Insider Outlook


Read the feature story on what the 2008 election means to the in-house bar here.


Two of Sonnenschein Nath & Rosenthal's Washington, D.C. partners who counsel business on legal and regulatory issues, one a veteran of two Republican administrations, the other a former national chair of the Democratic Party, shared their thoughts on the impact of Election 2008 on issues of particular concern to in-house attorneys. Excerpts from the two interviews follow:


Fred McClure, former legislative adviser to Presidents George H.W. Bush and Ronald Reagan:

Election Overview

If Congress is made up of more Democrats than there are in this Congress, which seems to be the current political thinking, the question is how big will the majority be? And that will have an impact on health care, immigration, energy, every single thing they try to do, no matter who is elected President. And it will be more important in the Senate than in the House. It determines whether you can invoke cloture, cut off debate. You need to muster 60 votes for that. And then you have the 67-vote piece needed to override a veto.

In the House, it doesn't make a difference. The party in control controls the agenda, and the other guys might as well not show up. There, the bigger issue is what sort of bargaining power conservative Democrats who were elected in what had been GOP districts--blue dogs, they are called--will be able to exert. That primarily affects budgeting issues but can affect substantive issues, depending on the part of the country they are from. For example, a Democrat from Texas may have a different view on offshore drilling than a Democrat from North Carolina.

I also have the view that no matter who wins the White House, the prospect is that we will have an activist government because of the Congress. For example, if Democrats control Congress and the White House, the number of Congressional investigations and hearings associated with business and industry will take a hit, in the sense that the party will want to look under the hood. If there is a Democratic Congress and a Republican President, you are going to see activism aimed not only at business, but also at government agencies and departments in terms of whether they effectively do or don't do what they are supposed to do, whether it is FEMA or FDIC or the SEC--take your pick. Where you have a divided government, there is yet another target-rich environment for investigative activities to take place.


Labor and Employment

In the labor and employment area, as a practical matter [debate] will revolve around the ability [of unions] to organize and how easy it is to get an election called, and the other piece that will be an issue will be the minimum wage.

I have not heard McCain make a pronouncement on EFCA [the Employee Free Choice Act, which would make it easier for unions to organize and compel mandatory arbitration if they fail to reach an agreement with management]. But do I think McCain would veto that? I suspect he would. Do I think he would be able to sustain a veto? That again would depend on the makeup of the House and the Senate. Because it is not a veto that would be supported by just Republicans--I think you would have a mix of Republicans and Democrats supporting him on the veto. It depends on what part of the country they are from.


Climate Change

As for climate change--I don't know where Congress will come out. And you have the issue of: Where will you place your emphasis when you become president? Because we will have a sea change in terms of institutions: Is health care more important than climate because they can't have it all? Or is it more important to do energy if they don't do anything in the next three weeks? And then you have to think about the little event going on over in Iraq and be able to continue to pay for that.


Immigration

Immigration has been a big issue for McCain--it has been an issue that has sort of defined him in some instances and made him vulnerable early in the primary process. John had some pretty strong views and he reached across the aisle--his views were not dissimilar from President Bush's--when you come from the Southwest, you have a different feeling about it than if you come from Minnesota.

But I don't know that there is any demand to do anything on the immigration front. Other than the business world concern about H-1B visas, you will have to deal with whether you have a fence or not, whether or not there will be stepped up enforcement at the borders. But is that at such a high degree of concern that it demands there be comprehensive immigration reform in the next Congress? What circumstances have to be there so that we will respond to it, when we haven't been able to over the last two years? Is there a big clamoring out there for someone to do something on immigration reform? I don't know that there is.

Until Congress can figure out how to deal with the question of what do we do with the people who are here illegally now, we are never going to get to the issue of how do we then keep our borders secure. How do we get to the question of highly skilled workers? How do we get to be able to depend on the lower end of the scale where we can't get enough workers to meet demand?

I don't see it as an issue permeating to the campaign, other than conversations when speaking to Hispanic groups. I don't think [Obama and McCain] spoke to the VFW (Veterans of Foreign Wars) about it. Maybe it will be an issue in their debate, but who are you talking to when you step on that landmine?


Tort Reform

You don't hear much about tort reform anymore because all of the political value has been squeezed out of it. Tort reform in a future Congress with a different President is going to depend upon how someone defines reform. [If Obama is President], do you roll back some stuff that has been accomplished? [If McCain is President], do the Republicans feel like there is anything they can get out of the subject? And the answer is no. It is not on the Republican agenda, and the Republicans are not pushing it.

On the Democratic side, there may be some effort to roll back on the reforms, but frankly that needs to take place in the states and not on the federal level. Which of course makes it more difficult on business because then they have a 50-state regulatory scheme. But sometimes they want that. So I haven't seen anything and I don't have any expectation of that being a big issue because it's kind of a Republican issue, but not necessarily a McCain issue.

Judicial Appointments

I handled the nominations of [Supreme Court Justices] Scalia, Souter and Thomas when I was in the White House, so I have a perspective on this. At the big court level, there is a relatively high chance that the next President will have an opportunity to appoint a member to the Court. If that occurs, the President is going to have to figure out a way to come up with a candidate that will pass muster based on what the makeup of the Senate is after this election. He's got to get someone who can garner at least 60 votes and so who do you choose? My suspicion is that a candidate will have to be probably pretty much in the center with maybe a little lean to the right [to be] filibuster proof.

So I suspect the person will be an open-minded, probably middle-of-the-road jurist--that's a McCain kind of candidate. An Obama candidate cannot be some far left jurist from the 9th Circuit in California--there would have to be a very dramatic change in the makeup of the Senate to move too far in either direction, particularly given how the Court is doing its thing now.

On the Court of Appeals level, it depends on the part of the country. There's been a little bit of a hassle on the 4th Circuit on the East Coast--it hasn't been as much of a hassle in other places. When I was handling the nomination of Atty. Gen. John Ashcroft for President Bush, the 4th Circuit was a pain in the butt already. The deal is that it reaches from Maryland to South Carolina, so you have all these senators who think the appointments are theirs. So the President has to deal with senators who each think that judges on the Court of Appeals are theirs. It's a mess.

Joseph Andrew. Former National Chair of the Democratic National Committee (1999-2001):


Election Overview

Having had conversations for 20 years with GCs of publicly held companies of all sizes, what people tend to focus on first and foremost are the larger economic issues, rather than any specific concept. As a practical matter, the GC is focused on what their CEO is focused on, and that tends to be more on the atmosphere under which they will operate. "Am I going to have a headwind or a tailwind?" is usually the way these conversations begin.

To their credit, Bill Clinton and Bob Rubin have changed the nature of that conversation for Democrats, because people began to look differently at the history. So now you have everyone from analysts to Goldman Sachs and well-known economists who have noted that activist government tends to presage good economic times.

More often than not, the Democratic Party has become the party that closely related to what Wall Street would see as solid economic principles--lowering the national debt, trying to make sure we pay as we go--paygo is a Democratic concept, for example. If you look at any polls of CEOs or C-Suite execs, they are less focused on particular legislative items than on the larger trends they will operate under.

Having said that, there are all these independent issues that obviously general counsels have to deal with. Those fall into two categories--what will affect my business individually, and what will affect business writ large. You have very different conversations about different issues. If you ask American business leaders, all will list health care in top two or three, same with climate change, but the intensity is focused on those who are producers or users of quantities of energy.

So you always have these conversations about breadth versus depth of intensity when I talk to CEOs and general counsel. The bigger the company, the more they are concerned about the broader issues and there are fewer they are intense about. They want to know, how will the Democrats improve the economy? What are we going to do about health care? They tend to get focused for understandable reasons on the big trends that either are headwind or tailwind rather than on individual issues before the Senate.


Labor and Employment

Some labor provisions will affect only those companies that are organized or could possibly be organized, which represents less than 10 percent of all companies now. So on these labor issues, there is no question that 10 percent of the companies in America feel very strongly about them, and 90 percent could care less.

The labor issues are focused on whether the Democrats will get a significant majority in the House and whether they will reach that magic number of 60 in the Senate. It would mean this legislation would pass. You could make an argument that if Democrats get that majority but John McCain wins, they are more likely to pass than if Barack Obama wins. Because people are concerned that Obama will be a mollifying force on Congress, as opposed to a Congress that is going to do whatever it wants to and will be trying to take on a Republican President.

It's been a long time since we've had a significant majority of Democrats that controlled Congress and a Republican President. You have to go back to Nixon--and during the Nixon administration we had more activist regulatory legislation passed by Congress than at any time in the history of the United States. In 1992-1994 when you had a Democratic President and a Democratic Congress, you find that the activist agenda was mollified.

The Clinton administration was pushing what was perceived to be more of a business-oriented agenda than the Democrats in Congress really wanted. There is every reason to believe you might have the same impact with an Obama administration, because you have a player who would have credibility and power inside those Democratic caucuses saying, "We don't think this is what you should do."


Climate Change

On the broader issue of climate change, Obama and McCain's positions are similar, but there are some specifics on which they differ. Because Obama is pushing for a windfall profits tax, the companies that are oil producers are pro-McCain. McCain also has favored getting rid of federal tax on gasoline. He has something for the oil producing companies and Obama has something against them. When you look at natural gas, the companies tend to be Obama; coal companies are nervous about everybody and more worried about Obama. The nuclear industry is trying hard to be friends with everybody, but they perceive that McCain will be more likely to build more nuclear plants faster, while alternative energy is very firmly with Obama because his platform has very specific tax advantages for alternative energy.


Immigration

The two presidential candidates are closer than we have seen in a long time. They are significantly closer than you would assume a Democratic and Republican candidate would be. And that's why the battle is focused on the House, even more than the Senate. On this issue, even Republicans in the Senate are more progressive than Republicans in the House. The most conservative Republicans in the House, those who have led the anti-immigration reform charge, are often some of the most embattled right now in an unusual election year.

You find immigration is an issue with breadth but little intensity. Everyone is concerned because of the cost--the regulatory cost with employer-oriented enforcement. Everyone--whether they do it themselves or they outsource it--has low-cost employees somewhere in their process, cleaning the office or doing the landscaping--so you have an immigration problem somewhere. The liability is dramatically increasing for companies, whether they are big or small, though admittedly the smaller ones are the most focused on this.

So this is where social conservatives say, "We don't want to open our borders to all these people because of terrorism concerns, the fear it will increase crime." That's a social concern. The economic concern is obvious--we want everyone here and we want them as quickly as possible because it lowers labor costs and it lowers regulatory cost. This is the challenge that Republicans have--where the social concern conflicts with the economic agenda--because small business clearly wants immigration reform. They don't want to hire people who are illegal, they just have to because they can't find anyone else. To the extent that large companies are outsourcing all the time, the guys who run the Xerox machine and the people cleaning the offices, they too want to avoid the individual liability they would have. They don't want to hire an outsourcing company who is hiring someone who is illegal, they just have no choice.

In the long run, this is a big winning issue for the Democrats because it is perceived that Democrats will actually take action on this. So this is an area where even local Chambers of Commerce are trying to convince their congressmen to support the Democratic position. It helps Obama because the perception is that McCain is for it but he can never get it through his own party. McCain is ahead of his own party on the immigration issue.


Tort Reform

Tort reform would be a much different issue if John Edwards had been the nominee. The trial lawyers are nervous about Obama because of his history. That nervousness has allowed GCs to say, "Here's a Democrat that maybe I can deal with on tort reform issues." So the fact that Obama was not the choice of the trial bar has helped Obama when it comes to dealing with general counsels on this issue.

One other little nuance about Barack Obama that is interesting in conversations with general counsels is that Obama was a law school professor while serving as a state senator, and he has significant writings. While those writings are often more rights oriented than anything, general counsel who are more focused on these issues than the average person have found many things to like in them. In tort reform, he is perceived to be less problematic than either Hillary Clinton or John Edwards or Bill Richardson. That poses challenges for Obama within the Democratic family, but this tends not to be as hot an issue when it comes to the presidential campaign.


Judicial Appointments

There is a concern that there has been too much partisanship within the appointment of federal judges. But in particular we have just gone through a two-and-a-half-year-long investigation of whether there was partisanship in the appointment of U.S. attorneys.

That's what scares American business.

In general, there is no question that American business would prefer more conservative appointments than more progressive appointments to the federal bench. But what they really don't want is partisan appointments, because that's not good with anybody. So what has hurt Republicans is that we have had an overtly partisan Justice Department and an overtly partisan process of making these appointments.

That's what the ABA has been struggling with, and that's what most other groups have been struggling with. We have to make sure that people have confidence that the President is going to be picking people that are genuinely qualified. So what I hear general counsels focus on is that they believe McCain and Obama both would be a positive step forward in terms of making appointments of people who are more qualified and less partisan.

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