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O'Rourke's Senate Challenge to Cruz Has Texas Business Cheering

(Bloomberg) -- In what has been a surprisingly competitive race for the U.S. Senate in Texas, there’s one clear winner beginning to emerge: the state’s business community.

Democratic U.S. Representative Beto O’Rourke’s aggressive campaigning and fundraising has made incumbent Republican Senator Ted Cruz work harder for what once was viewed as a stroll to the finish line in a deep red state. Polls in the last month have shown O’Rourke within striking distance of Cruz, although the two most recent surveys show the Republican’s lead widening to as much as nine points.

Companies looking for action on immigration, health care, trade and other core issues have seen upside in O’Rourke’s challenge. It sends a message to Cruz, who unsuccessfully sought the Republican presidential nomination in 2016, that he needs to be more attentive to the needs of his Texas constituents, said Mark Jones, a political science professor at Rice University in Houston.

“You’re not invincible. You can be challenged,” said Jones. “You don’t have the luxury of doing whatever you want without feeling the electoral consequences.’’

Tempered Image

Business leaders say they’re seeing a more tempered version of the take-no-prisoners politician who some complained has been more focused on his national image than on his home state, especially during his run for the Republican nomination. Cruz, who was instrumental in the 2013 government shutdown, didn’t do much during his first term to endear himself to companies at home.

“His relationship with the business community has really improved in the last two years,” said Matt Mackowiak, president of political consultants Potomac Strategy Group and chairman of the Travis County Republican Party in Austin, Texas. “He doesn’t try to blow things up anymore. What he tries to do is be more effective on issues that matter to Texas.’’

Texas’ junior senate seat is still Cruz’s to lose, according to political analysts in the state. Any Republican candidate starts with an advantage with the Texas business community, which reflects the region’s conservative politics. The Texas Association of Business, a statewide chamber group, endorsed Cruz, as have other key business groups such as the Texas Farm Bureau.

Major Differences

Both candidates portray themselves as good for business, and they agree on some issues, such as ensuring a strong trade agreement between the U.S. and Mexico. But there is a sharp division on other matters:

About 40 percent of Texas’ population is Hispanic or Latino, and Cruz supports adding a citizenship question to the Census, which some fear would scare away some immigrants from being counted. O’Rourke opposes the question. O’Rourke supports providing a path to citizenship to immigrants brought to the U.S. illegally as children; Cruz wants to deport them.

Cruz championed the tax cuts that helped lift corporate profits this year, while O’Rourke voted against the GOP tax overhaul because he said he wanted more of the benefits to flow to lower-income workers instead of the already wealthy. O’Rourke supports Internet neutrality, while Cruz backed the Trump administration’s repeal of those rules. Both hail jobs created by the energy industry, but while Cruz is an advocate of deregulation, O’Rourke wants more oversight of pipelines, fracking and drilling to prevent harm to the environment.

Trade and Immigration

But President Donald Trump has made the decision for businesses more complicated with his policies on trade and immigration, issues that are deeply intertwined with Texas companies and the state’s $1.7 trillion economy. Where candidates stand on those issues may matter more than political party, depending on how it hits a business’s bottom line.

“At the end of the day, it’s about economic impact,” said Laura G. Murillo, chief executive officer of the Houston Hispanic Chamber of Commerce, which is not making an endorsement in the race.

Murillo lays out three priorities for her members: preserving a strong trade agreement with Canada and Mexico, ensuring a legal path for immigrants brought to the U.S. as children and making sure everyone is counted in the 2020 U.S. Census.

Jobs Impact

Murillo cites numbers that matter to local companies: 80,000 people in Houston affected by Dreamers legislation, 200,000 jobs in Texas that depend on the trade agreement with Mexico, $17 million in federal funding that the city would lose for every 20,000 people not counted in the Census.

But those points barely register for Vince Puente, who runs an office equipment company with his brother in Fort Worth, Texas. Southwest Office Systems Inc. provides copiers and software to businesses, employs 53 people and posts $15 million in annual sales.

Puente has personal views on immigration, but his business is most affected by issues like health care and minimum wage increases. On those topics he’s more in line with Cruz, who has opposed the Affordable Care Act and sees minimum wage hikes as hurting jobs.

“When they say we have to pay for it, that has a dramatic effect on a company our size,” said Puente, who has served on the board of several local chambers in Dallas and Fort Worth.

Business Background

O’Rourke, who represents the state’s 16th congressional district, highlights his background as a small business owner, having started and run an Internet services and software company in El Paso. He says he is the only candidate in the race who’s had to make payrolls, ask a bank for loans, hustle for clients and pay for healthcare while keeping a company competitive.

“I understand the things that we are fighting for -- that the people of Texas have asked us to fight for -– (such as) making sure that we lead on immigration," O’Rourke said while waiting for the start of an event last month at Prairie View A&M University in Prairie View, Texas. "Small business owners and large business owners alike tell me immigration is critical to the future of the state."

On that, Cruz agrees. “There is no race in the country with a starker divide on immigration than this U.S. Senate race here in the state of Texas," he said during a campaign stop in Houston last month. "I promised the people of Texas I would fight to secure the border, to keep us safe. That’s where the overwhelming majority of Texans are.”

Trade Stance

Cruz has had to tread cautiously on issues like trade in a state with $264 billion in exports, top in the U.S. He’s supported good relations with Mexico, even while under pressure to fall in line with Trump’s aggressive views on tariffs.

Cruz now voices opposition to shutting down the government as a negotiating tactic, and says he supports health insurance coverage of pre-existing conditions, though he’s fought to abolish the legislation enshrining those protections.

Jeff Moseley, CEO of the Texas Association of Business, sees a tight race as carrying some lasting lessons for Cruz. “It points to the fact that there is an opportunity to broaden and widen and work in a bipartisan manner with leadership across the state,” he said.

Many Democrats are skeptical of a new, more collaborative Cruz.

“Beto has forced Ted Cruz to get out there and work,’’ said Colin Strother, a longtime Democratic strategist in the state. “He’s hitting all the right notes and saying all the right things. But I’ve no doubt this version of Ted Cruz will go back on the shelf once he’s elected.’’

If Cruz is reelected with anything less than Trump’s 2016 victory margin of 9 percentage points in the state, it may force him to put his broader political aspirations on hold for a while and force him to keep up his attention on Texas issues.

“A good strong race makes a better politician,’’ said Puente in Fort Worth. “It should make him a better Senator if he does win -- a better representative of Texas.’’

As published by BNNB Bloomberg