Corporate America (Well, Not All of It, At Least) Won’t Abandon a Free Market GOP
Scott Lincicome
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William Galston envisions a bleak future for the Republican Party, and it’s all because of the rise of a “Tea Party” faction within the GOP that – gasp! – aggressively advocates free markets and limited, constitutional government.  But while there is little doubt that the Party is currently experiencing – to put it kindly – some growing pains, Galston’s conclusions about the inevitable death of the GOP are greatly exaggerated.

After summarizing recent polling on the ideological views of Tea Party supporters, Galston concludes:

They are a dissident reform movement within the [Republican] party, determined to move it back toward true conservatism after what they see as the apostasies of the Bush years and the outrages of the Obama administration.

Many tea-party supporters are small businessmen who see taxes and regulations as direct threats to their livelihood. Unlike establishment Republicans who see potential gains from government programs such as infrastructure funding, these tea partiers regard most government spending as a deadweight loss. Because many of them run low-wage businesses on narrow margins, they believe that they have no choice but to fight measures, such as ObamaCare, that reduce their flexibility and raise their costs—measures to which large corporations with deeper pockets can adjust.

It’s no coincidence that the strengthening influence of the tea party is driving a wedge between corporate America and the Republican Party. It’s hard to see how the U.S. can govern itself unless corporate America pushes the Republican establishment to fight back against the tea party—or switches sides.

I’m certainly not going to quibble with Galston’s interpretation of Tea Party polling or his views on Jacksonian conservatism, but his ultimate conclusions are, well, extremely conclusory.  Indeed, the notion that “Corporate America” must either destroy the Tea Party or abandon (and thus destroy) a new GOP that’s truly committed to free market, limited government policies suffers from several dubious assumptions and offers a false choice between Big Government conservatism and the political wilderness.

Most importantly, and as Galston’s own research shows, Tea Party supporters (and thus any GOP based on them) are not anti-corporation (e.g., Wal-Mart); they’re anti-corporatism (e.g., Wal-Mart lobbying for special treatment or Big Government policies that hurt them a little and their competitors a lot).  To the extent that U.S. corporations can live without Big Government’s help (and, obviously, they can and have), then there is no inherent reason why the Tea Party and Corporate America can’t live harmoniously within the GOP.  Indeed, there is much about limited government, free market policies that corporations big and small would like – for example, lower, more predictable taxes (corporate and personal); streamlined regulations and a defanged bureaucracy; free trade; more dynamic (and less union-controlled) labor markets; lawsuit reform; fiscal discipline; government transparency; and stable monetary policy.  Would all corporations like this platform?  Of course not.  But many most certainly would, even if it meant losing a little pork to achieve it.

Along similar lines, the ascendancy of limited government, free market policies within the GOP would simply cause corporations to realign their current cost/benefit analysis for determining whom to support in any given election and on any given issue.  Overall, two questions would arise: (1) Does the loss of subsidies, tax breaks and anti-competitive regulations provided by Big Government outweigh the domestic and global gains from the aforementioned free market policies (not to mention the ample savings on lawyer, lobbyist, accountant and “political intelligence” fees)? And (2) if so, are these losses sufficient to justify abandoning the GOP and retreating to the warm embrace of regulation/tax-heavy Democrats who might – if you donate enough and aren’t suddenly deemed to be evil – throw you a dirty wad of taxpayer cash?  There is no obvious reason why the answer to both of these questions would automatically and emphatically – and for every large company – be “yes.”  Galston simply assumes it.

In reality, the relationship between Corporate America and government is far more nuanced than the binary, monolithic, “corporations love subsidies and vote Republican” view that Galston’s piece implies.  Indeed, a simple scan of corporate campaign donations over the last 15 years demonstrates that (i) many corporations and industries already vote for and finance the Democratic Party (especially in heavily-subsidized or regulated sectors like finance, telecommunications, agribusiness and green energy); and (ii) the partisanship of corporate donations fluctuate from company to company, candidate to candidate, and issue to issue (unlike, say, American labor unions).  Thus, many of the very companies that might abandon a subsidy- and Leviathan-averse GOP have already left, and many other companies don’t choose to finance a candidate or party based solely on their embrace of runaway government spending.

Now, I freely admit that it’s impossible to know what would happen if this dreamy, free market GOP were to emerge (other than my joy-induced aneurism), but it is unquestionably absurd to assume that “Corporate America” would immediately flee the Republican Party en masse if its Big Government corporatism were replaced by a platform of low taxes, more passive regulation and freer markets.  Indeed, I suspect that a majority of U.S. corporations would in the end opt for a free market (but not anti-corporate) GOP over a cronyist Democratic alternative willing to determine market winners and losers based on ideological whims and campaign contributions.

And if I’m right, that “new GOP” would not only retain much of its corporate backing but also gain new grassroots support and find itself far more in tune with the current mood of the country.  Certainly, sound entitlement, welfare and other policies also would be necessary to ensure a winning electoral coalition, but these policies also aren’t incompatible with the Tea Party’s basic aversion to corporatism and fiscal incontinence.

Of course, not every ally of the current Republican Party would survive and support such a transformation: the lobbyists on K Street would almost certainly need to start polishing their résumés, but that’s one bit of attrition that the GOP could certainly stand to endure.

Fortunately for them, we have a two party system, and I hear that Albany and Sacramento are quite nice this time of year.

The views expressed herein are Scott Lincicome’s alone and do not necessarily represent the views of his employer, White & Case, LLP.

Scott Lincicome is an international trade attorney, adjunct scholar at the Cato Institute and Visiting Lecturer at Duke University. Follow Scott on Twitter. The views expressed herein are Scott Lincicome’s alone and do not necessarily represent the views of his employer, White & Case, LLP.
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