Big Business Loses Its Protector
The prospect of being hanged concentrates the mind wonderfully, Dr. Samuel Johnson once observed. So does the prospect of being defeated. Which is why you find a wonderful concentration of minds among congressional Republicans these days. They’re in a panic. Very much like investors, but for a slightly different reason. Investors are worried that they won’t be able to retire early. Republicans are worried that they’ll be forced to retire early. Shortly after this year’s midterm election, in fact.
So, what are congressional Republicans doing? The same thing a terrified crew does when it realizes the ship is sinking: They’re throwing ballast overboard to keep the vessel afloat. “The mood of the [Republican] conference is, ‘Let’s get on with this thing. Let’s not dillydally,’ ” Rep. Sherwood L. Boehlert (R-N.Y.) said. “We’ve got to do everything possible in short order to indicate to the American people we’re on top of these issues and we’re doing everything possible to restore confidence in the markets.”
What about the party’s long-standing commitment to big business? Overboard! Kersplash! Rep. W.J. “Billy” Tauzin (R-La.), chairman of the Energy and Commerce Committee, pressured House Republicans to take a hard line on accounting fraud. “Investor confidence is at a low, and the stock market is still going through this awful roller coaster,” Tauzin said. “We’ve got to put a stop to it.”
Then there was the spectacle of Rep. William M. Thomas (R-Bakersfield), chairman of the House Ways and Means Committee, advocating stronger enforcement powers for the Internal Revenue Service against companies that create dubious tax shelters. And introducing a bill to stop companies from relocating to Bermuda to avoid U.S. taxes. This, from one of business’ best friends in Congress, a man who received the “Spirit of Enterprise” award from the U.S. Chamber of Commerce.
Nearly 40 House Republicans signed a letter urging their colleagues to accept the Senate bill sponsored by Sen. Paul S. Sarbanes (D-Md.), which contains far-reaching corporate regulations. A new independent board to oversee corporate audits. New categories of corporate crimes. New grounds for lawsuits against companies that deceive investors. The sorts of things House Republicans would have rejected out of hand a few weeks ago.
The WorldCom bankruptcy and the stock market slide changed all that. Last week, House negotiators signed off on the Sarbanes bill with a few changes. The House quickly voted 423 to 3 to pass it, then the Senate voted 99 to 0 to send it to the president’s desk. Let’s get this straight: Republicans agree to pass tough new regulations on business, and the stock market soars. There’s an irony in there somewhere.
“We’ve got to look out for ourselves first and foremost,” a top House Republican strategist told the Washington Post. “We have to go home in a week and say we’ve done something. People have to wake up and realize the political nature of this fight.”
In a report distributed on Capitol Hill, a prominent Republican polling firm found that “the bottom has fallen out on the mood of the country.” In the pollsters’ view, “WorldCom’s [bankruptcy] announcement may have been the straw that broke the camel’s back.” It certainly broke the stock market’s back. “Voters’ attitudes toward corporate offenders are hostile,” the report warned. “Legislation punishing wrongdoers can’t be too tough.”
It is politically impossible to defend big business right now. Not even George W. Bush can do it. The president went to Wall Street to denounce “corporate abusers” and to call for an end to corporate wrongdoing--including practices he once engaged in. “I challenge compensation committees to put an end to all company loans to corporate officers,” the president said. Presumably like the ones he once got at Harken Energy.
The culture has shifted from business heroes in the 1990s (Bill Gates) to what Theodore Roosevelt called “malefactors of great wealth.” That puts Bush in an awkward position. How many business executives have been elected president? Answer: two. Both of them were named Bush.
The corporate crime wave also put conservatives in an awkward position. Isn’t support for business a core element of the conservative faith?
Actually, no. The core element of the conservative faith is opposition to government. Business usually shares that sentiment, so conservatives and business have been long-standing allies. But it’s an alliance of convenience. And money.
For business, politics isn’t about causes. It’s about interests. That’s why conservatives distrust big business. The two work together when they have the same interests--say, to pass a tax cut or to defeat environmentalists on oil drilling. But conservatives suspect that business is always ready to sell them out. And they’re right.
Yes, Republicans still get most of their money from big business. But so do Democrats. Under President Clinton, Democrats repudiated their anti-business image. In fact, you could say that business made out like bandits during the Clinton era. Literally. And business played it safe by giving money to both parties. Remember the White House coffees? The Lincoln Bedroom overnight stays?
The legacy of the Clinton era is that economic differences between the parties have shrunk, while values differences have grown.
The “red state-blue state” division of the country on election night 2000 was over values: conservative America versus liberal America. Economic issues were less important. The economy made Al Gore the winner of the popular vote. Values made Bush the winner of the election. The economic issue has drawn Democrats closer to business. At the same time, the values issue has pulled Republicans away from business. Conservatives feel betrayed by the corrupt behavior of business executives. The GOP has taken on a powerful strain of moralism since 1980. Conservatives used to see business as amoral. Now they see business as immoral.
Republicans are facing real problems in the midterm election this November.
The problems are not immediately apparent in the polls, which still show a close split between Democrats and Republicans across the country. The problem is one of motivation.
“If the negative mood of the country is sustained over the next few months, look for GOP turnout problems,” the Republican pollsters warn in their report.
Democrats are angry over the corporate scandals. And angry voters dominate midterm elections, which most people don’t bother with. Angry white men brought the Republicans to power in 1994. Angry Democrats came out to protect President Clinton in 1998, when he was threatened with impeachment. After eight years of steadily losing ground, the Republican House majority could be swept away by a wave of Democratic anger in 2002.
Republicans know they can’t rely on Bush to save them, even though he has sky-high job-approval ratings. Bush’s standing is above politics. When people say they support the president, it’s an expression of national solidarity at a time of threat. It doesn’t mean much for his party. It is certainly odd for a president to be coasting along with a 70% approval rating, as he is in this month’s New York Times-CBS News poll, while only about half that number--36%--say they intend to vote Republican for Congress.
Bush has enormous credibility on issues like terrorism and national security. He has less credibility on the issues that are likely to drive the midterm election--corporate responsibility, investor confidence and the economy. Most Americans do not think Bush is corrupt. They worry that he’s clueless--that he has no idea what to do about the stock market or the economy. It’s the same way people felt about his father in 1992.
Democrats have the advantage on the issue of corporate responsibility. The New York Times-CBS News poll asked people whether they thought the Democratic Party was more committed to protecting the interests of ordinary Americans or of large corporations. By 52% to 31%, people said Democrats favored ordinary Americans. By 58% to 29%, they said Republicans favored large corporations. Whose side is Bush on? The public is split: 42% say he favors ordinary Americans, 42% say he favors large corporations.
Last week, Republicans figured out that the smartest thing they could do was simply to say, “OK, we’ll go along with the Democrats on corporate responsibility. Support the Senate bill. Make it even tougher. Stop defending big business.” There are times in politics when the wisest thing to do is to say, “Me too.” Democrats did it in the war on terrorism, and it didn’t hurt them one bit.
