Defending Business Interests A Multi Pronged Approach

The modern American corporation is likely to follow a variety of approaches in defending its interests. The approach used will depend partly on the nature of the issue, but will also often involve several complementary strategies which can be used simultaneously.

The wise corporation will try to create a favourable attitude and willingness to listen amongst decision-makers before a problem arises. The most obvious way to do this is through campaign contributions. Prior to 1972 it was common for corporations to make campaign contributions from their general funds. This, practice was illegal, and so such contributions were often routed through overseas subsidiaries or individual donations by corporate executives in order to disguise their origin., After the Watergate affair led to the discovery of such illegal campaign contributions, corporations were limited to contributing amounts of no more than $5000 per candidate per election, the money to be raised by political action committees (PACs). Though PACs can have their operating expenses paid by the corporation, their funds must be ‘voluntary’ contributions from executives or stockholders. A corporation’s PAC may also ask its workers to contribute on two occasions a year — a rarely-used procedure.

Company PACs generally concentrate their giving on those best placed to help the company. Corporations thus usually give most of their money to incumbents (politicians already in Congress) rather than to their challengers.9 Such beneficiaries will usually be on the Congressional committees that most affect the corporation. Corporations’ PACs have proved willing to contribute to Democrats, even liberal Democrats, who are in the powerful positions and are almost certain to be re-elected, because the object is to buy access to the legislator and, if possible, goodwill. Only in 1978 and 1980, when the political tide was running against the Democrats did corporation PACs follow their hearts and tilt heavily towards supporting Republicans. In 1982 the balance shifted to the Democrats and remained there.

The corporation would also expect support from Representatives and Senators from areas where its factories are located. Such assistance might be of particular importance when there is competition between corporations for a government contract, for example to build a new transport plane for the Air Force. The top executives of the company can attempt to build ties to the legislators by making individual contributions to their campaign funds, though since 1974 such contributions have been limited by law to $1000 per election. The executives may also participate directly in the campaign, though this is unlikely. In spite of being urged frequently to become more involved politically, company executives have usually been too busy to do so. Social contacts and links with other elites (through working for the local symphony orchestra, for example) may however provide an opportunity for influencing the local climate of opinion and so, indirectly, the legislator. Above all, however, the legislator is likely to feel an identity of interest with local companies. Local companies, after all, determine the income and employment prospects of the legislator’s voters. The American system provides numerous opportunities for the legislator to claim the credit for good news for local companies: defence contracts, for example, will generally be announced through the local legislator’s office.

A third line of attack which the corporation might use would be to exploit links with the Executive branch. These links will take a variety of forms. The most obvious links are personal. Both Democratic and Republican Administrations recruit heavily from the ranks of business executives to fill the thousands of political appointments made by the president. Key figures of the Reagan Administration (1981-89), such as George Schultz, the Secretary of State, came to Washington from the boardrooms of major corporations (in Schultz’s case, the Bechtel Corporation). These personal links can be used if the corporation has a problem which needs government action or assistance. The awareness of the value that personal connections can provide in American corporations is demonstrated by the lucrative careers that former Executive branch officials can have as company lobbyists; a similarly lucrative career also awaits defeated legislators, whose Congressional contacts are greatly prized.

Apart from such personal ties, corporations may have almost institutionalised ties to particular government agencies. The agencies are subjected to constant argument and pleading from companies whose business is affected by their work. Corporations can moreover make life unpleasant for agencies that cross them through their Congressional allies. Congressional committee assignments are typically given to legislators with a constituency interest in the committee’s work. The committees that supply agencies with operating funds or that oversee their work are thus typically filled with legislators representing the people (including corporations, their executives and workers) with which agencies have to deal. The agency which offends interests it supposedly controls risks having its budget savaged and its executives humiliated by representatives of those interests in Congress.

Such considerations have led many observers to argue that American government agencies are unusually susceptible to `capture’ by the interest with which they deal. Agencies can be coerced as well as persuaded to fall in with their ‘clients” view of good public policy. Yet such arguments can be taken too far by neglecting the importance of party politics. Democratic Administrations have been quite likely to appoint people more sympathetic to environmental protection or labour unions to key positions, while the Republicans have appointed quite consistently officials sympathetic to business. In spite of predictions of capture by business, Democratic appointees to agencies such as the National Labor Relations Board (NLRB), the EPA, the OSHA and the FTC have caused apoplexy in the boardrooms of corporate America. Individual companies are usually represented in Washington by law firms. These are not law firms which specialise in court appearances, indeed, many of the law firms’ senior partners have not set foot in a court for decades. ‘Lawyers’ such as the one-time Truman presidential aide Clark Clifford, sell not their legal expertise but their connections built up over the years with a wide variety of influential people in Congress and the Executive branch. Access to such power figures might not secure a favourable decision for the company, but it will at least secure a serious hearing for the company’s arguments.

Individual companies in the USA thus have numerous opportunities to influence decisions before they need the assistance of a trade association or an ‘umbrella organization “for employers. Somewhat surprisingly; American trade associations and employers” organizations have not enjoyed a consistently high reputation in recent decades.