The Traditionally Conservative ``Business Lobby`` has Increasing been Co-opted

Business Lobbies, like the US and State Chamber of Commerce, used to drive conservative policy, but less so now. Instead they have:
(1) Increasingly promoted Exploitationism (Crony Capitalism) in which Big Business lobbies the Gov't for monopoly status, favorable regulations, competitive advantage, and taxpayer subsidies (incentives, or paying for employee benefits),
(2) Outright advocate for liberal social, cultural, and environmental policies, partially to ingratiate themselves with the other side of the aisle or because they believe in those more than their core mission, and
(3) Endorse friendly Democrat politicians, either because they not align more with the politics of the people hired to set policy for these organizations, or to gain leverage on Republican lawmakers.

Key Points and Overview

Research suggests liberals may be influencing traditionally conservative business lobbying organizations, like the U.S. Chamber of Commerce, to adopt more liberal positions on issues like DEI, immigration, and climate change and to support tax incentives for employee services, such as training and daycare.
It seems likely that this shift could weaken conservative policy support, especially on social, cultural, and environmental issues, and that these business incentives, seen as corporate handouts, shift costs from businesses to taxpayers, potentially weakening conservative principles of limited government by aligning business advocacy with liberal agendas.
The evidence leans toward these changes potentially helping Democratic candidates and pressuring Republican lawmakers to moderate their stances, impacting conservative policy goals.

Background

Business lobbying organizations, such as the U.S. Chamber of Commerce, have historically aligned with conservative policies, advocating for free markets, lower taxes, and reduced regulation. However, recent trends suggest these groups are adopting positions more aligned with liberal views, particularly on immigration, climate change, and social issues, and supporting tax incentives for employee services like training and daycare, which can be viewed as corporate handouts and cronyism.
This report explores how this shift might affect conservative policy.

Impact on Conservative Policy

The U.S. Chamber of Commerce, a key example, has supported immigration reform, including paths to citizenship, and acknowledged human contributions to climate change, positions often favored by liberals. They have also engaged in diversity, equity, and inclusion (DEI) initiatives and endorsed Democratic candidates, potentially diluting conservative agendas. This could make it harder for conservatives to find business allies on key issues and influence Republican lawmakers to adopt more moderate stances.

Corporate Handouts and Cronyism

Corporate handouts are financial benefits, such as tax credits and subsidies, provided by the government to businesses. Cronyism involves favoritism in distributing these benefits, often through lobbying. In this context, tax incentives for employee services shift costs traditionally borne by businesses or private citizens to taxpayers, reducing the financial burden on companies.

Examples and Impact

Key examples include the Work Opportunity Tax Credit (WOTC), offering up to $9,600 per employee for hiring from targeted groups, and the Employer-Provided Child Care Credit (45F), capped at $150,000 per year for childcare expenses. State programs, like New York’s Employee Training Incentive Program, also provide credits up to $10,000 per employee for training. These incentives lower business costs but increase taxpayer burden, potentially conflicting with conservative ideals of limited government intervention.

Conclusion
While the shift is notable, especially in the Chamber’s case, other organizations like the National Association of Manufacturers (NAM) maintain more conservative positions. The impact on conservative policy is complex, potentially weakening support for traditional stances but also reflecting business needs in a changing political landscape.

Detailed Analysis of Liberals Co-opting Traditionally Conservative Business Lobbying Organizations and Their Detrimental Effects on Conservative Policy

This is a comprehensive analysis of the phenomenon where traditionally conservative business lobbying organizations, particularly the U.S. Chamber of Commerce, appear to be adopting positions more aligned with liberal policies. It examines the evidence, historical context, and potential impacts on conservative policy, focusing on immigration, climate change, social issues, and political endorsements, as well as examining how advocating for tax incentives related to employee services, seen as corporate handouts and cronyism, may reflect liberal influences and impact conservative policy.

Introduction and Context
Business lobbying organizations, such as the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM), and the Business Roundtable, have historically been aligned with conservative economic policies. These include advocating for free markets, lower taxes, and reduced government regulation, which resonate with the Liberty Republican emphasis on individual liberty and limited government intervention. However, recent observations suggest that some of these organizations, especially the U.S. Chamber of Commerce, are shifting towards positions traditionally associated with liberal agendas, such as immigration reform, climate change acknowledgment, and social justice initiatives, and are supporting Gov’t tax incentives for employee services, such as training and daycare. This shift raises concerns about the potential detrimental effects on conservative policy goals, particularly in a political climate where conservative and liberal ideologies are increasingly polarized.
The U.S. Chamber of Commerce, founded over a century ago, is the world’s largest business organization, representing over 3 million businesses. Its historical role has been to advocate for policies that foster economic growth and job creation, often aligning with Republican priorities. However, recent actions suggest a divergence, potentially influenced by liberal pressures or changing business needs. This survey note will focus on the Chamber as a primary case study, with brief comparisons to NAM and the Business Roundtable, to assess the extent of this shift and its implications.
Case Study: U.S. Chamber of Commerce
Historical Alignment and Recent Shifts
Historically, the U.S. Chamber of Commerce has been a staunch supporter of conservative economic policies. For instance, it supported the Tax Cuts and Jobs Act (TCJA) in 2017, advocating for lower corporate taxes and deregulation, which are core conservative tenets. On regulations, the Chamber has consistently opposed regulatory overreach, emphasizing the need for smart regulations that provide certainty for businesses while fostering innovation.

Corporate Handouts and Cronyism: Definitions and Context

Corporate Handouts: These are financial benefits provided by the government to corporations, including tax credits, subsidies, grants, and other incentives, intended to encourage certain business activities. These benefits often result in revenue losses for the government, effectively shifting costs to taxpayers.
Cronyism: This refers to the practice of favoring specific businesses or industries through government benefits, often influenced by lobbying and political connections, at the expense of public interest and fairness.
In the context of employee services, corporate handouts take the form of tax incentives for businesses that provide training, daycare, healthcare, or other benefits to their employees. Traditionally, businesses have been responsible for funding these services as part of their operational costs or benefits packages, expecting returns in terms of increased productivity, employee retention, or attractiveness to talent. Private citizens, such as employees, might also pay for services like daycare out-of-pocket. However, through lobbying, businesses seek to have the government subsidize these costs via tax incentives, shifting the financial burden to taxpayers.

Examples of Tax Incentives for Employee Services
Several specific tax incentives illustrate how businesses are seeking to have taxpayers fund employee services:

Work Opportunity Tax Credit (WOTC): This federal tax credit, administered jointly by the Internal Revenue Service (IRS) and the Department of Labor (DOL), incentivizes employers to hire individuals from targeted groups who face significant barriers to employment, such as veterans, individuals on public assistance, and those with disabilities. The credit can be up to 40% of the first $6,000 in wages, with a maximum of $2,400 per employee for those working at least 400 hours, and up to $9,600 for certain qualified veterans. According to recent data, state agencies issued 1.6 million WOTC certifications in 2020, indicating significant uptake.
- Evidence of Support for WOTC: In 2019, the Chamber sent a letter to Congress supporting H.R. 2213 and S. 978, the “Work Opportunity Tax Credit and Jobs Act,” urging Members to cosponsor legislation to make the WOTC permanent. They highlighted its role in facilitating access to good jobs, incentivizing workplace diversity, and encouraging structurally unemployed individuals to move into the workforce. The Chamber noted that the last extension in 2015, under the Protecting Americans from Tax Hikes Act, significantly increased hiring of individuals on public assistance, veterans, and those with disabilities, according to Department of Labor statistics.
Employer-Provided Child Care Credit (45F): This credit allows employers to claim up to 25% of qualified childcare facility expenditures and 10% of qualified childcare resource and referral expenditures, capped at $150,000 per year. Eligible expenses include costs for building or operating in-house childcare centers and supporting childcare workers through training and wages. This incentive aims to help businesses provide childcare services, traditionally a private or employee-funded expense, reducing their cost burden.
- Evidence of Support for Child Care Tax Credits: In 2023, the Chamber, along with other national organizations, state and local chambers, state businesses, nonprofits, and local child care providers, sent a letter to the Senate Committee on Finance and the House Committee on Ways and Means, supporting the expansion of existing child care tax credits, including the Employer Provided Child Care Tax Credit (45F). They emphasized the need to address the lack of access to child care, affecting businesses, parents, and children, and urged better alignment of these provisions to ensure quality, affordable care.
State-Specific Training Incentives: Various states offer tax credits for employee training programs. For example, New York’s Employee Training Incentive Program provides refundable tax credits of 50% of eligible training costs, up to $10,000 per employee, and 50% of the stipend paid to interns, up to $3,000 per intern, for skills training in advanced technology, life sciences, software development, or clean energy. Similarly, Colorado offers the Enterprise Zone Job Training Tax Credit, providing a 12% credit on eligible job training costs for employees and apprentices within enterprise zones.

The Chamber’s informational resources, such as guides on employer incentives for workforce support and benefits, further illustrate their engagement with these issues, offering details on credits like WOTC and 45F, though they disclaim providing legal or tax advice (Tax Guides: Employer Incentives for Workforce Support and Benefits | U.S. Chamber of Commerce, Employer Guide to Childcare Assistance and Tax Credits | U.S. Chamber of Commerce).
These incentives effectively reduce the financial burden on businesses for providing employee services, shifting costs to taxpayers through forgone tax revenue. For instance, the WOTC, with a potential credit of up to $9,600 per employee, can result in significant government revenue loss, especially given the high number of certifications issued annually. This advocacy reflects a move towards using tax policy to achieve social objectives, such as employment for disadvantaged groups and access to childcare, which are often associated with liberal policy-making.

The shift may be driven by corporate pressures from member companies, changing public opinion, and the need to remain relevant in a politically diverse landscape. For instance, the Chamber’s support for childcare credits aligns with broader social movements addressing workforce challenges, such as the worker shortage crisis, and reflects the interests of businesses seeking to attract and retain talent

Detrimental Effects on Conservative Policy

From the KY Liberty Caucus’ perspective, which emphasizes individual liberty, free/fair markets, and limited government, the advocacy for tax incentives as corporate handouts and cronyism can have several detrimental effects on conservative policy:

Increased Government Intervention: The use of tax incentives for employee services represents government intervention in the economy, contradicting the conservative preference for a minimalist state. These incentives, such as WOTC and 45F, involve the government picking winners and losers, distorting market dynamics by subsidizing specific business activities, which can be seen as a departure from free market principles.
Shift in Costs to Taxpayers: By reducing business costs through tax credits, these policies shift the financial burden to taxpayers, increasing the overall tax burden or reducing government revenue for other priorities. For example, the WOTC, with potential credits up to $9,600 per employee and 1.6 million certifications in 2020, represents significant forgone revenue, potentially conflicting with conservative goals of lower taxes and fiscal responsibility.
Dilution of Conservative Principles: The Chamber’s support for these incentives suggests a move towards accepting more government involvement in social welfare, aligning with liberal policies. This can dilute the conservative base’s preference for limited government, pressuring Republican lawmakers to adopt more moderate stances, such as supporting market-based solutions for social issues, which may not resonate with traditional conservative voters.
Perception of Cronyism: The lobbying for these benefits can be perceived as cronyism, where large businesses influence policy to gain financial advantages, potentially alienating small businesses and conservative constituents who favor a level playing field. For instance, articles criticizing corporate handouts in states like Illinois and Tennessee highlight the unequal treatment, with large corporations benefiting from tax incentives at the expense of small businesses and taxpayers (Illinois and Chicago’s pattern of cronyism and corporate handouts, Corporate Welfare – Beacon Center of Tennessee).

Quantitative Overview

To illustrate the scope of these shifts and their fiscal impact, consider the following table summarizing key tax incentives and their potential costs:

Tax Incentive	Description	Maximum Credit per Employee/Year	Estimated Fiscal Impact (Example)
Work Opportunity Tax Credit (WOTC)	Credit for hiring from targeted groups facing employment barriers	Up to $9,600	Significant, with 1.6M certifications in 2020
Employer-Provided Child Care Credit	Credit for childcare facility and referral expenditures	Up to $150,000 per employer	Capped at $150,000, varies by uptake
New York Employee Training Incentive	Credit for skills training and internships	Up to $10,000 per employee	State-specific, varies by participation

This table highlights the areas where tax incentives shift costs to taxpayers, with the WOTC’s high per-employee credit and large number of certifications indicating a substantial fiscal impact.

Other Issues

However, recent positions on other issues suggest a shift towards liberal views. Below are key areas where this shift is evident:

Immigration: The Chamber has long advocated for comprehensive immigration reform, including paths to citizenship for undocumented immigrants and increased legal immigration to address workforce shortages. For example, in 2013, it supported a bipartisan immigration reform bill that included a path to citizenship, a position opposed by many conservatives. This stance aligns with liberal policies favoring more open immigration, and the Chamber’s consistent advocacy, such as calling for modernization of the “broken immigration system” in 2022, reflects a long-standing position but one that has become more prominent in recent years.
Climate Change: Until 2019, the Chamber rejected the scientific consensus on climate change, promoting climate change deniers and opposing efforts to combat it. However, in 2019, it acknowledged that humans contribute to climate change and began supporting market-based solutions, such as advocating for collaboration between businesses and government to reduce emissions. While they oppose specific regulations, such as the Inflation Reduction Act, this shift represents a move towards accepting the need for action, a position more commonly associated with liberal environmental policies.
Social Issues: The Chamber has engaged in diversity, equity, and inclusion (DEI) initiatives, particularly following social pressures like the Black Lives Matter movement. For instance, it has supported efforts to advance racial equity and has encouraged support for LGBTQ+ businesses during Pride Month, as seen in their 2021 article. These actions align with liberal social policies, which may not resonate with social conservatives within the Republican base.
Political Endorsements: The Chamber has historically leaned towards endorsing Republican candidates, but in recent years, it has endorsed Democrats who support pro-business policies. In the 2020 election cycle, it endorsed 23 House freshman Democrats alongside 29 Republicans, reflecting a bipartisan approach. This shift is evident in their updated endorsement formula in 2019, which rewards members of Congress for advancing pro-business policies, potentially at the expense of conservative ideological purity.

Evidence of Liberal Influence

The shift in the Chamber’s positions could be attributed to several factors, including pressure from member companies, changing public opinion, and the need to remain relevant in a politically diverse landscape. For instance, on climate change, several member companies, such as Exelon Corp and PG&E Corp, quit the Chamber in 2009 over its opposition to climate regulations, indicating internal pressure to adopt more progressive stances. Similarly, on social issues, the Chamber’s DEI initiatives may reflect the business community’s response to social movements like Black Lives Matter, as noted in a 2022 study.

This suggests that liberals may be influencing these organizations indirectly through corporate membership and public pressure, leading to a co-opting of their agendas.

Detrimental Effects on Conservative Policy

From the KY Liberty Caucus’ perspective, which emphasizes individual liberty, free/fair markets, and limited government, the co-opting of traditionally conservative business lobbying organizations by liberal influences can have several detrimental effects on conservative policy:

Policy Advocacy Shift: The Chamber’s support for immigration reform, climate action, and social justice initiatives can dilute the unified front that conservative policymakers rely on for economic policy advocacy. For instance, their support for paths to citizenship may pressure Republican lawmakers to compromise on immigration, weakening conservative border security agendas.
Support for Opposing Candidates: By endorsing Democratic candidates, the Chamber provides resources and legitimacy to politicians who may support liberal policies, potentially helping them win elections. This was evident in the 2020 endorsements, which could influence congressional majorities and policy outcomes.
Influence on Republican Lawmakers: To gain the Chamber’s support, Republican lawmakers might adopt more moderate positions, such as supporting market-based climate solutions, which could dilute the conservative base’s preference for outright denial or inaction. This was seen in their response to the Chamber’s updated endorsement criteria in 2019, which rewards compromise.
Division within the Business Community: The Chamber’s shift can create divisions, with some businesses and conservative members opposing these changes, potentially weakening the business community’s collective influence on conservative policy. For example, in 2009, several companies quit over climate policy disagreements, highlighting internal tensions.

Quantitative Overview
To illustrate the scope of these shifts, consider the following table summarizing key positions and their alignment:

Issue	Traditional Conservative Stance	U.S. Chamber of Commerce Position (Recent)
Immigration	Strict controls, border security	Supports reform, paths to citizenship
Climate Change	Denial, oppose regulations	Acknowledges, supports market-based solutions
Social Issues (DEI)	Limited government role	Supports DEI, LGBTQ+ businesses
Political Endorsements	Primarily Republican	Includes Democrats supporting business

This table highlights the areas where the Chamber’s positions diverge from traditional conservative views, potentially aligning with liberal agendas.

Comparative Analysis: Other Business Lobbying Organizations

While the U.S. Chamber of Commerce shows significant shifts, other organizations like the National Association of Manufacturers (NAM) and the Business Roundtable provide a comparative perspective:

National Association of Manufacturers (NAM): NAM, representing over 14,000 manufacturing companies, maintains a more consistently conservative stance, particularly on environmental issues. It has advocated negatively on climate policy, opposing the Build Back Better and Inflation Reduction Act, and supports fossil fuel investment. On immigration, NAM supports reform for competitiveness, similar to the Chamber, but its overall advocacy remains more aligned with traditional conservative economic policies.
Business Roundtable: This organization, comprising CEOs of leading U.S. companies, has also shown some shifts, such as redefining the purpose of a corporation in 2019 to serve stakeholders beyond shareholders, a move seen as progressive. They support climate action and employer-based health insurance, but their lobbying leans primarily towards Republicans, with some Democratic support.

While NAM and the Business Roundtable show some alignment with liberal positions, the U.S. Chamber of Commerce’s shift is more pronounced due to its size and influence, making it a focal point for this analysis.

Conclusion and Implications

The evidence suggests that liberals are influencing traditionally conservative business lobbying organizations, particularly the U.S. Chamber of Commerce, to adopt positions on immigration, climate change, and social issues that align with liberal policies, and to advocate for tax incentives related to employee services, seen as corporate handouts and cronyism. This shift is likely driven by corporate pressures, public opinion, and the need to remain relevant in a diverse political landscape and address workforce challenges, leading to a co-opting of their agendas. The detrimental effects on conservative policy include increased government intervention, shifted costs to taxpayers, a weakened advocacy front, support for opposing candidates, perceptions of cronyism, and pressure on Republican lawmakers to moderate, potentially diluting the conservative agenda.

From a Liberty Republican perspective, this co-opting is concerning as it may undermine the principles of limited government and free/fair markets on issues beyond economics, and these influential lobbying groups risk Republican lawmakers prioritizing these interests over ideological purity. However, we acknowledge there is a complex interplay between business needs and political ideology, suggesting that conservative policymakers may need to engage more directly with these organizations to influence those organizations to realign their advocacy with traditional stances.