- Enticing new jobs and dollars sometimes means that lawmakers must woo the very businesses that they're supposed to be regulating with a far more objective eye.
- Amazon has long faced criticism for its hyperaggressive tactics as it conquers new industries, from entertainment to cloud computing to smart-home devices.
- Beyond favorable tax treatment and other financial perks, the deals allow companies in Silicon Valley and beyond a chance to make nice with their regulators
Few things unite a Republican stalwart like Roy Blunt and a Democratic firebrand like Claire McCaskill. But the prospect of a political win prompted the two U.S. senators to put aside their differences this week — and practically plead with Amazon to plop its new headquarters in their shared home state of Missouri.
In doing so, the duo joined a growing group of federal lawmakers — from Pennsylvania to Texas — who are actively angling for the e-commerce giant's second corporate outpost, dubbed HQ2. The new hub could generate 50,000 new jobs and $5 billion in fresh investment wherever it ultimately lands, at least in the company's eyes.
For members of Congress, though, this sort of race to capture corporate cash and attention always presents an immense contradiction. Enticing new jobs and dollars sometimes means that lawmakers must woo the very businesses that they're supposed to be regulating with a far more objective eye.
And they face a special challenge when it comes to Amazon, a tech behemoth that has long faced criticism for its hyperaggressive tactics as it conquers new industries, from entertainment to cloud computing to smart-home devices.
"I do think it puts people in a difficult situation, because obviously, on the one hand, you want to speak out strongly on issues of privacy, on issues of antitrust, on issues of tax [compliance]," said Democratic Rep. Ro Khanna, who represents a slice of Silicon Valley, in an interview with Recode. "But I think also many of these members say, 'Look, 50,000 jobs in our environment, which may not require college degrees, is like winning the lottery.'"
At times, it seems like a precarious balance for lawmakers to strike.
Earlier this year, for example, Democratic Sen. Cory Booker sounded alarms about Amazon's most recent gambit: Its $14 billion purchase of Whole Foods. At the time, Booker told Recode that the deal — which the U.S. government later approved — could create new headaches for disadvantaged communities already lacking in grocery options.
By October, Booker nonetheless saw new opportunity in Amazon's desire to set up a shop outside of its Seattle roots. In time for the company's Oct. 19 application deadline, Booker joined New Jersey's unpopular Republican governor, Chris Christie, to pitch Newark as the best site for HQ2. Local regulators also promised Amazon a whopping $7 billion in tax breaks if it located its future hub in the city where Booker previously served as mayor.
"Amazon would be smart to come here," Booker said at a recent press conference.
His office did not immediately respond to a request for comment.
'Bend over backwards'
Federal lawmakers aren't just groveling for their own sake at the feet of Amazon CEO Jeff Bezos. Along with governors and mayors from their states, they're trying to fulfill the pledges they've made to voters — to create new economic opportunities and boost the availability of high-paying jobs.
That's why Wisconsin pols — including House Speaker Paul Ryan — set about offering $3 billion in tax subsidies this year to another company, Foxconn, which is now set to build a new factory there. Local and federal officeholders in Virginia similarly worked with to secure its investment in a new 970,000-square-foot data center in the state.
"Facebook's partnership with Virginia and this significant investment in Henrico County are great news for the region," Sen. Mark Warner said this October.
But these efforts are immensely beneficial for tech giants, too. Beyond favorable tax treatment and other financial perks, the deals allow companies in Silicon Valley and beyond a chance to make nice with their regulators — no small advantage at a time when the whole of the industry is under intense fire in the nation's capital.
Warner, for example, is probing Facebook right now, amid evidence that Russian agents coopted the social media site to influence the 2016 presidential election. He is even set to grill one of Facebook's executives at a hearing before the Senate Intelligence Committee next month.
Amazon's political agenda is immense. To start, the company has a great deal at stake as the U.S. Congress wades into debates over tax and immigration reforms. It also faces flack for its size, as lawmakers like Sen. Elizabeth Warren question whether tech platforms in general are too large for their own good.
And Amazon has a public enemy in the White House: President Donald Trump has regularly lambasted the company's leader, Bezos, for his ownership of The Washington Post, even claiming that the newspaper allows the tech giant to dodge U.S. taxes.
Those obstacles have driven Amazon to spend roughly $6.1 million to lobby federal officeholders so far this year, according to federal ethics filings. By the end of 2017, Amazon could even break its lobbying record in Washington, D.C. And in the eyes of the company's skeptics, regulatory concerns could shape the Amazon's thinking about how — and where — to situate its next corporate headquarters.
"It's striking to me that Amazon has created this situation in which elected officials across the country are signaling to their constituents that Amazon is a great company ... and that we should bend over backwards to try to subsidize and support their expansion," said Stacy Mitchell, the co-director of the Institute for Local Self-Reliance. The group has battled with Amazon in the past.
'We look for you to be a partner in that endeavor'
To Rep. Khanna, at least, his fellow lawmakers aren't entirely "motivated by political interest" as they try to woo Amazon's HQ2.
"Right now, it's the absence of any federal policy" — a more organic, government-led efforts to bring jobs and investment to areas outside Silicon Valley — "that has every member of Congress out for themselves making a sales pitch," he said in an interview.
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Whatever the cause, the courtship from the nation's capital continues.
In Missouri, for example, McCaskill and Blunt hope their public plea might give a boost to cities like Kansas City and St. Louis. In their missive, sent Monday, they highlighted to Amazon the "smoother ride" of the state's transportation system, its easy access to airports, its trails for joggers and walkers alike — and, yes, its hip startups, too.
If it seemed too cute, it's probably Amazon's fault: The company, after all, told cities and states that it would give great weight to localities that boast the right transportation and infrastructure on top of the best tax terms.
A spokeswoman for McCaskill, however, rejected the notion that the Democratic lawmaker might ease up on the e-commerce giant if Missouri ultimately wins Amazon's office sweepstakes. "She's never hesitated to take on tech companies when they disagree," the aide told Recode, citing the fact that McCaskill supports an anti-sex trafficking bill that the tech industry opposes.
Roughly 700 miles south, meanwhile, two powerful Republican senators from Texas sought to make their own sales pitch to Amazon last week.
"Everything is bigger in Texas, and that includes our economy, our skilled workforce, and our quality of life," wrote Sens. John Cornyn and Ted Cruz in their letter to the company.
At the moment, big cities like Austin and lesser-known parts of the Lone Star State appear to be vying for Amazon's HQ2. If one of those Texas towns lands the new headquarters, it could also deliver something of an added political coup for the likes of Cruz — a failed 2016 presidential candidate who may wish to burnish his business bona fides in a future White House bid.
In Delaware, Gov. John Carney enlisted his state's representatives to the U.S. Congress, including Sens. Chris Coons and Tom Carper, in a bid to get Amazon's attention. Scores of Pennsylvania lawmakers from both parties did the same, as cities like Philadelphia now vie to be the tech giant's second home.
And in Colorado, nine Democrats and Republicans who comprise the state's full congressional delegation banded together in their appeal. Cities like Denver are seen as some of the strongest competitors for Amazon HQ2, but the company has remained mum as to who, if anyone, is on its shortlist.
"Local, state and federal policy makers are committed to continuing the policies that have allowed our state to thrive," the group of pols wrote, "and we look for you to be a partner in that endeavor."
—By Tony Romm, Recode.net.
CNBC's parent NBCUniversal is an investor in Recode's parent Vox, and the companies have a content-sharing arrangement.