Levers of Power - Kevin A. Young

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types of legislation. The first type involves straightforward interventions by the government on behalf of business. Examples from the Obama administration include its promotion of tax cuts for corporations and wealthy individuals and its aggressive pursuit of pro-corporate trade agreements. In these cases, explanations like the one in the Schoolhouse Rock! parody do not adequately account for the administration’s actions. Familiar factors like corporate campaign money, lobbying, Republican obstructionism in Congress, and the president’s own conservatism were only part of the story. The capital strike that we described in the Introduction—massive corporate disinvestment from the economy and the threat of its continuation—was a central factor. The administration sought to rekindle “business confidence” so that banks and businesses would ameliorate the recession by making more loans and hiring more workers. Pro-business legislation was a quid pro quo: we’ll give you huge public handouts if you start investing in the economy again.

      The second type of legislation that we examine includes reform bills with some progressive thrust, in the sense that they might impinge on elite profits or power. We will examine four examples from Barack Obama’s first term as president: the 2010 Affordable Care Act (ACA), or “Obamacare” (passed); the 2010 Wall Street Reform and Consumer Protection Act, or “Dodd-Frank” (passed); the climate policy bills in the House and Senate in 2009–10 (did not pass); and the 2010 bills to repeal the military’s “Don’t Ask, Don’t Tell” (DADT) policy (passed).1

      The roots of these progressive bills are more complicated than pro-business legislation like corporate tax cuts. They may originate from a variety of sources. For one, elections help to define the legislative agenda. The Democratic victories in the 2008 elections and the strong public opinion in favor of reform played some role in the initiation of these bills. While the Democrats showed relatively little regard for public opinion in determining the content of their new bills (as we will demonstrate), they needed to appear to be taking some action. They could not afford to completely ignore their core campaign promises.

      Public support for reform and Democratic control of government were inadequate in themselves, however. Elite support was essential. As Al Gore noted in regard to the climate bills, “it’s virtually impossible” for politicians “to enact any significant change” unless they have “permission from the largest commercial interests who are most affected by the proposed change.”2 For the healthcare and financial reforms, the greatest pressure came from corporations outside those sectors; most health and financial corporations came to the table later, in the hopes of shaping reform to their liking. The climate bills had the support of some large corporations, though fewer than supported the other bills (which was the main reason climate reform failed to pass). In the case of DADT, the military, rather than business, was the “most affected” institution, and the high command had to give its “permission” for repeal before Congress would agree to support it. Without the support of at least some elite sectors, it is unlikely that any of the bills would have been introduced, let alone passed.

      Ascertaining elites’ preferences is difficult given that their publicly expressed positions often “reflect accommodations to circumstances that constrain what can be achieved.”3 That is, their views on legislative reforms are shaped, in part, by the external threats and prospects they see on the horizon. In the cases just described, they faced strong pressure for progressive reform from public opinion, from other elite sectors, and from certain leaders in Congress. In one case, the DADT fight, they also faced major pressure from a social movement: gay and lesbian military personnel and their supporters, who were undermining the stability of the military through lawsuits and through the discharges resulting from violations of DADT. In these contexts, many business and military leaders decided that “if you’re not at the table, you’re going to be on the menu.”4 That is, it is better to participate and shape reform in your interest than to oppose it outright, and therefore risk a much larger setback.

      The targeted institutions did not just react defensively to external pressures, however. They also possessed formidable power to influence the initial shape of each bill (and, as we’ll see in the next chapter, its reshaping in Congress). The most telling display of their power was their ability to exclude certain reform options from consideration. Single-payer healthcare, socialized medicine, bank nationalization, a carbon tax, and many other potential changes were never seriously discussed, even though many of those options had major public support. Being at the table allowed business to keep certain options off the table. This form of business power is often ignored by political scientists, but it is vitally important for understanding how policy is made.5 During the Obama administration, the prior exclusion of unfavorable reform proposals was in large part the result of the capital strike/business confidence dynamic, wherein the potential for business disinvestment helps to prevent even the consideration of progressive policy changes. The business representatives involved in the early reform discussions helped communicate that threat to government policymakers, who limited their initial proposals to reforms that would not significantly disrupt business confidence.

      The voice of corporations and other elite institutions held particular weight given that, in all of these cases except the DADT fight, there was little collective protest that threatened “business as usual.” Significant pockets of activism certainly existed around all these issues, but they were not very disruptive and could hardly qualify as mass phenomena. Progressive reform bills sometimes arise in the absence of mass disruption, but they tend to be more tepid and congenial to elite interests—and still more so after they emerge from the congressional revision process, as we will show in the next chapter.

      We close this chapter by examining a contrasting case: the major reforms to US labor law in the 1930s. Legislation ensuring the right of workers to form independent unions was initiated in response to economic disruption, which was largely due to the explosive working-class strikes and protests of the 1930s that targeted employers. This and other New Deal reforms were more robust than any Obama-era reforms. The key variable was the level of disruptive mass mobilization in each epoch. Corporate elites in the 1930s and 2000s were both forced to accept some amount of reform, but the elites of the 1930s experienced far more pressure. This example suggests how disruptive mass movements can force the initiation of strong progressive reform legislation in Congress: not by pressuring politicians but by threatening the elite institutions that control the politicians.

      Capital Strikes and Pro-Business Legislation

      The Obama administration initiated a host of new legislation designed to advance the interests of business. Often those initiatives contradicted Obama’s campaign rhetoric, which had promised that he would tax the wealthy at higher rates, pursue trade deals that benefited workers rather than corporations, and regulate business more closely. The disjunction stemmed less from the new president “selling out” than from the imperative of boosting business investment in the economy. Cultivating businesses’ confidence in the administration was essential because the $787 billion government stimulus bill passed in February 2009 was too small, given the magnitude of the crisis, and because the administration was unwilling or unable to take measures that would force investment in Main Street.6

      President Obama entered office in the throes of a historic disinvestment crisis. The problem was not a lack of money, but the fact that corporations were hoarding trillions of dollars in capital rather than investing it in the economy. Although the Great Recession officially ended in June 2009, the rate of unemployed or underemployed workers was still 17 percent in November 2010, and remained at almost 15 percent as Obama’s second term began in January 2013.7 Thus, Obama’s first term and much of his second were dedicated to convincing business leaders to start investing again.

      During Obama’s first two years, many corporate leaders deemed his policies insufficiently pro-business. Their critique was overblown: from the start, the administration took great pains to accommodate

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