The Unknown History of How Big Business Bought the Democrats Off

( – promoted by buhdydharma )

Actually, the title is misleading. This story is about far more than the Democratic party’s acquiescence to corporate servitude. It is about the rise of neofascism in America, the conquering of our government through subversive means, and how Big Business got together and changed this country to their liking.

Below is an excerpt from the best book ever written on how money influences politics – Dollars and Votes by Dan Clawson, Alan Neustadtl and Mark Weller. This excerpt specifically, however, is the fascinating and largely unknown story of how, after a series of setbacks in the 60s, Big Business decided to band together and destroy “liberalism”. The America that we see today, neoliberal, pro-corporate, anti-regulation, and generally hostile to anything resembling liberal or progressive government interventionism – is the direct product of the campaign begun so many years ago and which culminated in the election of Ronald Reagan.

Dollars and Votes

How Business Campaign Contributions Subvert Democracy



In most elections the vast majority of corporations pursue an access (or pragmatic) strategy. But in the I980 election a large number were ideological, risk-taking, conservatives. To understand the changing corporate mood we need to go back at least to the early I960s. During the I960s, a series of social movements challenged many aspects of the established order. Blacks undertook the first major movement, first in the South and then in the North. Urban riots, Malcolm X, and the Black Panther party demonstrated that this opposition could become militant and threatening. Strong student and antiwar movements put thousands of people in the streets and took over buildings. Young men resisted the draft or deserted the military. In the late I960s and early I970s, the women’s and environmentalist movements grew rapidly. Although most of these challenges to authority did not focus primarily on corporations, corporations increasingly felt their impact, both in worker rebellions and in demands for increased social responsibility. The host of “public interest” organizations initiated or influenced by Ralph Nader constituted what was, in some ways, the mildest and most mainstream social movement. But it was also the movement that most specifically, in arguing for more regulation of business, targeted corporate practices.

Richard Nixon, a conservative Republican, won a narrow victory in I968 and a landslide in I972. But policy does not depend on politicians’ personal preferences, or even on electoral outcomes, so much as it does on the mobilization of power outside the electoral arena. In the I9805, that was primarily business power. At the end of the I960s, the forces with the power to shape the national agenda were a set of social movements. As a result, Nixon’s administration enacted a host of key liberal measures on the domestic front. From I969 through I972, virtually the entire American business community experienced a series of political setbacks without parallel in the postwar period. In the space of only four years, Congress enacted a significant tax-reform bill, four major environmental laws, an occupational safety and health act, and a series of additional consumer-protection statutes. The government also created a number of important new regulatory agencies, including the Environmental Protection Administration (EPA), the Occupational Safety and Health Administration (OSHA), and the Consumer Product Safety Commission (CPSC), investing them with broad powers over a wide range of business decisions. In contrast to the I9605, many of the regulatory laws enacted during the early I9705 were broader in scope and more ambitious in their objectives. As a result, corporations felt under attack and vulnerable. It appeared that even a conservative Republican president such as Nixon would inevitably be pushed to support more and more regulation of business and interference with the market. Top business executives meeting in I973 articulated their feeling of vulnerability: “We are fighting for our lives,” “We are fighting a delaying action.” As one said, “If we don’t take action now, we will see our own demise. We will evolve into another social democracy.”


These domestic setbacks were matched by problems in the international arena. The United States defeat in Vietnam, the rise of OPEC, and, a few years later, the overthrow of the Shah made U.S. multinational corporations question the security of their overseas investments. Declining U.S. economic competitiveness, the rise of Japanese and European competitors and the burgeoning U.S. trade deficit, made it impossible to solve domestic problems by offering costly concessions to U.S. workers and activist movements. In the I974 congressional elections, the Democrats made huge gains, adding s seats in the Senate and 48 in the House to what had already been secure majorities. This aftermath of Watergate only increased the sense that the tide was running against business, that mobilization was needed to prevent the United States from becoming a social democracy.

It would be easy to argue that business concerns reflected more paranoia than reality. Most of the new regulatory agencies were weak, lacked money for enforcement, and were inclined to accommodate corporate interests. For example, in I97I, when there were 47,000 commercially available chemical compounds, the Occupational Safety and Health Administration had set legal limits on concentration levels for only about 500 of them, leaving the remaining 99 percent unregulated. Most workplaces were never inspected, and if violations were found the average fine was only about $25. Things changed little over the years: A I985 study by the Congressional Office of Technology Assessment reported that the average fine for a “serious violation” was only $172, despite the fact that such violations were defined as those that created a “substantial probability of death or serious physical harm”. But while these regulations were often weak and enforcement minimal, they established a precedent, both creating a material-institutional base for government regulation, and defining t e public interest” as different from, and opposed to, corporate interests. Business understandably felt threatened, and had it not responded, these initial steps might have led to more far-reaching changes.

In the mid to late I970s, business began its own countermobilization, operating simultaneously on many fronts. Money was shifted out of liberal and moderate think tanks and policy organizations (the Brookings Institution, Council on Foreign Relations, and Committee for Economic Development) to newly founded or reinvigorated conservative equivalents (the American Enterprise Institute, Hoover Institution, and Heritage Foundation). In I965 and I970, the three moderate organizations had more than triple the funding of the three conservative ones; by I975, this advantage was much diminished, and by I980, the conservative organizations spent substantially more than the moderate ones.

Advocacy advertising expanded enormously. Traditional advertising tries to sell a product: Presta-Glop cleans teeth whiter than Ultra-Goo. Advocacy advertising has no explicit connection with a corporation’s products but, rather, it promotes a message, often explicitly political, sometimes simply “image.” In I979 David Vogel estimated corporations were spending one-third of their advertising budgets on such campaigns. The business press began the admittedly difficult task of redefining reality: “It will be a hard pill for many Americans to swallow-the idea of doing with less so that big business can have more…. Nothing that this nation, or any other nation, has done in modern economic history compares in difficulty with the selling job that must now be done to make people accept the new reality.”

Business also began to exert its muscle in more straightforwardly political arenas. One crucial step was the rise to prominence of the Business Roundtable. Founded in the early I970s, the Roundtable differed from earlier business policy organizations in two crucial respects. First, it was open only to chief executive officers of corporations-most earlier organizations had allowed in a few hand-picked academics, not to mention corporate vice presidents. Second, previous organizations focused primarily on the process of developing “appropriate” policy, which generally involved long-range study commissions and a primary focus on the executive branch. The Roundtable, by contrast, devoted most of its energy to direct lobbying activities, often focusing on Congress, the site of many of business’s political losses.

The Roundtable’s influence and business’s increasingly aggressive conservatism were dramatically demonstrated in the Labor Law Reform battles of I978. Labor was a key source of both money and organizational clout for many Democratic candidates and the northern Democratic party. The Democrats controlled the presidency and had near-record majorities in both houses of Congress. The Labor Law Reform Bill was labor’s number-one priority, although its measures were exceptionally mild. A few employers had been flouting the labor laws and appealing all adverse decisions by the National Labor Relations Board (NLRB). This won them years of delay. Then, if necessary, the corporations accepted the very mild penalties they received when convicted. The Labor Law Reform Bill prohibited such delaying tactics by providing that the decision of the NLRB would apply during the appeals process, until and unless a company won an appeal. It also stiffened the penalties for violations in order to reduce the economic incentives to break the law and pay the penalties. Unions saw the bill as an attempt to isolate a few companies that had been systematically violating the law. Therefore, they expected most major corporations to support the bill. Given the mild nature of the bill and Democratic dominance of government, it appeared the bill would pass relatively easily.

Instead, business mounted a major campaign against the legislation, spending more than $5 million to fight this one bill. In essence, business used all the normal tactics of pragmatic, access-oriented campaigns, but this time for the ideological purpose of defeating, rather than simply modifying, an important bill. Corporations pulled out all the stops: They cashed in their access chips so that government relations personnel could meet with members of Congress and explain their opposition. Managers from legislators’ home districts were brought in to make the company’s case. Small business owners were summoned as foot soldiers.

Those representatives of big business who were lobbying Senator Lawton Chiles, Democrat of Florida, heard him complain that most of the pressure he had received had come from large corporations. Almost immediately, the large corporations switched tactics, abandoning the attempt to directly lobby Chiles, and instead used their corporate jets to fly small-business owners from Florida to Washington to take over the job of convincing Chiles.

The business campaign was coordinated by the Business Roundtable. Big business has enormous resources, not just in money to spend, but in its ability to mobilize others. In I979, when Chrysler was trying to win a federal loan guarantee, it produced a list of the employment it generated in each congressional district. The list for just one Indiana Republican’s district included 436 companies with sales totaling over $29 million. Since the Business Roundtable included a couple of hundred such companies, it was able to put enormous pressure on members. Labor law reform may have been the most important issue, but, in I978, business had launched similar campaigns around consumer protection and taxes, winning significant victories in both.


Nineteen seventy-eight was also the year when business changed its campaign contribution behavior. The change resulted from a coordinated effort, not simply from a set of isolated decisions. During the I978 election, two key letters circulated within the corporate PAC community. The first was from Justin Dart, CEO of Dart Industries, and a personal friend of Ronald Reagan (though later also a friend and supporter of Bill Clinton). The second mailing was sent to all members of the Business Roundtable by Donald Kendall, CEO of Pepsico and chair of the Roundtable, with an accompanying analysis by Clark MacGregor of United Technologies. Dart’s analysis was framed in more aggressively conservative tones, but both communications contained the same basic message: Corporations should reduce their contributions to liberal and moderate (mostly Democratic) incumbents, and be more “attentive to candidates’ records on the broader, free-enterprise issues.” Kendall also decried the, “in my opinion, inflated role Washington representatives of some companies play in picking recipients of PAC funds”; implicitly he therefore urged CEOs to do more to set the direction for their PACS.

These letters were circulated only during the middle of the I978 election cycle. Corporations had already given many donations, and it undoubtedly took time for CEOS and boards of directors to consider the advice, change company policy, and then communicate this new policy to the company’s PAC director and PAC committee. An analysis by National Journal, comparing I978 corporate contributions before and after October I, revealed dramatically different patterns in the two periods. Through September 30, corporate PACS gave 72 percent of their money to incumbents; thereafter, only 49 percent.

The attempts to mobilize and unify the corporate community in support of ideological conservatism and an aggressive political stance began late in the I978 election, but came to fruition in I980. As one corporate PAC director told us:

There was a genuine movement, the closest thing I’ve ever seen on the part of business in this country, almost a phenomenon that occurred in that year and a half or two years of that particular election. It was a genuine virtual fervor. Let’s go out there and we can do it, we can change the system. The Chamber of Commerce and NAM [National Association of Manufacturers] and everybody beating the drum.

Or, as another put it to us: “I think we just basically kind of got with the program and did what we thought a business PAC was supposed to do at that point in time.” Around I980 “was the big, really exciting time.”


The shift in business behavior is one key factor explaining the differential policy outcomes of I98I and subsequent years. In I980 and I98I, there was “a genuine virtual fervor.” Far more corporate PACS gave substantial amounts to Republican challengers than had done so before. After I98I business reverted to its normal (moderate, access) approach, in campaign finance and in political action more generally. Why did business change its approach after the I980 election, becoming less aggressive, more willing to support moderate Democratic incumbents? Many factors undoubtedly played a part-the I982 recession and the return of prosperity, reduced concern about government because of the implementation of deregulation, a fear of popular backlash, the difficulties of a declining world power in deciding on a coherent strategy, and-undoubtedly crucial-the fact that business had succeeded in getting its most pressing demands addressed. Some of the corporations we interviewed stressed their economic difficulties in the early and mid-I980s as the reason that their behavior changed: “I think we are a little bit more pragmatic now-because we have to be.”

As another explained: “We were making money in I980. It wasn’t until later that the companies in [our industry] started really having serious problems and we had to look for all the help we could get from anybody. I think if you look at all the [industry] companies, basically they became much less ideological and much more concerned about their own problems.”

We would stress another key factor: the Democratic countermobilization and-associated with that-the increasingly pro-business character of the Democrats. After the I980 election, pro-business Democrats mobilized to persuade business that they deserved support. Tony Coelho, chair of the Democratic Congressional Campaign Committee, and perhaps the most successful Democratic fundraiser in the interval between Lyndon B. Johnson and Bill Clinton, led this effort. Coelho went to corporate PACS and told them, “You people are determined to get rid of the Democratic party. The records show it. I just want you to know we are going to be in the majority of the House for many, many years and I don’t think it makes good business sense for you to try to destroy us.” Coelho is convinced that it was this kind of fundraising that helped revive the Democratic party and prevent a realignment: “What had happened, in I980, we had our butts kicked. If the Republicans had been successful, they would have completed the job.

Our data make Coelho’s claim plausible. Corporate PACS did change their behavior dramatically between I980 and I984: They drastically reduced their efforts to defeat Democratic incumbents and they returned to a pattern of acceptance of the status quo. The corporate executive who had described I980 as “a genuine movement” also offered an explanation for its not persisting:

CORPORATE EXECUTIVE: I think that certainly that experience has not been replicated since that point.


CORPORATE EXECUTIVE: For a variety of reasons, not the least of which is the impact which that election had on Democrats. [The Senator he used to work for] is a perfect example of that. Here’s a guy who as a representative was conceived of as quite liberal, and now is conceived of and is a genuine moderate.

INTERVIEWER: Do you think that Democrats are more moderate since the I980 election?

CORPORATE EXECUTIVE: No question about that.

The increased conservatism by Democrats, along with corporate willingness to coexist with pro-business Democrats, reduced the probability of a thoroughgoing partisan realignment.

For a brief period around I980, a large proportion of corporations embraced a risk-taking, ideologically conservative, political strategy. Thereafter, however, most corporations returned to a pragmatic strategy of supporting incumbents to gain access: Business and the Democratic party moved toward each other. The Democratic party became more accommodating to business, and corporations became more willing to give to moderate Democratic incumbents.

Bill Clinton’s election culminated and solidified this change. Clinton was one of the founders of the Democratic Leadership Council, a group that self-consciously supported “moderate,” pro-business, Democratic policies, in contrast to what its members saw as the “too liberal” views of Michael Dukakis, Gary Hart, or Walter Mondale. Clinton’s campaigns and governance have been characterized by a mix containing some liberal initiatives and lots of conservative ones. Thus Clinton endorsed nondiscrimination against gays in the military, a significant tax increase for higher-income individuals, an executive order banning striker replacement by federal contractors, restoration of (limited) abortion rights, and a variety of other progressive initiatives. But he also supported the death penalty and a variety of “tough-on-crime” measures, immediately retreated from his support for gay rights in the military, pushed through NAFTA, and signed a draconian welfare “reform” bill. During the I996 election, and to a lesser extent in I992, the Republicans complained that Clinton was stealing their issues, that he had adopted their positions on all the key initiatives. And Clinton was hardly alone in this: The most serious threat to his nomination in I992 was Paul Tsongas, who espoused what were, if anything, even more probusiness positions. In such a situation business can hardly lose. As Kevin Phillips reminds us, the Democratic party is the second-most procapitalist party to be found anywhere in the world.

As a result of these changes in the Democratic party, by the late I980s most businesses no longer saw a major difference between the two political parties …


Extraelectoral mobilization-in the I960s, social movements and from the I970s to the I990s, corporate political action-is the factor that best explains major shifts in policy; its impact is more important than election outcomes.


To what extent does corporate political activity explain changes in policy outcomes? This can best be examined through a comparison of the periods following the I980 and I994 elections. In I980, corporate campaign contributions indicate a unique degree of corporate political mobilization and an unprecedentedly aggressive push for ideological conservatism. In I994 (and I996), corporate campaign contributions indicate business as usual-that is, a preference for conservative policies, but no major push for change. If policy responds to business’s extraelectoral mobilization, we would expect to find major policy shifts after the I980 election, and much milder policy changes following the I994 election despite the fact that both elections involved similar conservative victories at the polls. And we do find exactly that.

The period after the I980 election redefined what was seen as normal and expected, what values people held, and what the government was to do. This redefinition was in part cultural, but it also was embodied in a host of major policy changes, including:

* the most massive peacetime military buildup in history a huge tax cut, with a disproportionate share of the benefits going to business and the wealthy budget cuts in a wide range of nonmilitary programs, especially those that benefited the poor

* a dramatic rise in the size of the government deficit, in effect a result of the tax cut for the rich, but culturally and politically accepted as limiting the ability of the government to introduce any new programs

* a wholesale firing and permanent replacement of striking federal (PATCO) workers, not because of individual acts of violence but simply because they had gone on strike

* an open attack on affirmative action and minority populations, exemplified by Reagan’s “welfare Cadillac” stories.

Collectively, these actions altered the political and cultural framework, replacing the old New Deal understandings-government is responsible for economic prosperity, taxes should at least intend to redistribute income from the rich to the poor, and government programs are the solution to various problems caused by the market-with a new framework that presented government as the problem, not the solution. Tax cuts, not new programs, became the first emphasis; income inequality and “trickle-down” were the preferred ways to structure the economy. The government (and especially Reagan’s team) carried out these changes, but government never acted alone. Observers were continually surprised by the success of the Reagan Revolution: The Democrats controlled the House of Representatives, and the American political system gives enormous advantages to any group trying to stall and prevent change; so the conventional wisdom, at least initially, was that Reagan would be unable to pass his program in anything approximating its full form. Instead, not only did it pass, but it did so with amazing speed.

A major reason for the success was solid business support for this program; our data on the unprecedented character of corporate campaign contributions are one indicator of that unity. Many of the changes were a result of “nonpolitical” actions. For example, it was business’s aggressive stance toward labor that gave meaning and significance to Reagan’s firing of PATCO (Professional Air Traffic Controllers) workers. The altered business stance toward labor dated back at least to the I978 battle over labor law reform, and many of the other changes-military buildup, a change in Federal Reserve policy-had begun before Reagan’s election. Contrary to the common perception, Reagan was not popular at the time he introduced these key changes (in I98I and I982), but was popular at a later point (in I984 and I985) when he was not able to pass his program. The operative factor was not popular opinion, but business support and mobilization, though, over time, a range of cultural and media forces helped solidify an altered understanding of what was reasonable, normal, and expected. I Popular support was thus a consequence, not a cause, of the new program.


… I996 Clinton was reelected by a decisive margin. Business was largely unconcerned about the election: Certainly it was not engaged in an all-out-for-Dole-and-Gingrich mobilization. One indicator of this laid-back attitude is a Fortune magazine poll of the CEOS of major corporations taken during the spring of I996: 40 percent of them believed that who was selected as chair of the Federal Reserve Board was at least as important as who was elected president. In part, this is simply a recognition of the power of the Federal Reserve chair, but if the Democrats had been running Jesse Jackson, we suspect the poll results would have been different.

Part of the reason corporate owners and executives were unconcerned about the election was Clinton’s success in co-opting Republican issues. Politics had already been redefined. Rather than a pro-business party confronting a populist mobilization, the I9905 are better understood as a one-party-money-party-state, although the party contains two contending factions. In the wake of the I994 election, Clinton’s most important political task was to reassure business. Clinton’s White House coffees have been considered exclusively in terms of their importance for fundraising. Perhaps as important as the money raised was the message to business: “I’m on your side, I want to hear what you have to say, and I will do my best to meet your needs if I can do so.” Implicitly the message was: “Despite what might seem like a golden opportunity, this is not the time for you to push for a full-scale realignment.” Sometimes what does not happen is as important as what does: Clinton’s coffees may have prevented the emergence of an active corporate opposition, and that may have been as important to his election victory as the money raised.

Read more excerpts from this book here.



Skip to comment form

  1. . . . of the “two” corporate parties.  While the Republicans tea-bag and vigilante themselves into political irrelevance, the Democrats solidify their position as the newly preferred (by corporate America) vehicle for corporate policy.

  2. I didn’t see it mentioned in your excerpt, but another important aspect of this reactionary movement is found in the “Lewis Powell memo, written before Powell was appointed to the Supreme Court by Nixon.

    • dkmich on March 28, 2010 at 13:44

    every fleeing sane Republican left, further driving this corporate owned party to the right socially, which is why pro-life democrats are also welcomed into this money mash.  They threat corporations used was you have to or we will leave and take our jobs with us.  Well, we did and they did anyway.   The moral of the story is to never, ever let someone get away with blackmail or extortion.  It never stops, and they can’t be trusted no matter what.  

    Obama is just one more neoliberal off the Democratic bench.  Those Democrats that sold him otherwise, and they did, prove that they are corrupt and liars.

    I don’t know about voting third party on the state and local level, but the presidency is a sure bet.  

  3. is the dismantlement of “indigenous” protections here in the United States herself. It’s a quasi colonial policy brilliant hidden under the facade of free enterprise. It can only be short lived, because there is only so much that can be extracted from the workers themselves.

    This free enterprise, quasi colonialism must find foreign conquest, but the problem is that it just won’t work anymore; witness the absurd wars in Vietnam, the Anglo-American adventure in the Falklands, Grenada, Panama, Afghanistan, Iraq etc. The Cold War needed to be replaced and quick. So now without authentic enemies we fight windmills. The problem is we’re now totally broke.

    There are two ways to “try” and get out of this bad dream: 1) Make domestic labor work harder for less and 2)Steal resources from others. Hello England 1850! I mean WTF, Bush was certain that Iraqi oil would pay for whatever the hell he and Cheney were up to. It’s clear to me now that since this whole house of cards is crumbling, the new focus for the Aristocracy is to form even bigger and better cartels, multinational behemoths accountable to no one: The United Fruit Companies on steroids.

    Obviously it won’t work, but how long they can get away with it will be very interesting.  

    • banger on March 28, 2010 at 18:47

    This is stuff I lived through and the whole movement was actually pretty plain to see when it happened. What really depressed me was, as I often state here, that the “progressives” in America never responded to any of this. They persisted in single-issue politics that had some mixed success but this did not nurture a movement on the left. But that is understandable since there was no theoretical underpinning within which leftist thought could coalesce. So, it is not surprising. Just contrast our experience with Western Europe’s experience.  

  4. They kidnapped K Street with Obama’s election and now to buy all the votes from here on in.

    Thank You for Shopping Democrat Inc. America!

    We know you have no other choice in liberal parties and we thank you for your patronage…

  5. Search for I9805 and I9605 for 1980s and 1960s … also once the Democrats gained s seats in the Senate, which I assume is 5.

    This is the answer to those who say, “we have a majority in …”. “We” who? Unlike the post-Watergate Congress, non-corporate representatives would be a maximum of 30%~40% of the House, 20%~30% of the Senate.

    Of course, its not like business interests entered the Democratic Party after the 1970’s, it was just a shift in the business interests. The mainstream oil companies were in the Democratic coalition in the 1950’s while the individual wealthy oilmen, many of them a legacy of the big strikes in East Texas earlier in the century, were in the Republican Party. During the era of oil price stabilization, the interests of the mainstream corporate oil companies were in promoting maintenance of as close to full employment as possible without accelerating inflation, since slower growth (never mind recession) meant lower production quotas. This in conflict with the interest of the individual wealthy oilmen in avoiding taxes on wealth income.

    Once the Texas Railroad Commission lifted the quotas on production in March, 1971, the interest of the corporate oil companies in maintaining fairly high levels of employment went away, and they shifted to the Republican Party. The above is also likely an important part of the story in accelerating a movement that might have otherwise been slower.

    As elements of the establishment Democratic Party felt the pinch of the loss of the corporate oil producers, they started working on which business sector they could get to replace the oil companies, and the Hedge Fund Democrats were born.

Comments have been disabled.