Tags: lobby | AEI | Carney | business

Policy Guys Debate Role of Big Business Lobbies

Tuesday, 16 Jul 2013 02:05 PM

By Robert Feinberg

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The American Enterprise Institute (AEI) hosted a panel on July 11 of four observers of the lobbying efforts of big corporations in Washington to consider the question, "Is Big Business a Big Problem for Free Enterprise?"

The program was part of the Culture of Competition Series AEI has been running as "an effort to better understand and market the case for fair and open competition in the marketplace and the world of ideas, highlight the practical and moral benefits of meaningful competition, commission original research and analysis and host events like this one for discussion and debate."

The panel, moderated by Jonah Goldberg of the AEI, consisted of four experts who are well-qualified to discuss the topic: Tim Carney, one of the leaders of AEI's Culture of Competition program and also a columnist for The Examiner; Tony Fratto, former official in the George W. Bush Treasury and White House; Sam Geduldig, former House staffer for leading Republicans; and William Galston of the Brookings Institution, a self-described "fascist liberal" member of the panel.

The event would have been worthwhile if only for the list Carney rattled off of expensive government programs enacted in recent years with the backing of big business.

Goldberg, a natural entertainer, explained that the program was inspired by a piece Galston had written for the New Republic on a theme familiar to conservatives — that big business is not necessarily as devoted to the free market as some people might expect. This led some liberals to seek alliances with business groups.

Goldberg added that he especially loved the recognition that big business is often congenial to furthering the aims of public policy through government. He then asked each of the speakers to respond to the theme question.

Galston responded that if by "free enterprise," one means a government and public policies conducted virtually without interaction with the market or private sector, so that big business is the enemy of free enterprise, that's a "crazy" understanding of free enterprise.

Galston declared that this is his fundamental proposition, that the idea that business and government have a "hydrolic" relationship in which when one is up the other is down is "false to history and to the facts of the present day." Rather, he sees a fundamental cleavage between the interests of big business and small business on policy matters, so that the Republican Party finds itself much closer to the National Federation of Independent Business, the small business lobby, than to the Chamber of Commerce or The Business Roundtable, especially in the Republican-controlled House of Representatives.

Historically, this is as true as it has been since the Republicans and big business forged their alliance with the Republicans of President McKinley and Mark Hanna before the turn of the 20th century. This leaves big business to consider whether it wants to continue to wander or to accept the fact that it can just accomplish more by working with the Democrats.

Fratto immediately reacted that the question is a "terrible" one. For him, the question of a home for big business is one for the parties, not for big business, and he accused the parties of having "a myopic view" of this question.

Fratto's model envisions big business as the avatar of American enterprise as it competes for a share of emerging markets he thinks will grow "exponentially," and he argues that only big business can fulfill this mission on a truly global scale.

He lamented that there isn't enough representation of American companies among the largest global enterprises, with Wal-Mart the only one with momentum, having reached No. 2, and the "megabank" JPMorgan Chase down at No. 55 in terms of global revenues. He emphasized that if America is going to claim its share of fast-growing global markets, big American firms must do it.

Carney moved immediately to rebut Fratto's presentation, declaring that "big business is often the greatest enemy of free enterprise, but it ought to be the single greatest advocate of free enterprise." He agreed with Fratto that the U.S. economy is less consolidated than those of competing industrial countries, but for him this is a good thing.

Carney proceeded to rattle off his list of programs enacted in recent years by big government in partnership with big corporations:

• The Medicare Part D prescription drug program in 2003, on behalf of pharmaceutical companies and health insurers,

• The expansion of ethanol under the 2005 energy bill through the ethanol mandate, expanded under the next energy bill in 2007, with the help of Goldman Sachs,

• The light bulb mandate, which was backed by GE as a measure to improve its margins,

• The bailouts of the biggest banks and auto companies in 2008 and the stimulus in 2009, both backed by the Chamber of Commerce, and

• Obamacare's individual mandate, promoted by the health insurance lobby along with pharma, which financed key ads for Senate Majority Leader Harry Reid, D-Nev., to reward his support, then the American Hospital Association supported Obamacare by filing a brief with the Supreme Court.

• On climate change, Carney found the Chamber and the big oil companies on the right side, but GE, DuPont, Alcoa, Dow, and GM supported climate change legislation in 2009.

(I would add to the list the repeal of Glass-Steagall at the behest of Citigroup in 1999, and the impassioned defense of JPMorgan and its CEO, Jamie Dimon, by House Financial Services Chairman Spencer Bachus, R-Ala., when the London whale scandal broke in 2012.)

Carney concluded with a juicy quote from Dimon that the Dodd-Frank Act "creates a nice protective moat around the company, because of the regulatory costs, so obviously that can't be bad."

Geduldig protested that the clients of his firm and of Fratto's would rather not pay them, but would rather pursue innovation and job creation on a global scale than spend millions trying to persuade Washington lobbyists to conduct editorial campaigns so that the views of big companies would circulate on Capitol Hill. Unfortunately, lobbyists are necessary to help corporate clients navigate the intricacies and the "BS" of complex federal legislation and regulation.

He pleaded, "Who are we to judge? How dare we sit here and judge them when all they're trying to do is live up to their promise to their shareholders to create profits and jobs and sell products, and we're just getting in the way?"

Goldberg retorted that as a commentator, passing judgment on public affairs is what he does.

I would add that he used to hold the naive view propagated by the lobbyists, but as early as the post-war years, when Lyndon Johnson was known as "the Senator from Brown & Root," an oil service company later absorbed by the Bush empire, big business has found a comfortable reception by the Democratic Party.

Later this would come to fruition under the leadership of Rep. Tony Coelho, D-Calif., who headed the Democratic Congressional Campaign Committee, while Chuck Manatt chaired the party in the early 1980s. In more recent years, the biggest but shakiest Wall Street firms, led by Goldman, Citigroup and JPMorgan, moved seamlessly between administrations of both parties, guided by powerful bipartisan law and public relations firms.

Now these firms and lobbies are in full control, and they know it. Whether this is a problem for so-called "free enterprise" is merely a theoretical, incidental issue.

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