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White House Opens Door to Chamber on Fiscal Cliff Talks

By Julie Bykowicz
November 27, 2012 11:13 AM EST 105 Comments
The U.S. Chamber of Commerce has 300,000 members and represents more than three million companies. It raised $147 million in 2011 -- a 25 percent decline from the $200 million in 2010, according to its most recent tax filings.
Photographer: Joshua Roberts/Bloomberg
The U.S. Chamber of Commerce has 300,000 members and represents more than three million companies. It raised $147 million in 2011 -- a 25 percent decline from the $200 million in 2010, according to its most recent tax filings.

(Corrects location of Better Markets in ninth paragraph of story that moved yesterday.)

The U.S. Chamber of Commerce shouts “JOBS” with two-story-tall block letters strung on its building facing the White House.

Until today, that was the closest the business trade association got to President Barack Obama’s talks on skirting the fiscal cliff, a $607 billion combination of automatic spending cuts and tax increases scheduled to take effect in January. Thomas J. Donohue, president of the chamber, met this afternoon with White House aides, said Sally-Shannon Birkel, a spokeswoman for the chamber.

The invitation to talk came after Donohue said his organization had been shut out of Obama’s fiscal cliff discussions.

Republicans and Democrats Differ on Taxes as 'Cliff' Looms

“We have not been contacted by the White House,” Donohue told reporters at a press conference Nov. 13.

Birkel said in an e-mail that today’s meeting, which included Jack Lew, Obama’s chief of staff, “is part of the ongoing dialogue on the fiscal cliff.”

In addition to Donohue, White House aides are meeting today with Business Roundtable president John Engler, said William C. Miller Jr., the Washington-based group’s senior vice president.

The chamber, having pledged to spend at least $50 million on political advertising backing Republican candidates who opposed Obama, has largely been a bystander in the debate over Washington’s most critical post-election issue. It is being supplanted by other business groups such as Fix the Debt and the Partnership for New York City.

Traditional Dynamic

Chamber members such as Ford Motor Co. (F), Honeywell International Inc. (HON) and Dow Chemical Co. (DOW) have aligned themselves with the groups that have access to the White House, altering the traditional dynamic between business interests and government as Obama is insisting that more tax revenue from top earners be part of any deficit-reduction bargain.

“The chamber expects to have a seat at the table, but the table is set by people it just tried to politically kill,” Dennis Kelleher, president and chief executive officer of Better Markets, a Washington-based nonprofit, said in an interview.

“There are business organizations that have not been as strident and vitriolic as the chamber” in working against Obama, “and those are the ones that will be the leading voices on any fiscal-cliff deal,” said Kelleher, whose group advocates for stricter financial regulation.

While the chamber promotes its own plan for reducing the U.S. budget deficit, including increased domestic energy production and building the Keystone XL pipeline, it hasn’t gained the administration’s attention.

Hill Influence

That isn’t to say the chamber won’t play a role. After a deal develops, the chamber will have influence in the House, where it has close ties with the Republican majority.

“We have absolute access to what happens in the Congress,” Donohue said.

The chamber’s place on the sidelines as of now shows Obama is “still in campaign mode,” Jade West, senior vice president of government relations for the National Association of Wholesaler-Distributors, said in an interview. She said she views the chamber’s spending against Democrats as “a chicken- and-egg situation.”

“The president spent four years criticizing the business community,” West said. “Why would the chamber not try to put someone in office who doesn’t hold such contempt for business?”

After the 2010 midterm elections, White House officials met with the chamber, wholesalers and other business groups to try to forge a relationship -- a sign that the administration recognized their influence.

‘Two Monologues’

“It wasn’t a conversation,” West said of her group’s meetings. “It was two monologues with people talking past each other.”

The Business Roundtable, a collection of CEOs, has had some success staying in touch with the White House, said Miller. The roundtable worked with Obama during his push to overhaul health care in 2009, though the group ultimately joined the chamber in opposing the legislation as it passed in 2010.

The group’s CEO members will meet with administration officials in December, Miller said in an interview.

“We don’t get involved with campaigns, so it does make it easier,” said Engler, a Republican former governor of Michigan. “If you’re actively spending and you win, you get sometimes more love. If you’re actively spending and you lose, sometimes you get a lot less.”

CEO Outreach

Dozens of CEOs on the Business Roundtable -- many of whom also belong to the Chamber of Commerce -- also have sought other ways to connect with the White House in fiscal-cliff negotiations.

The Fix the Debt campaign, which is spending $40 million to push for a compromise in the fiscal cliff talks, lists 32 CEOs on its council.

Print advertisements in Washington publications borrow slogans from companies such as McDonald’s Corp. and Nike Inc. -- “I’m Fixin’ It” and “Just Fix It.”

Another group, the Partnership for New York City, has 32 corporate partners. The White House has tapped both groups to draw attention to CEOs willing to engage in seeking compromise.

A dozen CEOs, including Ford’s Alan Mulally, Honeywell’s David Cote, Aetna Inc. (AET)’s Mark Bertolini, Dow Chemical’s Andrew Liveris and Wal-Mart Stores Inc. (WMT)’s Mike Duke, met for about 90 minutes with Obama on Nov. 14.

Corporate leaders accept that higher taxes for some will be part of a debt-reduction plan, Cote said after the meeting.

Avoiding Stalemate

Executives are seeking to demonstrate more leadership in Washington because they recognize that the political stalemate runs deeper now than the “normal political baloney,” Cote said last month. Rob Ferris, a spokesman for the company, confirmed Honeywell’s chamber membership.

Berkshire Hathaway Inc. Chairman and CEO Warren Buffett and other wealthy executives have written opinion articles and spoken out in television interviews about their view that they can be taxed more to help close the deficit. In today’s New York Times, Buffett called on Congress to act immediately to set a minimum tax on high incomes even as it considers a longer-term overhaul of the tax code.

“The reform of such complexities should not promote delay in our correcting simple and expensive inequities,” he wrote. “We can’t let those who want to protect the privileged get away with insisting that we do nothing until we can do everything.”

Tax Opposition

It’s a position that runs counter to that of the chamber. “Reduce the budget deficit through higher economic growth, spending restraint, and entitlement reform -- not higher taxes,” the chamber says on its website.

Even so, “those CEOs that are organizing themselves to join others in challenging the debt are doing something very useful,” Donahue said.

Maya MacGuineas, a spokeswoman for Fix the Debt, said her group is designed to expire after the debt problem is solved, while the chamber and others will endure. Fix the Debt is an offshoot of the Committee for a Responsible Federal Budget, a bipartisan group that backs deficit reduction and of which MacGuineas is president.

“The story being told about division in the business community doesn’t exist,” she said in an interview. “When there is an actual deal on the table, there may be splits on how best to do tax reforms.”

TV Ads

The activism by Fix the Debt and the individual CEOs is pre-empting the chamber and the Business Roundtable in some ways. For example, the chamber doesn’t plan to spend money on advertising to promote its debt plan because Fix the Debt has already done so.

“It’s kind of ridiculous for us to go to the same people to raise the same money to do the same kind of ad,” Bruce Josten, the chamber’s executive vice president of government affairs, said at the Nov. 13 press conference.

The business leaders haven’t offered specifics and their debt-reduction messages could be muddled, Engler said in an interview Nov. 16 at the Business Roundtable’s offices near the Capitol in Washington.

“They’re focused on the federal deficit, which they understand requires entitlement reform. And they also believe that tax revenues are part of that solution,” Engler said. “Depending on who you talk to with Fix the Debt, you get different ratios.”

Chamber Membership

The chamber has 300,000 members and represents more than 3 million companies. It raised $147 million in 2011 -- a 25 percent decline from $200 million in 2010, according to its most recent tax filings.

“We’ve still got a pretty damned good brand that plays very well,” Donohue said at his news conference. Still, the chamber’s ideas on tackling the deficit haven’t gained traction.

“To demand that your Christmas list, the energy package, be front and center when you don’t even have a seat at the table -- that can only be viewed as benighted thinking,” Kelleher said.

Adding to the rival business voices, Patriotic Millionaires, a group with more than 200 top-earning members, paid visits Nov. 14 and 15 to House Minority Leader Nancy Pelosi, a California Democrat, Senator Chuck Grassley, an Iowa Republican, and others. Their message: Tax us. We can take it.

“Two groups I have particular contempt for are the Chamber of Commerce and the Club for Growth, which I like to call the ‘Club for Greed,’” Arthur D. Lipson said in an interview. Lipson, a Patriotic Millionaires member, is managing director of Western Investment LLC, a hedge fund based in Midvale, Utah. “They both help perpetuate this vicious circle of wealth staying in a small group.”

Club for Growth

Club for Growth’s super-political action committee spent at least $19 million on this year’s congressional races, none of it to back Democrats.

David Watson, a Patriotic Millionaires member and a former software developer for Google Inc. (GOOG), said the chamber doesn’t represent business broadly. A review of the chamber’s 2011 tax returns shows that $35.6 million -- or almost 25 percent of its budget -- came from 20 contributors who gave $1 million or more. One donor gave $8 million.

Of his former employer and the chamber, Watson said in an interview: “I can’t imagine it’s an easy relationship.”

Google spokeswoman Niki Fenwick confirmed in an e-mail Google’s membership in the chamber and declined to comment further.

Some companies, including Apple Inc., left the chamber in 2009 as the group spent money trying to kill the consumer financial protection agency that the Obama administration pushed into law.

Democratic Criticism

Senate Majority Leader Harry Reid, a Nevada Democrat, in a Nov. 13 floor speech on a cyber-security bill that the chamber opposes and Republicans are blocking, attacked the group as “an arm for the Republican Party.” Speaking seven days after elections that gave the Democrats’ Senate caucus a net gain of two, Reid said the chamber “wasted their money this time.”

The chamber spent at least $35 million on ads this year, most of them opposing Senate and House Democrats, according to the Center for Responsive Politics, a Washington-based group that tracks political spending.

While chamber officials say they didn’t spend money in the presidential race, the group’s view of government regulation, spending and lower taxes lined up with Republican nominee Mitt Romney’s platform. All seven Republican Senate candidates in which the chamber invested $1 million or more lost, Center for Responsive Politics data show.

Donohue Leadership

Donohue, who has led the chamber since 1997 and whom tax filings list as compensated with about $5 million annually, showed defiance when asked by reporters how he would make his fiscal-cliff message heard if the administration doesn’t listen.

“We have enough assets here, enough voice here, enough resources here that we can take care of ourselves,” he said.

Asked how the chamber expected to work with senators it had bet against, Donohue said its efforts weren’t personal and that the group isn’t deterred by its losses.

“We’re in the political business for the long run,” he said.

To contact the reporter on this story: Julie Bykowicz in Washington at jbykowicz@bloomberg.net

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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