Minnesota GOP: The Decoupling

/ 10 March 2012 / jennifer

Lawrence R. Jacobs and Tony Sutton, Star Tribune, March 10, 2012 –

Business and the party’s purists are finding fewer opportunities to travel on parallel tracks.

The historic alliance between the Republican Party and the business community is showing strains. While both still advocate low taxes and limited regulation, they seem to be moving in different directions on a range of issues.

The acceleration of the globalized economy has inspired a growing number of large firms to favor a pragmatic, “bottom line” orientation that, while favoring smaller government, accepts the idea of targeted government intervention to stabilize markets, level the playing field at home and abroad, and sustain consumer demand through stimulus spending during economic downturns.

Meanwhile, a growing segment of elected Republicans are moving in the opposite direction. An ardent commitment to conservatism and libertarian values has replaced the GOP “pragmatism” of the past. That older approach pressed hard for conservative principles but in the end cut deals with Democratic majorities, even if they increased taxes and spending.

The new gap between business pragmatism (especially in corporate America) and Republican principle was vividly displayed in Washington last August during the showdown over raising the debt ceiling to cover the country’s past spending.

Republican leaders were thwarted by party purists who demanded that any compromise be tied to significant spending cuts. Instead, the GOP leadership chose to rely on the votes of Democrats to raise the debt limit.

Far from earning the respect of big business, the near cataclysm sparked a 635 point sell-off on Wall Street and led to Standard & Poor’s unprecedented downgrading of the credit rating of U.S. government bonds.

Immigration reveals another parting of the ways. Many businesses favor expanding legal immigration to supply the labor they need, while many Republicans, including the GOP presidential hopefuls, favor deportation (or “self-deportation”) of the 14 million undocumented individuals who currently live in the U.S. They also oppose the Dream Act to grant citizenship to undocumented youth who grew up in the United States.

Minnesota offers its own growing list of flash points. Republican legislative majorities put a constitutional amendment on the ballot to ban same-sex marriage. But some employers fear that this will create problems within their companies, making it more difficult to extend benefits to domestic partners or to recruit or retain talented employees.

GOP stalwarts at the State Capitol have thus far stalled progress on establishing health insurance exchanges, calling it a sellout of libertarian values and a capitulation to “Obamacare.” By contrast, the state’s major business associations — the Chamber of Commerce and the Minnesota Business Partnership — favor the exchange as an online marketplace of insurers that can foster competition and drive down premiums.

While business and the GOP agree on low taxes in the abstract, online sales have put the two sides at loggerheads. Amazon alone was able to avoid paying $653 million in state sales taxes in 2011, according to an estimate by Credit Suisse.

This puts Minnesota’s largest brick-and-mortar retail stores like Best Buy and Target at a massive disadvantage. Leveling the playing field for Minnesota business might require GOP purists to do the unthinkable — expand taxes.

The pattern on these and other issues is clear: Business has become more pragmatic and less wedded to the GOP agenda, while many elected officials in the Republican Party have become more ideological and driven by principle. In the past, the executives of most of Minnesota’s larger corporations were consistent supporters of the GOP platform. Now, some have backed off that across-the-board support.

Although business remains leery of Democrats’ inclinations toward more taxes and government, its frustration with Republicans has spawned situational coalitions with centrist Democrats. Pharmaceutical drug producers, medical care providers and suppliers and others sided with President Obama on health reform as a potential boon.

Business cheered as teachers unions were challenged by Obama’s stand against underperforming teachers and schools. Some Minnesota Democrats embraced the GOP’s stand on supporting new teacher licensing to allow executives and others to enter the classroom. In these and other cases, a number of Democrats risked the ire of their party’s purists.

What accounts for Democratic pragmatism and Republican purism? Defeat and its effects may be part of the story. Beginning in 1968, five of six presidential elections were won by Republicans, who denigrated their opponents as too ideologically liberal.

Pragmatism born of loss, combined with initiatives such as the Democratic Leadership Council, tempered liberal purism, preparing the way for Democrats to win three of five contests for the White House since 1992.

While the Democrats have been moving to the center to achieve electoral success, Republicans moved right. In particular, they interpreted their sweeping wins in 2010 as a backlash against the failure of government and the “get along” habits of both political parties.

Today, they believe that they are bound by a mandate from voters — a mandate that says government spends too much and that higher taxes equal fewer jobs.

Many conservatives are pressing Republicans not to compromise because they believe America is in real trouble and any compromise with liberals will only make those problems worse. These are the justifications many Republicans use for standing firm and avoiding deals with Democrats that compromise their principles.

In the past, Republicans have been most successful when the business community and the conservative activist community were on the same page. Today, the concern for the GOP at the state level is clear. Without the support of business, it will be difficult to win elections. And for the business community, there is risk, too.

By not getting fully behind Tom Emmer’s campaign for governor in 2010, the business community ended up with a DFL governor who opposes new right-to-work labor rules, favors raising taxes on the affluent and business, and isn’t as supportive of reducing regulation as a Republican would be.

Looking forward to the November election, businesses that recoil from the GOP’s conservative shift run the risk of arming DFL Gov. Mark Dayton with DFL legislative majorities.

Business and Republicans face a difficult and potentially momentous choice in the 2012 presidential and legislative elections — mend their breach to form a united front, or splinter to pursue separate agendas. The campaign landscape offers Republicans extraordinary opportunities.

High unemployment after enormous government spending has elevated voter disapproval of President Obama’s handling of the economy and opened the door for Republicans to recapture the White House, solidify their legislative majorities in Minnesota and Congress, and seize control in the U.S. Senate.

Conservatives insist that the GOP stick to its principles of cutting taxes and spending as it capitalizes on the backlash against Obama. Rick Santorum is the latest front-tier contender for the GOP presidential nomination who has urged primary voters and caucusgoers not to settle for Mitt Romney’s moderation.

“We will no longer abandon and apologize for the policies and principles that made this country great for a hollow victory in November,” he has said.

Presenting such a clear and epic choice against Democrats in the November elections could energize conservatives and win over enough independents to ensure sweeping Republican victories. But it is also possible that business and independent voters will tire of ideology and insist on practical proposals to fix problems — even if it requires compromise.

How Republicans and business negotiate their growing divide may decide the outcome of the unusually significant 2012 elections and define the course of politics in Minnesota and the country for years to come.

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Lawrence R. Jacobs is director of the Center for the Study of Politics and Governance at the University of Minnesota’s Humphrey Institute of Public Affairs. Tony Sutton is former chair of the Republican Party of Minnesota.

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