The Impact of the Reagan Administration
When one business executive was asked what he thought about the Reagan Administration, he responded that he thought he had died and gone. to heaven.17 It is easy to see why. The Administration followed clearly anti-union policies, starting by breaking a strike by air traffic controllers and destroying their union and continuing by appointing resolutely pro-management people to agencies regulating lab our relations. Strong supporters of business’s contention that environmental, health and safety regulations were too strict were appointed to run the agencies responsible for these regulations. In case these appointees proved after all to be insufficiently sympathetic to business, their agencies had their budgets cut, making any growth in their activities impossible, and the agencies were placed under the close supervision of the critical Office of Management and Budget, which is part of the Executive Office of the President. The Administration asked Congress to reduce business taxation; the Congress responded by trying to out-bid the Administration in the generosity of the allowances it offered to business. The triumphs of business in the early years of the Reagan Administration were considerable. Yet a number of considerations suggest that the political problems of business did not disappear. The public interest groups, which had seen their memberships decline in the 1970s, re-grouped in the 1980s and had some success in attracting new members who were frightened by the threat the Reagan Administration posed to their values. A number of accidents halted the drive to weaken the social regulatory agencies. Scandals or alleged scandals overtook the Director of the Environmental Protection Agency and the Secretary of Labor. The Secretary of the Interior was too indiscreet about his views on racial minorities, Jews and women. In order to cut the Administration’s political losses, the top officials involved in these scandals were replaced by moderates more acceptable to Congress and the public interest groups. The vast budget deficits produced by the 1981 tax cuts coupled with the Reagan Administration’s appetite for certain types of federal spending (such as defense spending) produced rapid demands for tax increases and tax reforms to make such increases fairer. The 1986 Tax Reform Act in fact increased the tax burden on business considerably, although the opposition of corporate executives was attenuated by vast reductions in tax rates for very highly paid individuals such as themselves. Above all, business discovered that although the challenges to its collective interests had weakened in the 1970s, the imperative for corporations to protect their individual interests remained. Changes in the tax system tended to affect corporations differentially. For example, large tax allowances for investments benefited capital-intensive industries. The abolition or reduction of such allowances in return for lower tax rates would therefore set corporations in capital-intensive industries against those in lab our-intensive industries. Similarly, while some corporations feared the rising tide of foreign competition, others with a lively export trade or large investments overseas remained attached to free trade. In consequence, business politics in the 1980s was both active and individualistic. The reduction in the threat of public policies contrary to the collective interests of business consequent upon the election of the Reagan Administration did not result in any reduction in the general level of business political activity in Washington. The quest for federal contracts, tax changes and trade protection which would benefit individual corporations was more vigorous than ever. The drive towards building organizations to defend the collective interests of business in contrast all but disappeared. The Business Roundtable became just one of several organizations claiming to represent business in Washington as its novelty and glamour faded. The NAM and the Chamber of Commerce came to differ sharply on a number of issues. The general business organizations, like the trade associations, frequently found themselves immobilized by differences of interest and opinion among member corporations; in American business organizations, individual corporations can often veto a policy commitment by the organization for fear the corporation will resign and its dues be lost. The diminished opportunities for organizations representing collective business interests to play a prominent role increased the opportunities for individual corporations to be more prominent politically. Lobbyists for individual corporations supplemented by Washington lawyers or contract lobbyists pressed their cases vigorously on politicians rendered attentive to their clients’ needs by ever more numerous PAC contributions. Individual corporations paid what to ordinary Americans were fabulous sums to contract lobbyists thought to be able to reach the appropriate official. Thus TWA paid Michael Deader, who had left the Reagan White House to make his fortune as a contract lobbyist, $250 000 to make a single phone call to the Secretary of Transportation, Elizabeth Dole. Even President Nixon’s disgraced Attorney General, John Mitchell, was able to secure $75 000 from a business .that thought that Mitchell could help obtain it a federal contract to build subsidized housing. Former Secretary of the Interior James Watt collected $300 000 from one client. Corporate PACs continued to buy the attention — and possibly the goodwill — of politicians with campaign contributions; the larger the federal contracts received by a corporation, the larger its PAC tended to be. By the end of the 1980s, many Americans wondered where the boundary between corrupt and normal business practices had been drawn. Indubitably, however, the decade had witnessed a shift away from business politics being routed through business organizations towards greater emphasis on political activity by individual corporations. This did not constitute a return to the situation which had prevailed in the 1950s and early 1960s, however. In the 1950s, individual corporations had been much less actively involved in politics than in the 1980s, while even by the end of the 1980s, general business organizations or trade associations had not been reduced to the same condition of weakness that characterized them earlier. Politics mattered more to most corporations than it had in the 1950s. The early years of the Bush Administration also seemed to promise some return to those issues which unite business by threatening its collective interests. The President’s own talk of a ‘kinder, gentler society’ seemed to hold out hope to critics of business behavior such as environmentalists. The President’s comments almost certainly reflected an upsurge of popular concern about nuclear accidents following Chernobyl, the effect of chlorofluorocarbons on the earth’s atmosphere, and a damaging oil spill off Alaska from the Exxon Valdez. In contrast to the 1950s, American business remained politically alert and well equipped should any important challenges re-emerge. Yet in a different sense to their original intent, Schoolman and Tierney’s comment on changes in the general American interest group system, ‘More of the same’, could be applied to business interest groups. As noted earlier, American business has always seemed disorganized by international standards. There is no single organization which speaks for business authoritatively comparable in status to employers’ groups in other democracies. Though much strengthened, business
Business and Politics in the USA 57
groups in the USA remain fragmented, competitive and lacking in authority.