Is the Cham­ber los­ing its grip?

It was once the most pow­er­ful lob­by­ist in Wash­ing­ton. Now more cor­po­ra­tions go their own way.

The Washington Post Sunday - - DIVERSIONS - BY STEVEN MUFSON

This should be the U.S. Cham­ber of Com­merce’s mo­ment.

¶ A busi­ness­man oc­cu­pies the White House. Repub­li­cans, who have re­ceived gen­er­ous cam­paign do­na­tions from the Cham­ber, con­trol both houses of Congress. And the agenda is full of fa­vorite busi­ness is­sues such as tax re­form, reg­u­la­tory roll­backs and in­fra­struc­ture spend­ing.

¶ Yet in re­cent months, the U.S. Cham­ber — his­tor­i­cally one of the cor­ner­stones of Wash­ing­ton pol­i­tick­ing and pol­i­cy­mak­ing — has been deeply shaken. Mem­bers are di­vided over the bor­der­ad­just­ment tax, health care and cli­mate change. Some want the Cham­ber to more vig­or­ously stand up to Pres­i­dent Trump to pro­tect free trade.

¶ There has also been tur­bu­lence on the for­eign front. The U.S.­In­dia Busi­ness Coun­cil has op­er­ated un­der the U.S. Cham­ber’s wing since its found­ing in 1975. But on July 7, the coun­cil’s high­pow­ered board — in­clud­ing top ex­ec­u­tives of Pep­siCo, Cisco, War­burg Pin­cus, and MasterCard — voted 29­0 to break away, say­ing in a let­ter to mem­bers that the Cham­ber “adds no value, but im­poses un­nec­es­sary bu­reau­cracy.”

¶ Gen­eral Elec­tric — the na­tion’s 1oth­largest com­pany and maker of prod­ucts as var­ied as CT scan­ners, soft­ware and gas tur­bines — has con­sid­ered pulling out of the Cham­ber be­cause it views the group as part of an an­ti­quated Wash­ing­ton in­flu­ence es­tab­lish­ment, too ex­clu­sively aligned with the Repub­li­can Party, and no longer an ef­fec­tive ad­vo­cate for GE’s in­ter­ests or views, ac­cord­ing to peo­ple fa­mil­iar with the com­pany’s think­ing.

like GE, which long re­lied on the Cham­ber to be their guide and ad­vo­cate in Wash­ing­ton, are now as po­lit­i­cally so­phis­ti­cated and con­nected as the Cham­ber — if not more so. And in an era that al­lows vir­tu­ally un­lim­ited in­de­pen­dent po­lit­i­cal spend­ing, they can form their own more fo­cused, and per­haps more ef­fec­tive, as­so­ci­a­tions. Many lob­by­ists who rep­re­sent com­pa­nies in­di­vid­u­ally think the Cham­ber has taken on the lum­ber­ing char­ac­ter of its ag­ing build­ing, a 92-yearold lime­stone ed­i­fice lined with Corinthian col­umns over­look­ing the White House.

“If there was a time in the past when they needed the Cham­ber for ac­cess to the White House, that’s kind of gone,” said a pub­lic af­fairs con­sul­tant who had worked with three For­tune 500 com­pa­nies that have weighed leav­ing the Cham­ber. “Com­pa­nies have the tools to cre­ate coali­tions of like-minded firms on is­sues that are im­por­tant to them.”

This comes on top of high-pro­file de­fec­tions in re­cent years. Ap­ple and Pa­cific Gas & Elec­tric dropped sup­port in 2009 in re­sponse to the Cham­ber’s at­tempts to cast doubt on sci­en­tific ev­i­dence of global warm­ing and play down its eco­nomic significance. And Nike quit the Cham­ber’s board, say­ing “we fun­da­men­tally dis­agree” with the group’s cli­mate pos­ture, though it has re­mained a mem­ber.

Hewlett-Packard, Mars, Unilever and Ya­hoo have also dropped out.

“Cur­rently our fo­cus is on par­tic­i­pat­ing in trade as­so­ci­a­tions that di­rectly im­pact our busi­ness strate­gies and prod­uct port­fo­lio,” Mars spokes­woman Denise Mered­ith Young said.

The phar­macy gi­ant CVS quit in 2015 over the Cham­ber’s lob­by­ing to ease restrictions on tobacco sales; CVS re­moved cig­a­rettes from its stores in 2014.

Yet many of Amer­ica’s big­gest cor­po­rate names have cho­sen to re­main — if not en­thu­si­as­tic, at least mum and on the Cham­ber’s ros­ter — pay­ing dues to the as­so­ci­a­tion or its wholly owned af­fil­i­ates de­voted to spe­cific is­sues. At least one ma­jor firm, in­vest­ment man­ager Black­Rock, has joined so it could mon­i­tor dis­cus­sions on Se­cu­ri­ties and Ex­change Com­mis­sion reg­u­la­tions.

One rea­son for stay­ing in the Cham­ber: Com­pa­nies want to be on the same side as com­bat­ive Cham­ber Pres­i­dent Thomas J. Dono­hue, nearly 80, who took the reins of the group two decades ago and re­mains a for­mi­da­ble fig­ure and fundraiser. The Cham­ber and its af­fil­i­ates spent just un­der $104 mil­lion on lob­by­ing in 2016, more than any other cor­po­ra­tion or in­dus­try as­so­ci­a­tion by a whop­ping mar­gin, ac­cord­ing to the Cen­ter for Re­spon­sive Pol­i­tics.

“The Cham­ber un­der Tom’s lead­er­ship has been a real force,” said Charles O. Hol­l­i­day Jr., chair­man of Royal Dutch Shell and for­mer chief ex­ec­u­tive of DuPont. “I don’t nec­es­sar­ily agree with all their poli­cies,” he added, sin­gling out cli­mate change, “but I think their voice has been use­ful.”

‘Get­ting the pol­icy right’

Founded in 1912, the U.S. Cham­ber sits atop a na­tion­wide net­work of lo­cal cham­bers of com­merce that op­er­ate largely on their own. It does not pub­lish lists of mem­bers or their con­tri­bu­tions.

It takes more than $4 mil­lion a week to run the 500-per­son na­tional or­ga­ni­za­tion, which paid Dono­hue a hand­some $6.6 mil­lion in 2015, ac­cord­ing to the Cham­ber’s most re­cent Form 990 fil­ing to the IRS.

Some Cham­ber mem­bers think that it’s time for Dono­hue, who bought a $2.8 mil­lion house in North Palm Beach, Fla., in 2011, to step down. But peo­ple who know him say he is stay­ing. He has said that peo­ple will know he’s dead when he is car­ried out of the of­fice in a box with flow­ers.

“He looks at his sus­tained ac­tiv­ity in Cham­ber as keep­ing him alive and ac­tive and he looks at [long­time Mo­tion Pic­ture As­so­ca­tion Pres­i­dent] Jack Valenti who re­tired and died a short time later,” says Craig Fuller, a Rea­gan White House of­fi­cial who met Dono­hue in the mid-1970s.

At the Cham­ber, fundrais­ing re­mains a strength. Com­pa­nies, for in­stance, can pay $100,000 a year and the Cham­ber says it will “be their voice in Wash­ing­ton.”

When it comes to a big com­pany, Dono­hue of­ten “puts on his gla­di­a­tor uni­form,” said an ad­mirer, and presses for con­tri­bu­tions. He went at least once to Wal­mart’s head­quar­ters in Ben­tonville, Ark., and re­ceived mul­timil­lion dol­lar con­tri­bu­tions. Wal­mart, like many com­pa­nies, steers its money to­ward Cham­ber af­fil­i­ates, ve­hi­cles for pro­mot­ing spe­cific projects such as tort re­form or com­pelling on­line re­tail­ers to pay sales tax.

The U.S. Cham­ber In­sti­tute for Le­gal Re­form, a par­tic­u­larly pop­u­lar af­fil­i­ate, col­lected $44.8 mil­lion in 2014, ac­cord­ing to its Form 990. It has filed law­suits or briefs in cases that would limit em­ployee class ac­tions. The Part­ner­ship to Fuel Amer­ica, part of the Cham­ber’s In­sti­tute for 21st Cen­tury En­ergy, worked to win ap­proval of the Key­stone XL pipe­line.

But the sheer size of the Cham­ber can make it dif­fi­cult unify po­si­tions.

The Cham­ber says it avoids is­sues that split its mem­bers, such as the bor­der-ad­just­ment tax. GE, for ex­am­ple, fa­vors the pro­posed levy while Wal­mart op­poses it.

Yet it has alien­ated some mem­bers and pleased oth­ers — no­tably big in­sur­ance firms — by giv­ing its stamp of ap­proval to GOP ef­forts to roll back for­mer pres­i­dent Barack Obama’s Af­ford­able Care Act.

“The larger you get, the tougher some of the is­sues be­come,” said Fuller, who has been a Cham­ber board mem­ber. “Most of time there is a sense that for the greater good we’ll stay en­gaged at the Cham­ber.”

Dono­hue said in a speech that the test for any pol­icy boils down to “a sim­ple ques­tion: Will it speed growth or will it im­pede growth?”

Neil Bradley, the Cham­ber’s chief pol­icy of­fi­cer, says that the Trump ad­min­is­tra­tion of­fers op­por­tu­ni­ties to ad­vance its is­sues. Items on Trump’s agenda — reg­u­la­tory re­lief, tax re­form, an in­fra­struc­ture plan and rolling back Obama’s health-care plan — “are the sub­stan­tive things we ex­pected and hoped to be deal­ing with,” Bradley said. But Trump’s pro­tec­tion­ist views and de­sire to limit im­mi­gra­tion con­flict with the Cham­ber’s.

Many mem­bers would like the Cham­ber to be a more high-pro­file leader in pro­mot­ing free trade, pro­vid­ing cover to com­pa­nies that might be vul­ner­a­ble if de­fy­ing the pres­i­dent on their own.

“You could al­ways say some­one needs to yell louder or make a big stink about some­thing,” Bradley said, but he added that when it comes to trade, the Cham­ber is “fo­cused on get­ting the pol­icy right.”

The Cham­ber says it has reCom­pa­nies launched a me­dia cam­paign called “Faces of Trade” to high­light U.S. ex­porters. And Dono­hue has trav­eled to Canada and Mex­ico for talks on the North Amer­i­can Free Trade Agree­ment, whose ter­mi­na­tion he said would be “dev­as­tat­ing” for U.S. com­pa­nies and jobs.

The Cham­ber as­serts that its ef­forts saved the Ex­port-Im­port Bank, which pro­vides U.S. gov­ern­ment credit for ex­porters and which con­ser­va­tive Repub­li­cans wanted to abol­ish. Dur­ing the 2016 cam­paign, Trump called the in­sti­tu­tion “ex­cess bag­gage,” only to let it stand this year.

But one GOP lob­by­ist cau­tioned that “they didn’t re­ally save it.” Trump has nom­i­nated to its board two for­mer mem­bers of Congress — Scott Gar­rett and Spencer Bachus — who have re­jected its mis­sion and vowed to close it. They could cur­tail the bank’s lend­ing.

Bi­par­ti­san sup­port is lack­ing

Many com­pa­nies com­plain the Cham­ber has be­come too closely aligned with the Repub­li­can Party.

In 2016, in direct con­tri­bu­tions, the Cham­ber gave money to 17 Se­nate Repub­li­cans and no Democrats. In­clud­ing the House, 95 per­cent of the Cham­ber’s con­tri­bu­tions went to Repub­li­cans, ac­cord­ing to the Cen­ter for Re­spon­sive Pol­i­tics, a non­par­ti­san re­search group.

Its in­de­pen­dent spend­ing on elec­tions came to $29.1 mil­lion, none of it for Democrats and only $199,861 — less than 1 per­cent — against Repub­li­cans in pri­maries.

In a move that in­fu­ri­ated Democrats, the Cham­ber spent $1.4 mil­lion on tele­vi­sion ads last year to de­feat Evan Bayh of In­di­ana in a race for his old Se­nate seat, even though Bayh, a cen­trist, had worked for the Cham­ber for five years.

“Evan Bayh is, well, more lib­eral than you may think,” one ad said, and de­fend­ers of the Cham­ber say Bayh’s vot­ing record on busi­ness is­sues was far weaker than his op­po­nent’s.

The Cham­ber says it ap­plies a lit­mus test, back­ing law­mak­ers who sup­port 70 per­cent of its pri­or­ity mea­sures.

In his last year in of­fice, Bayh voted for the Lilly Led­bet­ter Fair Pay Act, which passed the Se­nate on a vote of 61 to 36. The Cham­ber counted that as a mark against Bayh, low­er­ing his score to 43 per­cent. Another of the seven key votes that year: Bayh voted in fa­vor of the Af­ford­able Care Act, which the Cham­ber op­posed.

By con­trast, the Busi­ness Round­table, a group of lead­ing chief ex­ec­u­tives, does not score mem­bers of Congress or con­trib­ute to po­lit­i­cal cam­paigns.

De­feat­ing Bayh helped dash Demo­cratic hopes of re­tak­ing con­trol of the Se­nate. Scott W. Reed, the Cham­ber’s se­nior po­lit­i­cal strate­gist, ac­knowl­edges that was the goal for 2016. “Last cy­cle, it was to make sure that [Sen.] Mitch McCon­nell (R-Ky.) was leader of Se­nate,” he said. “There’s no com­par­i­son be­tween McCon­nell and [Sen. Charles E.] Schumer (D-N.Y.) about who’s go­ing to be more pro-growth and sup­port the free-en­ter­prise sys­tem.”

Schumer’s spokesman Matt House replied that “the Cham­ber has de­volved into a to­tally par­ti­san or­ga­ni­za­tion, do­ing a dis­ser­vice to its mem­bers and mak­ing it less ef­fec­tive.”

The Cham­ber’s cam­paign tac­tics can be harsh.

Last year, the Cham­ber spent $4.2 mil­lion on ads op­pos­ing Katie McGinty, a for­mer White House en­vi­ron­ment of­fi­cial, de­rid­ing her “far left agenda” and sug­gest­ing that McGinty would kid­nap “high-en­ergy” chil­dren to tax them. “Run Jimmy! Run!” a mother cries out as a woman wear­ing high heels steps out of a black car.

Reed says the Cham­ber has al­tered its ap­proach. This year, it ran ads sup­port­ive of Demo­cratic Sens. Heidi Heitkamp (N.D.) and Claire McCaskill (Mo.) on spe­cific bills, even though this is not an elec­tion year. And last year, it spent money to help de­feat a Free­dom Cau­cus mem­ber, in­cum­bent Rep. Tim Huel­skamp (RKan.), in a Repub­li­can pri­mary, which Reed said sent a strong sig­nal to the Free­dom Cau­cus. “We think it’s im­por­tant to re­build the mid­dle in both par­ties,” he said.

Though Dono­hue op­posed Obama’s health care, fi­nan­cial and en­ergy re­forms, he still had ac­cess to se­nior of­fi­cials at the White House, no­tably Obama con­fi­dante Va­lerie Jar­rett and later Jeff Zients, who was head of the Na­tional Eco­nomic Coun­cil. Dono­hue vis­ited the White House nearly a dozen times from Fe­bruthat ary to June in 2009, in­clud­ing three en­coun­ters with the pres­i­dent, White House vis­i­tor logs show.

Later, Dono­hue backed Obama ef­forts on im­mi­gra­tion re­form and trade.

But on the Trans-Pa­cific Part­ner­ship, a com­pli­cated trade deal that the Obama ad­min­is­tra­tion forged, the Cham­ber “did less arm twist­ing than I would have an­tic­i­pated,” said a for­mer se­nior Obama ad­min­is­tra­tion of­fi­cial.

“I think they’ve be­come more ori­ented to­ward the Repub­li­can Party,” said Rep. John De­laney (D-Md.), a for­mer chief ex­ec­u­tive who first ran for Congress in 2012 and later re­ceived a “Spirit of En­ter­prise” award from the Cham­ber.

“It’s un­for­tu­nate, be­cause I think on many is­sues, the Democrats have been more sup­port­ive of things that would help the pri­vate sec­tor,” De­laney added. “But I don’t think the Cham­ber has em­braced the op­por­tu­nity to build with Democrats bi­par­ti­san sup­port.”

Cli­mate change is sticky is­sue

Per­haps the most net­tle­some is­sue for the Cham­ber has been cli­mate change.

The Cham­ber as­serts that it is neu­tral on the Paris cli­mate ac­cord that Obama helped forge, but the Cham­ber has pro­vided am­mu­ni­tion for foes of the agree­ment.

On June 1, when Trump an­nounced his de­ci­sion to pull the United States out of the Paris cli­mate ac­cord, he re­peat­edly cited a re­port co-com­mis­sioned by the Cham­ber. It was done by NERA Eco­nomic Con­sult­ing, a firm that has done stud­ies paid for by the oil and nat­u­ral gas in­dus­try.

The re­port said the econ­omy would lose 2.7 mil­lion jobs, suf­fer 12 to 38 per­cent drops in in­dus­trial pro­duc­tion, and cut av­er­age U.S. house­hold in­come by as much as $7,000 by 2040. But Ken­neth Gilling­ham, an as­sis­tant pro­fes­sor of eco­nom­ics at Yale Univer­sity, said that the study omit­ted the in­flu­ence of tech­no­log­i­cal change, as­sumed that other coun­tries had no car­bon poli­cies, and did not count ben­e­fits from cli­mate poli­cies.

The Cham­ber is­sued a state­ment say­ing the study used reg­u­la­tions pro­posed by the Obama ad­min­is­tra­tion, but Gilling­ham, who worked at the Coun­cil of Eco­nomic Ad­vis­ers un­der Obama, calls that “bla­tantly false.”

The Cham­ber has long tried to in­still doubt about cli­mate change. In 2009, the New Mex­ico util­ity PNM Re­sources quit the group af­ter a Cham­ber of­fi­cial sug­gested hold­ing a cli­mate change trial like the 1925 “Scopes Mon­key Trial” over evo­lu­tion.

Later the Cham­ber joined states in­clud­ing Texas and Vir­ginia as well as fos­sil fuel com­pa­nies in su­ing the En­vi­ron­men­tal Pro­tec­tion Agency, claim­ing that the EPA’s de­ter­mi­na­tion that green­house gases en­dan­ger hu­man health was capri­cious and ar­bi­trary. The courts dis­missed the law­suits.

A long list of high-pro­file com­pa­nies in the Cham­ber sup­port the Paris ac­cord, in­clud­ing GE, Mi­crosoft and the Walt Dis­ney Co. At least eight of the 25 com­pa­nies that signed a let­ter in a New York Times ad sup­port­ing the Paris ac­cord are mem­bers.

Bruce F. Freed, co-founder of the Cen­ter for Po­lit­i­cal Ac­count­abil­ity and a critic of the Cham­ber, said “com­pa­nies have real prob­lems when their spend­ing con­flicts with their busi­ness strate­gies and pol­icy po­si­tions.”

IL­LUS­TRA­TION BY BEADY EYES IL­LUS­TRA­TION FOR THE WASH­ING­TON POST

LUKE SHARRETT/BLOOMBERG NEWS

Work­ers at a Gen­eral Elec­tric plant in Greenville, S.C. The en­ergy gi­ant has con­sid­ered with­draw­ing from the Cham­ber.

JEF­FREY MACMILLAN

Thomas Dono­hue, who has served as pres­i­dent of the U.S. Cham­ber of Com­merce for two decades, is a for­mi­da­ble fig­ure and fundraiser.

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