How Companies and Executives Diverge Politically

Could corporate America really be losing control of the political process when corporate executives are spending so much to sway elections?

My latest Economic Scene column notes that for all the assertions that the Supreme Court’s Citizens United decision would lead to a corporate takeover of politics, corporations seem to be losing the ability to control their historical allies in the Republican Party.

I propose that one reason may be that companies reluctant to open up the campaign spending spigot have been outspent by partisan bazillionaires, including wealthy corporate executives, who do not share corporations’ need to appear nice to both sides.

Critics have made a legitimate point against my argument: who cares whether it’s Las Vegas Sands or its chief, Sheldon Adelson, that is spending hand over fist to push Republicans over the line? In their view, the distinction I make between a business and its executives is irrelevant.

It isn’t quite, though. Executives and their companies contribute to politics very differently. Adam Bonica, a political scientist at Stanford, collected data on the spending on last year’s elections by chief executives and directors of Fortune 500 companies. Then he compared them with the spending by Fortune 500 corporate PACs. The difference is stark.

Consider the first chart below. It confirms corporations’ pro-Republican leanings. But it is hardly extreme. Political spending by corporate PACs clusters just a little to the right of the partisan center. This responds to businesses’ need to keep lines of communication open to both parties - essential for effective lobbying to function.

Partisan Mix of Corporate PAC Contributions

Source: Adam Bonica, Stanford University

The second chart, by contrast, underscores how individual executives and directors exhibit none of this caution. A Sheldon Adelson or a George Soros has no qualms about picking a horse and backing it to the end.

Partisan Mix of Contributions by C.E.O.’s and Directors

Source: Adam Bonica, Stanford University

This kind of spending can produce very different political outcomes. A Congress that followed the political preferences outlined in the first graph would look very different from a Congress that hewed to the choices in the second.