USA: Corporate Power in Overdrive

CAMBRIDGE, Mass. -- With last week's reversal of his campaign pledge
to limit power plants' emissions of carbon dioxide, a key
contributor to global warming, President Bush surrendered to coal
companies and utilities dependent on coal. He had little choice.
It's payback time, and every industry and trade association is
busily cashing in.

There's no longer any countervailing power in Washington. Business
is in complete control of the machinery of government. The House,
the Senate and the White House are all run by business-friendly
Republicans who are deeply indebted to American business for their
electoral victories. If corporate America understood its long-term
interest, it would use this unique moment to establish in the
public's mind the principle that business can be trusted. But it's
doing the opposite, and the danger for American business as a whole
is profound.

Credit-card companies are getting a bankruptcy bill that will make
it harder for overstretched people who succumbed to these
companies' blandishments ever to get out from under the resulting
debts. Oil companies are on the way to obtaining rights to drill on
Alaska's coastal plain. Cigarette manufacturers are confident the
administration will drop the federal lawsuit against them.
Pharmaceutical companies are hoping to get longer patent
protections. Big, labor-intensive businesses want to get rules that
weaken unions, and they've already killed the Labor Department's
ergonomics rules, which would have protected workers against
repetitive-stress injuries. Airlines with labor problems can count
on White House actions to ward off strikes. And so on.

In normal times when business has to cope with some political
resistance its leaders are forced to set strict priorities. There
is only a fixed amount of political capital to spend. The Business
Roundtable, comprising the chief executives of large American
companies, typically establishes at the start of a new Congress a
legislative agenda reflecting what its members consider the most
important issues. The United States Chamber of Commerce, after
canvassing its mostly small and medium-sized member businesses to
determine their priorities, also develops a strategy. The National
Association of Manufacturers weighs in with its wish list. And the
National Federation of Independent Business, composed of small
firms, sets its goals.

These groups do not always see eye to eye, but under normal
circumstances they understand that legislative success requires
coordination. Separately, they lack the political clout to overcome
determined resistance in one or both houses of Congress or from a
president at least partly dependent for his political future on
organized labor, environmentalists and other interests besides
business.

The trade associations representing specific industries
coal-powered utilities, pharmaceuticals, hospitals, electronics,
securities, oil and gas, for example typically play supporting
roles. Their own parochial legislative goals can't interfere
directly with the priorities of business as a whole because the
industries often have to depend on the larger business groups to be
heard. Specific firms may retain their own Washington lobbyists,
but they, too, have to work with others in order to have
significant effect.

Political resistance, in other words, forces the business
community to decide what's most important to it. It thereby enables
corporate America to exert some discipline over itself. Business
leaders can prevent or at least distance themselves from excesses
by any single company or industry that might otherwise taint
business as a whole in the minds of the public.

American business notably did not come to the aid of cigarette
manufacturers when lawsuits against them began several years ago.
Nor has corporate America as a whole fought on behalf of the gun
lobby. Labor and environmental rules with broad consequences
typically become high priorities for legislative attack, but not
all such rules. In the first Clinton administration, the business
community was quite happy to let the Labor Department target
apparel manufacturers and major retailers in its crackdown on
sweatshops. I recall a number of White House meetings in which the
leaders of major business organizations quietly assented to the
administration's plans to block subsidies flowing to a particular
industry, or to impose new clean-air rules on another industry, or
to move aggressively with an antitrust complaint.

With political resistance gone, the business community can,
paradoxically, no longer discipline itself. Every business lobbyist
on K Street is under enormous pressure from clients to reap
something from the new bonanza. Every trade association must
demonstrate to its members large returns from their investments in
getting an all-Republican business-friendly government. And the
pressure only ratchets upward: Every time one company or one
industry receives its reward, other Washington lobbyists,
representing other firms or industries, come under even more
pressure to score victories.

Nor can the Republicans themselves provide any discipline.
Washington is awash in corporate i.o.u.'s, all waiting to be cashed
in, and George W. Bush can't argue that the Democrats will block
the payoffs. Under these circumstances, the Bush forces are finding
it next to impossible to maintain order. Demands for regulatory
relief are growing louder, and most will have to be met. Corporate
welfare will flow ever more freely. Once the tax bill is open to
amendment, corporate tax breaks will blossom like the cherry trees.

At some point perhaps as soon as the 2002 midterm elections,
surely no later than the next presidential election the public
will be aghast at what is happening. The backlash against business
may be thunderous. Hence the great danger that corporate American
confronts.

Robert B. Reich, former labor secretary, is professor of economic
and social policy at Brandeis University and author of "The
Future of Success."

• 106 Money & Politics