April 21, 2021

Inside the GOP’s tense fallout with the big business lobby

Recalling the encounter to CNN last week, Tenney said she asked Sullivan, “Why did you…

Recalling the encounter to CNN last week, Tenney said she asked Sullivan, “Why did you endorse someone who is against all the policies, who’s, like, voted for everything in New York that really was not really good for business, but was good for the trial bar, and it exposed many of us to liability?”

Sullivan handled it graciously, Tenney said, and didn’t seem surprised by the round of complaints. “He said ‘I kind of knew I was gonna get this,'” she said of the February meeting of Republican members of the House Small Business Committee.

For the Chamber, the dustup was another sobering reminder that their longtime ally, the Republican Party, is growing more populist by the year — and many of its members now view the business groups with suspicion. For years there was cooperation between the party and the Chamber, blocking the Democratic policy agenda and electing Republicans during the Obama years. (The US Chamber is a lobbying organization funded by its members, from large corporations like 3M and Microsoft to small businesses. It is distinct from state and local chambers, some of which are members of the national Chamber).

But the fruitful partnership has been upended by shifts in both the political platform of the GOP and the more progressive social priorities for corporate America. As some Republicans embrace populism and economic paternalism typified by former President Donald Trump, groups like the Chamber are finding their member companies are less eager to follow the GOP’s trajectory.

For that, many Republicans privately argue that the one-time powerful lobby has lost its focus and can no longer be trusted as a pillar of the GOP coalition. The Chamber, meanwhile, insists its purpose — advocacy for its members and for free enterprise — hasn’t changed, even if the Republican Party has.

“The Chamber’s north star is and always has been to create American jobs, stimulate economic growth, and help businesses work on solving the nation’s most important challenges,” said a spokesman in a statement provided for this story. “The Chamber is committed to supporting pro-free enterprise, pro-business, pro-governing members of Congress from any party.”

The fallout has been felt between the GOP leaders of Congress — Senate Minority Leader Mitch McConnell and House Minority Leader Kevin McCarthy — who have scoffed at their courtship of Democrats and questioned the organization’s focus on issues in which they once aligned.

The gulf has only intensified over the weeks-long fight over voting rights in the United States, with GOP leaders lambasting major corporations for boycotting Georgia amid the Republican push to restrict and tighten voting access in the state. Top Republicans believe the business lobby in Washington could have helped make the case that leaving Georgia was the wrong decision.
Rep. Claudia Tenney speaks during a hearing at the House Committee on Foreign Affairs in March 2021.

And when it comes to electoral politics, GOP leaders see a sharp drop off from just six years ago when the Chamber was a dominant force in key races to last year when they endorsed vulnerable House Democrats and were a minor player in pivotal Senate races.

“Whatever they’re doing — we’re not seeing it in a visible way in terms of the playing field when it comes to political campaigns,” said Sen. John Thune, the South Dakota Republican who faces reelection next year and serves as minority whip. “I know there was a time when they were really active. That doesn’t seem to be the case anymore.”

“The Chamber of Commerce filed for divorce years ago, and the GOP has finally accepted it,” said Terry Schilling, the executive director of the American Principles Project, a social conservative advocacy group.

And privately, the assessment is even more harsh.

“The National Chamber of Commerce effectively endorsed Nancy Pelosi for speaker in 2020,” a senior House GOP aide said.

The Chamber has hardly abandoned the GOP. Just a few months ago, the organization released a TV ad with the Georgia Chamber of Commerce praising Republican Sens. David Perdue and Kelly Loeffler as the two were fighting to win runoff elections and maintain GOP control of the Senate.

But the general sense of alienation reflects the widening gulf between the business community and other parts of the Republican Party’s coalition.

In addition to the reaction in corporate America to Georgia’s new election law, which saw executives from hundreds of major companies sign a letter denouncing the legislation and several threaten to move business out of the state, there’s been skepticism about big tech firms, criticism of the business community’s support for more expansive immigration laws — and a sense that major corporations have “gone woke” on political issues that have become articles of faith among Republicans.
We're about to see how far CEOs will really go to protect voting rights
Republican lawmakers have taken notice and staked out positions contrary to the broader business community’s goals. This year, Sens. Tom Cotton of Arkansas and Mitt Romney of Utah proposed raising the minimum wage, along with mandating that employers enroll in E-Verify to ensure that their workers are legally working. Sens. Ted Cruz of Texas, Mike Lee of Utah, Josh Hawley of Missouri, Marco Rubio of Florida and Marsha Blackburn of Tennessee introduced a bill to remove the antitrust exemption for Major League Baseball. The National Republican Senatorial Committee has attacked Democratic candidates who’ve accepted corporate PAC money. And last month, Rubio endorsed a push by Amazon workers in Alabama to unionize, citing the online retailer’s supposed “war against working-class values.”
“(T)he days of conservatives being taken for granted by the business community are over,” Rubio wrote in a March op-ed for USA Today.

Salvaging the relationship

There are signs that the Chamber may be seeking to get back on the same page as the GOP. The group last week came out to oppose the Democrats’ sweeping bill to overhaul election laws. And as Democrats push to boost the corporate tax rate to help pay for a massive infrastructure package, the business community is bound to push back.

Yet the Chamber’s own efforts to expand its influence and reflect the broader political views of its member companies on issues like immigration have further alienated the group from Republican lawmakers. The beginnings of the break-up had already begun near the end of former Chamber CEO Tom Donohue’s tenure and have accelerated with the tapping of Suzanne Clark, the first woman to head the business lobby, as his replacement.

Republicans say Donohue’s criticisms of Trump’s immigration and trade policies and the Chamber’s cozying up with some Democrats were damaging. The Chamber’s endorsements for those freshman Democrats last year — eight of which lost narrow races — sparked more outrage among Republicans.

At left, Thomas Donohue, former President and CEO at the US Chamber of Commerce, and, at right, Suzanne Clark, his successor. Clark is the first female CEO of the Chamber.

Many GOP House and Senate campaigns are no longer courting the Chamber’s endorsement, a move that began before the 2020 election, after McCarthy said he did not want the group’s support “because they have sold out.”

Some Washington Republicans say other personnel changes at the Chamber around the time of Clark’s elevation to CEO are cause for concern — and reflect the lack of relationships that exist now between the business lobby and top GOP lawmakers.

Caroline Harris, the Chamber’s top tax lobbyist who was a major force behind the Republican-backed tax overhaul in 2017, left the organization after 14 years, according to an email obtained by CNN. This comes months after the Chamber’s longtime political director, Republican strategist Scott Reed, departed after his contract was terminated.

In a statement at the time of his departure, the Chamber claimed Reed had “repeatedly breached confidentiality, distorted facts for his own benefit, withheld information from Chamber leadership and leaked internal information to the press,” prompting his dismissal.

Reed declined to comment for this story.

A history of cooperation

The flashpoint between the Republican Party and the business community over voting rights is only the latest example of a growing rift since the heyday of the Barack Obama era, when the US Chamber helped sink progressive legislation to boost unions and tackle climate change, pushed back against the passage of the Affordable Care Act, and aided the party’s takeover of the Senate in 2014.

The Chamber has seen its clout on Capitol Hill tested even under Republican administrations, including in the second term of George W. Bush, when the President failed to quell his rightward flank in failing to pass a major bill granting legal status and a path to citizenship for millions of immigrants.

But the election of Trump shook the symbiotic relationship. While the Chamber vigorously supported the Republicans’ top legislative priority — the 2017 tax overhaul bill that lowered the corporate tax rate — the lobby group saw its influence wane and ultimately decided to reach back out to Democrats.
In July 2018, the Chamber released a report bashing the Trump administration during its trade war with China “for threatening to undermine the economic progress it worked so hard to achieve.” In July 2020, it sued the administration over its “job-killing immigration restrictions” and expressed its support for the Deferred Action for Childhood Arrivals program in light of the Republican attacks to dismantle it.
Sen. John Cornyn speaks during a hearing last summer. Cornyn told CNN the chamber's leadership were "hedging their bets" during the last election.
The Business Roundtable, a rival association made up of chief executive officers, has also been in line with some Democratic priorities in recent years. In 2019, the group reversed its decades-long view that corporations exist principally to serve shareholders, announcing that companies have “a fundamental commitment to all of our stakeholders,” including customers, employees and their communities. Over the next two years, it urged politicians to pass gun control and police reform legislation.
The rupture between the GOP and the business community came in September, after the Chamber endorsed 23 freshman Democrats in some of the tightest House districts and indicated it would try to repair bridges to Senate Democrats.

“Plainly, they were hedging their bets,” Texas Sen. John Cornyn, a member of Senate GOP leadership, said of the chamber’s endorsements of Democrats. “But you know I don’t think they’re going to like a 28% tax rate and have all their members who make over $400,000 a year paying a lot more taxes. I guess, it just seems like it’s not very well thought through.”

Business lobby now a bit player in races

And some Republican strategists say the party no longer needs its traditional allies in the business community.

Back in 2014, Reed and the US Chamber were deeply involved in promoting Republicans who could win Senate seats after some tea party Senate candidates lost in 2012. The Chamber’s outside group spent more than $35 million — the seventh highest-spender out of the 263 outside groups tracked by the Center for Responsive Politics.

But the Chamber then decided to take a step back from elections, even as it remained the biggest business lobbying group. In 2020, it spent about $5.7 million — the 67th of 657 outside spenders.

A GOP strategist told CNN that the latest fundraising numbers show that Republicans “don’t need to rely on businesses” to bankroll their campaigns.

Infrastructure negotiations: 4 things to watch on Capitol Hill
In the first quarter, the National Republican Congressional Committee announced it raised a record-breaking $33.7 million, even as many major corporations said they would pause donations to the 139 House Republicans who voted to overturn the results of the 2020 presidential election. McCarthy, one of those members, raised an astonishing $27.1 million — and less than 2% came from corporate PACs, according to the Wall Street Journal.
The Journal, however, found that PACs for companies gave $1.3 million in the first quarter to the 147 Republican objectors, down about 80% from the $6.7 million donated to those members of Congress in the first quarter 2019.

In the Biden era, the Chamber, Business Roundtable and major corporations have made moves further distancing themselves from Republicans out of power in Washington.

The Chamber of Commerce has supported aspects of President Joe Biden’s first two legislative priorities — the $1.9 trillion plan to Covid relief bill and the multi-trillion dollar infrastructure plan, although it strongly opposes how it plans to pay for the latter by increasing the corporate tax rate. It backed Neera Tanden for Office of Management and Budget director, the former head of the liberal Center of American Progress who had sharply criticized Senate Republicans. And it has expressed an openness to raising the minimum wage, although not to $15 an hour.
Meanwhile, the Business Roundtable has supported Biden’s decision to rejoin the Paris climate agreement and the World Health Organization, moves to preserve the DACA program and address climate change.

CNN’s Tara Subramaniam contributed to this report.