This column is from Trendlines, my business newsletter that covers the forces shaping the economy in Boston and beyond. If you’d like to receive it via email on Mondays and Thursdays, sign up here.
First they came for USAID. Then they came for universities and law firms. Pay heed, business leaders: Step out of line and they may come for you.
President Trump’s actions since returning to office have exposed the vulnerability of any organization — public or private — that takes money from the federal government. Or is regulated by a federal agency. Or requires federal approval of an acquisition. Or needs security clearance to do its work.
Defense contractors, consulting firms, media companies, hospitals, banks. The list goes on.
Can’t fight city hall? Try defending your company against the Justice Department or the Internal Revenue Service.
“The playbook here is really clear,” said Doug Howgate, president of the Massachusetts Taxpayers Foundation, a business-focused public policy organization. “It’s scary when we’re seeing enforcement of policy goals being applied based on who is on the receiving end.”
Everyone in the C-suite is already consumed with trying to gauge the fallout of a trade war. Hiring, expansion plans, the bottom line — all are in play.
There are so many questions. Are consumers in retreat? Is a recession on the horizon? Is the financial system going to break like it did in 2008?
And each new day brings more uncertainty — and the possibility that a business gets caught up in the White House’s campaign of retribution and ideological conformity.
That’s why it’s hard to overstate the importance of decisions by Harvard University, Boston law firm WilmerHale, and others to push back in court. At great financial risk, they are challenging Trump’s efforts to strong-arm them into compliance.
Consider the demands the administration has made on Harvard. In a letter to President Alan Garber and Penny Pritzker, the lead member of the governing Harvard Corporation, Trump officials accused the school of fostering antisemitism and “ideological capture,” including support for diversity, equity, and inclusion.
As a condition of future funding, the government wants to dictate how the private university governs itself, hires faculty, admits and disciplines students, and sets free speech boundaries.
It’s not unprecedented for presidents to use federal funding as leverage to advance their agendas or punish opposition.
Richard Nixon refused to spend billions in congressionally approved funds for programs he didn’t like. Barack Obama threatened to withhold federal money from schools that didn’t tighten up their policies for investigating sexual assaults.
But there aren’t many CEOs who would consent to the extreme intrusions sought by Trump — unless, of course, resisting meant financial devastation.
At WilmerHale, Trump’s executive order seeks to suspend its security clearances, federal contracts, and interactions with government officials. As my colleague Jon Chesto reported, such steps would cripple the firm’s ability to do business with the federal government or represent clients who do so.
WilmerHale’s sins: hiring Robert Mueller, who oversaw the Russia election interference investigation after Trump’s 2016 victory, as well as working for “partisan” clients (whatever that means) and racially discriminating against its own employees (for which zero evidence was offered).
“There is no doubt this retaliatory action chills speech and legal advocacy, and that is qualified as a constitutional harm,” US District Court Judge Richard Leon wrote last month as he blocked parts of Trump’s executive order.
Higher education, the judiciary and legal profession, and the media play pivotal roles in maintaining democracy. That’s why they are frequently targeted by authoritarians like Russia’s Vladimir Putin and Viktor Orban of Hungary.
So it’s distressing to watch some of the country’s elite organizations appeasing Trump.
- Columbia University, which is trying to avoid the loss of $400 million in federal funding.
- Law firms including Paul Weiss, which committed $40 million in pro bono work to causes favored by the president, and Skadden Arps, which pledged more than $100 million.
- Paramount, which agreed to arbitration of a $20 billion lawsuit filed personally by Trump against CBS News over its editing of a “60 Minutes” interview with Kamala Harris. Paramount is hoping to win government approval of its merger with movie studio Skydance.
The message these companies are sending is that capitulation is safer than confrontation. And if that thinking spreads, even the appearance of neutrality becomes risky.
You may be thinking: Wait, Trump’s only interested in big-game hunting. He won’t go after a smaller company like mine.
Don’t be so sure.
“It makes sense to go after the big guys first,” said James Rooney, chief executive of the Greater Boston Chamber of Commerce. Once a few of them cave to the pressure, “it’s only a matter of time until he takes it down to the next level,” Rooney said.
Nice company you got here, the government might suggest in a letter to you and your general counsel. It would be a shame if anything happened to it.
Even to Harvard, the world’s richest university, $2.2 billion makes a big difference‘Cautious terror:’ Harvard hospitals dodge Trump’s $2.2 billion funding freeze — for nowHarvard finds Trump’s funding freeze is real and immediate as extraordinary confrontation continues
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