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Open for Business

You think the U.S. Chamber of Commerce is a business group? It used to be. But today it’s just a tawdry hired gun.

By Ryan Grim

Tagged BusinessLobbyingpolitics

The Influence Machine: The U.S. Chamber of Commerce and the Corporate Capture of American Life by Alyssa Katz • Spiegel & Grau • 2015 • 336 pages • $28

Coverage of the influence of money in politics tends to suffer from the same weakness that all horse-race politics writing does: It almost never connects day-to-day movements to any broader reality or purpose. We learn about the size of ad buys or overall spending plans, but there’s no so what? Following the 2012 presidential election, the political press decided, rather unanimously, that all the talk about the Citizens United decision had been overblown because, after all, Democrats more or less matched Republicans on the spending front, a Democrat was reelected to the White House, and the party even hung on to the Senate, so no rich conservative was able to buy the election. Sure, Republicans later took over the upper chamber in 2014, but plenty of Democrats still managed to win.

This focus on campaigns and elections tends to exclude coverage of the political agenda itself. In other words, what is it that Congress and the regulatory agencies are thinking about and, just as importantly, not thinking about? And so this focus has missed one of the most fundamental transformations within our political system: the way in which corporate interests have moved the playing field away from party politics and into the bowels of agencies, courts, and Congress. The media have yet to figure out how to keep score. Author and journalist Alyssa Katz, in her new book The Influence Machine, charts the history and measures the power of one of the leading drivers of this shift, the U.S. Chamber of Commerce, which she calls the “single most influential organization in American politics” (as would anybody else writing a book on it).

The Chamber, unique in American politics, is the only organization that simultaneously spends big money on elections, lobbies Congress heavily, drills into the regulatory process, and, if all else fails, drags the government to court. As Katz keenly observes, the Chamber routinely promises to spend eye-popping sums of money on federal elections, but then in its tax documents several months later reports spending far less. Its critics suggest the Chamber does spend the money and somehow hides it from the IRS, but more likely the organization is following in the footsteps of Mark Hanna, the nineteenth-century Roveian consultant who helped get William McKinley elected in 1896. Before the campaign was over, he returned a sizable contribution, telling the donor they had more than enough money to win. The goal of business in politics is not to win elections or run up the partisan score; the goal, rather, is to make money. If that goal can be accomplished for less, all the better.

Katz doesn’t deliver many groundbreaking revelations; close Chamber watchers won’t learn much new. But hers is the first book-length exposé of a phenomenon that is generally known only deep inside Washington: namely, that the Chamber is not what it appears. The nonprofit Chamber’s official mission is “to advance human progress through an economic, political, and social system based on individual freedom, incentive, initiative, opportunity, and responsibility.” Beyond that, it is thought to be a coalition of business groups that collectively push for a free-market agenda aimed at improving the climate for business broadly. It is also often assumed to be a partisan operation aimed simply at electing Republicans. But, in fact, it’s neither of those things. Rather, it is a gun for hire, a façade that corporations can use, for a price, to do work in Washington that they would rather not have associated with their consumer brand. All of this, Katz argues convincingly, has often flown brazenly in the face of tax law, but power in Washington trumps both the spirit and letter of the law.

In 2005, the Federal Election Commission cast a 4-2 vote finding “preliminary evidence that . . . [Chamber head Tom] Donohue had violated federal law by steering corporate campaign contributions directly to a federal campaign committee in order to influence an election,” Katz reports. Similar movements of money had destroyed the career of Tom DeLay, but the Chamber came out just fine. After the commission settled the case, three commissioners voted in 2008 to reject the settlement, deadlocking the panel. It has been so since. “Again and again, in state elections and in federal ones, including presidential races, the U.S. Chamber and its affiliated organizations were operating as political organizations and effective ones at that. But as far as the IRS was concerned, they remained educational groups, free to do what they would with their funds,” she writes.

The Chamber stands for whatever it wants to, whenever it wants to, depending on who’s paying.

Thinking of the Chamber as an organization at all winds up missing the point. Yes, it has a headquarters—a hulking one that stares down the White House from across Lafayette Square—an HR department, water coolers, and so on. But knowing what can legally be known about the Chamber gets you almost nowhere. The Chamber, instead, stands for whatever it wants to, whenever it wants to, depending on who’s paying. It has become an essential cloak for corporate special interests looking to get in and out of Washington without anybody seeing.

For decades, the Chamber tried to be what it seemed to be: a respectable coalition of businesses. But it found itself neutered by its need for consensus—companies are all in competition, after all—and easily outmatched by the combined might of labor and consumer advocates throughout the 1970s. It also was distracted by the anti-communist paranoia that consumed much of the politically active business community after World War II.

The new model was launched secretly, first uncovered on a day where the news wound up being utterly ignored. Jim VandeHei, then a Wall Street Journal reporter, broke it on September 11, 2001: The Chamber was selling its advocacy services to specific industries and companies at quite specific price levels. Drug makers paid for cover in a fight over pharmaceutical prices, Ford wanted to beat back legislation sparked by the deadly tire failures on its Ford Explorers, and so on. (For businesses without any particular interest at the moment, the dues paid to the Chamber are better thought of as protection money: Nice company you have there—would be a shame if a little congressional curiosity should happen to it.)

Today’s Chamber addresses a central problem for businesses in Washington: While business and business owners in general might be broadly popular—the business of America is business, after all—the particular things that individual businesses want tend to be extremely unpopular. Oil companies fighting the acceptance of climate change, insurers opposing health-care reform, tobacco companies opposing smoking regulations, gas companies opposing fracking laws, and trucking companies opposing driver-fatigue rules don’t exactly capture the public’s heart. Since the public might be broadly sympathetic to business but not individual businesses, the Chamber offers to cloak corporate self-interest in vague principles. That means that the Chamber is generally incapable of or uninterested in thinking strategically about the direction of the country. Instead, it simply moves from skirmish to skirmish, leaving behind a scorched landscape.

Katz, who is also the author of the well-received and timely Our Lot: How Real Estate Came to Own Us, is a policy writer, a cultural critic, and a member of the New York Daily News editorial board. Throughout her career, she has leaned more toward research and synthesis than banging the phones and surfacing scandal. This is not a Game Change-style book that will put you inside turbulent meetings or in the heads of officials. Neither embittered former employees nor mischievous insiders are gossiping or sharing damning emails. Nobody’s cell phone lights up while driving their Audi on the GW Parkway, or the other sorts of obscure narrative details that populate a certain genre of Washington insider literature. Her book is no less rigorous for it, but the lack of intimacy with the key figures does serve to remove a sense of drama from the narrative, and the book becomes more a compilation of facts and events, a point-by-point indictment rather than a page-turning tale. Katz’s approach yields a thorough piece of work, but the lack of tantalizing scooplets that are the currency of Washington and New York publishing today will diminish its impact.

That’s a shame, because Katz builds what is a very strong case brick by brick, and it’s remarkable to watch the Chamber’s power rise chapter by chapter. The Chamber’s first foray into the pay-for-play game came just after the November 1994 GOP takeover of Congress, from the kind of industry that desperately needed cover: tobacco. “The Chamber has been kind of a weak sister in recent times,” one Philip Morris lobbyist wrote in a memo Katz relays. “However, based on a meeting we had with Chamber staff last week (and reflective of our sharp reduction in dues), the Chamber is eager to regain its former position of policy influence AND regain its stead in our once upon a time good graces.” The memo continues, “If we go to them with a specific action agenda, I believe they will do their utmost to attempt to see it through.” So on behalf of cigarette makers, the Chamber challenged the science around addiction and the link to cancer, lobbied Congress, went to court, battled regulators, and waged a public-relations campaign—in short, the all-in-one Chamber playbook.

“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 told a tobacco executive in 1998. Katz quotes one tobacco exec memo describing the approach: “Chamber is the client, PM [Philip Morris] stays in the background, Chamber handles the day-to-day.” But what does fighting for smoking have to do with the broader business climate? The Chamber just kind of made up a rationale. “One can only imagine which industry will be next,” Donohue wrote to Congress members, pretending his work on behalf of tobacco was motivated by a “first they came for the cigarette-makers”-style solidarity, rather than the paid service it was. “The gaming industry? The beer and wine makers? Over-the-counter pharmaceutical companies? Fast food?” asked Chamber strategist Bruce Josten.

For decades prior to its tobacco epiphany, the Chamber had largely walked softly, without a stick, through the streets of Washington. It came into being at the urging of President Taft, who wanted a more efficient way of knowing just what it was business wanted from the government. Birthed largely at the request of the government, it was given special tax-exempt status, which the organization today deftly exploits to keep its sources of funding hidden (the Chamber and its legal arm spent more than $200 million in 2012 and 2013, the most recent years tax documents are available—a figure that will presumably grow in 2016). That the Chamber, America’s great voice of free enterprise, was created by the government is, depending on how colored your politics are by vulgar Marxism, somewhere between deliciously ironic and entirely unsurprising.

The Chamber was established to operate mostly by consensus, which, as veterans of Occupy Wall Street know all too well, means that for decades it did very little in the way of operating. When it did, it did so in collaboration with—brace yourself—Democrats. And not just any Democrat, but that man himself. “Chamber president Henry Harriman, a former textile manufacturer, spent much of the spring of 1933 across Lafayette Square from the Chamber of Commerce headquarters, collaborating with [Franklin] Roosevelt’s brain trust to develop the National Recovery Act,” writes Katz. When the Supreme Court struck down the parts of the act the Chamber liked, and FDR moved forward with New Deal programs it didn’t, it presaged a decades-long run of impotence, punctuated by panics about communism.

So while the Chamber spent the middle part of the twentieth century bickering and licking its New Deal wounds, Big Labor ran up the score. Katz relays that when an 8 percent hike in Social Security payments was being considered, the Chamber politely suggested a more modest increase. It’s hard to remember or imagine today, but there was a time when Congress bowed before the might of the consumer lobby, and businesses panicked at word that Ralph Nader’s band of raiders had an eye on their enterprise—a moment in time that Katz captures with the help of a “Mad Men” episode. “Roger Sterling is on the phone with a client,” Katz writes. “ ‘Oldsmobile. He wants to know if there’s any way around Nader,’ Sterling tells Pete Campbell, his hand on the mouthpiece. Responds Campbell, without hesitating: ‘There isn’t.’ ”

The president of the Chamber in those days, Ed Rust Sr., not only acknowledged Nader’s sway, but even made the argument in 1973 that business was better off because of him, that Nader and business ought to want the same things. Nader and the Chamber could agree, Rust said, on “products that work as they are supposed to, on warranties that protect the buyer at least as much as the seller, on services that genuinely serve.” It was a different kind of Chamber, but the forces that would create the new one were already bubbling. Rust lasted less than a year.

For Katz, it was Tom Donohue who played the pivotal role in executing the new strategy, and she lays out just how instrumental this one man has been in shaping the Chamber and, with it, Washington politics. Donohue was right for the job because he was not a businessman. Rather, he rose up as a university fundraiser, then deputy assistant postmaster general of the United States, then a lobbyist for the trucking industry, which perfectly positioned him to understand how Washington works, shorn of any pretense about free enterprise or a “pro-business climate.” For Donohue, the climate is irrelevant. What matters is who’s paying the Chamber, and what they want for it.

With its nihilistic approach to politics and the economy, the Chamber can fail only if its particular project fails.

Some critics of the Chamber have argued that its efforts have largely backfired because the top priorities of business—infrastructure investment, comprehensive immigration reform, and a stable business climate not shaken by random threats of debt default and government shutdowns—have been foiled by the very conservative element of the GOP it helped fuel in 2010. But that assumes the Chamber cares about the overall business climate; instead, with its nihilistic approach to politics and the economy, the Chamber can fail only if its particular project fails. And in the event that happens, it’s really a failure only if the Chamber manages to get blamed and loses clients as a result.

Even readers familiar with the Chamber’s reach into the political system will be taken aback by the breadth and depth of its ability to shape the very legal structures of states where it has key business. While the stories Katz pulls together were not entirely unknown to the public at the time, the Chamber’s involvement, and its wholesale strategic assault on state judiciaries, are brazen enough that the chamber could come to define our era of corporate capture of the levers of republican government.

One instance, in Illinois, was an all-out war for a judicial seat in order to sway the outcomes of two particular cases. State Farm Mutual Automobile Insurance had been tagged with a $1.05 billion judgment for systematically ripping off and deceiving customers. And a jury had awarded $10 billion in a judgment against Philip Morris, a penalty for its marketing of “light” cigarettes in a way that suggested they were somehow less harmful. The Chamber needed a candidate who’d rule the “right” way on those cases and, sure enough, one was recruited by a State Farm lobbyist. The company and the Chamber pumped millions into the 2004 race. It would be an interesting judicial system that submitted verdicts to the democratic process, allowing companies on the losing end to take their case directly to the public on appeal. It would be a strange one, but at least there would be a logic to it.

But the public debate in Illinois, of course, was not about whether the verdicts against State Farm and Philip Morris should stand. It was instead a standard political fight, fought over personalities with misleading-at-best claims made about each side. The Chamber won, and while the public might not have known what the reward would be for the victor, it soon became clear. Their candidate, now dressed in robes, cast the deciding votes to throw out the two verdicts. Were this merely a case of the Chamber finding a rare opportunity to exert outsized influence in one race, it would still be a remarkable turn of events. But it was just one of numerous cases documented by Katz, many of which only became exposed as Chamber projects long after voters had gone to the polls.

Katz does her level best to wind up on a hopeful note. The raw success of the Chamber’s model, she argues, could be replicated by progressive groups working in alliance with enlightened businesses toward a common goal:

The Democratic Party could use its own version of the Chamber of Commerce—an outside intervention to force dynamic change, and unite its own activists behind a common agenda and strategy that encompasses workers, consumers, and companies that care about their welfare. The Sustainable Business Council isn’t willing to wage a war in which money is the ammunition, but someone else will have to, and the world of dynamic new business powers is not impoverished. The combatants may end up being companies like Skanska and Apple that left the U.S. Chamber, disillusioned; perhaps Google will finally heed the ceaseless calls to drop its Chamber membership and find fresh avenues for influence. The same technologies that foster crowdfunding for emerging business à la Kickstarter also harbor tremendous potential to pull together funding for political action from a constellation of fragmented companies, empowering them to form their own lobbying and campaign-cash forces to disrupt legacy industries’ deep-pocketed lock on power.

As the Republican Party increasingly operates outside the realm of reason, it’s the Democrats’ turn to answer a call to duty, and to build a bridge for business to political power based on prosperity and social advancement.

We know the strategy works. After all, it’s been done before.

Setting aside the prospect of aligning Apple with workers’ rights groups, Katz’s prescription gets her own analysis wrong: The Chamber is not a real coalition, as she makes plain throughout the book. And the promise of secrecy it offers to, say, an oil company is not one needed by the Sierra Club. Environmental and consumer groups are just fine with the public knowing they are pushing for whatever they’re pushing for, and it does the project no harm for anybody to know it. They don’t need cover.

The prospect of crowdfunding in Washington has the potential to be real in some situations, but matching the scale of billionaire industrialists, who can easily chip in several hundred million per election cycle, is no easy task. What Katz finds is not that the Chamber has found a new way to win the game, but that it is, in significant ways, playing a different game entirely. While the parties jockey for position ahead of the next election, the Chamber plays for keeps.

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Ryan Grim is the Washington bureau chief for The Huffington Post.

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