Image: Sarah Grillo/Axios
Fortune 500 companies are retaining major law firms with GOP ties in anticipation of a Republican-controlled House of Representatives seeking retaliation against companies it sees as aiding leftist forces.
Why it matters: Once the allies of big business, the modern Republican Party is preparing to accelerate a political realignment by exercising congressional subpoena power against key segments of American business.
- Targets would likely include big tech companies that have been criticized by conservatives for being overly censored, financial giants driving sustainable investment, and beneficiaries of massive Biden-era spending programs.
How we got here: Increased corporate involvement in social issues such as racial justice and abortion rights has turned large sections of American business against the orthodoxy of GOP policy.
The split left American companies Desperate for the few Washington firms that can help break into a GOP faction that is less open to business concerns than it has been in years past.
- “For years, Republican lobbyists delivered victory after victory after victory for American business with a Republican party that wanted to help,” a K Street Republican told Axios.
- “Many of the members who contributed to these victories have retired or lost elections and are being replaced by people who could care less about building a relationship with a Fortune 500 company’s internal lobbyist.”
What we observe: Key legislation – from COVID-19 Aid and Chip Funding Act to the Anti-Inflation Act and the bipartisan Infrastructure Act — will give Republicans, who have railed against overspending, ample scrutiny.
- Businesses should review the federal programs they have participated in and decide whether they could come under the scrutiny of a Republican congress, said Michael Bell, attorney for global law firm Hogan Lovells.
Backstage: Christopher Armstrong, a partner at Holland & Knight that specializes in congressional investigations, told Axios he is briefing corporate clients on a suspected GOP caucus eyeing oversight powers for private companies.
- “In past conventions, Republicans were expected to focus on administration,” he said. “Of course that will happen. But the arrogance against them to investigate private companies? I think those days are over.”
- Aaron Cutler, head of congressional investigations practice at Hogan Lovells, told Axios his firm organizes two- to three-hour simulations to interview CEOs and “get under their skin” like a congressman would.
These preparations are not based on paranoia: For months, leading House Conservatives and outside allies have been planning investigative strategies in private and public institutions.
- If Republicans regain investigative powers in November, “the days of just focusing on government agency actions will be gone,” Mike Howell, who leads the Heritage Foundation’s oversight project, told Axios over the summer.
- “It is not just in government now that the left is imposing its agenda; it’s in the corporate boardrooms, it’s in the school boards.”
Flashback: The current moment harks back to 2010, when the GOP took control of the House of Representatives after sweeping Democrat-backed legislation like the Affordable Care Act and the American Recovery and Reinvestment Act addressed the Great Recession.
- Subsequent GOP regulatory investigations uncovered Solyndra, a solar panel company that went bankrupt after receiving $535 million in federal loan guarantees from an Obama-era stimulus law.
- “A year from now there will be another household name — it won’t be Solyndra — that’s emblematic of waste, fraud and abuse,” said Jim Barnette, a partner at Steptoe & Johnson, who previously served as general counsel for the company’s Energy Committee of the House.