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Business Scales Backs Its Wish List for Congress

Agenda: The relatively modest reforms it's likely to seek include tax breaks and product liability protections.


WASHINGTON — Though most of the U.S. business community is happy that the House and Senate remained in Republican hands, its ambitions for the new Congress taking office in January are relatively modest: maybe a bit of tax reform and continued efforts to trim spending.

Not even the most ambitious corporate executive still believes that Congress is going to achieve the goals of the revolution proclaimed by House Speaker Newt Gingrich (R-Ga.) in the heady days of 1994, when Republican legions won control of both houses of Congress for the first time in a generation.

Instead, the watchword for 1997 is "creeping incrementalism," said R. Bruce Josten, director of membership policy for the U.S. Chamber of Commerce, who assembled a unified business coalition that quickly raised $5 million to defend the GOP freshman against AFL-CIO attack commercials.

"Sweeping change just will not happen as long as Clinton is across the street," said Josten, whose office is on the other side of Lafayette Park from the White House.

The modest steps that business will push for next year could include:

* A cut in the capital gains tax.

* Changes in the estate tax system to provide relief for owners of family businesses.

* Increases in tax deductions for children.

* Product liability legislation reducing the exposure of business to consumer lawsuits.

After failing in efforts in the last Congress to get major regulatory reform, business leaders realize that "something is better than nothing," said Paul Huard, senior vice president of policy for the National Assn. of Manufacturers. "We will take a more incremental approach."

The exception, Huard said, is in federal assistance for the elderly: Business will press for major reforms of Medicare and Social Security. The growth of these programs is "unsustainable," he said, and they will eventually "eat the federal government alive" by crowding out all other spending from the budget.

In Tuesday's races for the House, business helped protect the majority of friendly Republican incumbents from a $35-million campaign by the AFL-CIO. The union movement waged its costliest and most unified drive in decades.

Of the 38 Republican incumbents over whom labor and business went head to head, 26 won reelection and 12 were defeated. The unions had their best showing in the West; three GOP freshmen in Washington were defeated. In California, Andrea Seastrand of Shell Beach was defeated, but Frank Riggs of Windsor and Brian Bilbray of San Diego won new two-year terms.

Union leaders share at least one view with business: that nothing dramatic will happen in the new Congress.

Unions, which had dreamed of a Democratic president working with a Democratic Congress, won't get what they want most: a law prohibiting businesses from permanently replacing strikers and a change in labor law making it easier to organize workers.

Likewise, business' dreams about the possibilities of a Bob Dole presidency won't come true: a new tax system, drastic restraints on government regulatory power, strict limits on product liability lawsuits and a budget that is balanced quickly.

Each side took solace in the scaled-back ambitions of the other.

The Gingrich "revolution is over--the House Republicans will be more moderate than the group elected in 1994," said Gerald McEntee, president of the American Federation of State, County and Municipal Employees and the leader of the AFL-CIO political education committee.

He said labor could take a share of the political credit for stopping Congress' swing to the right and for the enactment last summer of an increased minimum wage and a law making it easier for workers to get health insurance when they change jobs.

Labor's effort "is no one-act play," said McEntee. "What we just had was opening night, and this is a long-run show." The union movement's goal, he said, is to have cadres of permanent activists in virtually every congressional district.

The AFL-CIO had "ground operations" in 102 House districts this time, a catch-all category that might include volunteers, advertising campaigns and telephone banks. But only 46 of its 102 preferred candidates were successful.

The unions' assault on pro-business Republicans prompted a response from an ad hoc business coalition, including the U.S. Chamber of Commerce, the National Assn. of Manufacturers, the National Federation of Independent Business, the National Restaurant Assn. and the National Assn. of Wholesaler-Distributors.

These groups, brought together by Josten of the U.S. Chamber, quickly agreed to raise money for a hasty advertising campaign.

Of the 119 candidates supported by the Business Industry Political Action Committee, 70 were winners, according to Charles S. Mack, the committee's president. "That includes the vast majority of the embattled House freshmen and a significant share of the open seats in both Houses," he said.

Nevertheless, union officials said they were encouraged by a newfound unity and focus on political issues. Exit polls of voters indicated that households with union members accounted for 23% of all voters this time, compared with 14% in 1994 and 19% in 1992, said Steve Rosenthal, the AFL-CIO's political director. The election can be counted a success "in our ability to turn out our voters and persuade them," he said.

However, Republican candidates still draw a significant fraction of the union vote: about 35% of union members voted Republican on Tuesday, down from 40% in 1994, according to exit polls.

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