Republicans and corporate America are out.
Only last week, American Airlines and the computer company Dell spoke out vehemently against projects led by the Republican Party that place voting restrictions on their home base, Texas. South Dakota Governor Kristi Noem, a rising star in the Republican Party, continued to be criticized for rejecting a bill that would have imposed a ban on transgender athletes in sports, citing the potential impact on her state’s financial results. And conservatives have spent days criticizing “vaccine passports” that some companies think are needed to get back to normal.
And then there was Georgia, where the Republican-controlled state chamber voted to end the millions of tax cuts Delta enjoys in aviation fuel after the airline’s CEO – along with the Coca-Cola CEO, another large Atlanta-based company – has condemned new voting restrictions in the state. (The state Senate led by the Republican Party did not take the measure.) On Friday, the Major League Baseball withdrew this year’s All-Star Game from Atlanta in protest against the same law.
Republicans were outraged.
“Boycott baseball and all companies that are interfering in free and fair elections,” former President Donald Trump said in a statement. “Are you listening to Coca, Delta and all!”
“Why are we still listening to these agreed corporate hypocrites about taxes, regulations and antitrust?” Sen. Marco Rubio, R-Fla., tweeted.
These public fights between companies and members of the Republican Party are becoming more frequent, although the division – possibly one of the most important in US politics and society – has been forming for years. The move is the product of a Republican Party increasingly driven by “cultural war” issues that enliven a base reinvigorated by Trump and corporate powers that are under more pressure than ever to align themselves with the left in voting rights, rights LGBTQ and anti-racism efforts.
The result is a deterioration in relations between a Republican Party that for years has defended the types of libertarian economic policies that have largely benefited these companies and companies that are using their power to help advance the causes of social and racial justice.
“We have long thought and still think of the great institutional drivers of this cultural war as if more in academia, the arts, the media and corporate America were out until recently,” retired Sen. Pat Toomey, R-Pa. , told NBC News in an interview. He added that, while he does not think of corporate America “as the biggest player yet,” companies that leave the field “can change the dynamics.”
This year saw one flash point after another. Weeks of conservative outrage over the “cancellation” of Mr. Potato Head and Dr. Seuss were not about policies instituted by the government, but the decisions made by toy maker Hasbro and the famous children’s author’s own company to address inclusion and racism, respectively. The February Conservative Political Action Conference – long a bastion of economic libertarianism – featured a panel condemning “The Awakening of Corporate America”.
“Part of that is a development that has been going on for probably 10 or 15 years,” said David McIntosh, president of the Club for Growth. “The old Reagan coalition – which included the Chamber of Commerce representing both large and small companies – as the Tea Party movement has really eroded.”
The trend has intensified as the Republican Party absorbs more white working-class voters and the Democratic Party finds new success with affluent suburban people.
These changes have been “exacerbated” under Trump, said a Republican lobbyist, with the party going “more into this cultural war that excites our voters and makes them really excited.”
“Talking about corporate tax cuts and reducing burdensome regulations does not help our new voters,” said the person. “I don’t think it’s that exciting. It might be exciting for the Republicans in the country club that we lost, but we are losing them.”
What this means for politics is less clear, however, even when some Republicans adopt some left-wing policies, such as raising the minimum wage. Under Trump, Republicans implemented a tax cut that saw many of its benefits go to some of those same corporations that conservatives now criticize for their social activism. Few Republicans are moving away from the traditional tax cut and deregulation agenda – although some prominent Republicans like Sen. Josh Hawley, R-Mo. And Rubio have sought to position themselves as corporate antagonists.
Toomey said he saw “an increase in economic populism among some Republicans”, with the possibility of more “anti-corporate momentum” if companies decide to “become part of the left-wing social movement”.
The Pennsylvania Republican said it could lead Republican Party lawmakers to propose restrictions on share buybacks, raise dividend taxes or even a more intense effort to break up big companies. Already, one of the biggest war cries on the right is opposition to America’s tech giants for prominent conservative displatforms, even though conservative content continues to dominate on platforms like Facebook.
Toomey, a former president of the Club for Growth, does not agree with such moves.
“I’m still going to fight for the right economic policy, right? I’m not going to say, ‘Well, we’re going to punish them for their bad behavior’, because unfortunately the punishment is inflicted on the American people and our economy,” he said. “So I’m not going to be a part of this.”
But Toomey, along with strong economic libertarians like Sens. Rob Portman, R-Ohio; Roy Blunt, R-Mo .; and Richard Burr, RN.C., are headed out at the end of their current term. If his successors are Republicans, they may be more in line with Trump’s type of policy.
A big test will be how Republicans deal with President Joe Biden’s planned tax hike. Among the proposals put forward by the White House is an increase in the corporate tax rate from 21% to 28% – which is less than the 35% rate inherited by Trump.
Rep. Jim Banks, R-Ind., Suggested that while Republicans are unlikely to vote for tax increases, they may not make much noise about raising the corporate tax rate.
“I can say that I will fight like hell to ensure that this government does not remove the tax cuts that we pass on individual rates, for working families,” he said. “That’s what I’m focused on.”
One of the biggest fractures in the relationship this year came in the wake of the Capitol’s deadly turmoil on January 6. Many companies have announced that they will no longer make donations to those in Congress who are opposed to counting certified results in certain states that Biden has won. Some said they would stop making political donations through corporate political action committees.
This has not proved so negative for Republicans so far. Hawley, for example, saw his fundraising soar in the first quarter of this year, when he found himself in what amounts to a “no fly list” for some corporate PACs.
Banks, who opposed the Electoral College count, said local news reports mentioning he was cut from corporate donations are among the “best” he has ever received in his home district.
“I couldn’t afford a better story,” he said.
Some feel that it is inevitable that companies will abandon these promises. The Republican lobbyist said he was “100 percent” sure that would be the case.
“There are 435 members of Congress,” said that person. “Canceling 147 of them is a difficult way to win an issue.”
Judd Legum, a progressive journalist who tracked corporate giving habits after the promises, said he was not so sure.
“The world is changing,” he said. “There are consumers who are more aware and consumers who are more aware of how they are spending their money.”
Paul Washington, who heads The Conference Board’s Environmental, Social and Governance Center, which conducts research on behalf of its business members, said that “expectations now are just different for companies than they were in the past,” and members of your group I don’t see the political and social trends they face reversing anytime soon.
Ultimately, McIntosh thinks corporate America will “really have to take a closer look at what is in its self-interest.”
“Are they better off being with a party that might speak to their social agenda?” he said. “Or are they better off with a party that looks after their economic interests?”