In the final Democratic debate of the primaries on Feb. 26, Senator Hillary Clinton (D-N.Y.) trumpeted the populist theme of her campaign: "The wealthy and the well-connected have had a President," she said. "It's time we had a President for the middle class and working people."
The setting was Cleveland, Ohio — a must-win state for Clinton in the primaries as she tries to catch up to Senator Barack Obama (D-Ill.). Clinton portrays herself as a champion of the middle class, which she hopes will go over well with voters in Ohio, a state that has lost more than 200,000 jobs during George W. Bush's Presidency, ahead of its March 4 primary.
But while Clinton's talk is tough — on opposing tax cuts for the wealthy, the influence of special interests like health insurance companies, and Big Oil — her record and support base indicate she's hardly an enemy of American business interests. Some of the biggest names on Wall Street — including John Mack, Chief Executive Officer of Morgan Stanley and Steve Rattner, managing principal of the Quadrangle Group — have publicly endorsed Clinton. She has more maxed-out, executive-level donors than either Obama or Senator John McCain (R-Ariz.) and has pulled in $3.9 million from donors associated with the health-care industry, more than any other candidate. Donors affiliated with Goldman Sachs are her top contributors.
"On the stump, candidates often say things to voters that would make their contributors cringe, but in the end contributors have a good track record of getting what they want," says Massie Ritsch, a spokesman for the Center for Responsive Politics in Washington. "No matter who is elected President, Wall Street will have a friend in the White House House."
Clinton, however savvy she has been in her dealings with business, will still not be the kind of pro-business president Bush has been. On Feb. 18 Clinton released a 13-page blueprint for fixing the economy that reads like a manifesto for working- and middle-class voters and against corporate interests. As Clinton stresses on the campaign trail, her health-care plan would mandate coverage for every American, with those who can't afford it eligible for government subsidies. To address the home foreclosure crisis, she pledges to freeze home foreclosures for 90 days and subprime, adjustable-rate mortgages for five years. She also pledges massive government investment in job creation for infrastructure projects such as roads and bridges, including the creation of at least 5 million new "green collar" jobs in cleaner and renewable energies.
The blueprint also takes a swipe at certain industries that she says are making outsize profits. She says she plans to "take back at least $55 billion per year from drug companies, oil companies, and firms that ship jobs overseas" and invest those resources in job creation and health insurance coverage. For example, her plan includes a "windfall profits tax" on large oil companies to help pay for the Strategic Energy Fund.
She also talks in general terms about regulation, saying she favors "a regulatory framework that protects against the excesses that have led to the current housing crisis." Equally important, Clinton would work to take away some of the advantages business enjoyed under the Bush administration, such as the Bush tax cuts, and free trade agreements that don't impose core labor and environmental protections on the low-cost countries eager to cut trade deals with the U.S.
On the face of it, the plan does not look like a strongly pro-business platform. "Broadly speaking, a Clinton Presidency would hurt the economy," says Dan Clifton, an analyst for Strategas Research in Washington. Clifton says business' worries include possible increase in taxes on income, capital gains, and dividends. In Wisconsin on Feb. 18 Clinton said she'd institute a "fair tax system" that eliminates loopholes for "hedge fund dealers." In other words, she'd raise taxes on hedge fund managers' investment gains from the current 15% to regular income rates of up to 35%.
Business is also worried about limits to trade. In the Cleveland, Ohio debate on Feb. 26 she pledged, when pressed, that she would tell Canada and Mexico the U.S. is pulling out of NAFTA if the countries were not willing to renegotiate the deal within six months to better protect workers and the environment. "She's talking about reworking NAFTA, but most larger companies need trade to expand," says Clifton.
The oil and gas industry are also not happy to be the targets of Clinton's populist rhetoric, which calls for new taxes on their profits. The industry has been lobbying Congress to oppose new taxes on the industry and will continue to fight the battle if Clinton wins the Presidency. "We're not at all opposing renewable energy incentives," says Mark Kibbe, senior tax policy analyst for the American Petroleum Institute, a trade organization for the oil industry. "But if the goal is energy independence, imposing a new tax on oil and gas is a bad idea."
A "balanced agenda"
What is there for business to like? In its most recent analysis of Senate voting records, the Chamber of Commerce gave Clinton a 67% favorable rating, compared with just 55% for Obama. (McCain rated 80% favorable.) Many business leaders recall the success of the economy of the late 1990s during Bill Clinton's Presidency, when workers' wages were rising across the board as the economy grew. Like her husband, whose term marked the rise of the "new left," Clinton is championing not radical wealth redistribution but what she calls a "balanced" agenda that will keep the fundamentals of U.S. commerce and free trade intact even as it offers more protections for middle- and lower-income Americans.
Wall Street is fairly comfortable with Clinton. "[She] has been a New York senator for seven years, and New York is the financial capital of the U.S. and the world," says Roger Altman, senior Clinton economic adviser and co-founder of Evercore Partners, an investment and advisory company in New York. "CEOs and other business leaders have had the chance to work with her [at] very close quarters. If you ask leaders of the financial community if there's anything to be afraid of, 80% or more would say no."
Indeed, some industries would gain considerably if Clinton were elected. Her "Economic Blueprint" calls for the creation of a $50 billion Strategic Energy Fund to support alternative energy industries. "With her record and proposals, there is great visibility in terms of what you get with Hillary Clinton," says Bryan Sherbacow, 39, chief operating officer of Charleston, S.C.-based Ethanex Energy, an ethanol producer. "With George Bush a lot of people didn't know what they were voting for, and aren't willing to take that chance again." Sherbacow and his wife have maxed out on donations to Clinton, contributing $2,300 each for the primaries.
The question now is who will face McCain in the general election. Whether the nominee is Clinton or Obama, voters can expect the Democratic candidate to cater its economic message to its audience. "Any Democratic candidate for President walks a fine line between policy approaches that will strengthen the middle class and at same time retain good and credible working relationship with business," says Altman. "It's always a complex dynamic."