Financial Times, Jan. 8, 2020
US business leaders rue their ‘Faustian bargain’ with Trump
Outgoing president delivered low taxes but executives are beginning to
count the cost
by Andrew Edgecliffe-Johnson
“It’s always been this Faustian bargain with Trump,” Dan Eberhart
admitted this week. The chief executive of Canary, a Denver-based
drilling services company, had put up with “the ridiculousness”
associated with Donald Trump because he also delivered pro-growth
policies and low taxes.
Mr Eberhart gave $100,000 to Trump-supporting political committees and
helped raise another $600,000 from other donors despite experiencing
recriminations “all the time” for supporting a historically divisive
president, he said.
But having watched Wednesday’s deadly violence at the Capitol building
after the president egged on a mob of supporters, he told the Financial
Times: “I’m done. I don’t want my mom to think I’m involved with this.”
Few mainstream business leaders have voiced support for the inflammatory
populist during the final weeks of his administration. But now even the
stalwarts are distancing themselves, amid warnings of a backlash against
executives who funded a president many now blame for imperilling the
rule of law.
Stephen Schwarzman, the Blackstone founder who was Mr Trump’s most
senior backer on Wall Street, had in November defended the president’s
right to challenge the election results in court. On Wednesday the
private equity boss condemned the “appalling” insurrection “that
followed the president’s remarks”.
Activist investor Nelson Peltz said he was ‘sorry’ he had voted for Mr
Trump in November © Patrick T. Fallon/Bloomberg
Activist investor Nelson Peltz told CNBC on Thursday that he had voted
for the president in November but was now “sorry I did that”. The
investor said he had supported many of Mr Trump’s policies, “but so much
was undone yesterday with what we all saw”.
Most striking, the National Association of Manufacturers, which steered
more than 70 per cent of its 2020 campaign contributions to Republicans,
called on US vice-president Mike Pence to “seriously consider working
with the cabinet to invoke the 25th Amendment” to remove the president
from office.
Threat of employee backlash
Companies were realising that they needed “to stop supporting those who
enabled the slow and steady rot” in US democracy, said Aron Cramer,
chief of BSR, a group which advises companies on their social
responsibilities. That, he added, would mean cutting campaign
contributions to those such as Republican senators Ted Cruz and Josh
Hawley who encouraged what the Business Roundtable called “the fiction
of a fraudulent 2020 presidential election”.
“We’re living in a time of employee activism and a lot of employees will
ask why their companies are supporting office holders [who] allowed a
baseless challenge to the election and therefore to democracy,” said Mr
Cramer.
“There’s not a major chief executive who’s a Trump supporter now
In a straw poll of 33 chief executives this week, Yale School of
Management professor Jeffrey Sonnenfeld found unanimous support for the
idea that companies should warn their lobbyists that they would no
longer fund “election result deniers”.
“There’s not a major chief executive who’s a Trump supporter now,” Prof
Sonnenfeld declared.
Corporate advisers said that executives’ concerns had been heightened by
threats by the Lincoln Project — a well-funded group that has campaigned
against Mr Trump with viral social media ads — to turn its fire on
corporate donors.
Steve Schmidt, a Lincoln Project founder, this week threatened “a brutal
corporate pressure campaign” that would seek to “foment employee
rebellions and shareholder revolts” at companies that had donated to Mr
Trump’s congressional allies.
Bruce Freed, president of the Center for Political Accountability, which
tracks investor revolts over political spending, said companies would
have to become “much more careful” about their financial support. “If
it’s a consumer-facing company, they worry about a boycott and they also
worry about employee morale.”
Executives’ support for Trump administration figures has caused crises
before. Equinox and SoulCycle customers protested when Stephen Ross,
chairman of the fitness chains’ parent company, hosted a 2019 fundraiser
for Mr Trump, and AT&T ousted its top lobbyist after admitting that
hiring Michael Cohen, the president’s former personal lawyer, was “a big
mistake”.
Supporters of US president Donald Trump gather outside the US Capitol on
Wednesday © Alex Edelman/AFP/Getty
Some attempts to stir up consumer protests have fizzled, however.
Despite a campaign to boycott Home Depot because co-founder Bernie
Marcus funded the Trump campaign, the DIY chain has produced some of the
strongest recent results of any US retailer.
“There’s a critical mass” before boycotts are effective, said Chip
Franklin, a talk radio host who had backed the Home Depot campaign. “But
sometimes just the threat of a boycott is enough to get stockholders and
others inside the company to rein a CEO in.”
Trump officials enter a tough job market
Advisers said the shock of this week’s events would be a test of the
business community’s commitment to social responsibility after a year in
which chiefs have been vocal on issues ranging from racial equity to the
US handling of the pandemic.
Despite the traditional revolving door between Washington and corporate
America, they added, few companies would be willing to hire Trump
administration veterans. Leadership Now, a coalition including
executives from Bank of America and LinkedIn, said companies should
“make clear that the president’s enablers will have no opportunity for
future employment with them”.
This week’s breach capped four years of friction between business and a
president who ran on an anti-elite message and then tuned out the views
of most large companies on issues from trade to immigration.
CEOs had abandoned Mr Trump’s business councils in August 2017, when he
claimed there had been “very fine people” at a white supremacist rally
that turned deadly in Charlottesville, Virginia.
But some later returned, with executives including Al Kelly of Visa and
IBM’s then chief Ginni Rometty, praising his administration’s leadership
at a 2019 meeting on reskilling.
Mr Trump’s 2020 campaign raised five times as much from S&P 500 chiefs
as Mr Biden’s campaign did, MarketWatch calculated, with the largest
donations coming from Jeff Sprecher of Intercontinental Exchange,
Sheldon Adelson of Las Vegas Sands, Steven Roth of Vornado and Oracle’s
Safra Catz.
Even as campaigners attacked the role that business had played in
supporting Mr Trump, some industry groups were arguing that companies
should play a stronger role in Washington.
Alongside priorities such as infrastructure spending, the US Chamber of
Commerce announced an event next week to discuss the “critical” role the
business community could play in “strengthening democracy”.
Mr Eberhart was already thinking about which Republican he would support
in 2024, but he said he could not now see himself funding another
campaign by Mr Trump or any member of his family.
“I think this is an unfixable rupture,” he said: “This is crazy. Nobody
signed up for this.”
Additional reporting by Alistair Gray
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