The Big Biz Small Biz Split Over Campaign Giving

With Republican control on Capitol Hill tenuous as the election approaches, you'd think the business community would be rallying behind its GOP soulmates in Congress. Think again. Small business is going all out to help finance vulnerable candidates, particularly House GOP freshmen. But Corporate America is another story. Sensing a shift in the political winds, big-company chiefs are shifting the allocation of their campaign donations between the two parties.

Indeed, Big Business could give Democrats a financial edge as November draws closer. And that's not sitting well with the Republican Congress, which sees treachery in boardroom pragmatism. "There's a lot of hedging going on, and Hill Republicans are really steamed," concedes one corporate lobbyist. What's more, Corporate America's bipartisan largess could widen the divide between big and small business.

After the landslide of 1994, Big Business spent much of 1995 making amends for years of bankrolling ruling Democrats with an outpouring of support for the GOP. At the insistence of the new power brokers, Corporate America turned on the money faucets--especially for GOP House freshmen who came to Washington with heavy campaign debts.

Now, that flow is being diverted. In 1995, major corporate PACs gave only 26% of their money to Democrats. By March, 1996, that rose to 32%, according to the Federal Election Commission. A BUSINESS WEEK analysis of corporate giving through April, 1996, shows the trend continuing. Examples: AT&T has given 46% of its donations to Democrats in 1996, compared with 32% in 1995. Federal Express Corp. has given 43% of its money to Dems in 1996, up from 29% in 1995.

By contrast, small-business advocates, led by groups such as the National Federation of Independent Business (NFIB) and the National Association of Homebuilders (NAH), are funneling even more money into GOP coffers. The homebuilders, for example, have given 86% of their money to Republicans this year, up from 83% in 1995. The Petroleum Marketers Association of America has followed suit, giving 92% of its contributions to the GOP this year, up from 86% in 1995. "They've been there on our issues," says John Kinas, the NAH's PAC manager. "We're going to be there for them."

DIFFERENT CONCERNS. For many small businesses, fearful of a return to a pro-regulatory Democratic Congress, it's not a matter of loyalty but one of survival. "It's a classic example of Big Business being able to survive in any climate," fumes Jeffrey Butzke, PAC manager for the NFIB. "Small business suffers under all the regulations that are passed."

Corporate America has a different take on political matters. "Big Business isn't worried about ideological battles," says Marty Farmer, PAC manager for Barnett Banks Inc. Adds Robert G. Liberatore, Chrysler Corp.'s vice-president for Washington affairs: "A company with millions of shareholders can't afford to be partisan."

Still, Corporate America risks getting the cold shoulder for pet projects if an angered GOP holds control of Congress. "They are notorious for leaning whatever way the wind is blowing," gripes Senator John McCain (R-Ariz.) But this time, warns Frederic V. Malek, an investment banker and top GOP fund-raiser, "Big Business is making a huge mistake."

Of course, now that polls suggest a resurgent GOP, Corporate America may shift its giving again. But it could be too late. A well-financed coalition of labor and trial lawyers is determined to return Democrats to power. And the Dems are certain to get a boost with voters from their confab in Chicago. A divided business community can only help that cause.