Is Capital Backing Donald Trump?
Is Capital Backing Donald Trump?
Capital normally swipes right. This year matters are more complicated
In the wake of a recent Supreme Court ruling limiting the scope of federal anti-bribery laws, it seems fitting to focus on Donald Trump’s transparent efforts to offer quid pro quos to U.S. businesses. There have been multiple reports in recent months recounting how Trump has suggested that this sector or that sector should be donating to his campaign, because if elected he will deliver tax cuts or regulatory relief.
The hard-working staff here at Drezner’s World has taken a keen interest about how capital has to make an unappetizing choice between left-wing populism and right-wing populism. As I noted a few years ago:
Between accommodating economic populism from the left and nationalist populism from the right, plutocrats will opt for the latter. Populist nationalism will not generate greater economic growth, but it does lead to redistribution that favors owners of capital. Preliminary evidence for this redistribution can already be seen from the reactions of plutocrats to the Trump administration’s first year in office.
At the start of 2024 it sure seemed that this hypothesis was bearing itself out. It is undeniable that Trump would offer far deeper corporate tax cuts compared to Joe Biden. And, sure enough, Davos Men were backing Trump, consistent with my hypothesis. This month, Trump’s surge in large-dollar donations suggested that capital was continuing to swipe right.
Over the past month, however, there has been some evidence that big business might not be gravitating to Trump as much as one would expect. Consider the following items:
First, two weeks ago CNBC’s Christina Wilkie and Brian Schwartz reported that Trump’s appearance at the Business Roundtable’s quarterly meeting went… poorly:
Former President Donald Trump failed to impress everyone in a room full of top CEOs Thursday at the Business Roundtable’s quarterly meeting, multiple attendees told CNBC.
“Trump doesn’t know what he’s talking about,” said one CEO who was in the room, according to a person who heard the executive speaking. The CEO also said Trump did not explain how he planned to accomplish any of his policy proposals, that person said.
Several CEOs “said that [Trump] was remarkably meandering, could not keep a straight thought [and] was all over the map,” CNBC’s Andrew Ross Sorkin reported Friday on CNBC’s “Squawk Box.”
Second, earlier this week Axios’ Felix Salmon reports that Trump has not garnered the support of top CEOs:
There are zero Fortune 100 CEOs — a group that historically leans Republican — that have donated to former President Trump this election cycle, according to data compiled by Yale's Jeffrey Sonnenfeld.
It's very easy to overstate how much America's business establishment supports Donald Trump.
Just because corporate America has serious issues with Joe Biden doesn't mean they are in Trump's camp.
That same day a story by four New York Times reporters arrived at a similar conclusion (while also quoting Sonnenfeld):
There is little evidence of a major shift in allegiance among executives away from Mr. Biden and toward Mr. Trump.
Jeffrey Sonnenfeld, a Yale School of Management professor who is in frequent contact with corporate leaders, said most chief executives he had spoken to preferred Mr. Biden to Mr. Trump, “some of them enthusiastically and some of them biting their lip and holding their nose.”
Executives who have donated to Democrats in the past generally continue to do so: Filings released by the Federal Election Commission last week showed donations to Mr. Biden’s campaign committees from business leaders including Marissa Mayer, the former Yahoo chief, and Brad Smith, the Microsoft president — both of whom recently hosted Biden fund-raisers — and from Mark Cuban, the tech investor….
Some of Mr. Biden’s business-world backers cite a more fundamental reason for their support: Mr. Trump’s presidency was characterized by frequent policy reversals and near-constant uncertainty, they say. Many are also concerned about his approach to immigration and trade, and about the possibility that Mr. Trump could seek to undermine the independence of the Federal Reserve.
At the session with the Business Roundtable executives, who met with Mr. Trump the same day, Mr. Zients stressed Mr. Biden’s commitment to stability and the rule of law.
“A lot of them — and I do this for a living every day, work with C.E.O.s in big companies — a lot of them view this as a choice between predictability and clarity on the one hand and unpredictability and chaos on the other,” said Roger Altman, senior chairman of the investment bank Evercore, who held Treasury positions under Presidents Jimmy Carter and Bill Clinton.
The New Republic’s Greg Sargent provides some more detail about how corporate CEOs are thinking:
Kenneth Chenault, the well-known former head of American Express, said he’s been telling CEOs that our democracy is “facing an existential threat,” and that for business to function, the rule of law is “absolutely sacrosanct.” And Reid Hoffman, the billionaire entrepreneur, noted that he’s been arguing to fellow executives that “stable rule of law and democracy” is actually “more important for business” than a “lower tax rate.”
One problem here, both Chenault and Hoffman told me, is that they run into some resistance. Some CEOs tell Chenault, bafflingly, that they take solace from the failure of Trump’s insurrection: “In essence, they’re saying, ‘Look, we just don’t think that can happen again,’” he said. Chenault also said some corporate leaders say they’re reluctant to voice concerns about Trump and democracy publicly for fear of “retaliation.” At times they actually cite previous examples of Trump, as president, targeting corporations, he noted.
Hoffman, for his part, sometimes runs into a wall of shortsighted self-interest. “I’ve argued with CEOs and business leaders who tell me they believe that Biden is as bad as Trump for business,” Hoffman told me. In reality, he said incredulously, they are prioritizing “their own narrow interests” over the imperative of maintaining a “stable society.”
Still, the real rub here is that both men are finding that CEOs are not flocking to the former president. “What I don’t see is a mass movement supporting Trump,” Chenault told me. Hoffman noted that “the vast majority of business leaders” admit, at least privately,1 that the fate of democracy is “much more important than a difference in the corporate tax rate.”
CEOs might also be worried about the ways in which Trump’s second term has the prospect of being super-inflationary. This week 16 Nobel-prize winning economists warned that Trump’s proposed policies would trigger inflation, concluding, “While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden's economic agenda is vastly superior to Donald Trump.” It would be easy to chalk this up to left-leaning economists, but a look at the signatories reveals multiple names that would ordinarily endorse a Republican.
So is capital thinking twice about backing the right-wing populist? Maybe not all capital, but definitely a particular kind of capital!
Axios’ Salmon astutely notes a distinction within the capitalist class: “big-name investors seem to be more likely to support Trump than big-name CEOs.” Or, to be cruder about it, plutocrats and financiers seem likelier to back Trump than corporate officers. This makes sense: Trump’s very crude quid pro quo offers to business are not going to resonate with CEOs who have to worry about corporate reputations and international profiles. Plutocrats and financiers, on the other hand, likely care more about tax cuts while simultaneously seeing themselves in Trump. They will also be better placed to find inflation hedges.
Trump has reportedly been frustrated by the tepid degree of corporate support he has received in 2024. He is correct to assume that under ordinary circumstances, he should benefit from the support of the capitalist class. As per usual, however, Trump is an outlier. His combination of bad macroeconomic policies and immature brand of leadership are so toxic that he is alienating groups that should be predisposed to vote for him.
Brian Beutler would very much like these CEOs to say such things in public, but that might be expecting too much of them.
They give $$ to both parties. For the big guys, American politics has always been heads I win, tails I win.
Presumably for many in this crowd, their decision to back Trump/Biden will hinge on their expectations of the 2017 tax cut expiring. In 2020 the monied class could vote for Biden knowing their tax cut would persist for at least 7 years. Biden has now pledged to raise rate significantly for those making more than 400k and raise corporate taxes among others. That said, it's a pretty small slice of the electorate, but turnout in this group is also probably v high. Don't ever sell financial self-interest short.