Tax Analysts Blog

After the Debt Limit Crisis, Can Democrats Be the Party of Big Business?

Posted on Oct 8, 2013

Wall Street isn’t buying all the tough talk about default coming from the Republican fringe. “We’ve seen this movie before,” one portfolio manager told The New York Times. “We know how it’s going to end.”

Fair enough: Recent history suggests that lawmakers will eventually snatch solvency from the jaws of default. Even the debacle of 2011 -- when questions about the debt limit prompted a downgrade for American debt -- left few lasting marks.

Still, near disasters are not conducive to a healthy business climate. If “certainly” and “confidence” really matter, as business leaders often say, then debt limit crises are a big problem.

So it seems only reasonable to ask: Are business leaders tired of these high-stakes theatrics? More to the point, are they ready to abandon the sometimes radical and chronically dysfunctional Republicans and cast in their lot with the Democrats?

There are ample reasons why business might give up on the GOP. The party has made battles over spending and debt limits the sum total of its legislative agenda (unless you count the 40 or so hopeless House votes to repeal Obamacare).

As a group, business leaders are certainly sympathetic to the GOP’s fiscal stance. While internally diverse and not a real “community” in any meaningful sense, business does seem to prefer small government to large and less debt to more.

But fiscal policy is not the only policy that matters to business. Other issues are at least as important, especially immigration and tax reform.
Fiscal brinkmanship has crowded out these topics, as well as many others. There is literally no room for compromise in Washington -- not between the parties and not even within the Republican caucus. A new GOP orthodoxy has taken hold, driven largely by the Tea Party, and that orthodoxy has made real lawmaking impossible.

While Republicans talk a lot about change, their addition to obstructionism has made them the party of the status quo. And that’s bad news for business. Whether you’re a retailer hoping for corporate tax reform or an agricultural company looking for sensible immigration reform, you should be very unhappy with Republicans.

Which raises a question: Might business look to Democrats for help?

It’s an implausible suggestion, given the party’s liberal drift in recent years. Many Democrats have been elected on explicitly anti-business platforms, and it seems unlikely that they’d be willing to throw business a bone, let alone a life ring. And business leaders, for their part, can't help but worry about the Democrats' penchant for regulation.

But both sides have much to gain from such an alliance. Business would get a party that’s already on board for immigration reform. And while tax revision, both individual and corporate, is less popular on the left than it is on the right, plenty of Democrats are committed to it. Even President Obama has made corporate rate reduction a centerpiece of his economic program.

Practically speaking, business leaders have already made their peace with key elements of the Democratic leadership. Senators from New York and California, for instance, are famous for the water they carry on behalf of Wall Street and Silicon Valley, respectively. More broadly, pro-business sentiment among Democrats is already well established, if not well advertised.

More important, that sentiment would almost certainly respond favorably to some financial encouragement. Spare me the moral outrage -- like it or not, money is the name of the game in Washington, especially in this era of unchecked campaign contributions. Progressives often complain that both parties are in the pocket of the business community, and to some extent they’re right. But that’s an argument for embracing reality, not railing against it. (At least until Congress does something about campaign finance reform, but that's another issue sidelined by partisan stalemate.)

In their battle for political ascendancy, Democrats could certainly use the help of levelheaded business leaders. The party’s long-term prospects depend more on demographic trends than campaign contributions, but deeper pockets would certainly help.

An alliance between business and the Democratic Party wouldn't be easy, and it probably wouldn't last very long. But in the short run, both sides have much to gain from teaming up -- even if they have to hold their noses to do it.

Read Comments (4)

edmund dantesOct 8, 2013

Are you kidding me? Big business has been partnered up with the Democrats for
years, for decades. Why do you suppose big business was given the Obamacare
waivers for a year? Big business is looking for cheap labor, and the Democrats
are doing their best to deliver with effectively unlimited immigration. Big
business CEOs have always favored Democrats with their contributions. Big
business *loves* more regulation because they already are staffed to manage it,
and more regulation is always a barrier to entry for smaller players.

The idea that there is any daylight at all between big business and the
Democrat party is a carefully nurtured myth, so the Democrats don't alienate
their base too much.

travis rechOct 10, 2013

As they say, Democrats are the second-most pro-business political party on the
planet.

edmund dantesOct 20, 2013

Here's the proof that the Democrats are, in reality, the party of the 1%.
Carried interest continues to be taxed at capital gain rates, and the topic has
dropped off of the radar. Thank you, Senator Schumer.

Joseph J. ThorndikeOct 21, 2013

As I said, some Democratic senators have been doing Wall Street's bidding for
a long time

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