Big business has sparked huge controversy in the midterm elections. is it worth it

Tampa-based Bloomin’ Brands, the public owner of the restaurant chain, bet this summer that Mehmet Oz could win Keystone State’s hotly contested U.S. Senate seat. Oz, the stand-up doctor endorsed by Donald Trump, promised In January, he will “take not a cent, not a dollar, of the company’s PAC money.” But some corporate PACs donated anyway, and Oz opposed environmental regulations and tax increases—a potential that would eventually earn him recognition as a “Pro-Business Champion” from the U.S. Chamber of Commerce. In July, Bloomin’s PAC donated $2,500 to Oz.

Of course, $2,500 is a small sum for the restaurateur, whose 2021 revenue is $4.1 billion. (Corporate PACs are limited to donating $5,000 per candidate per election, but corporations can also donate (basically unlimited) to so-called super PACs and “dark money” groups.) Bloomin’s PACs spent a total of $93,000 to 37 federal agencies According to OpenSecrets.org, 70 percent of the candidates are Republicans.

Still, Oz was a particularly fruitless target. First Bloomin’ — named after Outback’s signature appetizer, a 1,600-calorie fried onion — saw its go-to candidate over healthier veggies: In a much-mocked campaign video, Oz Trying to connect with the average voter through inflation, by ham-fisting trips to the grocery store to buy what he calls “crudités.”Then, less than three weeks before the election, when philadelphia inquirer Despite Oz’s pledge not to collect at least eight different corporate PAC donations, his campaign reportedly said it would return Bloomin’s money.

“It really shows you how despicable the whole corporate giving situation is — because if you’re not going to call me, I’m going to keep it.” .

(A Bloomin’ Brands spokesperson told wealth By email, Oz’s campaign returned the PAC donation on Oct. 10. 25, and declined to comment further. A spokesman for Oz’s campaign did not respond to a request for comment. )

After all, Oz lost to Pennsylvania Lieutenant Governor John Fetterman, whose victories in the swing state helped Democrats retain control of the Senate and prevent Republicans from sweeping Congress. While Republicans succeeded in overturning the House of Representatives, Democrats have more power than many polls predict — and many business leaders hoped. The chamber is “disappointed that several excellent candidates with our strong support were not able to win the election,” Chamber Chief Executive Suzanne P. Clark said at a Nov. 11 meeting. 9 Press release. “They could have been an effective voice for business and had a meaningful impact in the next Congress.”

Across the country, big corporations and their executives are feeling a similar hangover from campaign cash. Those donating to federal candidates hoping to reshape the balance of power in Washington have failed to make a broad impact — and the result could be a two-year stalemate. Donations to many Republican lawmakers come with the reputational cost of supporting election deniers, abortion opponents and other politicians whose platforms have enraged customers and employees. At the same time, donating to Democrats has its own risks, especially at a time when powerful Republican lawmakers are threatening investigations and other reprisals against “sober” companies.

“Getting involved in partisan politics can be a way to put your brand under its feet,” said Ciara Torres-Spelliscy, a campaign finance expert and law professor at Stetson University. “It’s the ultimate reputational risk.”

If politics becomes more pernicious, the negative impact of corporate campaign contributions will grow. The Sept. 6 riots at the U.S. Capitol sparked a brief wave of corporate soul-searching over support for a controversial candidate, but most companies eventually returned to business as usual. Corporate PACs and business trade groups donated more than $52 million in the 2022 campaign to lawmakers who voted against certifying the results of the 2020 presidential election, OpenSecrets.org reported this week.

But as the interim results show, companies aren’t even guaranteed to benefit from some of these worrisome investments. So are they really worth the risk? Or is it time for big business to rethink spending money on elections?

more money, more problems

For decades, big corporations and their operators have tried to influence election outcomes. Since Supreme Court 2010 citizens united The ruling opened the floodgates for corporations and wealthy individuals to donate without restriction — and with less transparency — to political candidates, while outside spending on elections soared. Combined spending by corporations and business people has made the 2022 midterm elections the most expensive in history, according to Open Secrets.

if or october. On Jan. 28, business-related political action committees were estimated to have spent $167 million in 2022 on Republican federal candidates and $137 million on Democrats. Donations from business-related people, including billionaires, are even higher: investor George Soros single-handedly spent more than $128 million this election cycle, all for Democrats; Donors — including Citadel’s Ken Griffin, Blackstone’s Stephen Schwarzman, venture capitalist Peter Thiel and Oracle’s Larry Ellison — collectively gave hundreds of millions of dollars to Republicans. (Notorious FTX founder Sam Bankman-Fried was one of the few top individual donors to support the Democrats in a big way, as much as $37 million. After his cryptocurrency firm collapsed this month, several lawmakers said They will donate Bankman-Fried campaign contributions to charity.)

Traditionally, companies and executives have argued that their money secures access to successful candidates to lobby for policies that protect and expand the businesses they depend on. “You can’t stay out of the political process,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce.

Although it disappoints Dr. Oz and several other unsuccessful candidates, the powerful business trade group said most of the politicians it backed in 2022 won the election. With its help: During this election cycle, the Chamber’s PAC donated $310,500 to 113 federal candidates, 75 percent of whom were Republicans and 25 percent were Democrats. Bradley said: “It doesn’t mean that we agree with every candidate on every issue, but does it imply that it would be better for us not to participate, not to donate money? I just fundamentally disagree with that. “

But now the bets are getting more complicated. After January. 6 With the uprising and the Supreme Court overturning Roe v. Wade – among many other social upheavals – big business is under unprecedented pressure to take public stances on political issues And deliver on their commitment to corporate citizenship and “stakeholder capitalism.”

“Today, corporations face very dire risks from participating in the political process and using political funds,” said Bruce Freed, president and co-founder of the Center for Political Accountability, a nonpartisan nonprofit focused on corporate political spending. organize.

No matter what employees and customers prefer, the solution is not as simple as the company diverting donations to the other side of the aisle. Businesses that speak out on environmental and social justice issues also face punishment from powerful lawmakers who oppose such advocacy. Disney has become a Fortune 500 cautionary tale here after opposing so-called “don’t say gay” legislation in Florida and angering Republican Gov. Ron DeSantis. (DeSantis had just won re-election in a landslide — and celebrated by pledging to “crack down on the awakened in business.”) In Washington, Republican lawmakers threatened congressional investigations and hearings on companies whose political leanings angered them Yes, including those with suspended contributions after January. 6.

It’s another argument for a corporate cold war against all candidates, rather than letting a PR crisis dictate when to donate and when to abstain. “Political spending just exposes companies to a whole host of problems and problems on both sides,” said Dorothy S. Lund, an associate professor of law at the University of Southern California, who published in January Harvard Business Review Thinks corporate political spending is “bad business”.

“Your reputation can be damaged by customers and employees,” while “republican politics do target companies,” Lund added. “It’s a dangerous game.”

cold turkey, then relapse

Some corporations have long agreed with her — and are happy to participate in every election.

Donating to politicians is “increasingly risky,” said Christopher Padilla, IBM’s vice president of global government and regulatory affairs. “You write a check to a congressman and people think you’re supporting everything that congressman stands for — even things you might not be comfortable with.”

IBM has never donated to political candidates — a policy that Padilla said has not hurt the company’s ability to effectively lobby lawmakers or express its views in Washington. (And he spared himself a tedious reception for campaign donors at the Washington Hotel “just to have 10 minutes to talk about some obscure tax issue.”)

“I don’t think PACs are bad. I’ve worked for companies that have them,” Padilla added. But these days, he sees most corporate political donations as a “crutch — companies have been doing it because they’ve been doing it,” rather than rigorously reassessing their investment strategies or trying to establish less ties with lawmakers. transactional relationship.

After Jan. 6, after hundreds of companies said they suspended or stopped political donations to lawmakers who questioned the legitimacy of the presidential election, Padilla heard from many other executives expressing interest in following IBM’s lead. Almost two years later, most of those companies have resumed giving, including to election deniers — and Padilla is disappointed that so little has changed.

“Frankly, I think there may be more reevaluations of the PAC after January 6,” he said. But “for some companies, that’s the way they’ve always done the work — so they don’t see any way to do it differently.”

Now, even some business-friendly lawmakers are telling them to rethink their giving strategies as companies assess the impact of their political investments in 2022 and prepare for the next presidential election. “Stop writing everyone checks,” Senator Joe Manchin of West Virginia, a powerful conservative Democrat, told the chief executives who gathered at the Fortune CEO Initiative summit earlier this month. executives said. “You’re all supporting bad behaviour.”

Manchin went on to say that he believes corporate donors should view their money as an “investment” rather than a “donation” in lawmakers working towards a specific goal. A spokesman for Manchin declined further comment, but he’s clearly a popular bet for businesses: He’s raised nearly $8 million over the past two years, including more than $1.2 million from PACs, and he didn’t even vote this month.

One of the donors? Outback Steakhouse’s parent company offered another $2,500 to Manchin’s next campaign a year ago if he ran for re-election in 2024. Good luck to Bloomin’.