Secrets of the Chamber

The U.S. Chamber of Commerce exaggerates the dangers of government action to its corporate paymasters and gets paid handsomely, whether it wins or not.

In 2011, Chamber of Commerce president Tom Donohue vowed that his organization would fight against what he called a “regulatory tsunami”: the thousands of pages of new rules that were beginning to flow out of federal agencies as they implemented the Dodd-Frank Wall Street Reform and Consumer Protection Act and other legislation Barack Obama had signed in his first two years in office. Donovan’s threat wasn’t idle. His organization’s army of lobbyists and researchers was already engaged in a bruising fight on behalf of the financial industry, aimed at bullying understaffed regulatory agencies into backing off.

Nov-15-Katz-Books
The Influence Machine: The U.S.
Chamber of Commerce and the
Corporate Capture of American Life

by Alyssa Katz
Speigel & Grau, 336 pp.

The Chamber hit the Securities and Exchange Commission hard, for instance, over a new rule that required companies to open up their shareholder elections. The rule, known as “proxy access,” was widely reviled in corporate America. The Chamber hired consultants to demonstrate that the rule would be ineffective and costly. It hired lawyers to claim that the SEC had violated the Administrative Procedure Act in drafting the rule. And, despite an estimated 21,000 hours of SEC staff work, the D.C. Circuit Court sided with the Chamber, concluding that the SEC “had failed to respond to substantial problems raised by commenters.” The rule was vacated.

As the journalist Alyssa Katz describes in her new book, The Influence Machine, “The swift obliteration of the board elections rule … had a chilling impact on the entire machinery of financial reform, at the SEC most of all. No agency could risk more accusations that it hadn’t properly evaluated all potential costs and consequences of a piece of Dodd-Frank.” And so, in Katz’s telling, agencies were cowed. They tailored rules to avoid running afoul of the Chamber’s demands, not eager to fight costly court battles. And the effectiveness of Dodd-Frank was thus blunted. Wall Street continued to thrive.

The Chamber also fought Dodd-Frank implementation in Congress. It lobbied (successfully) to keep the budget for the Commodity Futures Trading Commission low. It aggressively pushed Republican senators to filibuster the appointment of Richard Cordray to head the new Consumer Financial Protection Bureau, in hopes of keeping the agency leaderless. In short, it did whatever it could to undermine Dodd-Frank.

The Influence Machine is full of these kinds of stories. In Katz’s book, the Chamber comes off as a relentless fighter, user of all the tools in the lobbying tool kit. It funds the academic studies to ground its arguments. It scours the legislative calendar for low-profile opportunities, for long, must-pass bills in which to slip a provision, at the same time as it fights high-volume public PR battles. It bird-dogs regulators with piles of comments and then threatens everything with a lawsuit. The Chamber, Katz writes, is somewhat unique in that it is a “single institution that shapes the balance of power in the courts, at the ballot box, in the halls of state legislatures, and in the U.S. Congress.”

All this is true. But is it also true, as Katz announces in the opening lines of The Influence Machine, that the Chamber is “the single most influential organization in American politics, outside the Republican and Democratic Parties’ apparatuses”? Is it really the case that the Chamber has “concentrated the energies embedded in our democracy as potently as any the nation has ever seen”? After all, the organization tried to stop Richard Cordray’s nomination, but failed—just as it failed to stop the passage of Dodd-Frank itself. It could not block the Affordable Care Act, either, or dozens of other pieces of legislation the Democrats pushed through. The Chamber couldn’t even dissuade its friends in the Republican House of Representatives from defunding the Export-Import Bank, as happened this summer.

The Chamber of Commerce is certainly a well-heeled and influential organization, and it has grown more so in recent years. But Katz exaggerates its power. I suppose that kind of hype helps you sell a book to a publisher. Yet ironically it also underscores a hidden truth about how the Chamber and Washington lobbying operate: the more they exaggerate the dangers of this or that government action to their corporate paymasters, the more they get paid, whether they win or not.

Another truth is that lobbyists are much less likely to win on big issues where the details of the evolving bills are in the papers every day, than on smaller bills or omnibus legislation when they can work best deep in the weeds where nobody’s looking. One telling example from The Influence Machine involves how the Chamber, working on behalf of tobacco companies, got a one-sentence amendment into a 4,000-page budget bill in 1999, requiring that any researchers who received government support had to make their data public. Sounds reasonable enough—but what does that have to do with tobacco?

The Chamber wanted the amendment so that it could go after government-funded research studies that claimed secondhand smoke was harmful. At stake was a proposed Occupational Safety and Health Administration rule on indoor air quality. The Chamber then mobilized a campaign to pressure the Office of Management and Budget on implementing the data release, overcoming the objections of scientists and research institutions. The proposed OSHA rule never became law—the Chamber was able to cast doubt long enough for George W. Bush to become president and abandon the rule. In 2001, the Chamber helped to pass the Data Quality Act, which, as Katz explains, “allowed anyone to challenge information disseminated by the government, in any form, and demand a correction.… It also demanded an extraordinarily high level of scientific proof, publicly disclosed, before government could promote any regulation.”

An example like this highlights the maddening public interest jujitsu that effective business lobbyists often use. Like the kid’s game of “Who can punch the softest?,” the best ruse is the one dressed up as a good-faith effort.

As anyone with even a passing knowledge of statistics knows, a clever critic can find many ways to reanalyze existing data to get different results. For years, tobacco industry lobbyists had well-regarded statisticians around to cast doubt on studies linking tobacco and lung cancer. It’s not to say that government-funded science—or any science, for that matter—always gets things right. Plenty of studies turn out to be wrong. But the Chamber never intended for decisions to be based on sound science. It just wanted a higher, more transparent standard to undermine the whole concept of sound science—when it suited its members’ interests.

The Chamber of Commerce, founded in 1912, was the brainchild of President William Howard Taft. Taft called for a single, organized entity to speak with one voice for the growing diaspora of local business associations. In the 1930s, the Chamber first worked with Franklin Delano Roosevelt’s administration in crafting the National Recovery Act, then turned against FDR and began warning of government overreach. It began shifting to the right, toward the anticommunism that would consume the organization for several decades.

By the early 1970s, the Chamber, like much of the business establishment, was feeling sidelined from power as Congress began rapidly setting up new agencies to regulate consumer safety, workplace safety, and the environment. This new government activism provoked a near-existential panic in the business community, a panic that reinvigorated the Chamber and mobilized considerable business resources toward Washington.

The Chamber set up a cable network, Biz-Net, to broadcast its pro-free-enterprise message. It organized Citizen’s Choice, a massive grassroots network to “fight the unnecessary growth of the federal government.” Katz credits this effort as being at the forefront of modern “Astroturf” lobbying. “Back then,” she writes, “creating a false popular front was an innovation in political warfare.” As the Chamber continued to grow, however, consensus among members sometimes became harder to achieve. And that forced the Chamber into a somewhat less aggressive posture during the 1980s.

Another key turning point in the Chamber’s history came in the mid-1990s, when the then somewhat moderate Chamber initially supported, then opposed, the Clinton health care plan. That early support angered conservatives within the association, and especially Republicans in Congress. Eventually, the Chamber relented, and cemented a strong alliance with Republicans that would also involve a much more aggressive stance on a wide range of issues—including the organization’s position in Washington.

In 1997, the Chamber ditched its leader, Richard Lesher, because of his decision to side with the Clinton White House on health care. In his place, Tom Donohue—a man whose aggressive nature earned him nicknames like “George C. Patton”—took charge. In 1998, writes Katz, Donohue told a major donor, “My goal is simple—to build the biggest gorilla in this town—the most aggressive and vigorous business advocate our nation has ever seen.” Donohue’s pitch to the big companies was that he would be their front organization. The Chamber had a large and growing staff—it could do the lobbying, the public relations, the grassroots activism, the junk science and research, the litigation, and, eventually, the aggressive campaign spending. Companies could keep their donations secret, and get their concerns billed as top-priority issues for the business community writ large. Donohue’s pitch involves this tension between threat and opportunity: terrible things could happen to your business; our influence machine can prevent those terrible things from happening.

The Chamber has been relentless in keeping businesses in constant opposition to government regulation. Katz notes that the Chamber “has built its influence on business owners’ resentments of … demands by the regulatory state.” Writes Katz, “Something has changed in the last generation to break the social contract between American business and the American people, a pact that the U.S. Chamber of Commerce has played a role in dissolving.”

This change is the result of a self-reinforcing process. Spurred on by associations like the Chamber, as well as their own lobbyists, American businesses have steadily increased their investments in Washington over the last several decades, becoming more assertive in their lobbying. And as the amount of lobbying has increased, lobbyists have become more aggressive in making sure companies stay engaged by constantly emphasizing the threats, as well as the opportunity. This, in some ways, is the paradox of the Chamber’s lobbying efforts. The number one goal of the Chamber is to maximize revenue for the Chamber. To accomplish this, the organization has to be influential enough to merit expensive membership dues, but not so influential as to ever win the ongoing war against government regulation. Viewed in that light, is the passage of Dodd-Frank really a loss for the Chamber? Or is it also a win, because of all the work it creates? Does it lose in failing to stop the defunding of the Export-Import Bank, or does it win by keeping the issue alive for a future round?

Consider that in 2004, with George W. Bush as president and Republicans in control of Congress, the Chamber took in $90 million in revenue. In 2009, just five years later, with Democrats in control of the White House and Congress, its revenues had grown to $215 million—more than double. Donohue, not incidentally, doubled his salary from $1.8 million to $3.7 million during this same five-year period, according to Internal Revenue Service documents. As one former Chamber lobbyist told James Verini in the Washington Monthly (“Show Him the Money,” July/August 2010), “the Chamber does best when there’s a Democrat in the White House, because you want businesses to be scared.”

As the Nation publisher Victor Navasky used to say about his magazine, “What’s bad for the country is good for the Nation.” Perhaps the motto of the Chamber should be, “What’s bad for the business of America is good for the business of the Chamber.”

It’s clear from the first pages that Katz has not set out to give us a balanced treatment of the Chamber. She announces in the preface that her request to the Chamber for questions was denied, and she reprints the Chamber’s reply: “The nature and tone of these questions reveal an obvious slant” (nothing in her book gives me reason to doubt the Chamber’s response). And though in the preface she thanks “the Chamber alumni and associates who did take the time to lend their insights,” there is no apparent mention of these brave souls in the pages of the book. Almost all the footnotes are to secondary sources.

Certainly, Katz has done a very thorough job pulling together others’ reporting. She collected many detailed stories of Chamber lobbying. She recounts how the Chamber helped to kill climate change legislation; how it stopped bills that would have required 501(c)6 organizations like the Chamber to disclose more of their political spending. She tells us how the Chamber spent millions in state judicial elections and attorney general races to push out officials they felt were hostile to business and replace them with friendly allies. She also tells us how the Chamber tried to undermine a “Buy American” provision in the 2009 stimulus bill because those provisions would harm American companies who were doing business in China. The provision survived, but it was somewhat scaled down from the original version.

These are all good stories, and I’m grateful that they are now all in one place. But it’s frustrating at times, watching Katz’s attempt to fit every story into the same underlying presumption: the Chamber is run by evil geniuses who have figured out the secret of Washington lobbying, and whose only goal appears to be to use that secret to undermine democracy and serve the narrow, self-serving agenda of a few very large corporations. For Katz, “the losses are never complete.… The Chamber is relentless in its cause, and its cause is nothing less than dominance of the American political system.”

But, of course, nothing is ever quite that simple. Certainly, the Chamber is a very powerful and important organization. But, like most organizations in Washington, the Chamber sometimes wins, and it sometimes loses, and much of what happens in Washington is beyond its control. For example, despite a major push on immigration reform, the Chamber could not overcome the basic political fact that a considerable portion of the Republican base was hostile to the issue. But that kind of balanced assessment does not sell high membership dues. Nor does it draw in readers and sell books. For business reasons, it is always better to exaggerate.

The Influence Machine is a lively read, part history, part case studies. Thanks to Katz’s dogged research, we now have a field guide to what the most aggressive and ubiquitous modern lobbying operation is capable of doing. But there is also something lost in the attempt to make the Chamber the central mover in every fight, the villain who somehow always wins even when it appears to lose. There are elements of a richer story here, one in which the Chamber sometimes struggles, and in which the Chamber faces tensions and trade-offs. There is drama in this story, too. But there is also ambiguity.

Lee Drutman

Lee Drutman is a senior fellow in the Political Reform Program at New America.