US Chamber of Commerce Doubling Down on Political Juggernaut

In late February, the U.S. Chamber of Commerce, the nation’s biggest and most powerful lobbying group, gathered its members from around the country together on a conference call to talk politics.

The business group invited a special guest, Sen. Dan Sullivan, a newly elected Republican from Alaska. And Sullivan didn’t mince words in saying thanks.

“Without your support,” Sullivan told the listeners, “I think it’s very doubtful I’d be sitting here as your U.S. senator, talking to you right now.”

Sullivan has plenty of company.

The Chamber spent tens of millions of dollars to elect a Republican-dominated Congress in 2014 and just about ran the table: 94 percent of the 268 mostly Republican federal candidates endorsed by the business lobby won their races.

In the wake of that stellar win-loss record, a Chamber celebration should be in order — but that’s not how it’s playing out. In fact, as Congress left town for two weeks of Easter recess, there’s been remarkably little progress in the first three months of the new Congress on many of the biggest items on the Chamber’s wish list — comprehensive tax reform, immigration reform, a long-term highway bill — and the prospects for action later this year are equally bleak.

But leaders of the business lobby are soldiering on undaunted. Instead, the Chamber, whose imposing limestone headquarters fronted by Corinthian columns stand watch over the White House in the heart of Washington, D.C., is taking the long view. Perhaps that’s a natural strategy for an institution that has represented business in the halls of political power for more than a century.

The Chamber’s strategy will include a greater emphasis on recruiting the right sort of business-friendly GOP candidates and intervening in primaries as it attempts to sculpt a compliant Congress that mirrors its priorities. In other words, the Chamber will double down on its political juggernaut, and will no longer take breaks between elections.

“We’re just going to run it 24 months in a row, cycle after cycle after cycle,” said Thomas Donohue, 76, the Chamber’s longtime president and chief executive officer, during the Feb. 19 conference call.

The group is already raising money for upcoming special elections in New York and Mississippi. And after Labor Day, it plans to launch image-boosting campaigns in states like Illinois, Wisconsin and Pennsylvania, which all have Chamber-friendly Republican Senate incumbents up in 2016.

The long-haul strategy could well pay off — but it also might prove a tough sell to a fractious membership that wants quicker returns on the mountains of cash they pump into the Chamber. The Chamber is seemingly on a political roll, in some ways at the height of its power — but is finding it tougher and tougher to get what it really wants.

A booming voice

The U.S. Chamber of Commerce describes itself as businesses’ “voice in Washington, D.C.”

It’s also their army for hire. But it doesn’t come cheap.

The Chamber is easily the nation’s biggest business trade association, with an annual budget that has ranged from $145 million to $210 million each year from 2008 through 2013.

In 2014, the Chamber and its subsidiaries reported spending more than $124 million on lobbying, according to the Center for Responsive Politics, or roughly $340,000 per day.

The Chamber has ties to other groups who spend money to influence elections, many of which don’t reveal their donors, including the network of nonprofits linked to the billionaire industrialists Charles and David Koch.

Freedom Partners Chamber of Commerce Inc., one of the major groups tied to the Koch brothers and the current nerve center of the Koch network, gave the Chamber $3.5 million between November 2011 and December 2013.

Big checks from giant corporate members drive the Chamber’s operations. In 2013, the Chamber reported receiving 30 contributions of $1 million or more, according to its most recent available tax filing. That included one contribution of more than $5 million.

Don’t expect such secrecy to ebb: The Chamber fights fiercely against disclosing any more information about its supporters than it must.

Anonymity gives the Chamber “maximum freedom to raise money and to spend money,” said Bruce Freed, the president of the Center for Political Accountability, which pushes for more corporate political spending transparency.

The 30 contributions totaled a little more than $53 million — about 34 percent of the Chamber’s contributions in 2013. Many associations, small businesses and local chambers pay far less.

The trade association aggressively put that money and clout to use during the last election. It played a major part in the campaign to save Republican Sen. Thad Cochran’s seat in a tight Mississippi primary runoff, jumped in early with ads for Sen. Mitch McConnell, who became Senate majority leader, and spent millions to elect Republican freshmen such as Sen. Thom Tillis in North Carolina.

Now the Chamber is trying to figure out how best to take advantage of its electoral success to push for its policy goals.

“This is the maximum point of leverage, and we can’t let it be fleeting,” the Chamber’s national political director, Rob Engstrom, told the members on the conference call in February.

In an interview, Bruce Josten, the Chamber’s longtime head of government affairs, said the group is playing “a long-haul game” when it comes to legislative priorities.

“I can honestly and fairly say I’ve been working on immigration reform for close to 20 years,” said Josten, who himself marked 40 years with the Chamber last summer. ”The design of the Congress and the separation of powers was deliberate not to make it easy to enact a lot of law. It is just what it is.”

Like everyone else in politics, the business lobby finds itself navigating an increasingly polarized Washington, though the Chamber also sits at the center of a debate over whether it’s contributing to that atmosphere or reacting to it. With moderates vanishing on both sides of the aisle, the Chamber is working to elbow Republicans toward its views.

The split in the Republican Party helped drive the Chamber’s 2014 election strategy as it pushed for candidates it said would govern rather than obstruct.

But Donohue is known for his mane of bright white hair and thunderous rhetoric — during an event last December, he said proponents of corporate political spending disclosure want businesses to be “targeted, harassed, criticized and boycotted” and forced from the political arena — shows no sign of stepping back.

In a letter to members dated Feb. 2 obtained by the Center for Public Integrity, he praised early signs of action by Congress on the Chamber’s priorities but struck an urgent tone.

“Issues that divide Republicans, but shouldn’t — including immigration reform, infrastructure, and the Ex-Im Bank — must see positive action,” he wrote. Congress, he said, must “meet a series of upcoming fiscal deadlines to ensure the continuity of essential government services.”

To be sure, the House and Senate both passed budgets, though they must still reconcile them. The House also passed a measure to replace the formula-setting pay for doctors who treat Medicare patients. House leaders billed the legislation as a step towards entitlement reform, a larger Chamber priority.

Nonetheless, the dispute over funding for the Department of Homeland Security, which left Congress scrambling to avoid the agency’s partial shutdown, signals a tough slog ahead.

All in for Republicans

The Chamber may not be quite as Republican as, say, the Republican National Committee, but it’s gotten pretty close.

The Chamber endorsed six Democrats in 2014, all running for the House, out of 268 federal candidates it supported.

Out of the $35.5 million it told the Federal Election Commission it spent advocating for candidates during the 2014 election cycle, only about $500,000 — roughly 1.4 percent — was spent to benefit Democrats: incumbent House members John Barrow in Georgia and Scott Peters in California, according to the Center for Responsive Politics, which tracks campaign finance data.

It wasn’t always this way. In 2008, the Chamber endorsed 38 Democrats, including some running for Senate such as Louisiana’s Mary Landrieu and Arkansas’ Mark Pryor, who both lost their seats this time around. In 2010, the Chamber endorsed 21 Democrats, and in 2012, five.

The 2012 elections went poorly for the Chamber when its attempts to defeat unfriendly Democratic senators fizzled and most won re-election. In the wake of that bitter November, the Chamber’s leadership ordered a full review of its political operation and decided it needed better candidates on the Republican side.

So during the 2014 cycle, the Chamber injected itself into Republican primaries to knock out “candidates out there running on the Republican side that want to come to Washington and shut the place down,” said Scott Reed, the Chamber’s senior political strategist, during a Wall Street Journal panel last year.

The Chamber ran nearly 17,000 television spots mentioning a Senate candidate during the 2014 election cycle, according to a Center for Public Integrity analysis of advertising data provided by Kantar Media/CMAG, an advertising tracking service. It also ran ads in two dozen House races.

It boosted advertising on social media, placing ads on sites ranging from Facebook to music streaming service Pandora.

It drafted buzzy spokesmen, including NASCAR driver Richard Petty for North Carolina Republican Thom Tillis and football great Brett Favre, who cut an ad urging Mississippi voters to re-elect U.S. Sen. Thad Cochran. It also made use of several likely 2016 Republican presidential contenders, including former Florida Gov. Jeb Bush and Sens. Marco Rubio and Rand Paul.

Bush and Rubio did Spanish-language ads in states such as Colorado and Arizona, and the Chamber deployed Paul in states such as North Carolina, where a Libertarian candidate threatened to siphon votes from a Chamber-backed Republican.

The Chamber is already reviewing the 2016 electoral map to figure out which spokesmen would make the most effective messengers for the states in play.

The Chamber insists it isn’t aligned with either party. Still, the increasingly partisan tilt raises questions for some Chamber members who point out it will need Democratic votes on legislative priorities that don’t necessarily break down along partisan lines, such as trade, tax reform, immigration reform and infrastructure funding.

“Where do they plan to go from here? Are they going to achieve their legislative goals with those numbers?” said a lobbyist for one Chamber member company who requested anonymity because his company did not grant him permission to speak on the record. His company routinely pays the Chamber six figures annually.

The Chamber’s policy work began right after the election, Josten said: meeting with members and organizing briefings. It successfully pushed for the reauthorization of the Terrorism Risk Insurance Act, a program under which the federal government repays businesses’ costs after a catastrophic terrorist attack.

Other issues are proving significantly stickier to resolve.

Republicans acknowledge comprehensive tax reform isn’t likely happening this Congress, and more modest tax legislation will also have to leap serious hurdles. Immigration reform shows no sign of life. The president wants so-called “fast-track” authority to negotiate trade agreements, something the Chamber strongly supports, but a significant number of Democrats and some Republicans are opposed.

While there’s broad agreement more money is needed to rebuild roads, bridges and other infrastructure, lawmakers can’t agree on how much to spend or how they’ll pay for it all — and it has been a decade since the last time Congress successfully passed a long-term transportation bill.

One top priority issue: reauthorization of the Export-Import Bank, a bank that makes and guarantees loans for American companies doing business in other countries. Its charter expires in June and reauthorization is garnering vigorous resistance from a hefty number of Republicans. On the list of the opposed: House Financial Services Chairman Jeb Hensarling, who Josten acknowledges presents a challenge.

Hensarling, a Texas Republican, has called the Ex-Im bank “a sweetheart deal” for big companies like Boeing Co. and Caterpillar Inc. (both Chamber members) that doesn’t do enough to help small business. North Carolina’s Tillis, who enjoyed more than $5.6 million in help from the Chamber, is also opposed.

Josten said he’s working on the Ex-Im bank issue constantly, both with members and other associations, to bring pressure to bear and help harvest some votes.

Scoring votes

Democrats have their own take on the Chamber.

It’s hardly flattering.

“I have long viewed them as a wholly owned subsidiary of the Republican Party,” said former Rep. Earl Pomeroy, a North Dakota Democrat who lost his seat in 2010, thanks in large part to $270,000 the Chamber spent against him.

Of course, many argue the Chamber is doing exactly what it should be doing.

“When you talk about why is it important that the Chamber was successful in these elections, it’s so they have a stronger voice,” said Patricia Elizondo, a senior vice president at Xerox Corp. and a member of the Chamber’s board of directors since 2008.

Bill Miller, who helped build the Chamber’s political machine and oversaw its 2010 election efforts before he left in 2011, said members expect the Chamber to support legislators who are “vulnerable and helpful to the agenda.”

The Chamber’s Josten says the organization chooses which candidates to support based on their votes on key issues, which it tallies in an annual scorecard.

“Everybody likes to fixate on some of the big issues we care about and say, well, jeez, Bruce, you guys favor comprehensive immigration reform and Joe Blow’s against it,” he said. “Yeah, OK, so? And Joe Blow’s an 87 percenter with us on everything else, or a 92 percenter.”

The Chamber’s Senate scorecard for 2013 — the most recent available — includes eight votes, from major appropriations bills to immigration reform to reauthorizing the Federal Helium Reserve to sell helium to private entities.

As for why the Chamber has endorsed and spent for fewer Democrats lately, Josten said ironclad party discipline has yielded shrinking numbers of Democrats who vote with the Chamber often enough to score well.

He portrayed the Chamber’s political activity as promoting moderates.

“Obviously, I can’t say that our efforts led to a full restoration … of the middle, but it certainly was the beginning of a process of trying to restore a middle,” he said.

Chamber members don’t always like how the candidates fare on the scorecard. For instance, insurance companies, which heavily supported Pomeroy, a former insurance commissioner, weren’t thrilled when the Chamber targeted him.

Rep. John Sarbanes, a Maryland Democrat who is sponsoring legislation aimed at reducing the impact of groups that spend money to sway elections, said the Chamber is enormously influential, though many of its priorities are unlikely to pass this Congress.

But “it’s in the nature of organizations like that to take the long view,” he said. “I don’t know if they need a win anytime soon.”

When major bills move, he said, the Chamber will have a say.

Wrangling members

The Chamber’s effectiveness depends on forging accord among businesses of all sizes, types and regions, said Dirk Van Dongen, the longtime head of the National Association of Wholesaler-Distributors, a Chamber member.

“The Chamber has the challenge of kind of herding all the business community cats, if you will, into some coherency,” Van Dongen said.

The policy process is elaborate.

“It’s not Tom Donohue throwing darts at a dartboard in his office to decide how to position the U.S. Chamber,” said David Adkisson, the president and chief executive officer of the Kentucky Chamber of Commerce and U.S. Chamber board member. “It’s a very deliberate, relatively formal process.”

Some issues, such as the major Chamber priorities of trade and infrastructure spending, aren’t particularly divisive.

Others are tougher. Donohue has repeatedly acknowledged net neutrality divides the tech community, but the Chamber opposes the Federal Communications Commission’s move last month to reclassify Internet service so it’s treated more like a utility.

Then there are issues such as tax reform, where “you’ll never get the business community all on one page,” said Josten.

Donohue, who earned about $5.5 million from the Chamber in 2013, encourages debate and brings in experts to guide members to a policy position.

When a decision is made, he doesn’t back off, says Xerox’s Elizondo, even if members threaten to walk.

“I have seen the outcome where there is a faction of the group that doesn’t agree and sometimes there is a price to pay, but it’s good to know the process for getting to the answer is a pretty good one at the Chamber,” she said.

High-profile disputes have been bleeding into the public domain.

During 2009 and 2010, a group of companies, including Apple Inc., Exelon Corp. and Pacific Gas and Electric, quit the Chamber over its opposition to the Environmental Protection Agency’s plans to regulate greenhouse gases and other climate-change-related issues. Nike Inc. left the Chamber’s board. Other members, including Microsoft Corp. and Johnson & Johnson, issued statements disagreeing with the Chamber’s position.

In 2011, Yahoo Inc. also quit, reportedly over intellectual property legislation the Chamber supported and Yahoo opposed.

More than 40 local chambers issued statements distancing themselves from the national organization’s 2010 midterm election spending, citing a backlash, Politico reported. Several local chamber presidents interviewed by the Center for Public Integrity said, sometimes with deep sighs, they are frequently called upon to explain their relationship with the U.S. Chamber.

“People come in and say we don’t want to be a member of the Fayetteville Chamber because we don’t want to be a member of the U.S. Chamber because we don’t agree with the policies of the U.S. Chamber,” said Steve Clark, the president of the Fayetteville Chamber of Commerce in Arkansas.

But not everyone who quits can stay away.

Bob Linscheid, head of the San Francisco Chamber of Commerce, said his group left the U.S. Chamber for a few years, a rupture caused largely by differences over climate change and other environmental issues.

Linscheid re-upped its membership in early 2013. “I felt it best to not take our marbles and go home,” he said.

The two groups agree on the need for immigration reform, although Linscheid doesn’t believe it will happen anytime soon, no matter what the Chamber wants.

“They’re not going to be able to deliver. I’m frustrated by that, but I’m also a realist.” Linscheid said.

Exelon, the giant electric utility, rejoined in 2012, said spokesman Paul Adams.

Internal strife

Worse than disagreements among members, sometimes the Chamber publicly disagrees with itself.

Last year, the U.S. Trade Representative’s office was trying to prod foreign countries to improve enforcement of intellectual property rights — the kind of arcane but routine Washington ritual that can have high stakes for companies doing business abroad.

In February 2014, the U.S. Chamber’s Global Intellectual Property Center urged the trade representative to downgrade India’s status because it “has not shown a record of engagement on these issues.”

The U.S.-India Business Council, another Chamber program that represents companies doing business in India, didn’t agree. Ron Somers, then the council’s president, wrote in March 2014 that a downgrade would be unwarranted.

Two weeks later, David Chavern, then the Chamber’s chief operating officer, sent a third letter to the trade representative stressing the U.S.-India Business Council’s policy autonomy — and the Chamber’s disagreement with its position.

“We understand that a number of Chamber and USIBC joint members, including some companies identified as directors on the USIBC’s letterhead, do not support key elements of the USIBC’s submission,” he said.

Pfizer Inc., a member of both groups, sent its own letter saying it didn’t support the U.S.-India Business Council’s position, and soon its name disappeared from council’s online list of members, though it was recently restored.

By mid-April, Somers resigned to start a consulting practice.

‘Hand in glove’ with the Senate

In January, with the new Congress getting underway, the new chairman of the powerful Senate Finance Committee, Orrin Hatch, unveiled his 2015 agenda in a speech at the Chamber.

The Utah Republican called tax reform the top priority and said “all the people [at the Chamber] work hand in glove with us and help us to understand when we’re wrong and help us to understand how to make things right.”

It will certainly keep doing that. And just like in past election cycles, the Chamber is positioned to be a major player during the 2016 election cycle and will likely continue to throw its considerable weight behind Republicans.

Strategists on its February call said they are already building up resources, and Donohue told members they were welcome to come in and talk about individual races.

The Chamber will put its resources to work immediately. Reed, the political strategist, said it would back Richmond County District Attorney Dan Donovan, a Republican, in New York’s upcoming special election for a congressional seat representing Staten Island and part of Brooklyn.

In Mississippi, where there’s another special election, “It’s tea party central. We’ve got to keep an eye on this,” Reed said during the call, adding it is likely to go to a runoff.

And 2016 planning is already well underway.

The Chamber traditionally avoids directly participating in presidential politics, and it’s offered no indication it will change this philosophy for 2016. Nevertheless, it’s certain to have a major say in which politicians succeed farther down the ticket.

That’s a role Donohue relishes.

During the February conference call, Sullivan, the new senator from Alaska, recounted how an earthquake hit the state during the public event that marked the unveiling of the Chamber’s endorsement of him. He went on to praise the calm way the Chamber’s Engstrom handled the quake.

Donohue interrupted.

“I want to tell you, senator, why he handled it so calmly,” Donohue quipped. “He had arranged the earthquake.”

Vintage Donohue swagger — but the Chamber may find the ground easier to move than this Congress.

The U.S. Chamber of Commerce wish list

President and CEO Thomas Donohue laid out the U.S. Chamber of Commerce’s top priorities in his 2015 State of American Business address in January. What follows is the organization’s wish list — in Donohue’s own words.

Trade promotion authority

“The administration is negotiating two historic trade agreements — the Trans-Pacific Partnership Agreement and the Transatlantic Trade and Investment Partnership. The Chamber has supported these initiatives from the start.”

Keystone Pipeline

“We are going to keep pushing on the Keystone pipeline. The administration’s own facts clearly show that this project will create jobs and energy security without harming the environment.”

Immigration

“We know that reform is unlikely to happen in one big bill, and we recognize that moving forward cannot be ‘comprehensive or nothing.’ Yet there is more agreement in the country and in Congress than you may think — and it is in the political interests of both parties to act before the next election.”

Comprehensive tax reform

“We will encourage genuine efforts to create a simpler, fairer, pro-growth tax system. We will not support an approach that uses tax reform as an excuse to engineer another big tax increase on American business.”

Infrastructure

“We’re asking Congress to pass a long-term highway and mass transit bill with full funding — along with appropriate reforms. We must fully fund our aviation and water systems as well. The big question is how to pay for these programs. The simplest and fairest way to do this is through a modest increase in the federal fuels user fee that hasn’t been increased in more than 20 years.”

Regulatory reform

“Government reform must also address the regulatory system, which hasn’t been significantly modernized since the Harry Truman administration. Remember him? I do — it was a long time ago!”

Regulatory relief

“While we strongly support technological solutions to address greenhouse gas emissions, we do not believe that regulation of these emissions through the Clean Air Act is appropriate or workable.

In health care, we support congressional efforts to restore the 40-hour workweek to define who must be covered under the employer health care mandate. We’ll work to repeal taxes such as the medical device tax, the Cadillac tax and the health insurance tax.”

Capital markets

“The Chamber will also seek further targeted fixes to Dodd-Frank. For example, the Financial Stability Oversight Council is considering overdue and necessary changes to its systemically important designation process. In addition, both the Consumer Financial Protection Bureau and the Treasury Department’s Office of Financial Research ought to be placed under the appropriations process.”

Spending and entitlement reform

“More than anything else, the nation’s massive debt is being driven by entitlements… One of the early tests for Congress will be passing a fiscally responsible budget that will lay the foundation for further action on tax and entitlement reform. This will be no small feat.”

Net neutrality

“We recognize that the issue of net neutrality divides the tech community, but there can be no neutrality as far as the Chamber is concerned. We oppose efforts to regulate the Internet as if it were a 20th century public utility.”

Education reform

“We must ramp up efforts to reform public schools — to toughen the standards and measure them against prior years so that we know when students are falling behind. We also need to remove bad teachers and pay good teachers more, create more innovative charter schools, and ensure that parental choice is an option not just in wealthy communities but in all communities.”