Battle Royal '08 - The presidential election (exclusive web content)

Drew Ermenc

February 1, 2008

Web exclusive - Battle royal, extra rounds

Web exclusive - Material that didn't make the final cut

Ding, ding. This knock-down drag-out is hitting Georgia like Ric Flair used to slap Dusty Rhodes at the Omni. It's getting dirty, and we've all heard about the personal life of
Rudy Giuliani, the Oprah effect on Obama and the social issues that try men's souls. But while voters prep for the Georgia primary on February 5, and CEOs turn to candidates on both sides of the aisle, we wanted to break down the major candidates based on a number of business-centric issues: fiscal and economic, as well as prior management and political experience, to give you a summary of their basic principles. Let's get it on ...

Hillary Clinton

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She has some business friendly ideas, or else top executives like venture capitalist James Robinson, the former CEO of American Express, and embattled Morgan Stanley CEO John Mack, a longtime Republican, wouldn't be supporting her.

"She has a pretty comprehensive economic platform, and the record of the Clinton administration was pretty generally pro-business," says Tom Baxter, editor of the Atlanta-based Web site Southern Political Report. "But can you be business friendly while still raising taxes, which is something she's on the record as supporting?"

Baxter says yes. "Taxes go up and taxes go down. We've had an era in which business has been in favor of tax reform and reducing taxes, but it's not the only consideration for business."

David Johnson, president and founder of Strategic Vision, a public affairs agency, sees Clinton's role as a powerful New York politician as a draw for the business vote. "I consider her the most business-friendly candidate of the Democratic contenders," he says. "She's the establishment candidate. Because she's from New York, that plays a factor as well, because New York has numerous corporations. So in proposing legislation and getting things passed to help her constituents, she's had to help businesses and work with the Wall Street crowd."

On free trade, Clinton has a mixed record. Despite her husband's support of the North American Free Trade Agreement (NAFTA) during his first term, Sen. Clinton has indicated it has not delivered on what his administration had hoped, and she wants to revisit the agreement if elected. She also voted against the Central American Free Trade Agreement (CAFTA), but voted for free trade with Oman, Vietnam, Chile and Singapore.

Clinton also voted for comprehensive immigration reform in 2007 and is on the record for supporting similar legislation if elected. And she strongly believes funding federal programs such as the Small Business Administration will help entrepreneurs and small business owners.

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When business thinks of Clinton, health care often comes to mind. Her failed attempt at reforming the terribly complicated issue during her husband's first term is a sticking point with small business owners, who would have been harmed by her universal coverage proposal. Her latest plan still burdens business, but offers tax credits to encourage coverage, and exempts small business from mandates that would require coverage for all employees.

But political analysts like Johnson sees the health care talk on the campaign trail as just that: talk. "There's an old adage in politics that says, ‘Once burnt on the stove, you're very careful about grabbing the pot again,'" he says. "She was burned on health care, and it cost the Clinton's the mid-term elections in 1994. She knows now what can happen to her ...  And you'll see her being very flexible on it because she doesn't want a repeat."

Dr. Charles Bullock, the University of Georgia's Richard B. Russell professor of political science, also views health care as a thorn in her proverbial side. "At this point, business would be suspicious of whatever [she] proposed," he says. "The perception of a lot of business people would be what they remember from the '90s."

Clinton also is on record as supporting the reduction of special breaks for corporations and publicly scrutinizing CEO pay, and voted to increase the minimum wage in 2005 and 2007. She also voted for the Employee Fair Choice Act in 2007. Marc Freedman, director of labor policy for the U.S. Chamber of Commerce, believes this legislation will harm business. "In a nutshell, it would have made it easier for employees to unionize," he says. "[Sen. Barack] Obama and Clinton both voted for this bill."

John Edwards

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In a December Conde Nast Portfolio column, political reporter Matthew Cooper argued Edwards is a "phony populist," one who intentionally talks a big game about fighting large corporations, but has positions only slightly different than his Democratic counterparts.

For those suffering from the growing ramifications of the recent mortgage and credit meltdown, Edwards wants to enact national legislation providing consumer protections against predatory lenders, payday lenders and abusive financial products. Edwards wants to ban the worst payday loans and limit the often-deceptive tactics involving credit card interest rates.

Business friendly? Depends on who you talk to, but those in the home building and real estate industries may find his ideas a welcome respite given this current economic slowdown.

Edwards also calls for increased funding in education and schools which, he argues, long term would provide businesses with the skilled workers that are in short supply.

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Edwards has made it his mission through his political rhetoric and prior occupation to take on businesses and corporations. He made a livelihood – and millions of dollars – out of filing personal injury claims as a North Carolina trial lawyer against businesses and doctors.

On the campaign trail, Edwards uses terms like "iron-fisted grip" and "glorification of corporate profit" when referring to white-collar America, a pretty telling sign his policies won't take kindly to business, not to mention he endorses a higher minimum wage.

His universal health care plan would require businesses to finance their employees' health care costs. In April 2007, Edwards said his universal health care plan would cost $90 billion to $120 billion a year to the federal government. How does he plan on paying for this? By raising taxes. In an April 2006 interview with Tim Russert on NBCs "Meet the Press," Edwards said he was open to raising taxes on corporations and the wealthy to pay for his health care plan, and would consider taxing companies with "excess profits."

"I would consider him to be anti-business," Johnson says. "Not surprising, given his past experience as a trial lawyer. That's part of where his mindset is coming ... As a business owner, particularly if you're a small- or medium-sized business owner, what he's proposing, with health care and tax relief will hurt."

Rudy Giuliani

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"As mayor of New York, [Giuliani] was very business friendly," Johnson says. "He's also seen as a tax cutter. Giuliani has a clear record of reducing taxes, and has taken a similar position during his current campaign for president, stating he would lower corporate tax rates and marginal tax rates."

Elected in 1993, then-Mayor Giuliani called for more than $1 billion in tax cuts over the next four years, including a cut of $84 million in the commercial rent tax in 1996 and a $190 million cut in 2001, a proposal that included a reduction of the personal income tax surcharge.

Giuliani ran on a platform of reinventing government as mayor, and passed a number of privatization actions during his tenure that backed his promises. He privatized a wide range of previously city-funded programs, including city park maintenance and water meter readers. As president, he wants to implement a similar privatization approach with national health care, using the weight of the free market to even out the inequalities. Johnson sees the plan as less ambitious than the plans of Democratic candidates.

"It's for reforming the system, working within the system, bringing down health care costs, and letting the free market subscribe," Johnson says.

Guiliani has stated he plans on lowering the number of federal employees if elected. Despite a largely Democratic city council, electorate and powerful leadership, Giuliani was able to push much of his economic agenda through, and in turn, revitalized Gotham's economy, lowered regulations and government involvement, and made it easier to do business in New York City.

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Giuliani reduced taxes during his tenure, but he raised fees and surcharges in the process. "With Giuliani, [he instituted] surcharges on things like emissions in New York City and grocery deliveries," says Johnson. When asked the difference between taxes and surcharges, Johnson doesn't see one. "It's semantics. But [politicians] can say they didn't raise taxes and the tax base. These charges hurt business more than anything because these businesses have to pass [the extra fees] onto the consumer."

Mike Huckabee

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Huckabee has made a splash with his tax proposals – abolish income, payroll, capital gains and estate taxes in lieu of a national sales tax with a rate of 23 percent. Advocates say this national tax, often called the fair tax, will help small businesses by opening up resources that otherwise would be devoted to accounting for federal tax code, making companies more efficient.

And a fair tax could spark economic growth, as foreign currency and investments would not be taxed under the plan. But there's more to this surging underdog than the belief he can rid our lives of the Internal Revenue Service.

His ideas involving health care typically are business friendly, stressing universal programs that aren't mandated by law. "Our employer-based system has outlived its usefulness, but the answer is a consumer-based system, not socialized medicine," Huckabee says on his Web site.

"If there was one compelling reason why a businessman should vote for [Huckabee], it's what he has said about health care," Baxter says. "He has been as willing to be innovative in that area as any candidate has been. Health care is the No. 1 issue government has to address other than monetary policy. Huckabee has some interesting ideas in that area."

Huckabee also supports a tax credit to create incentives for manufacturers to make products in the U.S.

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On the flip side of the fair tax is the possibility of sticker shock, with nearly a one-third markup on the majority of goods sold. And what about retired Americans? Will they be taxed twice because the tax rate jumps on purchases instead of income? The fair tax is a highly unlikely probability.

A healthy debate also exists over whether Huckabee reduced or raised taxes as Arkansas governor. According to The Club for Growth, a conservative anti-tax group, Huckabee was responsible for a 37 percent higher sales tax after leaving office. So says The New York Times, which reported Huckabee and the state legislature were responsible for a number of tax increases because of a budget deficit, and chose to propose higher taxes rather than cut spending.

"He's anti-big business." Johnson says. "He comes across as a traditional populist. And if you look at his record in Arkansas, he was not business-friendly; he actually raised more taxes than Bill Clinton did."

And critics of his stance on immigration – which includes a 10-year ban on keeping illegal immigrants from reentering the United States, strict regulations and a hefty fines against employers of illegal workers – say his policies aren't good for the economy.

His campaign also has a focus on education and the arts, but, as Johnson puts it, "[these plans] will require raising taxes."
    
Barack Obama

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"Obama is hard to define," Johnson says. "Look at his corporate backing, and listen to what they say during the campaign; who's backing them, and who is giving donations." Obama has a long list of CEOs, including Penny Pritzker, chairman of Classic Residence by Hyatt; and Hollywood heavyweights such as Dreamworks co-founder Jeffrey Katzenberg.

Johnson points out Obama has bipartisan support in Illinois because of his willingness to listen. "If you look at his record, he's always run as a strong liberal; ‘tax the corporations, raise taxes.' But even when he was in the Illinois state legislature, his rhetoric was one thing, but the way he voted was something else. It was more conservative than people led on. You can make a deal with him; he will compromise. And while he'll speak the liberal line, his actual votes and policy is not quite as liberal as he'll talk about."

Obama wants to eliminate capital gains tax on investments in new businesses to promote entrepreneurialism; and supported comprehensive immigration reform and free trade with Oman. He's also on record as saying he wants to reward companies for creating domestic jobs.

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Although advocates suggest he does want to reach across the aisle, Obama's positions on business-related issues have been spotty at best. He voted against the free trade legislation CAFTA; voted twice for legislation to increase the minimum wage; and has proposed to amend NAFTA to include labor agreements. He, along with Sen. Clinton, supported the Employee Free Choice Act in 2007.

The Citizens for Tax Justice, a not-for-profit pro-tax group that emphasizes the closing of loopholes for corporate taxes and "requiring the wealthy to pay their fair share," gave Obama a 100 out of 100 rating.

His health care plan would be paid for with the expiration of the Bush tax cuts from 2001 and 2003. A universal coverage proposal similar to Clinton's, it also will require businesses to offer health care coverage. An exemption also applies for certain small businesses.

His plan also includes employer reimbursements for health care costs that reach above a certain level. "Clearly, a universal health care plan in which business owners are forced into [a health care plan] basically to help provide for their workers, it's going to take money away from businesses," Johnson says.

Bullock agrees. "Any of the Democratic candidates' plans would increase costs and would require a more federal role."

John McCain

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McCain is considered a political maverick, breaking with Republicans over the last several years on key issues. This has left an impression with prominent business leaders such as Boston Scientific's Pete Nicholas; New York Stock Exchange chief John Thain; and Fred Smith, founder and CEO of FedEx. "He does what he thinks is right," said Smith in a Fortune piece this past June. Advocates say that he understands how Washington works, and he's  willing to manage and compromise for the long-term good.

Johnson sees some similarities with another Republican who was liked by both sides of the aisle. "McCain is the most Reagan-esque," he says. "His business friendly immigration reform and overall congressional record ... it's very similar to Reagan in a lot of ways."

As a senator, McCain voted to cut capital gains taxes in 1997; voted for an extension of the Bush tax cuts in 2006; and voted against tax hikes in 1990 and 1993. "In the long run, business would be comfortable with someone who has been as anti-tax and as much of a budget hawk as McCain has been,"  Johnson says.

And McCain was an architect of immigration reform legislation in 2007. It failed to pass, but it had widespread support from both Democrats and Republicans, including President Bush. The U.S. Chamber of Commerce also endorsed the bill as business friendly legislation. "With the record for all three senators [Obama, McCain, and Clinton], they were all very involved [in the legislation]," says Angelo Amador, director of immigration for the U.S.  Chamber. "At the end of the day, the senators all had a good voting record."

Also in 2007, McCain was against the Employee Fair Choice Act. "All Democratic candidates have expressed support for this issue," says Freedman, who sees the bill as the No. 1 priority for unions in the upcoming election. "McCain supported the filibuster" that led to the bill's demise, he says.

On the campaign trail, McCain has proposed a health care plan that will put the responsibility on the individual, not the employer, and is a proponent of free trade.

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While crossing party lines to push the McCain-Feingold Act for campaign reform, a bill that has defined his political career thus far, he upset many in his party, who felt the legislation was too harsh and not good for business interests. "There's a lot of deep-seeded resentment among Republican interest groups [because of McCain-Feingold]. I don't have a strong sense that business groups are that vehement about McCain," Johnson  says.

His unpredictability in the Senate has left some questions. He proposed the Climate Stewardship Act, a bill that would reduce greenhouse gas emissions, and could have cost the government billions and sent manufacturers packing to less-stringent countries.

McCain opposed the Bush tax cuts in 2001 and 2003 because he felt it would create a deficit. He has since reversed his stance and now supports the cuts, but defended he wasn't wrong in his original decision. In 1998, he sponsored and voted for a significant tax hike – or "fee," as he called it – on cigarettes.
    
Mitt Romney

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At a rally in Iowa last fall, Romney summed up the reason he should be president in one short sentence. "I spent my life in the private sector," he said. "In business, you make a better product or you go out of business. In government, things seem to stay the same."

Romney has the most business experience among all the candidates. After graduating from Harvard Business School (in the same class as George W. Bush), Romney took a job at Bain & Co., and eventually was put in charge of starting Bain Capital in 1984, raising $37 million in the private equity group's first fund. He is credited with providing financing to Domino's Pizza, Staples and The Sports Authority after analyzing each company's business model and realizing their potential. As a private equity guru, an obvious strength as president would be his experience in analyzing budgets.

According to Baxter, Romney appears to be the strongest candidate for business. "He's the one guy who has considerable experience in private business and he's emphasized that on the campaign trail," he says.

In Massachusetts, Romney battled a Democratic state legislature over his proposal to reduce the state income tax from 5.3 percent to 5.0 percent in 2004, 2005 and 2006, failing in all three attempts, but managing to sign legislation in 2005 that established a two-day, tax free shopping holiday.

And he passed a health care reform law that is a hybrid of mandates to buy insurance, placing the burden on both individuals and businesses.

Bullock also sees Romney as the most business friendly. "His father was a business leader; he himself has experiences in the business community; and if you think of Olympics as a business affair (Romney headed up Salt Lake City's Winter Olympic Games in 2002), it's certainly critical to the interests of business. And he's been the chief executive of a state. He has more chief executive experience than most of the others put together."

Romney is on record supporting the abolishment of the death tax and elimination of taxes on interest, capital gains and dividends for the middle class.

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It's difficult to discern Romney's core beliefs based on his previous record versus his current campaign. While governor, Romney often made concessions and was viewed as a moderate Republican, yet he's switched positions on a number of issues.

He does not recommend his health care plan on a federal level, instead taking a unique position in the 2008 campaign. "Romney wants to make it a state issue; he's a state's rights Republican like Reagan. He's the only one running on that. It's not a plan that will ever be implemented," Johnson says. "He basically instituted the Kennedy health care plan. If he runs on that, everybody would be all over him on it having flip-flopped."

In 2003, Romney came out against the Bush tax cuts, although he now has said he wants to make the 2001 and 2003 tax cuts permanent. Like Giuliani, Romney used fees, surcharges and closed tax loopholes to balance his budget as governor of Massachusetts. Although he didn't raise the tax base per se, these loophole closures – 33 new fees and increases in 57 others – came at the expense of both personal income and taxes on corporations.

Regardless of how you feel on the issues presented, this presidential election is one of the most important in our lifetime. Make time to vote on February 5th.