GE GE Aerospace

By Nick Timiraos and Ted Mann 

Chief executives at big American companies are increasingly frustrated by the populist tone of the presidential campaign, and concerns are mounting in boardrooms and corner offices that antibusiness rhetoric may solidify even after the November election.

Some business groups had looked to a Republican administration next January that might peel back some Obama administration regulations. But that hope now is in doubt, and such groups are instead focused on key Senate and House races.

While some observers believe candidates may soften their stances once elected, executives worry that for now, the rhetoric of the election discussion could weigh on consumer confidence, thwart any immigration overhaul and derail a sweeping 12-nation trade pact, the Trans-Pacific Partnership, that the U.S. struck last year and that many businesses support.

"The precipitousness of the political debate is a little scary right now, " said Jim McNerney, who served as chief executive of Boeing Co. until last year and as chairman until February, at a recent industry conference.

Rhetoric from Republican candidates has grown more populist and less friendly to big business than at any time in decades, while the Democratic race is being influenced by the rise of liberal Vermont Sen. Bernie Sanders.

The GOP "has been captured by a large number of people who basically do not like big," said Judd Gregg, a Republican former U.S. senator and governor of New Hampshire, who sits on the board of Honeywell International Inc.

Some of these instincts gave rise to the tea-party movement in 2009 and sent dozens of more conservative lawmakers to Washington the following year, fueling gridlock on Capitol Hill. They flared in the 2012 GOP primary contest but receded with the nomination of former Massachusetts Gov. Mitt Romney, a private-equity executive.

Now, the race for the nomination is led by Donald Trump, who has opposed Chamber of Commerce positions on trade, immigration and corporate mergers, and Texas Sen. Ted Cruz, who last year cheered the campaign to shutter an export-financing agency and was one of five GOP senators to vote against trade legislation.

Some observers don't believe Mr. Trump, as a businessman himself, would pursue a broadly antibusiness agenda once in office. But his policy of threatening stiff tariffs against America's largest trading partners "is a very dangerous discussion," said Mr. McNerney. "The last time we did that was at the beginning of the Great Depression in the 1930s, alright?"

On the Democratic side, Mrs. Clinton might appear to be the most business friendly option given her résumé, her close relations to some corporate donors and her message of delivering pragmatic results.

But Mr. Sanders has pulled her away from centrist positions on financial regulation and trade. His army of idealistic supporters energized a nomination fight that has been far closer than anyone expected. Together with voices like Sen. Elizabeth Warren (D., Mass.), they could galvanize the progressive wing in policy battles next year.

"The center has collapsed," said one technology CEO. "Sanders and Trump will go away, but their supporters won't."

Charles Koch, the industrial magnate who with his brother presides over a network of conservative donors, became the latest to voice concern on Sunday, saying in an ABC interview he wasn't sure he would back either Messrs. Trump or Cruz and that it was possible he would support Mrs. Clinton instead.

In the current cycle, the Koch network of donors has said it is ready to spend hundreds of millions of dollars influencing 2016 races and on other politically oriented activities. So far, two political nonprofits backed by Mr. Koch and his brother have spent more than $3 million in the Ohio Senate race, according to the nonpartisan Center for Responsive Politics.

Anger over the bailouts of 2008 and an economy that has produced little shared growth has made the business establishment an obvious target for voters' frustration. But business leaders say calls to sharply curb trade and immigration would do little to address underlying economic inequities.

These corporate chiefs fault Democrats for ignoring tax treatment that puts U.S. firms at a disadvantage and chide Republicans for neglecting investments in education, infrastructure and workforce training that could help workers who have been left behind in a globalized economy.

"Everyone understands that people say a lot of things in campaigns, but the worry is they're going to box themselves into making policy mistakes should they get elected," said Tony Fratto, an official in the George W. Bush administration who now advises communications strategy for firms like Citigroup Inc. and General Electric Co.

Shortfalls for Social Security and Medicare, for example, will require some combination of benefit reductions, tax increases or more government borrowing. Ignoring the issue now "will make for very difficult and bad politics," said James Dimon, chief executive of J.P. Morgan Chase & Co. in a shareholder letter this month. "This is a tragedy that we can see coming. Early action would be relatively painless."

While more CEOs are speaking up, many say they remain reluctant to do so because it could put a target on their back. Mr. Trump's campaign, for example, lashed out at Facebook Inc. founder Mark Zuckerberg earlier this month after the technology executive spoke out against "fearful voices calling for building walls."

GE Chief Executive Jeff Immelt said in a February letter to investors that relations between big business and government were "the worst I have ever seen." Mr. Immelt has told fellow executives and board members after traveling overseas that his peers there have been bewildered by the direction of American politics, one person familiar with the conversations said.

Mr. Sanders sharply criticized GE last month for investing overseas while cutting U.S. jobs. Mr. Immelt hit back in an op-ed in the Washington Post that called out Mr. Sanders for never touring GE's aviation plant in Rutland, Vt., during his 25 years in Congress, a charge the senator disputed. "We create wealth and jobs, instead of just calling for them in speeches," wrote Mr. Immelt, who declined to be interviewed for this article.

Other executives of small and midsize businesses, especially in sectors under pressure from abroad, say the debate has exposed shortcomings of U.S. trade policy, including poor enforcement of trade deals. Free traders "have enjoyed a little bit of a free ride in academic circles, and the questions being asked now, 'What has been the net benefit for our society?'" said Bill Hutton, president of Titan Steel Corp. in Baltimore.

Jim Philipkosky, chairman of steel fabricator MLP Steel LLC in Scottdale, Pa., favors Mr. Trump because he said he is the most focused on how to create a level playing field.

"The establishment has been at the wheel for a long time, and the system has worked well for them, but not for everyone else," said Mr. Philipkosky, who supported Mr. Romney in 2012.

Joel Shine, chief executive of Woodside Homes, a privately held homebuilder in Salt Lake City, said the campaign's dour drumbeat about the economy could knock consumer confidence, a key ingredient in his business of selling homes. "If every ad between now and the election is about how terrible things are, you might just convince the American public that things are terrible," he said.

On the campaign trail, Mr. Trump has routinely called out Carrier Corp., the air-conditioning manufacturer, after the company said it would close an Indiana factory and transfer production to Mexico.

"I'm going to tell the head of Carrier: 'I hope you enjoy your stay in Mexico, folks. But every single unit that you make and send across our border, which now will be real, you're going to pay a 35% tax,' " Mr. Trump said at a campaign stop in Ohio last month.

The attacks come at an awkward time for its corporate parent, United Technologies Corp., which is trying to cut costs. When CEO Gregory Hayes appeared on CNBC in February to discuss merger talks with Honeywell, he responded to a question about how the merger could help American companies without stating Mr. Trump's name. "He might get the nomination, but that's it, right?" he said. United Technologies declined to make Mr. Hayes available for this article.

Technology executives are particularly outspoken on immigration, which has fueled a boom in Silicon Valley despite national declines in new business formation. "Anti-immigrant stances are the worst possible things we can do for new business creation, no question," said Glenn Kelman, chief executive of the online real-estate brokerage Redfin, based in Seattle.

Write to Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

April 24, 2016 20:22 ET (00:22 GMT)

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