By James Kwak
Jonathan Weisman of the Times wrote an article about the reluctance of many Republicans in Congress to extend policies that are traditionally favored by big business (and the Chamber of Commerce), such as infrastructure spending and funding for the Export-Import Bank. This points to a split between the traditional corporate wing of the GOP and the newer, ultra-conservative tax revolt wing.
My guess is that this will blow over and the Republicans will figure out a way to keep big business happy without upsetting the Tea Party too much. But it points out a potential shift among the people who fund the GOP.
Historically, the Republicans were the party of business. Businesses like to make money. That can mean a lot of different things for government policy. In some cases, they want less regulation, since regulatory compliance costs money. On the other hand, large companies often want more regulation, since they can absorb the costs of compliance better than small competitors. (See The Economist on tax preparers for a recent example.) Regulation can also be a mechanism for price fixing, as with the old Interstate Commerce Commission, which functioned as a legal cartel for railroads. Businesses definitely want lower corporate tax rates, since that increases their net income. But they also like some types of government spending. Most obviously, defense contractors like lots and lots of defense spending. Less obviously, businesses have historically been major beneficiaries of free public education, since it gave them a more skilled workforce. So in general, the business community is not obviously in favor of lower taxes or lower spending.
Contrast this with the interests of billionaires. The super-rich do have a lot of wealth tied up in company stock, so to some extent they share the interests of businesses. But as rich people, they have their own interests. In this case, they unequivocally gain from lower taxes and lower government spending; they get to keep more money and they don’t need government services, as individuals. Besides, once you’ve made your first billion, it doesn’t really matter how your business does after that point.
With increasing inequality and the relaxation of contribution limits, the balance of power within the Republican Party may be shifting from big business to billionaires. As USA Today reported, 25 percent of all super PAC money in this election cycle has come from five people. Furthermore, super PACs are accelerating an ongoing trend of decreasing party control over spending. Note that while major trade organizations like the National Association of Manufacturers and the Business Roundtable favor government spending that supports businesses, the Club for Growth, an antitax organization, is against.
As I said, I think the party will figure out a way to paper over its differences ahead of the elections in November. But in the long term, how long will it be before the business community figures out that the new Republican Party has fallen into the hands of antitax, antigovernment zealots who are willing to put low personal income tax rates ahead of high corporate profits?
The Baseline Scenario 
The other thing to add is that due to globalization the rich have become untethered to the nations the inhabit. So, they can happily make millions outside of the U.S., live in the U.S., and then push for policies in the U.S. that strictly benefit their class.
But yes, also as you indicate, they have also become so wealthy that the long term performance of businesses they run are a non-concern to them. The system therefor is dysfunctional and brings into question, as it stands, the validity of the primacy of capitalism itself.
Unfortunately the ultra-right policies (much pushed by people who are actually sincere in their beliefs, not just the rich) are probably only going to continue to further create and entrench the problem.
How long? Not long. They’ve already figured it out. And they’ll get it. As pointed out in other blog entries here, the Republican Party of today has shed most of its core beliefs in the last 30 years. I believe that the Republican Party is destroying itself (and that’s OK with me) in a race to appeal to the angriest, most ultra-conservative, narrow-minded, economically illiterate aging, white baby-boomers out there. Too bad William F. Buckley isn’t around to critique it.
@Carl – actually, it’s one step further along, isn’t it?
“Creative destruction” – making sure humanity, globally, does not have a chance to live a normal, decent life…remember, they ENJOY watching the mysterious ways of *science* and *math* unravel slow-mo before their eyes – 5 billion dying like witless animals (don’t worry, they’ll save their *kin* – the predatory creatures like lions and coyotes and vultures to help eat the dead…
“fascinating”….think I’ll write a book about it….
Now THAT’s power, eh?
Unintended consequences, anyone?
The Republican party fulfills the traditional conservative party role of persuading working people to vote against their own interests by appealing to prejudice and fear. I do not support this, but I recognize it as legitimate in the sense that similar political parties have existed in all democracies. Sometimes the strategy is more successful and sometimes less, but it is hard to foresee a democratic system where no such party exists.
What makes the political situation today different is that the Democrats are trying to become the party of the rich by adopting a simpler model – they will simply lie to their working and middle class constituents about what they intend to do, or the likely effects of what they intend to do.
Of course, it would be a mistake to overstate how different this is from what the Democrats have done in the past, but I think we can really say today that there are no leaders in the Democratic party who are trying to represent the interests of working people ahead of the interests of wealthy people. To the extent any of them are subjectively acting in good faith, it is only because they have bought into the neo-liberal version of trickle down ideology.
In short, the Democrats are the proximate source of the instability and rightward drift of the system more so than the Republicans.
2012 – the largest political party affiliation is “Independent” in USA and this is the year that an Independent candidate will get elected. Bet on it :-)
June will certainly be an interesting month….
The problem, as I see it, for the GOP is that it is presently searching for an identity which will appeal to the mainstream basic old fashioned conservatives. Increasingly the party has become the party of extremes, and, in doing so, seems to be in the process of alienation. Not only does the “tea party” fanatics (under Rove’s and Armey’s guidance) represent an extreme, which the originally constituted Tea Party did not intend to be a one issue division of the GOP, but it is almost entirely without other parts of its basis. The GOP is also alienating women (the whole health care birth control debate), students who see it as elitist and are feeling that their voting rights are under threat with the new anti-registration measures, the immigrants, whom the Republicans tend to abuse, especially the Hispanic community, as well as substantial portions of the 99% who see themselves being squeezed in the declining middle class, and feel that their problems (including foreclosures) are not being addressed. Of course, maybe none of this matters if folks like the Kochs continue to funnel millions into electioneering for the GOP, even if Romney seems to be both the frontrunner, and less electible every day.
R’s despise government regulation except when the government taxes the rest of us and then redistributes our taxes to business via government contracts and tax entitlements.
@albrt — Indeed. Faced with a choice between one national party that is indifferent to your economic concerns, and another that is openly hostile to them, is it any wonder that so many would rather vote for their favorite Idol contestant?
@ engineer…lol
At least we are separating the big spenders from the big savers. That will go along way toward judging him in the end.