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Election+Business
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Good afternoon! Welcome to the last 2019 edition of our weekly look into what’s at stake for American business in the 2020 election. I’m Theo Francis.
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This week, we see just how steeply CEOs lean Republican, dig into mutual-fund support for greater corporate political transparency and talk with Washington-bureau trade and economics writer Jake Schlesinger to understand what the new North American trade pact means for the candidates.
We’ll be back on Jan. 7. As always, we’d love your feedback and ideas. Just reply to this email. And if someone forwarded you this email, you can sign up here.
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2020 Countdown
46 weeks to Election Day, Nov. 3, 2020.
2 days to the Dec. 19 Democratic debate.
7 weeks to the Iowa caucuses.
8 weeks to the New Hampshire primary.
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ENERGY RESOURCES. President Trump with Continental Resources founder and Chairman Harold Hamm, a big donor to Republican candidates, at an October energy conference in Pittsburgh. Photo: Evan Vucci/Associated Press
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CEOs May Not Love Trump, But They Sure Donate to Republicans
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🛎️ The Takeaway: Judging by the money they give, CEOs favor Republicans over Democrats as much as 3 to 1
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As the 2020 campaign heats up, expect more CEOs like AT&T’s Randall Stephenson and fewer like Twitter co-founder Jack Dorsey.
Mr. Stephenson has, since 2010, personally given more than $374,000 to Republican candidates and committees and just $2,000 to Democrats. The AT&T boss even gave $50,000 in 2017 to Trump Victory, a joint fundraising committee with the Republican Party, despite some public tension between his company and the administration.
Mr. Dorsey, by contrast, has given Democrats all $20,500 of his personal contributions since 2010, including $5,600 apiece to Andrew Yang, a fellow tech entrepreneur, and Tulsi Gabbard, the Hawaii congresswoman, both of whom are seeking the Democratic presidential nomination.
Twitter declined to comment. AT&T didn’t respond to a request for comment.
Few other big-name CEOs have so far donated directly to Mr. Trump’s re-election campaign, and he got little support from them in 2016. But the degree of CEO preference for Republicans turns out to be dramatic: The Mr. Stephensons of this world outnumber the Mr. Dorseys something like three to one.
In a study of political contributions from nearly 4,000 public-company CEOs over 18 years, the executives gave two thirds of their money to Republican candidates and committees. Half of them gave Republicans at least 75% of their contributions.
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The study, by four economists at Harvard and Tel Aviv universities, looked at campaign contributions by 3,810 CEOs of S&P 1500 companies from 2000 through 2017. (Another 1,268 CEOs either didn’t contribute or did so in ways that the researchers couldn’t confidently identify, such as using nicknames or omitting company affiliations.)
Contributions to candidates, formal party committees and so-called leadership PACs, run by elected officials, were easy to classify. Contributions to committees not directly tied to either party were apportioned based on how those committees spent their funds.
To label CEOs as Republicans and Democrats, the researchers set a high bar: At least two thirds of an individual’s contributions had to go to one party; anyone more evenhanded was classified as neutral. Overall, about 58% of the CEOs qualified as Republican, while 19% qualified as Democratic.
The Republican edge held in all sectors and regions and among both male and female CEOs, the study found. It was even more pronounced in the energy, manufacturing and chemical sectors, and in the Midwest and South. Republicans had a smaller edge among women, and in the telecommunications and financial sectors.
The researchers didn’t name names, so we turned to data from the Federal Election Commission to identify some 2020 presidential contributions, including from Mr. Stephenson and Mr. Dorsey. Some others so far:
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Marc Benioff, founder and co-CEO of Salesforce.com, gave $2,700 apiece to Sen. Cory Booker and to Sen. Kamala Harris, who recently dropped out of the race;
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Reed Hastings, founder and CEO of Netflix, gave $5,600 to South Bend, Ind., Mayor Pete Buttigieg.
We also plugged a few names into the Center for Responsive Politics' Open Secrets database, getting a rough feel for partisan giving by adding up contributions since 2010 to recipients that CRP identified Democratic or Republican. (That left a lot of money uncategorized, including donations to corporate PACs.)
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Of course, for most people, the 2020 campaign is really just getting started. We’ll check back on CEO contributions next year once we know whom Mr. Trump will face in the general election.
— Theo Francis with Chad Day
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Chart of the Week: Political Funds
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Investors have increasingly backed shareholder proposals that push companies to provide more detail about their campaign spending, and mutual-fund managers are ahead of the curve. Support for the proposals has grown in each of the last two years among 45 big fund companies that manage more than $40 trillion globally, including such giants as Fidelity, BlackRock and Vanguard, according to an analysis of fund votes on 33 such proposals by the Center for Political Accountability. The Washington, D.C., nonprofit advocates for increased political-spending disclosure. Fund-group support varies widely, however: This year, 22 supported at least 80% of the proposals and nine voted against all of
them. Two years ago, a dozen fund groups fell into each camp.
— Theo Francis
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No, really, it’s the economy. Seeking to recover from a dip in the Iowa polls, Sen. Elizabeth Warren is doubling down on her message of increasing economic opportunities for ordinary Americans. Full story.
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As seen on T.V. After investing $100 million in television ads, former New York Mayor Michael Bloomberg has opened a campaign office in North Carolina well ahead of many of his Democratic opponents, part of an effort to combine strategies for the primaries and the general election. Full story.
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The enemy of my enemy. President Trump's support from the Republican establishment that resisted him in 2016 — along with Democrats' unanimity — shows how political tribalization has become almost complete. Full story.
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A third of campaign contributions from banks and their lobbying groups have gone to Democrats so far, the highest share since 2010, as Wall Street seeks to blunt Sen. Elizabeth Warren’s chances and court moderate Democrats.
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U.S. Immigration and Customs Enforcement arrests declined by 10% in the federal fiscal year that ended Sept. 30, as the agency focused its attention on the border and deportations increased 4%.
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Federal Trade Commission antitrust regulators are considering action against Facebook over the way it integrates its many apps and how it allows them to interact with potential rivals.
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Q&A: How President Trump Scrambled the Trade Debate
Economics reporter Jacob M. Schlesinger talks about how the new North American trade agreement will be felt on the campaign trail, in conversation with Theo Francis.
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Q:
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What does the new North American trade agreement mean, politically, for President Trump and his would-be opponents?
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A:
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It likely helps President Trump. This is one of his main calling cards. He’s going to say, “I told you I was going to replace Nafta and I did.”
Mr. Trump has said multiple times that he is sitting in the Oval Office because of his promise throughout 2016 to kill or change the North American Free Trade Agreement, and change trade policy more broadly. He clearly believes that is part of what got him elected, and that what he’s done will help get him re-elected.
Will it bring jobs back to America and do all the things Mr. Trump said it will? Maybe not. But he can say that he made a promise, and he followed through.
By way of contrast, look at the 2008 campaign. Barack Obama attacked Hilary Clinton on Nafta, since Bill Clinton implemented it when he was president. Mr. Obama literally said many of things Mr. Trump later did. During his eight years in office, he never touched Nafta.
Trump’s advisers think that's part of why he won and helps explain why unionized workers in the industrial Midwest left the Democrats to vote for him. Democrats often talked tough on trade, but didn’t do much to change trade policy once in office.
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Q:
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Presumably Democrats see some upside, or they wouldn’t have supported it.
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A:
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Definitely. To the extent that House Democrats feel like they’re getting hammered over impeachment, being branded a do-nothing Congress, this shows they can walk and chew gum at the same time — they can work with the president.
And they really did get the Trump administration to change provisions in the U.S.-Mexico-Canada Agreement, or USMCA. In a lot of ways, USMCA looks much more like a Democratic trade agreement than a classic Republican one, with some provisions long sought by organized labor.
But politically, Mr. Trump has basically stolen the Democratic message on trade. The 2020 contenders don’t talk much about trade right now. When they do talk about trade, they tend to attack Mr. Trump on his tactics or, in the case of China, that his actions haven’t been as tough as his words. But they’re having a hard time differentiating themselves from him. It’s mainly about process now, and voters don't get worked up about process.
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Q:
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How will the Democratic presidential candidates tackle it?
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A:
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It really depends on the candidate. Joe Biden is in many ways defined by his long track record as a supporter of many free-trade agreements. He’s tight with labor unions, but trade is the one issue where he has broken with them, repeatedly — starting with his 1993 vote in favor of the original Nafta. He hasn’t yet really articulated a trade policy in this campaign.
Sen. Elizabeth Warren’s trade platform is similar to Mr. Trump’s and takes an interventionist approach, not deferring to free markets. But she comes at it from a different angle. Trump trade policy tries to help U.S. companies export more, or force U.S. and foreign companies to produce more in the U.S. Ms. Warren is more focused on making sure that trade follows other goals, like adhering to environmental and labor standards.
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Q:
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How different is the new deal from Nafta?
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A:
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Most trade experts consider it a small change at best. North America remains largely a tariff-free zone. The new deal modernizes rules covering businesses that didn’t exist when the original Nafta was created, like e-commerce. The U.S. International Trade Commission did a thorough 382-page study on the likely economic impact and concluded it would be quite modest. The Peterson Institute for International Economics estimates it could actually slow growth a touch.
But conceptually, there are some huge differences. It changes the nature of trade policy. It specifies that, to avoid tariffs, a certain percentage of cars have to be made by workers earning at least $16 an hour. That’s a way of forcing production back to the U.S. or Canada from Mexico. That’s never been done in a trade agreement before and could make a big difference for small-car production, which has mostly shifted to Mexico.
There’s also a sunset provision, which requires a regular review. That creates a level of uncertainty that doesn’t exist in any other trade agreement.
Another change that has made the business community very angry is how USMCA dilutes a mechanism called the investor state dispute settlement process, or ISDS. Every trade deal since Nafta has had this. It gives multinationals recourse to an independent panel if they feel a country’s legal system isn’t doing them justice.
USMCA takes out those protections, except for a handful of industries. The business community was furious over that. But business would rather have a trade deal without ISDS than no Nafta at all.
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Q:
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Where does this deal leave business overall?
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A:
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Most Republicans, left to their own devices, wouldn’t do what Mr. Trump is doing on trade. But most haven’t challenged the president in any serious way.
Pennsylvania Sen. Pat Toomey has regularly attacked Mr. Trump’s trade policies, and said he’ll vote against USMCA because he sees it as a step backward for free trade. But as of now, he is the rare Republican who has said he would do so.
In the end, between Democrats, the president, and Republicans who won’t defy the president, free-trade business interests really don’t have a political home right now.
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European countries are threatening to impose tariffs on the U.S. and other countries with inadequate climate-change policies, leveraging trade policy in an echo of President Trump’s playbook. (Politico)
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Democratic voters have indeed shifted left over the last three decades, but changes in attitudes toward immigration and slavery reparations have been among the most dramatic. (FiveThirtyEight)
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A few campaigns made a concerted effort to combat fake news in 2016, but so far in the 2020 race, there seems little appetite to fight falsehoods.(New York Times)
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We’d love to hear from you. This week’s question: What business issue would you like to see move to the forefront of the campaign in the new year?
Share your thoughts by emailing us at voices@wsj.com. We’ll feature select responses in a future newsletter.
After this week, we’re taking a break until Jan. 7. Then it’s back to delivering our Election+Business newsletter weekly through the 2020 election. Let us know what you think by replying to this email.
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