How Do Corporations Play Politics?: The FedEx Story

United States law extensively regulates corporate participation in the political process. The rationale for this regulatory scheme is a concern that corporate political activity, particularly campaign contributions, will corrupt the political process and enable corporations to obtain rents at society's expense. Regulators, the media, and the public generally view corporate political activity as illegitimate and distinguish it from operational business decisions. Critics of corporate political activity advocate ever-increasing regulatory restrictions and support their analysis with empirical studies that purport to demonstrate the ability of corporate donors to buy favorable legislation by making political contributions to members of Congress. This Article challenges the prevailing characterization of corporate political activity as a distortion of the political process. Using a case study methodology, the Article examines the political involvement of one company, FedEx, in a series of regulatory reforms over a forty-year period. Drawing upon the business context, the legislative record, campaign finance materials, and interest group analysis, the Article demonstrates that political activity has been an integral component of FedEx's business growth and operations. FedEx successfully used its political influence to shape legislation, and FedEx's political success, in turn, shaped its overall business strategy. Moreover, in identifying the specific components of FedEx's political activity, the Article highlights the range of mechanisms that corporations use to engage in politics, revealing that the exercise of political influence is far more complex than the purchase of political favors in a spot market. Regulation is becoming an increasingly important factor for United States businesses. As a result, corporations must integrate political activity into their overall business strategy and must develop and manage their political capital in the same way that they manage other business assets. The FedEx story demonstrates the importance of politics to business and explains the growing investment by corporations in political capital. It further explains how the business world has responded, and will continue to respond, to regulatory restrictions by developing alternative mechanisms for exerting political influence. By understanding how and why corporations participate in politics, policymakers can better address concerns about the effect of corporate political influence. INTRODUCTION Corporate political activity has been the subject of federal regulation since 1907,1 and the restrictions on corporate campaign contributions and other political expenditures continue to increase.2 Most recently, Congress banned soft money donations in the Bipartisan Campaign Reform Act of 2002 ("BCRA"),3 a ban upheld by the Supreme Court in McConnell v. FEC.4 Significantly, although the omnibus BCRA clearly was not directed exclusively at corporations, the Supreme Court began its lengthy opinion in McConnell by referencing and endorsing the efforts of Elihu Root, more than a century ago, to prohibit corporate political contributions.5 Repeatedly, within the broad context of campaign finance regulation, corporate contributions have been singled out as particularly problematic.6 The federal regulatory scheme is based, in part, on the perception that corporations are able to use their substantial economic resources to influence public policy and thus distort the political process.7 At the same time, political activity is widely viewed as an illegitimate expenditure of corporate funds. Thus, again in the first few lines of the McConnell decision, the Court quoted President Theodore Roosevelt's statement that '"directors should not be permitted to use stockholders' money for political purposes."8 Similarly, the Court had previously characterized general corporate treasury funds spent on politics as being "diverted" from their proper use, indicating that political activity is not a legitimate business expenditure. …