Libertarian Candidate Gary Johnson: Corporate America’s Best Bet for President?

Jun 21, 2016

Tell the average American that the influence of big business is on the wane in Washington and he'll look at you like you have two heads.

After all, lobbying organizations spent more than $3 billion last year petitioning Congress on their favorite issues, while the average Congressmen must raise and spend more than $1 million every two years to get elected. With all that money flying around, it's safe to assume that campaign contributors have an easier time getting their points of view across to representatives than your average citizen.

But the rise of Donald Trump and the unexpected success of Bernie Sanders during the 2016 presidential primaries has underscored a trend that Fortune identified last February: despite all the money that big business throws around in Washington, its success rate of getting significant legislation passed has been dismal.

And neither Donald Trump nor a leftward-drifting Hillary Clinton appear anywhere near willing or able to marshal the political support necessary to pass the items Fortune identified as big business' four big ticket priorities: an overhaul of the tax code, new foreign-trade agreements, a long-term plan for federal debt reduction and the budget, and comprehensive immigration reform.

Poll after poll show that these goals aren't necessarily unpopular. The American public still believes in immigration, free trade, debt reduction, and tax reform, sometimes by large margins. The problem for those who support these ideas is that the political coalitions that currently dominate both the Republican and Democratic parties are hostile to these reforms. And what better way to unlock the support for these issues than to reject the two-party system altogether?

That's right, the establishment may win by doing the most un-establishment thing ever: vigorously supporting a third-party push for the presidency.

For the most part, the principles and policies put forward by former New Mexico Governor Gary Johnson are the sort supported by the Chamber of Commerce and the Business Roundtable. A lifelong Republican, Johnson defected to the Libertarian Party in 2012, when he first ran as that party's nominee. In an interview with Fortune, Johnson argued that he is the right candidate for business for the simple reason that he and his running mate, former Republican Governor of Massachusetts Bill Weld, represent a "proven ticket for smaller government."

Not only is Johnson for lower taxes, like Donald Trump, but he'd be a fierce advocate for the sort of free trade deals that have become a whipping boy in the age of Trump and Sanders. "If China wants to spend $10 producing a product and sell it for a buck, who benefits from that? I think we do," says Johnson. "I'm the free market guy. I think free markets work."

That sort of attitude has been missing in this presidential election, in which a large portion of the American public has been encouraged to blame their financial struggles on free trade agreements like NAFTA. But even NAFTA’s fiercest critics argue that it has cost the U.S. 35,000 jobs per year, or about one-seventh of the new jobs that the American economy is currently adding per month.

Yes, the rise of China and Mexico has cost America jobs as multinational companies discovered they could produce goods in those countries for less than they could in the U.S. But that dynamic is likely on account of growth-minded economic policy in those countries rather than a specifically detrimental economic policy in the U.S. Both Hillary Clinton and Donald Trump have not made this argument. If business leaders support Gary Johnson vigorously enough to get his poll numbers above 15%—which would give him a chance to take a place on the presidential debate stage—the candidate could make this case to a national audience.

On taxes, Johnson's position is that the U.S. should move from a system that taxes income to one that taxes consumption, with the hope of eliminating corporate income taxes altogether. This should appeal to business owners, who must compete with companies abroad that generally face a lower tax burden. At the same time, provisions in the tax code allow some American companies to pay much lower taxes than the statutory 35% rate.

Governor Johnson also breaks with the major party nominees on entitlement reform. While Donald Trump and Hillary Clinton have argued for the need to protect or expand spending on Social Security and Medicare, Johnson is focused on the unsustainable nature of those programs during a time when the ratio of working Americans to retirees is at historic lows and falling further. If politics is a struggle over whether to give the private or public sector control over the economy's resources, Governor Johnson is the only candidate in the race that can reliably be counted on to fight for the private sector in every case.

The one opinion of Johnson's that may give business people pause is his attitude toward central banking and the financial crisis. When asked if the Federal Reserve's actions helped or hindered the economic recovery, the governor took a liquidationist position, arguing that the U.S. economy would be in a better position today if we had just let America's major banks fail. While this is a popular position politically, there's little evidence to back it up in the economics literature outside fringe circles.

It may seem like a risky gamble for American business to back a third party candidate, as it could split the conservative vote between Donald Trump and Gary Johnson. But given Trump's unwillingness to stake out clear positions on taxes and spending, and his enthusiasm for threatening trade wars with China and Mexico, supporting Trump could risk elevating the populist, protectionist wing of the Republican party over the significant chunk of Republicans who believe in cutting spending and promoting free trade.

If Hillary Clinton is elected, that will likely spell a continuation of the status quo, with a Republican House of Representatives thwarting Democrats from accomplishing the goals that run counter to the interests of much of the business community, leaving free-market enthusiasts no worse off next year than they are today.

On the other hand, a Trump victory is a riskier proposition. The only promises that Trump has not wavered on, like his insistence on deporting millions of illegal immigrants and banning immigration from parts of the world with a history of terrorism, would create more problems than solutions for American businesses. And Trump has flip-flopped repeatedly on other issues that are dear to the business community, like tax reform, debt reduction, and government spending.

Trump's dip in the latest polls may have supporters looking to jump ship. And Gary Johnson is set to take a national stage at a CNN-televised town hall on Wednesday night, which may very well give a boost to his showing in national polls.

Big business has become a favorite target of the Democratic and Republican presumptive nominees. Such a beating might compel at least a few business leaders to seek out another option.

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