The Gop Squabbles, And Business Suffers

Republican split means the corporate agenda gets short shrift

Just a few weeks ago, the political landscape in Washington looked pretty good to Corporate America. After all, there were prospects of a budget surplus--and perhaps tax cuts. Labor lobbyists were distracted by union corruption scandals. And congressional Republicans--flush with big-bucks donations from business--seemed to have a lock on Congress next fall.

So why all the long faces along the K Street Corridor? Business lobbyists are coming to the conclusion that the 1998 session will not only be unproductive, but potentially bad for business.

For starters, priorities such as fast-track trade negotiating authority for the President, corporate tax cuts, and sweeping tort reform appear dead. Worse, corporate coalitions are losing the battle against popular White House proposals that will hit them directly in the pocket: a higher federal minimum wage and a patient "bill of rights" for members of managed-care plans. To the Republicans' dismay, the President's popularity is soaring, and support for his programs--not their tax breaks--is rising as well. He is, laments U.S. Chamber of Commerce President Thomas J. Donohue, "the best politician in my lifetime."

LONG FEUD. On the other hand, the GOP is too disorganized to mount an effective counterattack. "The reality is that the Republican majority is struggling," gripes a veteran business rep. "There's no unifying vision." House Speaker Newt Gingrich (R-Ga.) continues to preside over an unruly caucus of feuding conservatives and moderates. And Senate Majority Leader Trent Lott (R-Miss.) hasn't galvanized his forces.

Republicans can blame the loss of one top priority--getting fast-track trade authorization--on pro-labor Democrats. But on many other issues, it is their own infighting that's stalling legislation. Take the effort to get additional U.S. funding for the International Monetary Fund to help in East Asia. GOP anti-abortion foes vow to sink the $18 billion IMF package unless Congress cuts off funds to international groups that counsel about or perform abortions. Other GOP hard-liners want tough conditions on any new money lent to Asian economies.

Even when business and Hill leaders agree--such as on tax cuts--lobbyists find business interests low on the party's priority list. With an election looming, Republicans are focusing on middle-class voters with such goodies as a reduced "marriage penalty" for two-earner families. Big capital-gains cuts or corporate breaks seem unlikely, though small business may win estate-tax relief.

The Democrats, meanwhile, are dangling their own election-year goodies before voters. Clinton and Senator Edward M. Kennedy (D-Mass.) are leading a push to raise the minimum wage by at least $1 an hour over two years. Business leaders say the hike will mean fewer jobs, but they know they'll have trouble stopping some allies in the GOP from backing a proposal with wide public support. Congress has never voted down an increase in the minimum wage, and with the economy still expanding, it's unlikely it will do so this year.

Business may have to accept other potentially costly voter-friendly programs such as expanded child-care services, too. Many Hill Republicans have jumped on President Clinton's day-care bandwagon--even upping the ante with a tax break for stay-at-home moms in addition to incentives for business.

Then there's the backlash against HMOs. The White House and a bloc of congressional Republicans have proposed a new set of guarantees for patients, such as the right to medical specialists and information about treatments. Republicans are sympathetic to business concerns about how the plan would raise costs, but many don't want to be on the wrong side of the issue with voters. Among the leading advocates of reform are Senator Alfonse M. D'Amato (R-N.Y.), who faces a tough reelection battle in 1998, and Representative Charlie Norwood (R-Ga.) "They don't think they can be seen neglecting patients," concedes Thomas A. Scully, president of the Federation of American Health Systems, representing for-profit hospitals.

Some corporate lobbyists say they understand why the GOP would rather shun controversy than do battle for them. With Republicans hoping to maintain their majorities in the House and Senate, "they don't want to do anything to rock the boat," says one lobbyist. "That means don't get into any nasty fights with Clinton."

If that's what it takes to keep Capitol Hill in GOP hands, execs are willing to put up with some disappointments this session. They figure 1998 may be a bust, but there's always next year.

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