Republicans Split with Big Business

As political alliances go, few are more cemented in the public consciousness than the bond between the Republican Party and business. But, upon closer inspection, the GOP–big business relationship doesn't seem so cozy.

Take health-care reform. From the time the bill hit Congress, Republicans found themselves opposite big industry interests. From the drugmakers to the doctors to the insurers, every major player in the health-care battle declared themselves willing to work with Democrats to enact some variant on reform. Congressional Republicans, meanwhile, were almost universally opposed. Health-care reform advocates eventually dug up a handful of Republican notables to support reform, and in a radio address, President Obama singled out four for special notice: former health and human services secretaries Louis Sullivan and Tommy Thompson and former Senate majority leaders Bill Frist and Bob Dole. But, as reported by The Washington Examiner's Timothy Carney, it turned out that each of those Republican defectors had direct financial connections to the health-care industry, either as lobbyists or corporate consultants. In other words, these were folks whose allegiances to industry trumped their allegiances to their political party.

Nor is the health-care fight an outlier. Scan the big legislative battles of the past year or those on the horizon, and you start to see a pattern: the Republican Party on one side, entrenched big-business interests on the other.

On cap-and-trade, the stimulus, the bank and auto bailouts, and financial regulation, Republicans face, or have faced, substantial opposition from parts of the corporate community. Much of what's happening can be traced to the party's current identity crisis: without strong leadership to hold together various representatives, interests, and constituents, personal squabbles that might otherwise have been quelled are allowed to fester. At the same time, the party's nascent populism is surging to the surface, resulting in a more reactionary outlook.

That's souring relationships on the Hill. Wisconson Rep. Paul Ryan, one of the House's most economically conservative members, says that he's talking tougher with corporations than ever before. The problem, he argues, is that industry has drifted away from its support of free enterprise. "As long as big business was defending free markets, we didn't have a problem," he says. The trend now is for individual businesses and industry groups to push for regulation that is structured in such a way that they come out ahead—or make competitors worse off.

Wal-Mart's foray into the health-care debate is a prime example: The retail giant, once assailed by liberals for its stingy benefits, came out this summer in favor of an employer mandate to provide health insurance. The announcement made for good PR, but it was also strategically savvy: a mandate would raise retail competitor Target's health-care costs. The move put Wal-Mart in the GOP's sights. One top Republican legislator, who declined to be named because the conversation was private, recalled having "harsh words" with top Wal-Mart officials after its embrace of the mandate.

In the Senate, South Carolina's Jim DeMint accuses PhRMA, the D.C. lobbying powerhouse that represents the pharmaceutical industry, of a similar brand of self-serving deal-making. "PhRMA is infamous for sitting down and doing business. As long as they get their drugs sold, they'll support just about any policy." And sure enough, PhRMA reportedly cut a deal with the White House in which the organization promised to support reform provided Democrats agreed to limit the financial damage it could do to drug makers' profit margins. DeMint has also taken the U.S. Chamber of Commerce to task for its support of the recent fiscal-stimulus package, writing an April op-ed in The Washington Times declaring that, for the Republican Party to succeed, it must realize that its "true allegiance is not to the U.S. Chamber of Commerce, but to free markets."

Ryan and DeMint believe that the Republican Party bears the blame for the current state of affairs. While in power, Republicans became too used to making bargains with business, such as the Medicare prescription-drug benefit, which provided the pharmaceutical industry with a windfall at taxpayers' expense. As a result, the party got "caught up in trying to win different industries by doing something for them," says DeMint. Now "established firms are used to cutting deals with the party in power."

Meanwhile, anti-corporate sentiment is brewing amongst the activist right. Ron Paul's libertarian-tinged presidential candidacy was fueled in part on an anti-Wall Street, anti-banker mindset; during campaign speeches, it wasn't unusual for his biggest applause line to be a swipe at the Fed. And Mike Huckabee's presidential campaign tapped into the party's nascent populism, promising to represent Main Street rather than Wall Street. Congressman Ryan worries that the party's resurgent populism could push the base the wrong way: "Hopefully, it's channeled properly—which is pro-free market rather than anti-business."

He needn't worry too much. No one in the Republican Party will be calling for the destruction of corporate America any time soon. And RNC chairman Michael Steele's proposal for how to craft health-care-reform legislation—he suggested that the big health-care companies should be allowed to put together and submit it to Congress—indicates that the GOP's tendency to pander to big business hasn't exactly disappeared.

Nor is the business community partnering with Democrats and liberals on every issue. The Chamber of Commerce, for example, has earned the ire of the White House by continuing to oppose cap-and-trade and health-care reform. Bruce Josten, the organization's executive vice president for public affairs, says his relationship with congressional Republicans hasn't suffered at all. And he defends his group's decision to back the stimulus, saying that, though far from perfect, given the extreme economic circumstances, the package was essential to maintaining a functioning American economy for businesses to operate in. "Doing nothing was not a good idea," he says. Josten also points out that the chamber's stance was hardly unique; no business coalition stood against the stimulus.

But that's precisely the point. The chamber may stand by its decision to back the stimulus, but many Republican activists and leaders are already pushing to use the stimulus vote as a litmus test in 2010. As Republicans attempt to regain their hardline free-market credentials and fight off the ambitious agenda put forward by the Obama administration and Democratic Washington, the business community is simultaneously attempting to protect itself from a flagging economy and cozy up to the party in power.

Congressman Ryan takes the idea even further: "Big government likes big corporations," he says. That may be a stretch, but it increasingly seems as if, whether or not big government likes big corporations, in the more conservative corners of the right, Republicans don't.