Who’s Calling the Shots?

Trump wants to seem all-powerful, but big business has a lot of leverage over his administration.

Washington, DC. Lorie Shaull / Flickr

No doubt, the Trump administration will harm billions of people and the planet. But it won’t be all-powerful. Donald Trump presents himself as a “hard-driving, vicious cutthroat” leader, unfettered by “special interests,” but he will have to confront the same constraints that all politicians in capitalist societies face.

The need to maintain the flow of investments and to minimize economic disruption will force the administration to reconsider implementing parts of its extremist agenda. Understanding these contradictions, and how mass movements can intensify them, is key to building an effective resistance movement.

Banks and corporations will impose some constraints by shifting their investments. Non-corporate bodies, like the military and intelligence agencies, will impose others. These elite institutions will counter policies that either directly threaten their interests or that catalyze mass movements that can disrupt those interests.

Indeed, even before the election, we saw how business and state institutions would try to control Trump. Both congressional Republicans and corporate lobbying groups like the Business Roundtable and the Chamber of Commerce rejected the president’s promise to enact tariffs on outsourcing companies. His hostility to the Iran deal put him at odds with the military, as well as aerospace and oil companies anxious to do business in Iran.

When Trump’s policies do not spark automatic elite resistance, mass movements can compel corporations to oppose extremist measures by making their implementation too expensive or difficult. The Dakota Access Pipeline (DAPL) protesters have proven that disruptive movements can force major institutions like DNB Bank and the Army Corps of Engineers to withdraw or temper their support for projects initially favored by capital.

The policy outcomes remain unclear at this point, but understanding the potential sources of elite opposition to Trump can help social movements develop effective strategies.

Promises and Constraints

Donald Trump’s campaign promises included a slew of reactionary proposals — resuming the CIA’s torture program, banning Muslims, giving free rein to polluters — alongside a few vague progressive ideas — bringing down drug prices, protecting Medicare and Social Security, renegotiating trade deals, taxing Wall Street, and scaling back foreign military interventions. Evidence so far suggests that he meant the former promises and lied about the latter.

In any case, Trump’s actual intentions matter less than the degree to which elite institutions — particularly in the business world — support or reject his proposals. For example, we can expect proactive (and successful) opposition to any attempt to impose stiff tariffs or tax Wall Street. On the other hand, corporate America has rallied around his plans to further deregulate business and drastically lower corporate taxes, while remaining agnostic about the power he has already granted to the military, police, and immigration agencies. What we need to understand is how these reactions to Trump initiatives can be translated into institutional constraints.

Corporations’ political power comes from their control over economic investment, a power that often becomes visible in the form of factory closures, layoffs, capital flight, price hikes, and banks’ refusal to lend. These actions become a “capital strike” when businesses promise to relent in exchange for favorable changes in government policy. All politicians, irrespective of campaign promises or party affiliations, are subject to this pressure. Despite his erratic temperament, megalomania, and relative independence from corporate money, Trump will have to negotiate with these forces.

We can expect that the corporate world will use the threat of capital strike in two situations: First, when the Trump administration’s plans directly infringe on their profits or power, and, second, when these plans generate sufficient mass resistance to threaten profits or power. Non-corporate institutions in charge of implementation will respond similarly.

We’ve already seen examples of the first scenario. Boeing’s warning to Trump not to scrap the Iran deal included a veiled allusion to a strike: the company reminded him that selling eighty planes to Iran will “support tens of thousands of US jobs” and “ensure America continues to lead in global aerospace and to create jobs and opportunities in communities across the nation.”

For the same reasons, Trump’s threat to erect new tariffs will likely never materialize. Virtually all of the products sold in Trump hotels and resorts are manufactured in the low-wage Global South, so these tariffs would affect his (and his family’s) businesses. But even if the Trump brand willingly absorbed reduced profits, the projected impact on the corporate world at large would generate intense resistance. Most products supposedly “Made in the USA” use foreign raw materials and assembly lines, and even 15 percent of American exports are sourced with foreign inputs. Other countries’ retaliatory tariffs would shrink the overseas markets on which domestic industries rely, eliciting further opposition.

Even before the election, business vocally opposed these promised tariffs, with threats of capital strikes and, sometimes, disinvestment announcements. The business press quoted lenders and developers who said that “uncertainty” about new tax policy was “contributing to delays in getting projects off the ground.” Not surprisingly, Republican congressional leaders — ever-faithful mouthpieces for the corporate elite — echoed and amplified these complaints and threats, even though it meant risking their new leader’s wrath.

It’s unlikely, however, that we’ll see a full-fledged showdown between business and Trump over this issue. In fact, his advisers’ backgrounds suggest that his economic policy will align with corporate forces that favor “free” trade policies. His team includes current or former executives and representatives from General Motors, JPMorgan, IBM, Boeing, and Walmart, and he’s brought on at least six alumni of Goldman Sachs — the most powerful of the Wall Street banks that Trump repeatedly declared had been getting “away with murder.”

General Electric CEO Jack Welch is also advising the president; he once praised outsourcing as a way to undercut labor and regulatory standards, saying “Ideally, you’d have every plant you own on a barge.”

And while Trump has apparently nixed the Trans-Pacific Partnership, his incoming secretary of state, Rex Tillerson of Exxon, called it “one of the most promising developments” for advancing American corporate interests. Business’s structural power, as well its direct voice within the administration, all but ensures that no major new tariffs will be enacted and that outsourcing will proceed apace.

For the same reasons, immigration policy will stay largely the same. Despite his nativist rhetoric, Trump and other big capitalists benefit from the current system, which relies on millions of low-wage immigrant workers who live in constant fear of deportation. Indeed, entire industries — including Trump’s resort empire and other ventures— depend on stealing wages from immigrants, so any fundamental change to the status quo will spark intense backlash. Trump’s advisers include representatives from these immigrant-dependent industries, like Veronica Birkenstock, president of Practical Employee Solutions, which specializes in providing low-wage immigrant workers to American employers.

This does not imply any reduction in deportations or oppression of immigrants — just the contrary. Obama’s immigration policy managed to keep up the flow of low-wage labor for American capitalists while also deporting three million immigrants and admitting only a trickle of refugees from countries devastated by American bombs.

Using the same enforcement apparatus, Trump may well increase the rate of deportation. Immigration courts’ limited capacity may or may not constrain him, since he has issued orders for “expedited removal,” which denies its targets due process rights. But as long as deportations remain within certain limits, they will not threaten the supply of exploitable labor for American businesses. Nor would business interests necessarily oppose expanding immigrant incarceration, a major subsidy to the for-profit prison industry, or rising rates of hate crimes against immigrant and minority communities.

What About Obamacare?

Since 2010, the Republican Party has promised to repeal the Affordable Care Act (ACA), and Trump adopted “repeal and replace” as a campaign slogan. But any major modifications will have to win approval from the same industry interests whose consent Obama and congressional Democrats won before passing the bill in the first place.

The ACA has three inseparable pillars: insurers must accept patients with preexisting conditions, everyone must purchase insurance, and government subsidies will help low-income Americans afford their premiums. Insurers and providers only accepted the first pillar in return for the second and third — indirect subsidies to industry — and will not allow changes in this basic model without appropriate compensation.

The industry has already threatened market disruption, warning that providers will close medical facilities, that pharmaceutical companies will discontinue product development or raise drug prices, and that insurers will jack up premiums even faster or withdraw from the marketplace altogether (as some have already done). Insurance industry spokesperson Marilyn Tavenner warns that eliminating the ACA’s subsidies would force insurance companies to completely disinvest at “the next logical opportunity.”

Consequently, the New York Times reported that many Republicans have privately “voiced concern that their efforts to undo the law could have harmful consequences, such as inadvertently destabilizing insurance markets — a concern shared by Democrats and insurers.”

These specific threats will severely constrain both congressional Republicans and the Trump administration and will require years of negotiation to work out. For instance, the Republicans want to eliminate subsidies to repeal the taxes on the wealthy that pay for them and also claim to oppose the individual mandate. But the insurers have threatened to go on strike unless both provisions are maintained.

A potential compromise might end the subsidies and/or the mandate but free insurers to reject patients with preexisting conditions, essentially unraveling the entire framework. This sort of multidimensional bargaining takes months, maybe years, and has already become entangled with parallel negotiations around Medicaid and the Republican effort to privatize Medicare.

Although we cannot know the ultimate result, certain predictions seem safe. The final deal will be at least as congenial to the health-care industry’s demands as the original bill. Coverage and costs will further diverge from what the public needs and what it can pay. Indeed, short-term changes seem to be moving in this direction, as congressional Republicans first take aim at “regulations affecting insurer health plans and businesses.”

One further prediction: Trump’s inevitable boast that the outcome is “terrific” will require a new crop of “alternative facts.” His headline-grabbing order “to dismantle the Affordable Care Act” turned out to be “mostly a symbolic gesture.” The order merely instructed officials to take the ACA apart “to the maximum extent permitted by law” — a fancy way of admitting that they will be able to change very little. Major changes will require long, complex negotiations between the government and the relevant industries, and his opening salvo suggests that Trump will try to conceal the delays with dramatic gestures.

Carrier’s Capital Strike

The November 2016 agreement between Trump and the Carrier manufacturing company shows how easily corporations will be able constrain the administration. Carrier and its parent company, United Technologies, had previously declared that they would transfer just over two thousand jobs from Indiana to Mexico. Three weeks after the election, Trump gloated that he had saved over half of those jobs.

Setting aside the fact that Carrier will still eliminate over a thousand jobs, Trump has good reason not to brag about this particular encounter: he got played.

Carrier’s executives offered a clear account of the deal, explaining that Trump had offered them preferential input in policymaking: “the incoming Trump-Pence administration has emphasized to us its commitment to support the business community and create an improved, more competitive US business climate,” meaning tax cuts and deregulation. As Indiana business professor Mohan Tatikonda put it, the agreement promised Carrier a “seat at the table.” Economist Michael Hicks called the negotiation “damned fine deal-making” on Carrier’s part: “The chance for Carrier (and their lawyers) to help craft a huge regulatory relief bill is worth every penny they might save [in exchange for] delaying the closure of this plant for a few years.”

The price tag for staying in Indiana “for a few years” will be miniscule relative to the company’s overall wealth. As the New York Times noted, the $65 million in projected savings from outsourcing would only have added “about 2 cents a share in earnings.” Howard Rubel, a senior Wall Street analyst, commented that it’s “an easy concession [to make] if the [president] listens to some of the company’s bigger concerns.” Moreover, if Carrier gets less than exactly what it wants, or should its retained workers refuse to accept a new round of givebacks, it can (re)eliminate those eight hundred jobs at any time.

Tellingly, the company concluded its statement by stressing that the deal had not altered its policy of outsourcing, even hinting that it may demand still more concessions in the future: “This agreement in no way diminishes our belief in the benefits of free trade and that the forces of globalization will continue to require solutions for the long-term competitiveness of the US and of American workers moving forward.”

The self-styled master of the deal had just surrendered to a classic capital strike. He negotiated a partial postponement of Carrier’s disinvestment and gained a public-relations victory, but only by promising the company what could become immensely profitable leverage over regulatory policy.

Other corporations immediately recognized this negotiation’s significance. They are now making their own demands in exchange for slowing down — or at least appearing to slow down — their offshoring plans.

In January, the Ford, GM, and Fiat Chrysler CEOs discussed their “wish list” with the new administration. Ford’s Mark Fields described “working together with the president and his administration on tax policies, on regulation, and on trade,” and Trump promised drastic tax cuts and “reductions in regulatory burdens” for the companies. Fuel emissions standards are one area of special concern to the automakers. Fields threatened that one million jobs “could be at risk if we’re not given some level of flexibility on that.”

As in the case of Carrier, the companies made minor concessions. Bloomberg notes that “GM and Fiat Chrysler have each pledged to invest $1 billion in domestic assembly,” but “both companies said those plans preceded Trump’s election, and all three [including Ford] will continue to produce vehicles in Mexico.” The companies’ main gift to Trump, the New York Times suggests, are “photo opportunities that allow him to claim he is engineering a renaissance in industrial America, even as the big picture remains unchanged.”

How Mass Protest Can Constrain Trump

Not all of Trump’s threats impinge on elites’ profits and power. For example, his appointment of energy industry representatives to his cabinet underlines his commitment to dramatically increase fossil fuels production. This has generated little corporate or governmental opposition. Obviously the energy sector is delighted, as are Wall Street bankers, many of whom invest heavily in dirty energy. Corporations outside these industries are not likely to object to more drilling and pipelines.

That is, they won’t naturally object — they must be compelled to do so. Mass resistance can alter these industries’ cost-benefit analyses, perhaps enough to shift their positions. For instance, targeting banks with boycotts could force a change in their lending priorities. Divestment campaigns targeting fossil fuels companies have already helped produce $5 trillion in divestment from fossil fuels. If this disinvestment can be accelerated, it could help spur the transition toward clean energy (which is already underway, but moving too slowly).

The struggle against the Dakota Access Pipeline (DAPL) exemplifies this potential. The Standing Rock Sioux and their allies used civil disobedience to escalate the costs of construction, impose delays, and force the government to consider their claim that the pipeline violates treaty rights and environmental law. This prolonged battle eventually led the Army Corps of Engineers to pause construction and undertake a full evaluation of the pipeline’s potential environmental danger. This decision created a new delay and exacerbated two other institutional pressures that may still doom the project despite President Trump’s effort to resuscitate it.

First, Energy Transfer Partners (ETP), DAPL’s lead developer, faces financing problems stemming from the crash in oil prices, its acquisition of excessive debt, and now the protest-induced delays. Last year both Moody’s and Standard & Poor’s rated its outlook “negative,” and the company had to agree to a “shotgun wedding” with Sunoco Logistics Partners in November to avoid a junk rating that would raise “its debt funding costs.” That same month, DNB Bank sold off its assets in the project as a result of boycotts. While other major banks have yet to follow suit, the possibility of further defections still exists, which more boycotts could intensify.

Second, the delays created uncertainty about the project’s viability among oil and gas companies. ETP’s business plan relied on signing advance contracts with companies that would utilize the completed pipeline. These contracts attracted lenders by assuring sufficient revenue to repay the loans.

Unfortunately for ETP, the contracts specified a January 1, 2017, start date. With the construction stalled, the oil companies must utilize expensive temporary providers. Further, ETP’s violation of the date-of-completion clause allows their clients to nullify the contracts. The oil companies can therefore either find a permanent substitute — killing the pipeline — or use alternate providers while renegotiating their deal with ETP.

This has resulted in a threefold crisis, any element of which could permanently cancel the project: the oil companies could permanently move to alternate vendors, the lenders could withdraw funding, or the Army Corps could deny the environmental waiver. Even as Trump does everything he can to accelerate the pipeline, its fate remains uncertain.

Whether or not the anti-DAPL struggle ultimately succeeds, we can use it as a template for generating corporate and institutional opposition to Trump’s policies. Indeed, similar dynamics can be found in a number of previously successful efforts.

Consider, for example, Arizona’s racial profiling legislation. Massive consumer boycotts against state manufacturing and tourism quickly activated local business leaders, who then pressured the legislature to rescind the legislation.

Corporations also opposed flying the Confederate flag in South Carolina and North Carolina’s anti-LGBT law.

In these cases, mass pressures, both organized and unorganized, altered corporations’ calculations, compelling them to oppose extremist policies. In two of the three cases, the resulting corporate divestment led to the policies’ reversal or mitigation.

Mass pressure can likewise stall some of the more horrific elements of Trump’s agenda because capital will exercise its power over Trump whenever it is beneficial to do so. Workers’ and consumers’ disruptive power can play a major role in capital’s cost-benefit analysis.

Trump’s Weak Spots

The Trump presidency will have many horrible impacts, but the administration will also have to operate under significant constraints. Disruptive mass movements can amplify them.

We already have tremendous potential for disruption. Public opinion polls reflect a deep distrust of big banks and corporations across party lines. Tens of millions of people despise Trump, and have been galvanized and regalvanized by each new expression of his savagery. The fact that Trump’s presidency will further harm working people means that some Trump voters will eventually turn against him.

The Left must organize disruptive mass movements that can identify and target the real power-holders — the corporations and government institutions that dominate policymaking regardless of who holds office. These elite forces can restrain Trump, so targeting them may be the best way to counter his most reactionary reforms. It may also be the best long-term way to build a radical and independent mass movement that can restructure our economy and government along democratic lines, thus vanquishing not only Trump but also the bankrupt liberalism that created a vacuum into which a demagogue could step.

Confronting Trumpism also requires an explicit emphasis on antiracist, antisexist, anti-imperialist politics that firmly differentiates the Left from populist white nationalism. The latter forces are poised to expand under Trump by exploiting white racism and support for authoritarian institutions like the police and military. As Trump’s policies hurt working people of all races, he will try to compensate by intensifying his scapegoating of immigrants, Muslims, blacks, LGBT people, women, labor unions, the disabled, and the poor.

Inclusive, multiracial, working-class movements are not the norm in American history, but there are some precedents. The Left must build those movements, not only to defend against Trump’s most vicious assaults, but also to confront the structures, institutions, and ideologies that spawned him.