In August 2011, Mitt Romney was campaigning for president at the Iowa State Fair and explaining why he didn’t want to raise taxes on the American people when a heckler shouted that corporations should pay a greater share of taxes.
“Corporations are people, my friend,” Romney replied. He was jeered in the crowd, and jeered even more by Democrats afterward. “I don’t care how many times you try to explain it,” Barack Obama said on the stump. “Corporations aren’t people. People are people.”
Ten years later, there’s been a strange inversion. Corporations, responding to pressure from Democrats, are acting more like people—using their clout to weigh in on legislation and social-justice issues that don’t immediately affect their taxes or bottom line. Republicans, meanwhile, are furious at the idea that companies might act this way.
“My warning, if you will, to corporate America is to stay out of politics,” Senate Minority Leader Mitch McConnell said Tuesday. “It’s not what you’re designed for. And don’t be intimidated by the left into taking up causes that put you right in the middle of America’s greatest political debates.” In arguing that companies should absolutely continue to donate money to politicians, but also that they should stay out of politics, McConnell embraced the tortured position that money, and only money, is speech—and that actual speech is not speech.
Although McConnell quickly and unconvincingly tried to walk his comments back (“I didn’t say that very artfully,” he said Wednesday. “They’re certainly entitled to be involved in politics”), it’s clear that his original view is gaining sway among Republicans. Governor Brian Kemp of Georgia called Major League Baseball’s decision to move the All-Star Game from Atlanta “cancel culture,” while Lieutenant Governor Dan Patrick of Texas was blunter.
“You’ve meddled in a lot of issues lately … Stay out of things you don’t know anything about, and if you want to get involved, then you’re taking that risk,” he warned companies that have criticized voting-law changes under consideration in his state. Noting that many corporations have moved to Texas seeking low taxes and minimal regulation, he said, “Don’t, on one hand, say ‘Thank you, Texas,’ while, on the other hand, slap us in the face. We’re not going to put up with it anymore.”
What these politicians are expressing is the fury of people who thought they had a deal, and have learned that they don’t, at least not on the old terms. The old arrangement was simple: The fiscally conservative wing of the Republican Party would push for lighter regulation, lower corporate taxes, and lower taxes on the high earners who ran corporations. In return, the corporations would cut generous checks to Republicans and remain circumspectly quiet about the culture-war issues that the social-conservative wing of the party cared about.
To facilitate this bargain, McConnell made blocking or eliminating campaign-finance regulations a personal mission, knowing that if companies could make large donations, and especially if they could do it without public scrutiny, they’d fill up Republican coffers. (Though the economy has tended to prosper more under Democratic presidents, executives still prefer lower taxes and regulation.) The Kentuckian argued that money was speech, and limitations on donations—even requirements to disclose—infringed on free speech.
The deal worked for a long time, but like many things in American political life—the peaceful transfer of power comes to mind—it is a casualty of the Trump era. In the early half of his presidency, Donald Trump pursued some projects that solidified the traditional bond between the GOP and business, such as slashing taxes, but also others that divided the old allies, including protectionist policies on trade and personally intervening to bully companies. Last year, the U.S. Chamber of Commerce, usually a stalwart supporter of Republicans, endorsed some Democrats, and it forcefully condemned Trump’s attempt to overturn the 2020 election.
Meanwhile, a decades-long consensus that publicly held that companies should, above all, do whatever they could to maximize short-term shareholder value began to soften. In 2019, the Business Roundtable, a leading trade association, released new guidance that said corporations should “push for an economy that serves all Americans,” in Chairman Jamie Dimon’s words, by investing in communities and employees, dealing ethically with suppliers, and considering longer-term returns.
The implications of this shift began to emerge even before Trump became president, but accelerated during his term. With protests over racial justice and other causes coursing through the nation, companies began staking out positions that weren’t directly related to their business. After North Carolina passed a bill targeting transgender people in 2016, many companies announced that they would be avoiding the state. Disney effectively sank a similar bill in Georgia with a threat to leave the state. Companies expressed their support for the Black Lives Matter movement.
Now with voting laws at the center of national politics, corporations are speaking out. MLB moved the All-Star Game, Coca-Cola and Delta blasted the Georgia law, and other executives have objected to the law and other bills under consideration elsewhere. To critics, this is riskily divisive. Echoing a famous Michael Jordan line, McConnell complained that Republicans drink Coke and fly too.
But these companies are responsive to many groups, and just because their stances don’t directly affect revenue and profits, that doesn’t mean these aren’t business decisions. Corporations are balancing the demands of shareholders, customers, and employees, as well as the positions of their own executives, who in some cases are genuinely angry about issues such as racial justice and want to use their platform to make a difference. In the case of MLB, Jake Tapper reports that executives were worried that some baseball players would have boycotted the game and others wouldn’t have. The game would have become a political sore anyway, and yanking it quickly was a way of cauterizing the wound. Companies may also calculate that the long-term costs of being on the wrong side of social-justice issues, or the wrong side of an ascendant liberal, diverse population, outweigh the short-term risks of Republican backlash and boycotts.
In short, what McConnell calls “blackmail” is just free enterprise at work. These companies may or may not be acting in their long-term best interests—corporations make mistaken bets about the future all the time—but they are acting rationally. The minority leader is realizing that the deal Republicans had with big corporations wasn’t personal; it was just business. A tax break can buy you a lot of things, but it doesn’t buy love.
In taking these stances on big social issues, these corporations are acting in a majoritarian manner. But no one should conclude that they are progressive. Even as big business enters into a temporary alliance with Democrats on voting rights, many of its captains are fighting back against the plan President Joe Biden announced Wednesday to raise corporate tax rates. The Chamber of Commerce, despite applauding Democratic infrastructure-spending ideas, is aghast at the idea that its members should help pay for them. Companies that announced plans to suspend donations to politicians who backed the Trump coup, or to forgo political donations altogether, have quietly begun slinking back.
Still, big business does risk ending up estranged from both parties. Most Democratic politicians are just as happy to take corporate money as Republicans, but the party as a whole is perhaps less likely to see corporations as natural, permanent allies. If even so pragmatic and canny an operator as McConnell can speak in anger at business, the current rift with the GOP could leave lingering distrust, even as the two sides once again find common cause on issues such as taxes and regulation. Senator Marco Rubio of Florida endorsed a union drive at an Amazon warehouse in Alabama (though partly for trollish reasons), and he more recently asked on Twitter, “Why are we still listening to these woke corporate hypocrites on taxes, regulations & anti-trust?”
American government would probably be healthier if more politicians asked—for whatever reason—why they are so willing to accept corporations’ arguments on taxes, regulation, and antitrust. Corporations may be people, my friends. But corporations are not friends, people.