Hard-nosed Wall Street traders and corporations are giving more to Democrats than they have tended to in the past, but why?
Economist and Club for Growth founder Stephen Moore writes in
The Wall Street Journal
: "Business is living in a fantasy world" if they believe Democrats will spare them economic strife. "When you sell the rope to the hangman, you deserve to have a noose around your neck," he concludes. I say the opposite is true. Business people live in the real world and make decisions based on facts. Reality has led many of them to abandon the GOP.
Despite the conventional wisdom and the rhetoric of right-wing pundits, a Democratic administration might be better for business than a Republican administration.
The Republican majority lies in disarray. For years they cobbled together voters by advocating policies of low taxes, strong defense and social conservatism. But business appears to have tired of the GOP insincerity needed to maintain this unusual union. Former House Speaker Tom DeLay once infamously claimed: "I am the federal government."
This subsuming of big government combined with profligate spending has been a fiscal conservative's worst nightmare. Furthermore, the disastrous management of the war in Iraq has only intensified discord and fiscal irresponsibility.
CEOs, entrepreneurs and all businessmen have to live in the real world. If they look the wrong way, the consequences can be dire, resulting in a loss of market share or worse, bankruptcy. The environment has been changing in Washington, D.C. The Democrats have benefited from GOP losses, and a business would have to be crazy not to notice.
Look back to Bill Clinton's presidency. I seem to remember that the Clinton administration was reasonably responsible. Robert Rubin ran the Treasury Department. Together, Clinton and Rubin forged a plan of fiscal responsibility by combining a tax hike with a pay-as-you-go budget philosophy. Wall Street and Main Street benefited with stock gains and real wage growth.
Clinton passed other business-friendly policies. Clinton favored free trade and entitlement reform represented by the North American Free Trade Agreement (NAFTA) and welfare reform. He succeeded with help from Republicans and often over strong objections in his own party.
Policy, however, has not been the Bush administration's forte. The Price of Loyalty, a biography of former Treasury Secretary Paul O'Neil, reveals much on this topic. O'Neil, who'd served in the Nixon administration and been a CEO of
, had expected to spend his time weighing the advantage of one policy vs. another. He instead encountered politics driving policy. His opposition to Bush's tax cuts -- echoed not forcefully enough by former
chairman Alan Greenspan -- ended in O'Neil's resignation. Those tax cuts resulted in huge deficits.
The tendency for politics to override fiscal sense continued in the Bush Administration. Just look at the Medicare Reform Act of 2003 or the Energy Bill of 2005 -- bills full of waste that favored some industries over others, with grotesque subsidies increasing both government interference and size.
But the GOP, Stephen Moore included, continue to clamor that supply-side economics and relentless-tax cutting remain the only options to promote growth. Many Republicans gloss over the "little" problems in their equation. They don't mention the dramatic drop-off in revenue following Bush's tax cuts, nor do they acknowledge that the resulting rebound merely marked a return to a prior trend and was founded on more than $3.3 trillion in federal debt.
Business people don't have to look any farther than the problems in the credit markets and a weak dollar to understand we have a problem. Yes, the federal government, too, has a balance sheet. This is something serious business people understand. The GOP may want to consider discontinuing fanciful discussions and return to supporting fiscal responsibility. Perhaps then the real world would support them and consider returning them to office.