Corporate America is bracing for political gridlock and a flurry of GOP investigations as Republicans appear poised to emerge from the midterms with a razor-thin House majority.
The GOP is favored to narrowly take the House, though the race for the lower chamber is still in play. Election forecasters have given Democrats a slight edge in the Senate, which may not be decided for days, if not weeks.
That result would set the stage for a divided government that would struggle to find common ground on key economic and social issues, likely reinforcing the GOP’s focus on launching investigations into the Biden administration and corporations that they say have gone “woke.”
“Oversight and must-pass bills are really going to be the focus, because why are you going through the effort of passing things that President Biden’s not going to sign or [Senate Democratic Leader Charles] Schumer won’t give floor time to?” said Aaron Cutler, a partner at Hogan Lovells who previously was a top adviser to former House Majority Leader Eric Cantor (R-Va.).
House GOP officials plan to shine a light on Biden’s Afghanistan withdrawal and his son Hunter Biden’s business dealings, but there will also be a focus on private companies — a shift from just a handful of years ago, when Republicans handed historic tax cuts to corporate America.
House Republicans are prepping investigations into corporations’ operations in China, content moderation by Big Tech platforms and firms’ environmental, social and governance (ESG) initiatives, among other efforts.
Those probes are part of a broader effort by House Minority Leader Kevin McCarthy (R-Calif.) and other GOP leaders to punish companies for siding against the party on LGBT rights, abortion restrictions, voting rights and other issues.
“If you’re outside of government looking at this Republican House, these are not the same types of Republicans that came in in 2011 in terms of how they view companies and corporate actors,” said Karen Christian, a partner at Akin Gump who previously led GOP investigations on the House Energy and Commerce Committee.
Tensions ramped up last year when dozens of Fortune 500 companies paused PAC donations to GOP lawmakers who voted against certifying the 2020 election results after the Jan. 6, 2021, Capitol attack, a move that angered McCarthy.
Most major corporations have since reversed course, including Amazon, which ended its giving freeze last month. Still, the subject is still sore for many Republicans, and some are receiving enough money from individual donors that they no longer need to rely on corporate PACs.
McCarthy is still angry at the U.S. Chamber of Commerce — the nation’s largest business group that has long aligned itself with Republicans — for choosing to endorse a slate of Democrats in close 2020 House races. He unsuccessfully pushed the Chamber’s board of directors to fire its leadership team last week.
“How business approaches Republicans in this next Congress will very much dictate whether lawmakers will want to work with them or not,” said GOP lobbyist Casey Higgins, who served as a top aide to former Speaker Paul Ryan (R-Wis.). “Frankly, I think there’s a lot that needs to be done to mend those relationships.”
A House GOP majority would likely hand control of the House Judiciary Committee to Rep. Jim Jordan (R-Ohio), a longtime Big Tech critic who plans to probe allegations of anti-conservative bias at social media companies and coordination between Meta and the FBI.
Republicans have promised to investigate banks and investment firms that champion ESG policies, which they see as an attack on the oil and gas industry. Sen. Tom Cotton (R-Ark.) led letters to law firms last week labeling the ESG movement an attempt “to weaponize corporations to reshape society in ways that Americans would never endorse at the ballot box.”
Lobbyists told The Hill that they’ve been coaching high-ranking executives for when they’re inevitably ordered to testify before House committees. In some cases, that means simulating lawmakers’ lines of questioning aimed at getting executives to slip up or lose their temper.
Republicans historically have extolled the virtues of limited government intervention and free markets. However, the party’s rising stars are increasingly willing to use their power to go after private companies.
Florida Gov. Ron DeSantis, a top contender for the 2024 GOP presidential nomination, revoked Disney’s self-governing status as retribution for the company’s opposition to his bill to ban schools from teaching gender identity and sexual orientation through third grade.
McCarthy last year warned telecoms and social media companies not to cooperate with the Jan. 6 committee, stating that a Republican majority would “not forget” their decision.
Still, Republicans continue to side with big business on lower taxes — they plan to push for an extension of some of the 2017 tax cuts — and fewer regulations. They’ve worked hand-in-hand with business groups to oppose Biden rules aimed at boosting worker power and fighting climate change.
“We are optimistic that the new majority in the House will seize this opportunity to fight inflation and crime, rein in regulation and hold agencies accountable through oversight, and put our economic security front and center,” U.S. Chamber president and CEO Suzanne Clark said in a statement.
The two forces are aligned in opposing a Securities and Exchange Commission rule that would require public companies to disclose their climate-related risks. McCarthy has called on Congress to eliminate the National Labor Relations Board, which under Biden has been boosting a wave of unionization campaigns at big companies like Starbucks and Amazon.
“There is no question that corporate America has to reckon with growing Republican skepticism of big business, but even with this backdrop, we see tons of offensive opportunities for our clients in a Republican House,” said Jonathan Slemrod, a former Senate GOP and Trump administration aide who lobbies for Harbinger Strategies.