How Kennedy stretched the power of the White House to go after companies—and what could go wrong.
By Jeff Greenfield
For someone who isn’t even president yet, Donald Trump has sent a lot of messages to American companies. His carrot-and-stick approach to Carrier Corp. kept some 700 jobs in Indiana, instead of migrating to Mexico. His assaults on the cost of the new Air Force One and the F-35 fighter jet sent the stocks of Boeing and Lockheed southward. And on Thursday, he announced on Twitter that he asked Boeing to explore alternatives to Lockheed’s pricey F-35.
For many, maybe most of us, there’s an impulse to cheer when a president chastises a big economic player, or pressures a company to keep jobs in America, or demands more concern for the environment. Isn’t that the kind of “countervailing power” that progressives of a hundred years ago, like Woodrow Wilson and Theodore Roosevelt, sought to resist giant corporate powers? If the threat of economic reprisals would keep companies from shipping jobs out of the country, shuttering factories destroying the lifeblood of a town—well, isn’t that what the “bully pulpit” is for?
Maybe not. There’s something more than a little ominous about Trump’s threat during the campaign to punish individual companies. During the campaign, Trump warned: “Any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies.”
Apart from the policy consequences of the proposal—trade war, anyone?—lies the specter of massive government power aimed at specific private entities. That has mostly been out of bounds for presidents, and takes on an especially chilling note when you remember that the incoming president, over his career, has been particularly enthusiastic about attacking and humiliating any foe or critic.
But if you really want to worry about where the limits might lie when a president decides to go after individual companies—and even individual executives—there’s a cautionary tale from half a century ago that seems right on point. And the president stretching the boundaries of his power was John F. Kennedy.
In the spring of 1962, President Kennedy was celebrating a key labor agreement between the United States Steel Company—the nation’s biggest—and the United Steelworkers’ Union. Steel was a major component of the nation’s manufacturing sector. So the modest 2.5 per cent wage increase promised to act as a brake on rising prices, and by extension a victory against a boost in inflation that was on the top of the White House’s concern.
A few days later, on April 10, US Steel chairman Roger Blough came into the Oval Office and handed Kennedy a statement announcing that the company was raising prices for steel 3.5 per cent—a hike other steel companies would immediately follow.
This infuriated Kennedy: the steelmakers were just nudging up their worker’s salaries, but aggressively jacking up their profits. “You have made a terrible mistake,” Kennedy told him. “You have double-crossed me.” A few minutes later, his words were harsher. The White House let be known that JFK had said, “my father told me all businessmen were sons of bitches, but I never believed him until now.” (That was not precisely what JFK’s father had said: In fact, had compared businessmen to most intimate part of the male anatomy.) A day later, at a news conference, he went public with an extraordinary condemnation of the industry, charging that “a tiny handful of steel executives whose pursuit of private profit and power [showed] utter contempt for the interests of a hundred and eighty five million Americans.”
It wasn’t what Kennedy said, however, that demands our attention now: It was what his administration did next. Determined not to let the price increases damage the economy, and determined to prevent JFK being seen as a weak president, the Administration enlisted the full power of the federal government in the battle. (The full account of this story can be found in Richard Reeves’ superb book: “President Kennedy; Profile in Power.”)
Some of the tactics were bare-knuckles politics, but aboveboard: Defense Department contracts were shifted to companies that had not raised prices; Congressional allies of Kennedy promised antitrust investigations.
Others, however, did not simply walk up to the line between use and abuse of power, but jumped headlong over it.
For instance: in an effort to find out whether a steel executive at a shareholders’ meeting had publicly rejected the idea of a price increase, Attorney General Robert Kennedy dispatched FBI agents to quiz reporters about just what the executive had said. In an excess of zeal, some of the agents rousted reporters out of bed in the middle of the night.
Whether the nighttime visits were sanctioned by Bobby, the “visits’ to reporters clearly were “We’re going for broke,” Bobby had said, have “Their expense accounts and where they’d been and what they were doing.” He said later: "I told the FBI to interview them all, march into their office, subpoenaed for their personal records…subpoenaed for their company records.”
If there’s any doubt about just how far the Kennedys were willing to go in pursing their goals, it was dispelled by what the president said later to longtime friend (and Undersecretary of the Navy) Paul “Red” Fay. He was extolling the work of Clark Clifford, the premier lawyer-power broker of his day, who Kennedy had enlisted as his emissary to the steel industry.
“Do you know what you’re doing when you start bucking the power of the President of the United States?” he said, according to Fay’s memoir “The Pleasure of His Company.” “I don’t think US Steel or any other of the major steel companies wants to have Internal Revenue agents checking all the expense accounts of their top executives. Do you want the government to go back to hotel bills the time you were in Schenectady to find out who was with you? Hotel bills...nightclub expenses?”
The bludgeoning was way outside the bounds of how the White House is supposed to use its power. It also worked. Three days after his Oval Office visit, US Steel head Blough announced that the price increase had been rescinded, and other companies immediately followed. There was fallout, to be sure. Relations with the business community turned chilly for the rest of Kennedy’s tenure; Republican media outlets—TIME, the Los Angeles Times, the New York Herald-Tribune all were harshly critical. (JFK got so annoyed with the Trib that he ordered the 22 White House subscriptions cancelled.)
But the full extent of what the White House did never became public at the time, and a solidly Democratic Congress had no interest in looking into the use of such blunt instruments.
If there were any second thoughts inside the Administration, they were clearly not in evidence at a Kennedy family gathering. Ben Bradlee’s “Conversations With Kennedy” has the President jovially recounting a talk with Republic Steel chief James Patton, with Patton asking JFK “why is it that all the telephone calls of the steel executives in all the country are being tapped…why is it that the income tax returns of all the steel executives in the country are being scrutinized?”
“And I told him” Kennedy said, “that the Attorney General would never do such a thing…and of course Patton was right.” (Indeed, transcripts of those and other wiretaps would often find their way to the President’s desk.)
The temptations of great power do not follow ideological lines. A dozen years later, a Republican President was driven from office for conduct that does not seem all that dissimilar from what JFK and RFK had done: In terms of abusing power, wiretapping adversaries is just as egregious as the Nixon team’s break-in of Democratic Party headquarters, and the drawing up of an “enemies list” as potential targets of IRS investigations.
Given what we have already seen about how Donald Trump wields the power he does have—in gleefully singling out adversaries before crowds of thousands, or his Twitter following of millions—we should be very wary of how he may direct the all but limitless power of the office he will soon hold.
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