Defections Expose Chamber's Dirty Little Secrets

By Steven Pearlstein
Friday, October 16, 2009

It's been a lousy week for Tom Donohue and his pals over at the U.S. Chamber of Commerce.

For months now, Tom has been crisscrossing the country looking for corporate donations with which to launch a campaign to "remind, educate and persuade" Americans that the free enterprise system is what has made America great and is what will once again "lead us back to prosperity."

Normally, it wouldn't take a $100 million propaganda effort to convince most Americans of the value of "individual initiative, hard work, freedom of choice and free exchange of trade, capital and ideas." But inasmuch as the country is now mired in the worst recession in 75 years after a decade in which the government pursued the rabidly free-market agenda espoused by the Chamber, you can appreciate Tom's problem.

The Campaign for Free Enterprise, of course, is not really about creating 20 million jobs over the next decade -- if Chamber members could double their profits while creating not a single new job, that would suit them just fine. Rather, it's nothing more than a desperate attempt to repackage the same old anti-tax, anti-regulation, anti-government rhetoric in hopes of derailing the major initiatives of the Obama administration and the Democratic Congress.

Unfortunately for Tom, the world is finally catching on to his game.

In the past few weeks, a number of big-name companies -- including Apple, Nike and PG&E -- have resigned from the Chamber or its various boards and committees over its continued opposition to doing anything about global warming. Donohue and his minions tried to brush off the corporate defections as nothing more than a PR stunt orchestrated by environmental activists that would have little impact on an organization with 3 million members. But in the process, the controversy managed to expose three embarrassing truths about the Chamber.

The first truth is that the Chamber, in fact, does not represent anything close to the 3 million businesses it has always claimed. In response to an inquiry from Mother Jones, the chamber acknowledged that its actual paid membership is only 300,000, including several thousand local chambers of commerce whose own membership was used in calculating the inflated 3 million figure. Moreover, when Josh Harkinson of Mother Jones contacted some of those local chambers, their leaders took pains to distance themselves from the national organization, whose policies, they said, they had no hand in shaping and with which they frequently disagree.

"They don't represent me," said Mark Jaffe, chief executive of the Greater New York Chamber.

Indeed, the second dirty little secret that was revealed by the defections is how undemocratic the Chamber has become. Among lobbyists in Washington, the Chamber is known as a staff-driven organization, which should hardly be a surprise given the wide range of businesses that belong to it. And with a board of directors that is self-appointed and has an unwieldy 120 members, it should be no surprise that Donohue and his top staff really call the shots. While the Chamber likes to point to its network of policy committees that supposedly advise the board, the panels tend to be dominated by those members with special interests to protect. Recorded votes are rare, and presentations are heavily skewed toward experts who agree with the positions staked out by Donohue's lobbyists, who over the past 15 years tightly allied themselves with the Bush White House and the Republican leadership on Capitol Hill.

Moreover, much of the Chamber's public policy effort these days is now funneled through a network of independent entities that it has sponsored to work on specific issues. These arrangements allow the Chamber to raise large sums from businesses that may not want to be publicly identified with hardball tactics like filing lawsuits or running negative ads. The entities have the advantage of not being subject to limits on corporate political contributions, nor do they have to disclose where they get their money or how they spend it.

What we've also learned this week is how disingenuous the Chamber has become in its Washington lobbying. To hear it from Donohue and his minions, it's not that the business community opposes financial regulation, or universal health care or controlling greenhouse gases -- it's just opposed to every credible idea for doing something about them. And rather than focus on working constructively to improve legislation, the Chamber's default strategy is to try to kill it outright through exaggeration, misrepresentation and outright lies.

In the hands of the Chamber's propagandists, a rather straightforward effort to halt abuses by mortgage brokers and credit card lenders is being transformed into a regulatory power-grab that will ensnare butchers and bakers and candlestick makers.

A tax on gold-plated health plans that will generate the money needed to provide health insurance subsidies to low-wage workers is turned into a huge income tax on small-business owners that will snuff out job creation.

And a proposal for a cap-and-trade system for carbon emissions suddenly is dismissed as an economy-crushing tax increase that will send all manufacturing over to China.

Earlier this month, I went to one of those off-the-record dinners you might have heard about, where the chief executive of a big and well-known corporation was bemoaning the inability of government to deal with big problems like huge deficits, global warming and the failure to turn out more college graduates and PhDs in science.

When it came my turn to respond, I asked why he continued to pay dues to business associations that for much of the last 15 years had set out to deliberately undermine the public's confidence in government and starve the tax revenues. I never got an answer.

Steven Pearlstein can be reached at

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