WASHINGTON — The day after Rep. Eric Cantor became the first congressional leader in modern times to lose his seat in a primary, one of the biggest aftershocks occurred not on Capitol Hill or in the sprawling Richmond suburbs he has represented for more than a decade but on the New York Stock Exchange.
The share price of Boeing tumbled, wiping out all the gains it had made this year, a drop analysts attributed to the startling defeat.
While he was often an adversary to both the tea party and Democrats in Congress, Cantor, a Republican and the House majority leader, was also a powerful ally of business big and small, from giants like Boeing to the many independently owned manufacturers and wholesalers that rely on the federal government for financial support.
His loss at the hands of David Brat, a tea-party-inspired economics professor who campaigned on throwing corrupt Wall Street bankers in jail, railed against crony capitalism and insisted that immigration reform would only reward lawbreakers, spurred business leaders to mobilize to preserve their clout in Congress.
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Already uneasy over what they see as an especially hostile strain of anti-corporate populism growing within the conservative movement, and threatening the traditional corporate-friendly centers of power inside the Republican Party, many businesses fear the loss of some of their strongest champions on Capitol Hill.
In addition to Brat’s victory over Cantor, another populist conservative, Chris McDaniel, nearly unseated six-term Sen. Thad Cochran, of Mississippi, a Republican who embodies the party’s Chamber of Commerce wing, in a primary, forcing him into a runoff.
Leaders in the financial community still have a formidable force of allied lawmakers and hired lobbyists in Washington, D.C. But several major initiatives that business hoped to see through Congress this year are in doubt. There is reauthorization of the Export-Import Bank, a vital line of support for small businesses and large manufacturers, immigration reform and financing for the nation’s highway system.
Cantor’s loss is much more than just symbolism. He has been one of Wall Street’s most reliable benefactors in Congress. And Brat used that fact to deride the majority leader as someone who had rigged the financial system. In one recent speech, he accused lawmakers like Cantor of favoring “special tax credits to billionaires instead of taking care of us, the normal folks.”
The majority leader stopped a provision — reviled by the industry — in the Stock Act of 2012 that would have required hedge funds to disclose more about how they gather market-sensitive intelligence. He battled with conservative lawmakers to extend the Terrorism Risk Insurance Act, a top priority of the insurance industry, which has helped it recover from losses after the Sept. 11 attacks.
He helped scuttle White House proposals to collect more taxes from private equity firms. His wife, Diana, has had a career in banking, working for Goldman Sachs and New York Private Bank & Trust.
No industry was more generous to Cantor’s campaign than financial services. The three largest contributors in this election cycle, in which he collected $5.4 million, were Goldman Sachs, the Blackstone Group and Scoggin Capital Management.
As his ambitions to one day lead the House grew, so did his relationships with those donors.
Lloyd Blankfein, Goldman’s chief executive, called the loss of Cantor “stunning” and praised him as a sensible legislator in an interview on CNBC.
Those business interests, caught off guard by Cantor’s defeat, are moving quickly to ensure that Cochran does not meet the same fate.
Priority of business
Last week, many of D.C.’s top corporate lobbyists, representing an array of industries like shipping and telecommunications, gathered on Capitol Hill for a fundraiser that brought in $800,000 for Cochran’s runoff election June 24.
The biggest donors to the political committees supporting Cochran’s campaign have all been large corporations like the defense contractors Raytheon and General Atomics. Michael Bloomberg, the former mayor of New York, wrote a check for $250,000 last month.
One priority of business that is in the most immediate jeopardy given Cantor’s defeat is the Export-Import Bank, which companies like Boeing and General Electric and hundreds of smaller companies rely on to provide subsidized loans to foreign customers. Eliminating the bank has become a conservative cause on par with repealing the health-care law.
The Export-Import Bank helps sales of U.S. goods by guaranteeing loans to overseas customers and providing working capital to manufacturing companies at home. Stock analysts said Boeing expected the bank to enable $10 billion in sales this year by helping its customers finance purchases. Cantor’s loss jeopardized the future of the bank.
Cantor struck a deal in 2012 with the No. 2 Democrat in the House, Steny Hoyer, of Maryland, to extend the bank’s charter for three years.
“Cantor was the hub for finance, the hub for a host of big corporations that could trust him to get things done,” said Sean West, the head of U.S. analysis for the Eurasia Group, which advises corporations about political risk. “He was the one standing between the conservative pitchforks and the business community on a whole host of issues.”
Democrats like Hoyer said Cantor was often more of an obstacle than a compromiser. In that sense, they are not grieving over his departure. “Cantor was neither the facilitator or creator of gridlock, but he was way too careful of getting too far out ahead of the right wing,” Hoyer said, adding that he was not writing off all hopes of legislative progress.
What has concerned many businesses with a stake in federal policy is a growing anger on the right from people who can sound more Occupy Wall Street than tea party.
“You could even make a case that there’s a lot in common between the tea-party types and the Elizabeth Warren liberals,” said Gregory Valliere, the chief political strategist for the Potomac Research Group. “The impact of what’s happened is going to make Republicans in the House apprehensive about appearing to be too cozy to business.”