The Democratic-Industrial Complex

Over the past few weeks, President Obama and Congressional Democrats have reached a series of high-profile agreements with key industries that have usually aligned with the GOP. Automobile manufacturers, the health insurance industry, medical professionals, pharmaceutical executives, and electric utilities - not traditional Democratic allies - all have joined, to varying extent, in the big policy initiatives of Obama's second hundred days.

Most of the attention on these agreements has understandably focused on their near-term legislative impacts. But the cooperation between Democrats and traditionally skeptical industries could have far-reaching campaign implications as well. These industries already started shifting their dollars towards the Democrats after they regained the House and Senate majorities in 2007. Now, these nascent policy alliances offer Democrats the prospect of a more solidified financial commitment, creating yet another potential roadblock for a scrambling Republican Party. As Democratic lobbyist Steve Elmendorf put it, a closer alliance between Democrats and these industries "means potentially that [the Republicans'] time in the wilderness will be longer because these groups will not help them to get back into the majority."

Each of the Democratic policy agreements with these industries turned heads. After years of opposing federal mandates to improve vehicle mileage, a phalanx of auto executives joined President Obama at his announcement of new fuel economy standards last week. A week earlier, representatives of insurance, pharmaceutical and other health care companies flanked Obama as he announced an aggressive deal to reduce the increase in health care spending. And, to the frustration of Republican opponents, the cap-and-trade climate bill steered through the House Energy and Commerce Committee by Representatives Henry Waxman of California and Ed Markey of Massachusetts won praise from leading electric utilities.

While automakers are relatively modest donors, energy and health care concerns are big financial players. Democrats, in power at every level of the federal government, were always likely to fundraise well for the next two to four years. The question is whether they can parlay their warming relationships with these industries into the kind of cash advantage that Republicans enjoyed from them during their decade in the majority.

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In 2004, when Congressional Democrats were still in the minority, they only captured about 40 percent of $88.3 million total campaign donations from health care industries, according to the Center for Responsive Politics. Republican candidates received more donations across the board: from medical professionals, hospitals, insurance companies, and especially from the pharmaceutical industry, which gave Republicans $8.7 million and Democrats just $4.4 million. But by 2008, with the Democrats in the majority, the overall numbers reversed: Congressional Democrats captured almost 60 percent of a larger pot of health care money ($124.7 million). Democrats even bested Republicans in pharmaceutical donations, $11.3 million to $10.2 million.

Comparable fundraising shifts occurred in the automotive and energy fields. Among automakers, Republican Congressional candidates enjoyed a nearly three-to-one advantage ($1.4 million to about $550,000) over Democrats in 2004; in 2008, from the same group, Democrats collected over $1 million to about $950,000 for Republicans. Republicans still held a commanding lead in donations from the overall energy sector in 2008, raising $33.5 million while Democrats attracted $19.8 million. But even that was over $10 million more than Congressional Democrats raised from energy interests in 2004; the Democratic share of energy contributions increased from 26 percent in 2004 to 37 percent in 2008. Democrats still found little support from the mining and the oil and gas industries (which respectively directed 69 per cent and 75 per cent of their contributions toward Republicans). But Democrats have made big gains elsewhere, particularly among utilities. Utilities gave almost exactly two-thirds of their $13.3 million in political donations to Republicans in 2004. By 2008, Democrats and Republicans split $16.9 million of utility money almost 50-50.

A similar trajectory is evident at the presidential level. In 2004, Democratic nominee John Kerry received less than 40 percent of the health care industry's contributions to the party nominees; in 2008, Barack Obama collected 72 percent of the industry's donations. Kerry took in less than a quarter of the auto manufacturers' donations; Obama received 62 percent. And Kerry's campaign received only 17 percent of contributions from electric utilities; Obama captured 56 percent of their donations last year.

Though they have started to neutralize the GOP's financial advantage among these groups, Democrats may still have room to grow. The yardstick might be highs that Republican fundraisers enjoyed during their time in the majority. In 1996, the Republicans' first election with House and Senate majorities since 1954, they collected almost 63 percent of health care's total donations. Pharmaceutical interests directed more than two-thirds of their contributions to Republicans that year. The same story played out in the auto and energy sectors. Auto manufacturers gave 68 percent of their money to the GOP in 1996. And Republicans received 69 percent of utilities' donations en route to collecting 76 percent of the energy sector's total contributions.

Early numbers from 2010 election fundraising posted by the Center suggest that Congressional Democrats are approaching and even exceeding the donation shares that Republicans once experienced. So far in this cycle, Democrats are receiving about 66 percent of both the $3.5 million donated by health care companies and the $1.1 million donated by utilities. (Automakers have made negligible contributions to the 2010 race.) Democrats have even pulled ahead of Republican candidates in donations from the overall energy sector, defying conventional wisdom by raising $1.2 million from big energy so far, compared to $850,000 for Republicans. Even the oil and gas industry is hedging its bets, directing 43 per cent of its contributions so far toward Democrats.

With industry, Democrats are making the argument that they are better off working with the majority to shape legislation than joining Republicans in adamant opposition to Obama's plans. The message to business from Congressional Democrats, Elmendorf says, is that if they don't work with the party "it is going to be a vastly different bill; if you stay in the tent, we are going to get a more moderate bill."

So far, Obama and Congressional Democrats have strengthened their ties to these industries without inciting a backlash from the traditional party interests-environmentalists, consumer groups, labor-dubious of them. That challenge will grow more complex as cap-and-trade legislation continues its advance through Congress and both chambers begin seriously considering health care reform, which will directly pit traditional Democratic interests like labor against the medical industry on questions such as establishing a public competitor to private insurance companies.

If Obama and Congressional Democrats can continue to balance those interests as effectively as they have so far, the legislative, political and financial rewards could be substantial. For the moment, at least, key components of big business seem happy to stay in the Democratic tent, and the Democrats' campaign coffers are showing it.--