Big Business Clings to Wobbly Alliances With House Republicans

If House Republicans have a war brewing with the nation’s business community, it’s mostly under the surface.

Unlike the open aggression of Florida Gov. Ron DeSantis, the presidential contender who has waged a public battle against the Walt Disney Co. over social issues, House Republicans have engaged in discrete feuds with business interests while still brokering alliances of convenience.

Lobbying and campaign reports this month show big business interests actively engaged on Capitol Hill debates and working to woo sometimes-skeptical GOP leaders with political donations. At the same time, House Republicans were in the throes of a month-long attack on corporate ESG policies, including pushing legislation this week at the Financial Services Committee designed to energize the party’s working-class base as an election year approaches.

Half a year into House Republicans’ majority in the 118th Congress, the simmering tensions are forcing corporate lobbyists to seek allies wherever they can.

“Smart business is being pragmatic,” said Rich Gold, who runs the lobbying practice at Holland & Knight. “The era where there was complete alignment between the Fortune 1000 and the Republican Party is over.”

Lobbying and campaign-finance reports show that major corporations continue to engage with lawmakers, even as their interests occasionally diverge.

Photographer: Stefani Reynolds/Bloomberg

Big companies increasingly sound like Democrats on climate change and social issues such as LGBTQ rights —and even abortion, much to the chagrin of Republicans who run the House. Many of those employers now subsidize travel for their workers to obtain abortions if they live in states where the procedure is limited, Gold said.

On the flip side, corporations want to stem what they view as a deluge of new regulations from the Securities and Exchange Commission, the Environmental Protection Agency and other executive branch agencies. For relief from that, they turn to Republicans.

Issues like congressional probes into China pit members of both parties against some of the world’s most recognizable brands, such as Nike Inc. and Adidas, as Republicans, who also are scrutinizing Ford Motor Co.’s dealings with a Chinese battery company, see little political downside to targeting companies directly.

Lobbyists, including those close to House Republican leaders, have noticed the shift and say it requires a different approach.

In the past, the GOP often defaulted to what was in businesses’ interest, said Will Dunham, who was policy director and liaison to House committees for now-Speaker Kevin McCarthy (R-Calif.) until joining the lobbying firm Brownstein Hyatt Farber Schreck last year. Now, he said, House Republicans first ask if it’s good for workers and the economy.

For Dunham, the shaky coexistence these days between the GOP and corporate interests might best be described by a once-popular Facebook relationship status:

“It’s complicated.”

PAC Problems

The tensions over policy and governing approaches result, in part, from the GOP’s more populist shift, particularly on trade and immigration policy.

Some of the conflict also stems from the Jan. 6 US Capitol riot and corporate responses to it: shutting off their PACs, especially to the 147 Republicans—including McCarthy and House Majority Leader Steve Scalise—who voted against certifying the 2020 presidential election for Joe Biden.

Nearly all PACs have resumed giving. And companies have tempered their tones when it comes to divisive issues.

Target Corp., for instance, suspended all of its PAC donations after the Jan. 6 attack. It restarted donations in spring 2021, according to its Federal Election Commission filings, but did not contribute to the campaigns of House Republicans’ current leaders.

This year, however, Target’s PAC made new overtures to leadership, including $5,000 to Scalise and House Majority Whip Tom Emmer (R-Minn.), among other Republicans.

Former Rep. Tom Reed (R-N.Y.), a moderate who co-founded the bipartisan Problem Solvers Caucus in the House in 2017, said the business community took a “knee-jerk” reaction after Jan. 6, and more recently has sought to dial back its opposition to Republicans.

Reed voted to certify the 2020 election for Biden and said he disagreed with those who did not. But he said many company execs concede, at least in private conversations, that cutting off most, or even all, Republicans was an untenable position.

“The corporate world in particular is recognizing that they just can’t turn their back on that population like they did,” Reed said during an interview this spring.

Looking for Moderates

Reed has a birds-eye view of the tension between business interests and House Republicans from his new vantage point as a lobbyist at Prime Policy Group, the latest iteration of a longtime, and once top lobbying firm with roots to the former Black, Manafort, Stone and Kelly.

Moderate-leaning Republicans are now drawing more attention, Reed said.

“What I’m sensing is the corporate world is looking to develop those relationships,” Reed said, “because it allows them to participate in the Republican world in a way that may be more politically correct, than what they were previously embracing by running to that hard-left type of position.”

A comparison of two Pennsylvania Republicans illustrates Reed’s point.

Rep. Brian Fitzpatrick , who co-chairs the Problem Solvers Caucus, held almost $2.9 million in his re-election campaign as of June 30 and had raised more than $860,000 from other committees, including PACs for the National Association of Manufacturers, UPS Inc., Comcast Corp. and other business and lobbying groups.

Rep. Scott Perry, chair of the staunchly conservative House Freedom Caucus, whose members have routinely been a thorn in the side of business interests, held about $540,000 in his campaign as of June 30 and reported receiving about $150,000 from other committees, including PACs, though few of them tied to specific companies or business groups.

Both of their races are competitive, though Perry, who hails from the deep-red center of the state, is in a much less expensive media market than Fitzpatrick, who represents a district in the high-cost Philadelphia area.

Most corporate and industry group PACs give to members of both parties and have done so for years, and typically seek out lawmakers who are not on the far left or far right. But Republicans, in recent cycles, are getting a historically low percentage of their political cash from corporate PACs, The Wall Street Journal reported last month.

Still, Micaela Isler, executive director of the National Association of Business Political Action Committees, said her member PACs contributed about 48% to Democrats and 52% to Republicans in the 2022 election cycle.

McCarthy reported about $3 million from all PACs, including those connected with business interests, to his campaign or to joint-fundraising committees that partner with his campaign in the first half of the year, a Bloomberg Government analysis shows. His donors include the PACs of Johnson & Johnson, Goldman Sachs and the Mortgage Bankers Association. By contrast, House Democrats’ new leader, Hakeem Jeffries of New York, hauled in about $717,000 from PACs that donated to his campaign or to joint-fundraising committees that partner with his campaign, BGOV found.

Companies have also become noticeably more guarded about wading into controversial social matters, even when they bubble up into priority legislation.

During an atypically partisan fight over the annual Defense Department authorization, House Republicans added amendments that would restrict abortion access and transgender medical care for troops. Industry representatives said they worked to stay out of the fray.

“The defense industry, the defense community is steering away from those issues and just really sticking to getting platforms, getting programs authorized and letting Congress iron out and handle some of the more contentious issues,” said lobbyist Lisa Whisler, a partner at Capitol Counsel who leads the firm’s defense practice.

‘Rock and a Hard Place’

A signature area of conflict between corporations and Republicans is over environmental, social and governance matters.

During its focus on ESG, the House Financial Services Committee, which oversees banking regulators, has offered Republicans on the panel an opportunity to chastise corporations for liberal-leaning company policies and positions. But it’s not that simple.

Some companies have embraced environmental and social policies that Republicans deride, but they aren’t necessarily on board with the Biden administration’s efforts to require them. As a result, the biggest companies, and their lobbyists, face a delicate messaging dance.

Rep. Byron Donalds (R-Fla.), a member of the Financial Services panel, said executives of publicly traded companies tell him privately that they’re not eager for new environmental and social regulations but find themselves under pressure from activist shareholders and employees.

That leaves some of these executives “caught between a rock and a hard place,” he said.

Small businesses, by contrast, have been more public with their praise for the panel’s pushback on ESG regulations.

“Oh, they love what we’re doing,” Donalds said during an interview outside the committee’s meeting room.

The biggest business groups, including the Business Roundtable, have applauded some of the committee’s recent efforts, especially an overhaul of the rules for proxy advisory firms that recommend how shareholders should vote.

“Business Roundtable has long been concerned about the outsized influence proxy advisory firms wield in the shareholder voting process,” the group said in a letter to members of the Financial Services panel.

The US Chamber of Commerce, which has been at odds with House Republican leaders over past endorsements of Democrats and policy disputes such as one over the 2021 infrastructure law, also has expressed support for overhauling the proxy voting system.

Both groups reported an uptick in federal lobbying in the first half of this year compared with the same period last year. The chamber shelled out $35.1 million this year, up from $34.5 million. The Business Roundtable, an association of more than 200 CEOs, spent $10 million this year, up from $9.2 million in the first half of last year.

The SEC’s rules “have allowed social activists to abuse the proxy system,” and force companies to adopt a liberal agenda, said a memo from an ESG working group of Republicans on the Financial Services panel. The panel advanced legislation Thursday aimed at ESG and overhauling proxy voting.

The House Financial Services Committee, led by Chairman Patrick McHenry (R- N.C.) and ranking member Maxine Waters (D-Calif.), has sparred over ESG legislation.

Photographer: Ting Shen/Bloomberg

House Democrats have criticized Republicans’ focus on ESG, and this month’s sparring has followed party lines. The panel’s top Democrat, Maxine Waters (Calif.), said in a contentious markup Thursday the ESG-related measures were “being forced by the extreme MAGA wing of the Republican Party.” Any legislation would need to pass the Democratic-controlled Senate.

Another panel, the new Select Committee on the Chinese Communist Party, shows that some corporate probes have bipartisan backing. The committee is looking into specific companies’ alleged use of “Uyghur forced labor in their supply chains,” according to letters it dispatched to Nike, Adidas, Chinese retailer Shein and Temu.

It’s another example, lobbyists said, that Republicans see no downside in confronting big companies directly. Lobbyist Sam Geduldig, a partner in the CGCN Group who previously worked in House GOP leadership, said it speaks to the broader shift across the chamber’s Republicans, one that business interests likely will need to grapple with beyond the current Congress.

“These are people that are not afraid to criticize big corporations,” he said. “It’s just a different party.”

—Alexander Cohen contributed.