Pro-Business Liberalism

Too many liberals are reluctant to embrace the pro-business label. Meanwhile, the DLC Joe Lieberman types are really corporatists who claim to be pro-business. This contradiction places the Democratic Party in a hole because our political dialogue doesn’t distinguish between those who are pro-business and corporatist. The distinction is important because the corporatist Republican Party has benefited from the perception that they are the pro-business party and the modest risk-taking entrepreneur has supported them against their own interests. Meanwhile, the Democrats are enduring the worst perceptions among voters from both wings of their party: liberals reluctance to identify with pro-business policies makes the party appear in favor of handouts while the DLC reinforces the suspicion among voters that the Democrats are just as corporatist as the Republicans. It’s an odd contradiction and a rare feat of political ineptitude: the two wings of the party have managed to make Democrats appear socialist and corporatist at the same time.

The genesis of this affliction occurred in the late eighties when Tony Cohelo, a ranking member in the Democrats House leadership aggressively courted major corporations. Cohelo had good intentions. He wanted the Democratic Party to be more competitive after having its clock cleaned by Ronald Reagan twice. Consequently, the Democrats lost touch with their populist roots as they wined and dined corporate CEOs for campaign cash. Those Democrats who opposed this trend were labeled “protectionist,” outside the mainstream, and opposed to entrepreneurial capitalism. Sadly, as the Democrats became less identified with economic populism, the Republicans were able to exploit cultural populism while small business owners were persuaded that Democrats were going to raise their taxes and impose stifling government regulation. As the party’s base soured on Democrats for supporting pro-corporatist NAFTA legislation, small business owners responded to Newt Gingrich’s rhetoric about reducing taxes and government regulation. In 1994 the Democrats base stayed home, small business owners rallied to Gingrich’s banner and the vital center imploded on the Democratic Party. Bill Clinton proceeded to fight a rearguard action from the White House and enjoyed remarkable success but the center of political gravity shifted to the Right anyway.

Bush’s failed policies however offer the Democrats an opportunity to be the party of small business and become the majority party again. For one thing, there is an emerging consensus among small and medium sized businesses about the cost of health care. Businesses of all sizes are hemorrhaging money because the increasing number of uninsured Americans is hiking premiums. In that environment a single payer system is an appealing alternative because it will lift a heavy financial burden from employers. Personally, I don't believe single payer health care in America is politically viable but government assuming more of the financial burden certainly is. Real health care reform can be sold to the business community as an economic stimulus package designed to liberate entrepreneurs to invest their profits into growth and development instead of keeping up with the rising cost of premiums.

Another way the Democrats can appeal to the business community is by revisiting the bankruptcy reform law that passed last year. The new law is actually damaging to the modest risk-taking entrepreneur because it takes away a potential safety net in case their business fails. Typically, small businesses are largely financed out of the entrepreneur’s pocket and if his business fails, declaring bankruptcy allows him to have a fresh start and take care of his family. Hence, DLC Democrats like Joe Biden, Harry Reid and Evan Bayh actually stifled job creation by supporting this legislation because it will make prospective entrepreneurs more risk adverse. Yet the new law allows large corporations such as Delta Airlines to declare bankruptcy and default on their pension obligations. That’s wrong morally as well as economically. Democrats should vigorously campaign on a platform to revisit the legislation. This can be sold to the business community as a safety net for the small entrepreneurs who create jobs.

One interesting perspective about running a small business is from a loyal Democrat named Damon Leavell. Mr. Leavell runs a public relations and marketing firm in New Jersey called Forrest Communications. Specifically, Mr. Leavell’s business services firms in the finance and technology industry. Recently, he vented to me about how the political culture doesn’t distinguish between pro corporatist policies and helping entrepreneurs like him:

“I agree with you that there is a huge difference. Pro-business shouldn't be an excuse to give huge pennies to huge businesses so they can get campaign donations. I run a small business. I'm always amazed by what the Republicans say they're doing to help small businesses. In fact, each year, I only see the things they are doing to hurt small businesses. I'll give you an example. For the early years of running a business, guys like me are hit with a double tax that you the employee avoids. When you pay social security, 6% is taken from your salary each year. When I pay social security, 12% is taken from my salary. And I can't write a penny of that off. That's a huge number when you're taking a hit in your salary and taking financial risks to run a business. I would like a pro-business politician to do something like this: Eliminate the double taxation up until the first $80k, but extend the maximum social security payment for upper income business owners, who are more able to pay an additional 6% when their business is a couple years old. But that'll never happen. I think that times have changed and our government will be bought and sold in the future. It's always happened, but never to the degree it's done now. But I don't know how it can be stopped. The very people who we elect to stop it benefit from it, and nobody seems willing to provide real public funding for candidates. I don't know what the solution is, other than to try to make as much money as we can so we can be the buyers of politicians instead of the other way around.”

Mr. Leavell’s desire for elimination of double taxation is quite sensible and one all liberals should embrace enthusiastically. If employers such as Mr. Leavell were relieved of this burden he would have greater incentive and flexibility to hire more employees. Unlike Republican supply side nonsense that give tax breaks to corporate CEOs earning seven figures, it makes more sense to help those entrepreneurs who are on the frontlines of job creation. I find it especially interesting that an entrepreneur such as Mr. Leavell actually supports public financing for candidates as well. Perhaps leveling the political playing field with a new campaign finance structure can be sold to the business community as a way of replacing crony capitalism with legitimate competition.

I am a liberal Democrat opposed to corporatism but strongly pro-business. Liberalism and pro-business sensibilities are not in conflict. They go hand and hand.