC Corporation
Ernst & Young
Exelis, Inc.
Express Scripts, Inc.
Exxon Mobil Corporation
FedEx Corporation
Fifth & Pacific Companies, Inc.
First Solar, Inc.
Fluor Corporation
FMC Corporation
Ford Motor Company
Freeport-McMoRan Copper & Gold, Inc.
Frontier Communications Corporation
Gannet Co., Inc.
General Electric Company
General Mills, Inc.
General Motors
Goldman Sachs Group, Inc.
Grant Thornton LLP
Hanes Brands, Inc.
Harman International Industries, Inc.
Harris Corporation
Hartford Financial Services Group
Hasbro, Inc.
Hertz Global Holdings, Inc.
Hess Corporation
Honeywell International, Inc.
Humana, Inc.
Ingersoll-Rand PLC
Intel Corporation
International Business Machines Corporation
International Paper Company
Interpublic Group of Companies, Inc.
ITC Holdings Corp.
ITT Corporation
Johnson & Johnson
Johnson Controls, Inc.
JPMorgan Chase & Co.
Kelly Services, Inc.
Kindred Healthcare, Inc.
KPMG LLP
Liberty Mutual Group
Macy’s, Inc.
Marathon Oil Corporation
MassMutual Financial Group
MasterCard Worldwide
McDermott International, Inc.
McGraw-Hill Companies
McKesson Corporation
Medtronic, Inc.
Meijer, Inc.
Merck & Co., Inc.
Meredith Corporation
Meritor, Inc.
MetLife, Inc.
Microsoft Corporation
Motorola Solutions, Inc.
NASDAQ OMX
National Gypsum Company
Navistar International Corporation
New York Life Insurance Co.
NextEra Energy, Inc.
Norfolk Southern Corporation
Northrop Grumman Corporation
Nucor Corporation
Owens Corning
Peabody Energy Corporation
PepsiCo, Inc.
Peter Kiewit Sons, Inc.
Pfizer Inc.
PG&E Corporation
Phillips 66
PricewaterhouseCoopers LLP
Principal Financial Group, Inc.
Procter & Gamble Company
Prudential Financial, Inc.
Public Service Enterprise Group, Inc.
QUALCOMM, Inc.
R. R. Donnelley & Sons
Realogy Corporation
Rockwell Automation, Inc.
Rockwell Collins, Inc.
Ryder Systems, Inc.
Sanofi-Aventis
SAP AG
SAS Institute, Inc.
Sealed Air Corporation
Shell Oil Company
Siemens Corporation
Simon Property Group, Inc.
Southern Company
Stanley Black & Decker, Inc.
State Farm Insurance Companies
Steelcase, Inc.
Suffolk Construction Company, Inc.
SunGard Data Systems, Inc.
Target Corporation
Telephone and Data Systems, Inc.
Tenet Healthcare Corporation
Tenneco, Inc.
Texas Instruments, Inc.
Textron, Inc.
Thermo Fisher Scientific, Inc.
Time Warner Cable, Inc.
Tishman Speyer Properties, L.P.
TransCanada Corporation
Travelers Companies, Inc.
Tyco International Ltd.
UnitedHealth Group Incorporated
United Parcel Service, Inc.
United Technologies Corporation
Universal Health Services, Inc.
Verizon Communications
Viacom, Inc.
W. W. Grainger, Inc.
Wal-Mart Stores, Inc.
WellPoint, Inc.
WESCO International, Inc.
Western & Southern Financial Group
Weyerhaeuser Company
Whirlpool Corporation
Williams Companies
Windstream Corporation
WL Ross & Co. LLC
World Fuel Services Corporation
Wyndham Worldwide Corporation
Xerox Corporation
Yahoo! Inc.