Texas GOP’s All-In Focus on Culture War Spurs Corporate Backlash

(Bloomberg) -- Business and politics are colliding in Texas, where Republican Governor Greg Abbott is facing backlash over a conservative social agenda that companies say will make it harder for them to attract and retain the best talent.

The latest flare-up came Wednesday, when Dallas County Judge Clay Jenkins, a Democrat, issued an executive order that requires masks be worn inside businesses and schools, defying Abbott’s ban on such mandates. Issues like voting rights and the treatment of transgender children have also recently divided the governor and corporations operating in the state. Dell Technologies Inc., Apple Inc., Facebook Inc. and International Business Machines Corp. have publicly criticized priorities of the Republican-dominated state government.

It’s an awkward position for a politician who has painted himself as a champion of economic development, ready to tout successes in luring Oracle Corp., Hewlett Packard Enterprise Co. and Tesla Inc. to the Lone Star State and helping oversee the nation’s biggest jobs increase from 2010 to 2020. But facing re-election next year along with declining popularity and ultra-conservative challengers in the Republican primary vote, Abbott has pushed for legislation that plays well with his base even if it’s increasingly at odds with major corporations.

“Since the time George W. Bush was governor, we have seen that economic development as a cornerstone for growth for the Republican party in Texas,” said Jim Riddlesperger, a political science professor at Texas Christian University in Fort Worth. “What he is doing here is playing to the audience for the Republican primary and not to the general public.”

There’s a risk to that strategy come general election time, amid an influx of newcomers from companies relocating to the state as well as pandemic-era transplants lured by warm weather and zero income taxes. Many of those new residents have a more liberal disposition than life-long Texans, threatening the Republican party’s dominance of the state, which boasts the world’s ninth-largest economy.

Mask Mandate

For now, though, Abbott is going all-in on prioritizing bills underpinned by conservative priorities and fighting to block the mask mandate in Dallas. After many of the items failed to advance in the regular legislative term, Abbott called a special session in an effort to pass the proposals. Among the priorities: so-called election integrity, restrictions on vaccine and face-mask requirements in schools, preventing “censorship” by social-media companies and limiting transgender kids’ participation in school sports.

Democratic lawmakers opposed to voting restrictions fled the state to deny a quorum and derail the legislation, but Abbott called a second special session, and the standoff continues.

Businesses seeking to demonstrate their inclusive values have been drawn into the dispute, including HP Inc., Microsoft Corp. and American Airlines Group Inc. In May, they voiced opposition to Republican proposals that critics said would make it harder for disadvantaged individuals and people of color to vote.

We “oppose any changes that would restrict eligible voters’ access to the ballot,” the businesses said in a statement. “Freedom is preserved in our democracy when we hold free and fair elections that protect the fundamental rights of all Texans.”

Transgender Bill

Texas Competes, an organization representing businesses that favor LGBTQ rights including Apple, Amazon.com Inc., Dell, IBM and PayPal Holdings Inc., released a letter in June over concerns about proposed legislation its members viewed as discriminating against transgender people. One of the bills would ban trans youth from competing on school sports teams that don’t match their assigned sex at birth. The Texas Department for Family and Protective Services on Wednesday declared gender-affirming surgery will now be considered child abuse.

Abbott’s job approval has fallen since peaking at 56% in April 2020, coming in at just 44% in the latest poll from the Texas Politics Project at the University of Texas. Still, support remains high among Republicans at 77%.

Texas isn’t the only state where Republican governors are coming into conflict with the business community. Florida’s Governor Ron DeSantis has also clashed with business leaders over recent legislation.

One law DeSantis signed in May sought to block social-media companies from banning political candidates, an idea DeSantis promoted after former President Donald Trump was ousted from Twitter. Groups representing such firms as Alphabet Inc., Facebook and Twitter Inc. oppose the law, saying it violated their right to editorial judgment and put users at risk of disinformation and propaganda. A judge granted an injunction in June.

DeSantis also sought to prevent companies in the Sunshine State from checking vaccine status as a condition of receiving service, a move that threatened to complicate cruise lines’ return to sailing. Norwegian Cruise Line Holdings Ltd. sued for the right to demand full vaccination, getting a preliminary injunction Sunday.

“The Texas economy is booming,” Abbott’s press office said in response to questions. “Businesses are relocating to and investing in the Lone Star State at a record pace because we’ve built a framework that allows free enterprise to flourish and hardworking Texans to prosper.”

‘No Clue’

In an April interview with Fox News about corporate advocacy, he decried company criticism of the proposed voting laws.

“They need to stay out of politics, especially when they have no clue what they’re talking about,” he said.

For all the hand-wringing, it’s hard to link the state’s politics to any specific decisions among major companies to not invest or to relocate elsewhere. Texas is still an attractive place to do business given low taxes and a smaller regulatory burden for many businesses, so any disputes over public policy are likely to be temporary, according to Mark Jones, a political science professor at Rice University in Houston.

“I would expect that companies will continue to invest,” he said.

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