Is Trouble Brewing for Business?

08 Dec, 2010

By Doug Pinkham
Public Affairs Council President

December 8, 2010

Tea Party activists supporting limited government, free enterprise and lower taxes should be natural allies for corporations seeking higher earnings, right? Maybe not. Since coming on the political stage last year, Tea Party leaders have taken an anti-business stance on a number of key issues:

  • Last month a Pew study revealed that 63% of Tea Party Republicans think free trade agreements are bad for America. Tea Party Nation founder Judson Phillips, in a blog post criticizing the president’s recent trip to India, blamed the “absolute destruction of the American manufacturing sector” on Presidents Bush I, Clinton, Bush II and Obama, whom he called “globalists.”
  • In an earlier poll, Tea Party supporters said they favored higher taxes on goods imported from countries with low environmental standards, reports Businessweek.
  • Not long ago, Rep. Michele Bachmann, R-Minn., the head of the House’s 24-member Tea Party Caucus, called the G-20 Economic Summit “one short step” away from “one world government.”
  • Senator-elect Rand Paul, R-Ky., a Tea Party favorite, says he wants to abolish the Federal Reserve. Like many other Tea Party organizers, he also would have let GM and Chrysler fail.
  • Tea Party advocates also want to tighten immigration laws – a move opposed by many agricultural and technology companies worried about labor shortages.

“People who run corporations are basically taking care of themselves,” FreedomWorks Chairman Dick Armey told Businessweek in August. “They’re not very reliable people, and they’re very comfortable with Big Government that greases the skids for them.”

The U.S. Chamber of Commerce and the Business Roundtable accept that different companies have different views on many issues. But some Tea Party leaders think politicians and firms should pass a purity test. During the recent election, the Tea Party Patriots asked candidates to sign on to the “Contract from America,” which would – among other things – repeal the healthcare reform act, scrap the Internal Revenue code and ban emissions trading.

After their success in the midterms, activists set their sights on a new target – corporations that backed portions of President Obama’s agenda.

According to a new poll by FreedomWorks, conservatives have a strong negative impression of firms that supported healthcare reform, bailouts, cap-and-trade programs or other Obama policies. For example, the group claims favorability ratings for two major corporations drop dramatically when conservative voters are told those firms supported the stimulus plan or healthcare legislation.

Through boycotts and anti-corporate grassroots campaigns, “Tea Party activists are willing to tackle progressive CEOs just as they tackled progressive politicians,” said FreedomWorks President Matt Kibbe.

As presumptive House Speaker John Boehner and the Republican Party try to manage the expectations of the House’s new Tea Party Caucus, corporations – especially global companies – are likely to be caught in the middle.

Noam Scheiber of the left-leaning New Republic thinks Obama can use this situation to his advantage because Scheiber believes companies are in “a much more precarious position” than before the election:

Republicans might accept a double-dip recession as the price of vanquishing Democrats. But, to most corporate managers, such profit-destroying horrors outweigh the benefits of GOP rule.For that matter, even GOP rule itself doesn’t look nearly as appealing in the Tea Party era. In addition to opposing big business on some of its top priorities, like infrastructure spending and immigration reform, Tea Party pols are prone to dangerous games of brinkmanship. For example, many are drawing a line on raising the nation’s debt limit, which could create a fiscal crisis, leading to a collapse of the dollar and a surge in interest rates.

Because the Republican establishment is more concerned about election primary challenges than business priorities, he says, “the reality is that the GOP is much more likely to move toward the Tea Party movement than vice versa.”

That’s not all bad, since Tea Party activists have rightfully articulated public concern about deficits and wasteful spending. They’ve also convinced Democratic and Republican incumbents to acknowledge the pervasive anti-Washington sentiment.

But a major shift toward Tea Party priorities makes many people nervous. Perhaps that’s why polls show business support for a divided government, rather than one dominated by the newly resurgent Republican Party. A survey published in Fortune magazine before the election showed the business community hopeful that divided government will give it time to absorb recent major reforms. More than half said they wanted Republicans to work with Obama on new policy issues, rather than roll back laws already enacted.

In fact, by a margin of 2-to-1, respondents said divided government would actually help improve economic conditions.

With Republicans now in control of the House and the president ready to compromise, that scenario just might unfold. But if Republican leaders cater too much to the party’s emergent wing at the expense of economic recovery, the consequences could be serious.

How serious? “The Tea Party’s small-government slogans may be appealing,” writes  Businessweek, “But its policies could throw the U.S. economy into chaos.”

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