Does GOP Spell “Bad For Business”?

Paul Heideman Oct 7, 2013

While the federal government shutdown is having all kinds of impacts on working people in the U.S., from the delay of vaccinations at the start of flu season to Head Start programs being closed and much more, it is also having an important impact on the ruling class. One of the most important of these is the deepening rift between sections of the Republican Party and the American capitalist class.

To put it bluntly, many American capitalists are not happy about the Republican-led game of chicken over funding the government.

The Business Roundtable, one of the most important institutions of the U.S. capitalist class, has sided openly with the Democrats on this issue, as the corporate CEOs it represents have made the rounds to various media outlets decrying the harmful effects of the shutdown. The U.S. Chamber of Commerce called the shutdown "an unwelcome hit to the economy and a sad symbol of our dysfunctional federal government"–though it pales in comparison, the organization went on to say, to the looming threat of a federal government default if Congress doesn't vote to raise the debt ceiling.

Of the two questions that Congress is currently warring over–funding government operations, which has caused the shutdown, and the raising the debt ceiling–capital is more worried about the latter.

The debt ceiling is the legal restriction about how far the federal government can go in the red. If it isn't raised, the government won't be able to borrow money and could begin defaulting on its debts. Given that major financial institutions and governments are the holders of this debt, a federal government default could easily spark another major financial crisis that would plunge the world economy back into recession or worse.

Still, large numbers of capitalists don't like the government shutdown, either, because it brings a level of uncertainty into their affairs. Despite the ruling class mythology about capitalists receiving profits as a result of the risk they take in making investments, in reality, capitalists try to avoid risk. What they want is a stable investment climate where they can reasonably predict what's coming down the road. Tense battles over government shutdowns generate a lot of uncertainty, ranging from whether a business' customers will get their paychecks to whether roads will be repaired on time.

With more and more representatives of the capitalist class criticizing what has always been known as the "first party of American business," the Democrats seem to be in the drivers' seat, appearing to both Corporate America and the general public as the "responsible" party in this dispute.

But this obscures an important fact: While everyone is focused on the Republicans' attempt to delay or defund Barack Obama's health care law, the Affordable Care Act (ACA) by holding the funding resolution hostage, the so-called "clean" legislation that the Democrats are demanding would lock in harsh cuts in most discretionary programs other than the Pentagon. In other words, the Democrats battle against the Republican Tea Partiers is so they can push through an austerity agenda that Corporate America, not to mention many Republicans, very much favors.

All this raises the question of why the Republicans, who aren't exactly known for being unfriendly to big business, are risking so much with their grandstanding over the Affordable Care Act. To understand what's happening, it's useful to go back over some of recent history.

In the 2006 midterm elections, in the wake of the Bush administration's disastrous response to Hurricane Katrina and increasing public discontent with the wars in Afghanistan and Iraq, the Republicans took as decisive a drubbing as it had in recent memory, leaving both the House and Senate in Democratic hands.

As left-wing author Mike Davis noted at the time, the results "convincingly refute the legend of invincibility that had been woven around [Bush strategist] Karl Rove's signature strategy of intensive base mobilization." Indeed, only two years earlier, liberals–rather than blame the miserable I'm-a-better-warmaker-than-Bush presidential campaign of John Kerry for his defeat–had worried about a "permanent Republican majority." The 2006 election shattered that scenario.

When the financial crisis detonated in late 2008, it only intensified the resentment felt throughout the country against Republican rule. Headed for an ignominious defeat in November, fractures began opening up in the party, centered around the bailout of the financial sector.

A small but significant portion of the party, eager to put distance between itself and the electoral whirlpool the Bush administration had become, announced its opposition to the bailout in the name of small government and free enterprise. Of course, they failed to stop the Bush administration, with Democratic support, devoting trillions to the Wall Street bailout, and they also failed to staunch the Democratic avalanche in November that brought Barack Obama to the presidency. But in that moment, some Republicans saw the outlines for a rebranding strategy for their party.

This rebranding strategy emerged months later in the strange guise of the purportedly grassroots movement called the Tea Party.

Of course, as noted at the time, the Tea Party was anything but grassroots. Its supporters were older, whiter and richer than the overall population, and they had the backing of some of the most powerful people in the country. The organizations that were set up to "represent" the Tea Party had close connections to the Republican establishment.

Nonetheless, with the help of an all-too-willing media titillated by the theatre and bluster cannily deployed by Tea Party strategists, the Republican Party was able to distance itself from the legacy of the Bush years and appear as an emerging opposition to Obama's alleged government overreach. In the 2010 congressional elections, the Tea Party was able to recapture the House with a commanding lead, thanks in no small part to Barack Obama's failure to deliver in any meaningful way on the promises of his campaign.

The 2010 election left many liberals having flashbacks of 2004–the Republicans were once again portrayed as an invincible electoral juggernaut. Once more, however, history put these fantasies to rest–in the 2012 election, Obama easily defeated the hollow avatar of wealth going under the name Mitt Romney. At the same time, the intra-party tensions visible in 2008 again came to the fore, with major Republican figures like Karl Rove worrying publicly that the Tea Party's focus on ideological purity in primary elections was costing the Republicans winnable seats.

Today, those splits are dominating the party. Tea Partiers led by Texas Sen. Ted Cruz have all but declared war on any GOP colleagues not willing to back the strategy of a shutdown, and Republican stalwarts like John McCain have responded–using the gift for language so typical of their party–by calling the Tea Partiers "whacko birds."

The key question that arises from this history is what the split in the party signifies. Are the Tea Partiers simply feral reactionaries, outside of the discipline of the capitalist class? Is the whole thing a charade, with Boehner and Cruz secretly in cahoots to push de facto austerity on the country?

The truth–stubbornly inclined in this case to follow a cliché–seems to be somewhere in the middle.

First, it's important to dispel the self-flattery of Tea Party propaganda–that this represents some sort of right-wing insurgency against business as usual. Some of the richest and most notoriously conservative names in the U.S. ruling class, like the Koch brothers, are closely tied to both Tea Party organizations and the politicians who claim to speak for them.

But that's not the only source of support for the Republican right. Ted Cruz, for example, received the endorsement of the U.S. Chamber of Commerce and National Federation of Independent Business, both important organizations of the capitalist class as a whole. The story is the same for other representatives connected to the Tea Party. Without the backing of a significant portion of the capitalist class, the Tea Party would not have been half as successful as it was.

This doesn't mean, however, that the capitalists backing the Tea Party have bought wholesale into the full right-wing program. Few capitalists, for example, have much interest in abolishing the Department of Education–particularly when it's doing such a nice job under Obama of gutting public schools and attacking teachers' unions.

By supporting the Tea Party, even if they don't agree with all of its proposals, capital helps to keep a check on anything Obama might do, especially if he were to face significant pressure from social movements. As Harry Braverman, an American Marxist from an earlier generation, wrote of the intransigent right of his time: "[T]he capitalist class as a whole keeps up a running fire against high taxes, not because it could or would alter the tax structure fundamentally, but in order to keep its share as low as possible within the limits dictated by present circumstances."

The same principle applies today–and it's a valuable insight to keep in mind, especially in light of what the Tea Party fanatics have been able to accomplish in pulling government policy to the right, even as they've been seen as losers in particular legislative battles.

By unleashing the pit bulls to attack Obama's health care legislation and denounce the administration for presiding over unprecedented "big government" spending, the business and political establishment are able to box in Obama and the Democrats and move the "responsible center" in Washington closer to unprecedented austerity. Not a bad outcome if you're a Republican-leaning corporate executive.

Nevertheless, if the Tea Party isn't conservatism gone rogue, with no connection to the policies promoted by the ruling class, it's also true that the current divisions in the party are real. John Boehner's hands aren't completely tied by his party's right wing, as some accounts would have it, but there are serious differences over party strategy that have brought the Republicans into conflict with significant sections of the U.S. capitalist class.

One result, for example, is that no one seems capable of calling off the pit bulls when the Republicans end up following a losing strategy–as in the case of the government shutdown. The traditional main party of big business is losing credibility by the day in the eyes of the public, which makes it less useful to the ruling class by the day.

So why are capitalists seemingly unable at this moment to discipline the right wing of the Republican Party–why are they unable to either bring the Tea Partiers to heel through their own pressure, or to get party leaders like Boehner to do it themselves?

The first, and simplest, answer is that the Republicans are an opposition party at this point. That means that they are not primarily responsible for securing a decent investment climate for capital. In the U.S. political system, the responsibility for creating a climate in which capital is comfortable investing falls most heavily on whoever controls the executive branch. The opposition, even when they have the power to obstruct by holding the majority in one house of Congress, has more room to grandstand.

But this isn't sufficient to explain the Republican right's distance from those who normally hold their leash. The institutional set-up of U.S. politics, which requires tremendous amounts of cash raised from corporations and the rich, usually functions to guarantee that no politician steps too far beyond the boundaries of what capital deems acceptable.

One of the most important causes of this seeming breakdown in relation to the Republicans is the way that gerrymandered districts have made Republican congressional representatives less dependent on funding from corporations or the rich to win.

After 2010, when the Republicans took over a number of state legislatures, they were able to redraw the maps for congressional districts, making them "safer" for Republicans. In most cases, this meant making them significantly whiter. Today, House Republican districts are, on average, 75 percent white, compared to the country as a whole that is 64 percent white.

Because the gerrymandering process leaves districts overwhelmingly Republican or Democratic, primary challengers who are more ideologically "pure" are often able to defeat more moderate opponents. As the Washington Post reported, a number of Republican incumbents who lost in the primaries in recent years have been defeated by more conservative challengers who actually raised far less money. Because of this, capitalists are not as easily able to exert pressure on these representatives through the usual means.

Redistricting may have shaped this fight, but it's clear, too, that it's not the whole story. Tea Party senators like Ted Cruz and Mike Lee are also playing an important role in the showdown, and they haven't been able to rely on redistricting to secure their elections.

Here, the Tea Party rebranding project itself seems to be important in giving a boost to their preferred candidates in statewide races. Cruz, for example, was able to defeat his Republican primary opponent David Dewhurst, despite the latter's endorsement by a host of business organizations–Cruz, on the other hand, had the support of a range of Tea Party groups and their leading representatives like Sarah Palin and Rick Santorum.

These three processes go a long way toward explaining why the right wing of the GOP seems to have slipped its leash. But, of course, Corporate America hasn't given up. The Chamber of Commerce has announced plans to support primary challenges against GOP politicians it deems irresponsible–the mirror image of the Tea Party strategy. As one consultant to the chamber put it, "Clearly, we're getting to a point where we need a Congress that's going to be productive, proactive and create a stable environment for economic growth and job creation."

What does this mean for the left?

The drama over defunding Obama's health care law reinforces a fundamental point that the left too often forgets: Under capitalism, the state isn't directly controlled by capitalists, which creates the possibility for certain things to move in directions that capital doesn't want–though only to a certain extent, and for a limited period of time.

But more importantly, there's more than one way to skin a cat. In this case, the ruling class has the "world's second-most enthusiastic capitalist party" to rely on: the Democrats.

In the short term, the main political victor in the government shutdown will be Obama and the Democrats. Obama will emerge from this battle with renewed credibility, both among capital and the general public. To business, he will have once again proven himself a reliable steward of its interests–in this case helping to save the ruling class from the monster it created to hinder his presidency. Among the general public, Obama will appear the more reasonable party to the dispute, willing to compromise to get the government moving.

But the "reasonable compromises" Obama is offering are attacks on the working class, including means-testing in the Medicare program and cutting Social Security cost-of-living increases. These measures are unpopular on their own, but when introduced as solutions to the crisis of the federal government, with the Tea Party run amuk, Obama will have a far easier time. This doesn't mean the president is secretly happy about the shutdown – but he isn't about to let a good crisis go to waste, as the saying of his former chief of staff, Rahm Emanuel, goes.

As such, it seems likely that the Democrats will continue to be the main party that the capitalist class relies on, at least in the short term.

This showdown highlights one of the central tragedies of capitalism–that crises for the ruling class manifest as far more dire crises for the working class. While capital scrambles to bring the Tea Party to heel, federal workers are going without paychecks and crucial social services are being denied.

It's difficult to say that this crisis offers an opening for the left. Until there is a working class movement strong enough to offer an independent political alternative to ruling class politics, the splits among our rulers will be transient enough. Only by building such a movement will we be able to make their crisis theirs alone.

First published at

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