Who's afraid of Charlie Rangel? 

By Richard S. Dunham

updated 8:27 p.m. ET Nov. 6, 2006

President Lyndon B. Johnson liked to joke that "we haven't done anything for business this week — but it is only Monday morning." In his day, corporate interests often saw Democrats as allies.

Today, accurately or not, many executives equate Democrats with higher taxes, regulatory excess, and lawsuits run amok. With most pundits forecasting major Democratic gains in the Nov. 7 midterm elections, business is bracing for the worst.

It may not have to.

On issues ranging from Sarbanes-Oxley rules to immigration to retirement security, business may find some unlikely allies in Democrats such as Charles B. Rangel of New York, Barney Frank of Massachusetts, and John D. Dingell of Michigan. "Should they be in charge, they're going to want to create a coalition that enables them to continue being in charge," says Jay Timmons, a senior vice-president at the National Association of Manufacturers and a longtime aide to Senator George F. Allen (R-Va.).

Top Dems are already planning post-election sessions with business leaders, including former Clinton Administration Treasury Secretary and Citigroup Chairman Robert E. Rubin, to discuss the party's economic agenda. House Minority Leader Nancy Pelosi (D-Calif.) says she intends to consult regularly with such CEOs as Cisco Systems Inc.'s John T. Chambers, a Republican who has backed President George W. Bush. Pelosi has said she supports cutting the budget or closing tax loopholes to offset new spending. "Democrats understand the importance of a growing and vibrant economy," says Pelosi, the Democrats' Speaker-in-Waiting. To be successful, "you have to govern from the middle."

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With the election not yet decided, it's premature for Democrats to celebrate or schedule hearings. But polling shows them leading in 240 districts, 22 more than the number needed to seize the House. On the Senate side, they need to capture six Republican seats to gain control; late October polls showed them ahead in five states and tied in another. Of course, even a more conciliatory approach probably won't deter Democrats from convening oversight hearings to target certain industries with close ties to the Bush White House -- particularly energy, pharmaceuticals, insurance, and defense.

Still, as business contemplates the probability of a Democratic House in 2007, corporate interests are discovering that some liberals are more open to consensus building than might be expected. "In the end, Democrats will realize that to accomplish anything, they'll have to do something in combination with the business community," says Matt Bennett, vice-president of Third Way, a moderate Democratic strategy group.

Business has started to reach out to Representative Frank, the sharp-minded, sharp-tongued liberal who is in line to be chairman of the House Financial Services Committee. Frank is best known as a progressive on social issues, but Republican colleagues and business lobbyists who have worked with him on financial matters say he is willing to work across party lines. "Barney Frank is fair, he's smart, and he's focused," says former Representative Steve Bartlett (R-Texas), now CEO of the Financial Services Roundtable. "That's the kind of leadership we need."

Frank is widely expected to encourage some curbs on the 2002 Sarbanes-Oxley law, which imposed new governance rules on companies in response to a series of corporate scandals. While the White House and some Republicans favor lifting some of the mandates, they have been waiting for the retirement of Financial Services Committee Chairman Michael G. Oxley (R-Ohio), who is leaving Congress at the end of this year, before changing the law he co-authored with outgoing Senator Paul S. Sarbanes (D-Md.).

Democrats want to keep the transparency provisions of the new law but ease small business reporting requirements that have made it harder for entrepreneurs to raise capital, says Frank. They also want to reduce what Senator Charles E. Schumer (D-N.Y.) calls "compliance minutiae" that businesses consider burdensome and a drag on innovation. Frank says he wants to puncture "the myth that if you're a liberal, you're an anti-capitalist."

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