Corporate Power in Overdrive

The New York Times

CAMBRIDGE, Mass. -- With last week's reversal of his campaign pledge to limit power plants' emissions of carbon dioxide, a key contributor to global warming, President Bush surrendered to coal companies and utilities dependent on coal. He had little choice. It's payback time, and every industry and trade association is busily cashing in.

There's no longer any countervailing power in Washington. Business is in complete control of the machinery of government. The House, the Senate and the White House are all run by business-friendly Republicans who are deeply indebted to American business for their electoral victories. If corporate America understood its long-term interest, it would use this unique moment to establish in the public's mind the principle that business can be trusted. But it's doing the opposite, and the danger for American business as a whole is profound.


Credit-card companies are getting a bankruptcy bill that will make it harder for overstretched people who succumbed to these companies' blandishments ever to get out from under the resulting debts. Oil companies are on the way to obtaining rights to drill on Alaska's coastal plain. Cigarette manufacturers are confident the administration will drop the federal lawsuit against them. Pharmaceutical companies are hoping to get longer patent protections. Big, labor-intensive businesses want to get rules that weaken unions, and they've already killed the Labor Department's ergonomics rules, which would have protected workers against repetitive-stress injuries. Airlines with labor problems can count on White House actions to ward off strikes. And so on.

In normal times -- when business has to cope with some political resistance -- its leaders are forced to set strict priorities. There is only a fixed amount of political capital to spend. The Business Roundtable, comprising the chief executives of large American companies, typically establishes at the start of a new Congress a legislative agenda reflecting what its members consider the most important issues. The United States Chamber of Commerce, after canvassing its mostly small and medium-sized member businesses to determine their priorities, also develops a strategy. The National Association of Manufacturers weighs in with its wish list. And the National Federation of Independent Business, composed of small firms, sets its goals.

These groups do not always see eye to eye, but under normal circumstances they understand that legislative success requires coordination. Separately, they lack the political clout to overcome determined resistance in one or both houses of Congress or from a president at least partly dependent for his political future on organized labor, environmentalists and other interests besides business.

The trade associations representing specific industries -- coal-powered utilities, pharmaceuticals, hospitals, electronics, securities, oil and gas, for example -- typically play supporting roles. Their own parochial legislative goals can't interfere directly with the priorities of business as a whole because the industries often have to depend on the larger business groups to be heard. Specific firms may retain their own Washington lobbyists, but they, too, have to work with others in order to have significant effect.

Political resistance, in other words, forces the business community to decide what's most important to it. It thereby enables corporate America to exert some discipline over itself. Business leaders can prevent or at least distance themselves from excesses by any single company or industry that might otherwise taint business as a whole in the minds of the public.

American business notably did not come to the aid of cigarette manufacturers when lawsuits against them began several years ago. Nor has corporate America as a whole fought on behalf of the gun lobby. Labor and environmental rules with broad consequences typically become high priorities for legislative attack, but not all such rules. In the first Clinton administration, the business community was quite happy to let the Labor Department target apparel manufacturers and major retailers in its crackdown on sweatshops. I recall a number of White House meetings in which the leaders of major business organizations quietly assented to the administration's plans to block subsidies flowing to a particular industry, or to impose new clean-air rules on another industry, or to move aggressively with an antitrust complaint.

With political resistance gone, the business community can, paradoxically, no longer discipline itself. Every business lobbyist on K Street is under enormous pressure from clients to reap something from the new bonanza. Every trade association must demonstrate to its members large returns from their investments in getting an all-Republican business-friendly government. And the pressure only ratchets upward: Every time one company or one industry receives its reward, other Washington lobbyists, representing other firms or industries, come under even more pressure to score victories.

Nor can the Republicans themselves provide any discipline. Washington is awash in corporate i.o.u.'s, all waiting to be cashed in, and George W. Bush can't argue that the Democrats will block the payoffs. Under these circumstances, the Bush forces are finding it next to impossible to maintain order. Demands for regulatory relief are growing louder, and most will have to be met. Corporate welfare will flow ever more freely. Once the tax bill is open to amendment, corporate tax breaks will blossom like the cherry trees.

At some point -- perhaps as soon as the 2002 midterm elections, surely no later than the next presidential election -- the public will be aghast at what is happening. The backlash against business may be thunderous. Hence the great danger that corporate American confronts.

You may also like