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Republicans are losing their love for corporate America

To US Executive , Rob Porter Mann is the ideal senator. Smart, rational and experienced, he served as Republican President George W. Bush’s top trade representative and budget chief from 2000 to 2008, then became an Ohio senator more than a decade ago. Mr. Portman has only one downside: he’s retiring. The party’s candidate to succeed him is JD Vance, who has the support of recent Republican commander-in-chief Donald Trump. Mr. Vance called Big Tech the “enemy of Western civilization” and saw elite managers as part of a “regime” whose interests were far removed from those of the American heartland.

Left-leaning Democrats remain the biggest headache for businesses — this month, Senate Democrats passed a hike to catch businesses off guard and new restrictions on drug pricing. But, in the words of an executive at a major financial firm, “We hope the Democrats will hate us.” The New Thing is a disdain for the right. There was a time, a lobbyist recalled fondly, “when you walk into a company’s Republican office and the question is, ‘How can I help you?'” Those days are over. The prospect of Republicans sweeping the midterm elections in November and retaking the White House in 2024 is no longer a relief for U.S. boards.


The Economist

The executives and lobbyists interviewed, speaking on condition of anonymity, said Republicans were becoming increasingly hostile in tone and substance. Public spats, such as Disney’s feud with Florida’s Republican Gov. Ron DeSantis over a classroom discussion of sexual orientation, or Republicans slamming BlackRock, the world’s largest asset manager, for conducting “Sober” investing, these are only its most visible manifestations. “The axis of the past was left to right,” said an executive at one of the largest U.S. companies. “Now it’s the axis from insider to outsider; everyone seems to want to prove that they’re not part of the superstructure, including business.” Long-held center-right orthodoxy — in favor of free trade and competition, against industrial policy — is emerging keep changing. As Republicans’ stance on big business changes, so too does the contours of American business.

For decades, close collaboration between Republicans and business has helped shape American capitalism. The corporate pursuit of free trade abroad and the profit-seeking pursuit of free enterprise at home dovetailed with the Republican creed of personal liberty and anti-communism. By the 1990s, even Bill Clinton and other Democrats had embraced new trade deals that gave companies access to new markets and cheaper labor.

As Glenn Hubbard, the former dean of Columbia Business School and a senior economic adviser to Mr. Bush, put it, “Social support for the system is a given, and you can argue about the parameters,” said Rawi Abdelal of Harvard Business School, Barack Obama and Mitt Romney in 2012 The presidential battle “felt a lot at the time”. “But in terms of business interests, it doesn’t matter at all.” Two-thirds of spending (pac s) to fund candidates in federal elections, as well as slashing corporate taxes in 2017, was Trump’s major legislative achievements. However, Mr Trump’s campaign is based on the feeling of ordinary Americans that they are being left behind. Executives hoping his fiery campaign rhetoric will be drowned out by the president’s restraint have had to contend with his trade war with China, restrictions on immigration and dangerous stances on climate change and race. Bosses had to speak out against his policies, shocking many of their employees and customers. In the eyes of Trump supporters, such statements cast CEOs

as progressive elites bent on weakening their constituencies a member of.

After Mr. Trump’s loss to Mr. Biden, companies wonder if their old alliance with Republicans will be restored. On July 17, Republican senators voted to pass a bill that includes $52 billion in subsidies to compete with China by producing more computer chips in the U.S. — something chipmakers like Intel naturally say Appreciate. This month, nearly all Republicans opposed the Democrats’ $700 billion climate and health care bill, known as the Reducing Inflation Act (ira), which taxed large corporations and enabled the government to haggle with drugmakers over the price of certain prescription drugs.

This superficial business friendliness still hides a deeper shift, however. The GOP is attracting more working-class voters – an evolution that has been accelerated by Mr Trump’s willingness to put the interests of American workers on paper (if not always in practice) over those of American multinationals . Gallup polls show that for most of the past 50 years, more Republicans have confidence in big business than those who have little or no confidence in big business, often by double-digit margins. Last year, the number of people who distrusted outnumbered those who trusted by a record 17 percentage points, worse than at the height of the 2007-09 global financial crisis.

Republican campaign funds are increasingly being filled with small donors or the extremely wealthy. Sarah Bryner of OpenSecrets, a NGO that tracks campaign finance and lobbying, points out that both groups tend to be more theorists than pragmatists.

The result of all this is growing Republican support for policies hostile to American corporations. Senator Josh Hawley of Missouri wants the company to have more than $1 billion in revenue to pay employees at least $15 an hour. His Florida colleague Marco Rubio supports the formation of workers’ councils within the company as an alternative to unions. In March, Arkansas’ Tom Cotton called on Americans to “reject the ideology of globalism” by restricting immigration, banning some U.S. investment in China and suggesting that Congress “punishes outsourcing to China.” Republicans in Congress have co-sponsored several bills with Democrats to rein in Big Tech. Mr Vance, who is likely to join them after the mid-term, has proposed higher taxes for companies that move jobs abroad. Trump himself has repeatedly promised to lower drug prices.

Republicans opposeira — and other business-prudent The Democrats are advocating – which may simply mean they hate Democrats more than they hate big business. Many bosses worry that the Republican Party will pursue punitive policies once it returns to power. “No one’s going to say, ‘Don’t worry,'” sighed one pharmaceutical executive. “Ignore what politicians say publicly at your own risk,” warns another business tycoon.

This is already evident at the state level , Republicans often control all the levers of government, so being free to shape their agenda in a way is impossible in gridlocked Washington. After Disney spoke out against a Florida law restricting discussions of gender and sexual orientation in schools, Mr. DeSantis signed a law that would revoke the company’s special tax status. A new Texas law restricts the state from doing business with companies that “discriminate against the gun and ammunition industry.” Kentucky, Texas and West Virginia have passed similar laws prohibiting doing business with banks and other companies that boycott fossil fuel producers; about a dozen other Republican-run states are considering doing so.

Laws like this create problems for companies. In July, West Virginia’s treasurer said anti-fossil fuel policies at some of the largest U.S. financial firms — BlackRock, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo — made them ineligible for state contracts. The definition of what constitutes discrimination or boycott is vague. JPMorgan, which does not lend to companies that sell military weapons to consumers, first said Texas law prohibits it from underwriting municipal bond deals in the state and then bid (unsuccessfully) for the contract. In Texas, Republican lawmakers have threatened to sue companies that pay their employees to go abroad for abortions, and the Texas legislature has severely curtailed it.

Right-wing culture warriors have always been part of the Republican Party, but the lines between them and their pro-business country club colleagues have collapsed. Now, another business magnate worries that both sides consider it “acceptable to use state power to subdue private entities to their views”. “esg is a four-letter word in some Republican offices,” said Heather Podesta of lobbying firm Invariant, referring to the practice, BlackRock, among others, considers environmental, social and governance factors in investment decisions, not just returns. Texas Senator Ted Cruz blamed BlackRock owner Larry Fink for high gas prices. “Every time you fill up the gas tank,” he roared in May, “you have to thank Larry for the enormous and inappropriate esg pressure on you. “

Companies are adjusting to this new, more volatile political reality. Some are creating more formal processes to examine the risks of specific social issues that could spark a political backlash, including Republicans. The way companies describe their strategies to politicians is also changing. Lobbying is no longer limited to party leaders in both houses of Congress. With politicians in both parties increasingly willing to flout party leadership, “you have to go one by one,” one executive said. Neil Bradley, the chamber’s policy chief, said his group had to redouble its efforts “to find an interest in owning governance”.

Sometimes that means supporting more Democrats. In 2020, the Chamber approved more vulnerable NDP incumbents, mostly moderates, than in previous years. That prompted Kevin McCarthy, the top Republican in the House at the time, to say he didn’t want the group’s endorsement “because they’re sold out.” So far this year, corporatepac has donated 54% of campaign donations to Republicans, down from 63% in 2012 (see chart). Company employees retreated even more hastily, with only 46% donating to Republican candidates, up from 58% a decade ago, according to OpenSecrets. If the result of this is a divided government, that would be a good fit for American business. As one executive put it, “We may not improve, but we won’t get more disastrous policies.”

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