tea party

Why Big Business and House Republicans don't mix

October 22, 2013: 5:00 AM ET

Only one company on the Fortune 100 is headquartered in a Tea Party congressional district.

By Tory Newmyer, writer

Ted Cruz

Ted Cruz

FORTUNE -- Last week, right-leaning corporate powers were gnashing their teeth as the Republican-led House of Representatives they helped sponsor nearly pitched us into a debt default. That outcome averted, this week they're beginning to puzzle through how to translate their buyer's remorse into something constructive -- perhaps by investing in primary challenges to the most hardcore ideologues in Congress.

That the Republican Party is riven so fundamentally between its populist and establishment wings these days shouldn't be a great shock, considering the Tea Party tantrum that precipitated the shutdown and default brinkmanship was a sloppier rerun of the 2011 standoff.

But it does appear only now to be dawning on business leaders how little leverage they have with the band of stalwarts that out-maneuvered their own leaders in the Capitol to manufacture this last crisis. As Politico notes, the business groups that exist to channel the corporate agenda in Washington are being forced to reckon with the fact that they are badly outgunned out in the states by a new breed of conservative agitators -- groups like Heritage Action for America and the Senate Conservatives Fund, with deep pockets and no patience for compromise.

"Fundamentally, if the business community wants to be more engaged in the grass-roots politics, they have to have a permanent presence there," Heritage Action's Dan Holler told Politico.

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But aren't these groups the newcomers to the grassroots? They're Washington creations, after all, while the nation's top corporations employ hundreds of thousands of people all across the country. The answer appears to be, "Yes, but ..."

Consider this: Only one company on the Fortune 100 is headquartered in the Congressional district of what the New York Times calls the "Tea Party core" -- the 38 most radical Republicans in the House (That company is ExxonMobil (XOM), No. 2 on the Fortune list, and its representative is Kenny Marchant, one of 144 House Republicans who voted against the package to reopen the government and lift the debt ceiling last week.)

Expand that universe to include the 42-member second tier of hardliners, and you capture three more Republicans representing top corporate headquarters: Ohio's Steve Chabot (Proctor & Gamble (PG) and Kroger (KR)); Illinois' Aaron Schock (State Farm and Caterpillar (CAT)); and from the same state, Rodney Davis (Archer Daniels Midland (ADM)). But both Davis and Schock voted for the compromise package, and I'd argue Schock for one does not rank among this faction.

Overall, House Republicans represent just 27 companies on the Fortune 100. These stats need a small constellation of asterisks. A member of Congress in a district without a major corporate headquarters may still represent an area where a company's top leadership lay their heads down at night. Or the district could be home to an operations center or some other outpost that would mean the company's employees make up a significant part of the district's economic base.

And geography is hardly destiny. Some of the companies on the roster are helmed by executives who have carved out publicly conservative profiles despite operating in bright blue Congressional districts. Meanwhile, Ted Cruz, the freshman Senator from Texas who arguably engineered the shutdown and debt ceiling fight, represents 10 companies on the list.

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Nevertheless, the lack of overlap between the faction of House Republicans most averse to compromise and the home bases of companies most eager for a functioning government does signal the profound disconnect between the two.

The economic impact of America's biggest companies is undeniable: If the Fortune 500 were a country whose GDP represented sales, it'd be the second-largest economy on earth. And yet Tea Party Republicans representing largely rural districts sound proud not to be acquainted with those companies' leaders.

"I guess they have their connections, but we're not hearing directly from them at all," Rep. Tim Huelskamp, a Republican representing central and western Kansas, told me earlier this month amidst the debt ceiling standoff. "Maybe it's the big difference between corporate CEOs who worry about quarterly reports and my folks at small businesses who worry whether they're going to hire employee number 51. They're not worried about the debt ceiling issue."

Of the CEOs publicly warning about the consequences of a debt default (AT&T's Randall Stephenson and BlackRock's Larry Fink are among those most vocal), Huelskamp said, "I'll admit I have no idea who these folks are. They have nothing to do with my district. They aren't active and engaged in the political process other than when things like this come up, and they essentially love the status quo."

It goes both ways. On Monday morning, Tom Donohue, the top business lobbyist in Washington as president of the U.S. Chamber of Commerce, acknowledged he doesn't know Cruz.

Stitching the GOP back together calls for finding a way to bridge that divide -- or for one side to categorically vanquish the other -- because the current state of the party can't abide.

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