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Ascertaining Business's Interests and Political Preferences

  • David E. Broockman (a1)

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Medicare is one of the largest social programs in the world. Did organized industry favor Medicare's passage in 1965? If it did, this would represent powerful evidence in favor of the theory that social programs typically require cross-class alliances to pass, such as alliances between business and labor. However, in a previous article in this journal, I argued that answering questions about political actors’ preferences—such as whether organized industry favored Medicare's passage—can be surprisingly difficult due to the “problem of preferences”; that is, political actors might misrepresent their true policy preferences for many reasons. For example, when their ideal proposals are not politically feasible, political actors may wish to bolster support for a more politically viable alternative to a disliked proposal—even if they do not truly support this alternative to the status quo. To better understand political actors’ true policy preferences, I argued, scholars should trace how those actors’ expressed preferences change as a function of their strategic context—just as scholars seeking to understand the impact of any other variable trace the effects of changes in it.

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I thank Anthony Chen, Paul Pierson, Eric Schickler, and Ken Shotts for helpful feedback. Any remaining errors are, of course, my own.

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1. Broockman, David E., “The ‘Problem of Preferences’: Medicare and Business Support for the Welfare State,” Studies in American Political Development 26 (October 2012): 83106.

2. See Ibid., Table 1.

3. See extensive documentation of this fact in Broockman, “The ‘Problem of Preferences,’” 89–91, 97–99. Marmor, for example, famously described this period as “the politics of legislative certainty”; Marmor, Theodore R., The Politics of Medicare (London: Routledge, 1973), 5759. As Republican John Byrnes also explained, “It was perfectly apparent that the truck was on the road and it was all gassed up and going…. The politics of the thing dictated that there was going to be passage of a federal program.” As a result, Byrnes said, “there was no use in proposing something that had no possibility at all of being a substitute for what the [Johnson] Administration was proposing.” Reminiscences of John Byrnes, 1967, Butler Library Oral History Collection, Columbia University. For evidence that this widespread understanding was publicly acknowledged, see Arlen J. Large, “Medicare's Foes, Feeling Passage Is Likely, Put Forth a Barrage of Alternative Plans,” Wall Street Journal, January 12, 1965.

4. Broockman, “The ‘Problem of Preferences,’” 83.

5. Swenson, Peter, “B is for Byrnes and Business: An Untold Story about Medicare,” Clio (June 2006): 3, 3943.

7. Broockman, “The ‘Problem of Preferences.’”

8. Peter Swenson, “Misrepresented Interests: Business, Medicare, and the Making of the American Health Care State,” Studies in American Political Development, (April 2018): 1–23.

9. M. E. Feary to John Byrnes,. 22 February 1965, Box 29, John Byrnes Papers, Wisconsin Historical Society.

10. Swenson, “B is for Byrnes and Business,” 41.

11. Ibid.

12. See more detailed discussion in Broockman, “The ‘Problem of Preferences,’” 94–95.

13. Broockman, “The ‘Problem of Preferences,’” Table 2.

14. Swenson, “B is for Byrnes and Business.”

15. See, e.g., Deakin, James, The Lobbyists (Washington, DC: Public Affairs Press, 1966), p. 125–33; Hall, Donald R., Cooperative Lobbying: The Power of Pressure (Tucson: University of Arizona Press, 1969), 240–45.

16. “State C of C Denies Need for Medicare,” Los Angeles Times, May 24, 1962.

17. U.S. Congress House Committee on Ways and Means, Hearing on Medical Care for the Aged, Testimony of James A. Mann, 88th Cong., 1st Sess., 21 November 1963.

18. U.S. Congress Senate Committee on Finance, Sessions on H.R. 6675, Testimony of Council of Louisiana Business and Trade Associations, 89th Cong., 1st Sess., 10–19 May 1965. The Louisiana State Chamber of Commerce is a signatory to this statement opposing the Medicare bill.

19. In searches in state newspapers and the Congressional record, I did not come across any evidence that any of the twenty-two “missing” state chambers voiced support for Medicare.

20. Searches in state newspapers for statewide Chambers of Commerce did not yield any results indicating that the chambers existed.

21. Vogel, David, Fluctuating Fortunes: The Political Power of Business in America (New York: Basic, 1989), p. 25.

22. See Bell's obituary, Wolfgang Saxon, “Elliott V. Bell is Dead at 80; Ex-Editor of Business Week,” New York Times, January 12, 1983.

23. Harold B. Meyers, “‘Medicare,’ the Cure That Could Cause a Setback,” Fortune (May 1963).

24. See “A Case of Unhealthy Haste,” Wall Street Journal, September 4, 1964; “An Unhealthy Climate,” Wall Street Journal, April 27, 1965; “Sechswochenkrankheit,” Wall Street Journal, June 8 1965; “Where We Are Going,” Wall Street Journal, September 21, 1965; “Overwhelmed With Welfare,” Wall Street Journal, November 5, 1965, among many.

25. Alexander, Herbert E., Financing the 1964 Election (Princeton, NJ: Citizens Research Foundation, 1966), 45.

26. See, e.g., Cox, Gary W. and Magar, Eric, “How much is majority status in the US Congress worth?American Political Science Review 93, no. 2 (1999): 299309.

27. Vogel, Fluctuating Fortunes, 26. Another account indicates that businesspeople were particularly won over by Johnson's actions to reduce federal spending in 1964. However, this account also indicates that LBJ started to lose business's support in later years when he increased federal spending more than they thought and would not cut the budgets of the Great Society programs in the wake of the ballooning federal budget. See McQuaid, Kim, Big Business and Presidential Power (New York: Morrow, 1982), 226, 232, 241–42, 250. See also Harold B. Meyers, “L.B.J.’s Romance with Business,” Fortune (September 1964): 230.

28. Harold B. Meyers, “L.B.J.’s Romance with Business,” 222.

29. Evans, Rowland and Novak, Robert, Lyndon B. Johnson: The Exercise of Power (New York: New American Library, 1966), 470.

30. If we were to accept such inferences, labor's strong support for LBJ would imply that both labor and business agreed with LBJ on every issue and, by extension, each other—a dubious conclusion indicative of a flawed premise.

31. Byrnes's response is slightly ambiguous with regard to whether he is answering the interviewer's question with respect to large corporations in general or GM specifically. However, Byrnes's response repeatedly refers to comparisons between a specific subject and a broader group, suggesting that his response should most likely be interpreted with respect to GM in particular. Byrnes also attributes a quote about unions to the subject of his answer, something he seems more likely to do with respect to one company (GM) whose workers were substantially unionized rather than large corporations in general, not all of whom had largely unionized workforces.

32. Reminiscences of John Byrnes, 1967, Butler Library Oral History Collection, Columbia University.

33. Swenson also writes, “In fact, they thought they ‘might come out better in the long run’” (p. 7), quoting Byrnes. Here, Swenson's article omits a detail: Byrnes thought GM felt even more equivocal than that, in fact, saying, “Maybe we might come out better in the long run” (emphasis added). Reminiscences of John Byrnes.

34. Swenson's article here again neglects the problem of preferences as well: What was GM's strategic calculus in representing its position this way to Byrnes? For example, with so many pieces of legislation threatening to business looking possible to pass in the 89th Congress, such as the Taft-Hartley 14(b) repeal, it is not hard to imagine GM might have discounted Medicare's importance to Brynes, to try to get Byrnes to focus on fighting other even more threatening pieces of legislation. In order to take GM's position seriously, not only do we need more detail on it than Byrnes's vague characterization offers, but we also need an explicit consideration of the problem of preferences.

35. There are also plenty of groups outside of business, such as evangelicals in the United States, whose political preferences may not be animated by their economic interests alone.

36. For example, Swenson notes that the Conference of State Manufacturers Associations (CSMA) gave a statement to Congress asking for specific provisions of the Medicare bill be changed but without registering objection to Medicare overall. Swenson writes, “Astute legislators would have been able to deduce the NAM's lack of representativeness from the fact that state-level manufacturers’ associations did not speak up against Medicare in Congressional testimony.… The state manufacturers’ associations’ joint statement, endorsed by 37 of them, contained not a single objection to Medicare's core purpose, design, and financing provisions” (p. 13). I could not locate any pre-1965 testimony from the CSMA, but an example proves the broader point. One of the signatories to the CSMA's statement was the Illinois Manufacturers’ Association. Following Swenson's patterns of reasoning, one might imagine they were indifferent or even supportive of Medicare as a result of signing onto this CSMA statement. However, in 1964, the Illinois Manufacturers’ Association told Congress that Medicare was “socialistic legislation,” strongly opposed it in any form, and said it was not needed. See U.S. Congress House Committee on Ways and Means, Statement of E. Russell Bartley, Hearing on Medical Care for the Aged, 88th Cong., 2nd Sess., January 1964.

37. See Broockman, “The ‘Problem of Preferences.’”

38. “State C of C Denies Need for Medicare,” 62.

39. Epstein, Edwin M., The Corporation in American Politics (Englewood Cliffs, NJ: Prentice-Hall 1969); Corning, Peter A., The Evolution of Medicare. Social Security Administration, Office of Research and Statistics, Research Report No. 29. (Washington, DC: U.S. Department of Health, Education and Welfare, 1969); Vogel, Fluctuating Fortunes. These references are discussed in Swenson, “Misrepresented Interests,” p. 7.

40. See Epstein, The Corporation in American Politics, 52.

41. Corning also notes in his discussion of Medicare that any growing business support for Medicare was probably due to Medicare becoming more popular with Americans in general at the time, cutting against the Swenson's theoretical logic that forces specific to business's shifting interests were responsible for Medicare's passage.

42. Rowen, Hobart, The Free Enterprisers: Kennedy, Johnson and the Business Establishment (New York: Putnam, 1964), chap. 14. The book's author, presumably writing in 1963, may not have judged Medicare as significant to discuss for many reasons: For example, when Medicare had little chance of passage and when historical actors could not have known it would be viewed as significant later on. Moreover, Rowen's book clearly indicates that business broadly opposed federal spending, government-run services that the private market could provide, and market intervention—all of which Medicare represented.

43. Levitt, Theodore, “The Johnson Treatment,” Harvard Business Review 45, no. 1 (January–February 1967): 114–15. Medicare receives the most attention in the article when Levitt says that LBJ was wise to sign Medicare with ailing former President Harry Truman present, as it would be impolite to “say a bad word” about Medicare with Truman present.

44. Levitt, Theodore, “Why Business Always Loses,” Harvard Business Review 46 (March–April 1968): 82.

45. McQuaid, Kim, Uneasy Partners: Big Business in American Politics, 1945-1990 (Baltimore, MD: Johns Hopkins University Press, 1994), 134.

46. See Hall, Cooperative Lobbying, 240–45.

47. National Association of Manufacturers, Eastern Division, “Results of NAM Survey of Business Opinion on Labor's Legislative Goals,” Public Affairs Report, 27 January 1965. NAM Papers, Series I/Box 49/Public Affairs Department, Public Affairs Reporter, 1965, Hagley Museum and Library.

48. Regression analysis comparing the general public to both groups yields clearly statistically significant coefficients (for business owners and managers, p < 0.001, and for just the small sample of business owners, p < 0.02). It will be of no surprise to public opinion scholars that any group of individual Americans will feature a mix of people supportive and opposed to any particular piece of controversial legislation; individuals who owned businesses likely also planned to retire and were concerned about their own medical risk, may have had parents whose bills they feared they had to pay for, and so forth.

49. Swenson, “B is for Byrnes and Business,” 41.

50. Swenson, “B is for Byrnes and Business,” 41.

51. See Broockman, “The ‘Problem of Preferences.’”

52. Swenson, “B is for Byrnes and Business.”

I thank Anthony Chen, Paul Pierson, Eric Schickler, and Ken Shotts for helpful feedback. Any remaining errors are, of course, my own.

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